El Paso Electric Company (EE)

Taxes other than income taxes

Taxes other than income taxes increased $0.7 million, or 6.3%, for the three months ended March 31, 2009 compared to the same period last year primarily due to higher revenue related taxes in Texas resulting from a higher fixed fuel factor and the collection of fuel surcharges. Taxes other than income taxes increased $1.6 million, or 3.3%, for the twelve months ended March 31, 2009 compared to the same period last year primarily due to revenue related taxes in Texas and increased property taxes in Texas.

Taxes other than income taxes

Taxes other than income taxes increased $0.6 million in 2008 compared to 2007 primarily due to increased property taxes in Texas and New Mexico and payroll taxes at Palo Verde. Taxes other than income taxes decreased $1.3 million in 2007 compared to 2006 primarily due to a decrease in property taxes and the change in the Texas franchise (income) tax law in 2006 which took effect in 2007 offset by an increase in Palo Verde payroll taxes.

Taxes other than income taxes

Taxes other than income taxes increased $0.6 million in 2008 compared to 2007 primarily due to increased property taxes in Texas and New Mexico and payroll taxes at Palo Verde. Taxes other than income taxes decreased $1.3 million in 2007 compared to 2006 primarily due to a decrease in property taxes and the change in the Texas franchise (income) tax law in 2006 which took effect in 2007 offset by an increase in Palo Verde payroll taxes.

Taxes other than income taxes

Taxes other than income taxes decreased $0.3 million for the three months ended March 31, 2008, compared to the same period last year primarily due to lower property taxes and lower revenue-related taxes. Taxes other than income taxes decreased $1.1 million for the twelve months ended March 31, 2008 compared to the same period last year primarily due to lower property taxes and a change in the Texas franchise tax law resulting in all franchise taxes being recorded as income taxes beginning in 2007.

Taxes other than income taxes

Taxes other than income taxes decreased $1.3 million in 2007 compared to 2006 primarily due to a decrease in property taxes and the change in the Texas franchise (income) tax law in 2006 which took effect in 2007. These decreases were partially offset by an increase in payroll taxes. Taxes other than income taxes increased $5.5 million in 2006 compared to 2005 primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries including fuel surcharges. We incur city franchise taxes as revenues are billed to customers.

Taxes other than income taxes

Taxes other than income taxes decreased by $0.9 million and $1.7 million and $3.2 million for the three, nine and twelve months ended September 30, 2007, respectively, compared to the same periods last year due to lower property taxes. The three and nine month periods decrease was also due to a change in the Texas franchise tax law resulting in all franchise taxes being recorded as income taxes beginning in 2007.

Taxes other than income taxes

Taxes other than income taxes decreased by $0.3 million and $0.8 million for the three and six months ended June 30, 2007, respectively, compared to the same periods last year due to lower property taxes and a change in the Texas franchise tax law resulting in all franchise taxes being recorded as income taxes beginning in 2007. Taxes other than income taxes increased $0.3 million for the twelve months ended June 30, 2007 compared to the same period last year primarily due to higher revenue-related taxes associated with increased retail revenues including fuel surcharges.

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Taxes other than income taxes

Taxes other than income taxes decreased for the three months ended March 31, 2007 compared to the same period last year by $0.5 million due to lower property taxes and a change in the Texas franchise tax law resulting in all franchise taxes being recorded as income taxes beginning in 2007. Taxes other than income taxes increased $2.9 million for the twelve months ended March 31, 2007 compared to the same period last year primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries.

Taxes other than income taxes

Taxes other than income taxes increased $5.5 million in 2006 compared to 2005 and increased by $2.4 million in 2005 compared to 2004 primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries including fuel surcharges. We incur city franchise taxes as revenues are billed to customers. The increase in 2005 compared to 2004 was partially offset by a decrease in New Mexico occupation street rental tax. As a result of a June 2004 change in New Mexico law, the occupation street rental tax on retail sales of electricity is now collected directly from retail customers and not recorded as an expense.

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Index to Financial Statements

Taxes other than income taxes

Taxes other than income taxes increased by $2.6 million, $7.0 million and $11.1 million for the three, nine and twelve months ended September 30, 2006, respectively, compared to the same periods last year primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries.

Taxes other than income taxes

Taxes other than income taxes increased by $2.3 million, $4.5 million and $9.0 million for the three, six and twelve months ended June 30, 2006, respectively, compared to the same periods last year primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries.

Taxes other than income taxes

Taxes other than income taxes increased by $2.1 million and $5.7 million for the three and twelve months ended March 31, 2006, respectively, compared to the same periods last year primarily due to an increase in the El Paso city franchise fees which took effect in August 2005 and higher taxable revenues due to increased kWh sales and increases in fuel recoveries.

Taxes other than income taxes

Taxes other than income taxes increased by $2.4 million, or 5.7%, in 2005 compared to 2004 primarily due to an increase in the El Paso city franchise fees which took effect August 2, 2005, which was partially offset by a decrease in New Mexico occupation street rental tax. As a result of a June 2004 change in New Mexico law, the occupation street rental tax on retail sales of electricity is now collected directly from retail customers and not recorded as an expense. Taxes other than income taxes were relatively unchanged in 2004 compared to 2003.

Taxes other than income taxes

Taxes other than income taxes increased $0.4 million, or 3%, for the three months ended September 30, 2005 compared to the same period last year primarily due to an increase in the El Paso city franchise fees which took effect beginning August 2, 2005 partially offset by a decrease in property taxes. Taxes other than income taxes decreased $1.7 million and $2.4 million for the nine and twelve months ended September 30, 2005, respectively, compared to the same periods last year. The decrease was primarily due to a decrease in property tax compared to the prior period. In addition, pursuant to a June 2004 change in New Mexico law the occupation street rental tax on retail sales of electricity is now collected directly from retail customers and not recorded as an expense of the Company.