Utility rates
A retroactive surcharge reaching back to July 2025, a new demand charge aimed at rooftop solar, and a grandfather date that decides which side of it you are on.
Border Energy Group · August 1, 2026 · 8 min read
The short version
The Public Utility Commission of Texas approved El Paso Electric's rate case in February 2026. Average residential bills rise about $13 a month. Because Texas law lets approved rates reach back toward the filing date, there is also a retroactive component covering roughly July 2025 through May 2026, collected as a temporary monthly surcharge rather than a lump sum.
Separately, EPE is replacing the flat minimum bill for rooftop solar customers with a demand charge based on your single highest hour of grid draw each month. Solar owners interconnected before the December 2017 cutoff are grandfathered. Everyone else is not.
If you own solar and are not grandfathered, the thing that now costs you money is not how much energy you use. It is when you use the most of it at once.
EPE filed this rate case in January 2025. After a contested hearing and a proposal for decision from administrative law judges, the PUCT approved it in February 2026, with commissioners modifying several items — including setting the utility's authorized return on equity at 9.4% rather than the 10.7% requested, and cutting the base-rate revenue request substantially below what EPE asked for.
The City of El Paso intervened, and by the utility's own figures the average residential bill moves from roughly $98 to roughly $111 per month. The City later sought a rehearing to press for further customer protections.
This is the part generating the most confusion, and it is not a billing error.
Under Texas practice, when a utility files a rate case, approved new rates can be applied retroactively to a date shortly after the filing — even though the review itself takes many months. EPE filed in January 2025, so the approved rates reach back to roughly July 1, 2025, covering the interim period while the case was pending.
That creates a balance for energy you consumed during those months at the old rates. Rather than bill it as one lump sum, EPE recovers it through a temporary monthly surcharge spread across a defined period. When it has collected the balance, that line goes away.
Two different surcharges, often confused
The retroactive rate surcharge covers the difference between old and new rates on power you already used during the interim period. It is tied to your consumption.
The rate case expense surcharge is separate. It recovers the legal and administrative costs both the utility and intervenors accumulated during the proceeding. It is not tied to your usage at all.
For distributed generation customers — rooftop solar owners — EPE is replacing the flat monthly minimum bill with a demand charge. Advocacy group Solar United Neighbors has estimated the new charge will average roughly $28.50 to $47.50 per month for most DG customers.
The mechanism is what deserves attention. A demand charge is not based on total kilowatt-hours. It is based on your single highest interval of grid draw during the billing month — typically the peak sixty-minute demand. One hour of heavy simultaneous load can set the charge for the entire month.
Residential demand charges are unusual in the United States. They are standard for commercial and industrial accounts, where facilities employ energy managers precisely to control peak load. Applying that structure to households asks homeowners to manage something most have never had to think about.
Solar owners whose systems were interconnected before the December 2017 cutoff are grandfathered and exempt from the new demand charge. Systems interconnected after that date are subject to it.
Verified against EPE's filed tariff
The cutoff is commonly cited as December 18, 2017, but EPE's own Residential Service Rate schedule (Schedule No. 01) states grandfathering applies to DG customers whose interconnection application was submitted and accepted prior to December 17, 2017. A day either way rarely matters, but if your interconnection landed in that exact week, the tariff language is what governs — not a news summary.
The tariff also confirms the grandfathering term: 20 years from the date of interconnection, not permanent, and it transfers with the property if sold. If you are relying on grandfathered status, confirm your interconnection date and your remaining term directly with EPE.
Texas House Bill 912 takes effect September 1, 2026. It requires a cost-benefit analysis of rooftop solar before a utility changes solar fees or compensation rates.
Because EPE filed this rate case in January 2025 — before HB 912 passed — the demand charge was approved without that analysis having been completed. Solar advocates have argued publicly that this circumvents the intent of the new law and have pressed the City to push EPE to commission a neutral third-party study anyway. EPE has said the rate case reflects investments already made to maintain reliability and support growth in its territory.
We are not going to tell you how that fight should come out. What we will tell you is that you should not plan a twenty-five year asset around the assumption that this is the last rate change. It is not.
A demand charge is largely indifferent to how much solar you produce. Your peak grid draw usually happens in the evening, after production has fallen off — the air conditioner recovering, the dryer running, dinner being cooked, an EV plugging in. Panels on the roof do very little about a 7 p.m. peak. If your entire case for solar was offsetting kilowatt-hours, part of that case just got weaker.
A battery is the one thing that directly attacks a demand charge. It stores production from the middle of the day and discharges it during your peak, so the grid never sees that spike. This is exactly how commercial customers have managed demand charges for decades — the utility has now extended that logic to households, and the same tool answers it.
That is also why exporting surplus to the grid is no longer automatically the best use of your production. When export credit is low and your own peak is expensive, keeping the energy is usually worth more than selling it.
In February 2026, EPE launched a pilot with Base Power to put residential batteries on customer property at no cost, seeking up to 10 MW of distributed storage ahead of the summer peak — because it is faster and cheaper than building new generation. When your utility concludes that batteries on your side of the meter are the cost-effective answer, the question stops being whether storage works here.
Commercial and industrial accounts in this territory have paid demand charges for years, and they are usually the largest controllable line on the bill. The same arithmetic that now applies to a household applies at far greater scale to a warehouse, a clinic, or a school campus — and the same combination of on-site generation, storage, and load control is what moves it.
This article summarizes publicly reported information about El Paso Electric's Texas rate case as of August 2026 and is provided for general information. Rate structures, effective dates, and grandfathering terms are governed by EPE's approved tariffs and PUCT orders, not by this summary. Border Energy Group is not a utility, a law firm, or a financial advisor. Verify your specific rate schedule and interconnection status with El Paso Electric before making decisions.
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