UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  SCHEDULE 13G


                    UNDER THE SECURITIES EXCHANGE ACT OF 1934
                                (Amendment No. 2)


                            EL PASO ELECTRIC COMPANY
                            ------------------------
                                (Name of Issuer)

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                         (Title of Class of Securities)

                                    283677854
                                    ---------
                                 (CUSIP Number)

                                December 31, 2002
                                -----------------
             (Date of Event Which Requires Filing of this Statement)



----------------------                                    ----------------------
 CUSIP No. 283677854                  13G/A                Page 2 of 12 Pages
----------------------                                    ----------------------

--------------------------------------------------------------------------------
1.   NAMES OF REPORTING PERSONS
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

         Highfields Capital Management LP
--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a)  [_]
                                                                    (b)  [_]
--------------------------------------------------------------------------------
3.   SEC USE ONLY

--------------------------------------------------------------------------------
4.   CITIZENSHIP OR PLACE OF ORGANIZATION

         Delaware
--------------------------------------------------------------------------------
  NUMBER OF       5.   SOLE VOTING POWER  4,653,600
    SHARES       ---------------------------------------------------------------
 BENEFICIALLY     6.   SHARED VOTING POWER  0
  OWNED BY       ---------------------------------------------------------------
    EACH          7.   SOLE DISPOSITIVE POWER  4,653,600
  REPORTING      ---------------------------------------------------------------
 PERSON WITH      8.   SHARED DISPOSITIVE POWER  0
--------------------------------------------------------------------------------
9.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
         4,653,600
--------------------------------------------------------------------------------
10.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN       [_]
     SHARES
--------------------------------------------------------------------------------
11.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9

         9.3%
--------------------------------------------------------------------------------
12.  TYPE OF REPORTING PERSON

         PN
--------------------------------------------------------------------------------



----------------------                                    ----------------------
 CUSIP No. 283677854                  13G/A                Page 3 of 12 Pages
----------------------                                    ----------------------

--------------------------------------------------------------------------------
1.   NAMES OF REPORTING PERSONS
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

         Highfields GP LLC
--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a)  [_]
                                                                    (b)  [_]
--------------------------------------------------------------------------------
3.   SEC USE ONLY

--------------------------------------------------------------------------------
4.   CITIZENSHIP OR PLACE OF ORGANIZATION

         Delaware
--------------------------------------------------------------------------------
  NUMBER OF       5.   SOLE VOTING POWER  4,653,600
    SHARES       ---------------------------------------------------------------
 BENEFICIALLY     6.   SHARED VOTING POWER  0
  OWNED BY       ---------------------------------------------------------------
    EACH          7.   SOLE DISPOSITIVE POWER  4,653,600
  REPORTING      ---------------------------------------------------------------
 PERSON WITH      8.   SHARED DISPOSITIVE POWER  0
--------------------------------------------------------------------------------
9.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
         4,653,600
--------------------------------------------------------------------------------
10.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN       [_]
     SHARES
--------------------------------------------------------------------------------
11.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9

         9.3%
--------------------------------------------------------------------------------
12.  TYPE OF REPORTING PERSON

         OO
--------------------------------------------------------------------------------



----------------------                                    ----------------------
 CUSIP No. 283677854                  13G/A                Page 4 of 12 Pages
----------------------                                    ----------------------

--------------------------------------------------------------------------------
1.   NAMES OF REPORTING PERSONS
     I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

         Jonathon S. Jacobson
--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP               (a)  [_]
                                                                    (b)  [_]
--------------------------------------------------------------------------------
3.   SEC USE ONLY

--------------------------------------------------------------------------------
4.   CITIZENSHIP OR PLACE OF ORGANIZATION

         United States
--------------------------------------------------------------------------------
  NUMBER OF       5.   SOLE VOTING POWER  4,653,600
    SHARES       ---------------------------------------------------------------
 BENEFICIALLY     6.   SHARED VOTING POWER  0
  OWNED BY       ---------------------------------------------------------------
    EACH          7.   SOLE DISPOSITIVE POWER  4,653,600
  REPORTING      ---------------------------------------------------------------
 PERSON WITH      8.   SHARED DISPOSITIVE POWER  0
--------------------------------------------------------------------------------
9.   AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
         4,653,600
--------------------------------------------------------------------------------
10.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN       [_]
     SHARES
--------------------------------------------------------------------------------
11.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9

         9.3%
--------------------------------------------------------------------------------
12.  TYPE OF REPORTING PERSON

         IN
--------------------------------------------------------------------------------



-------------------------                             --------------------------
 CUSIP No. 283677854                 13G/A                Page 5 of 12 Pages
-------------------------                             --------------------------

--------------------------------------------------------------------------------
1.        NAMES OF REPORTING PERSONS
          I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                   Richard L. Grubman
--------------------------------------------------------------------------------
2.        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP          (a)  [_]
                                                                    (b)  [_]
--------------------------------------------------------------------------------
3.        SEC USE ONLY

--------------------------------------------------------------------------------
4.        CITIZENSHIP OR PLACE OF ORGANIZATION

                   United States
--------------------------------------------------------------------------------
        NUMBER OF       5.    SOLE VOTING POWER   4,653,600
         SHARES         --------------------------------------------------------
      BENEFICIALLY      6.    SHARED VOTING POWER   0
        OWNED BY        --------------------------------------------------------
          EACH          7.    SOLE DISPOSITIVE POWER   4,653,600
        REPORTING       --------------------------------------------------------
       PERSON WITH      8.    SHARED DISPOSITIVE POWER   0
--------------------------------------------------------------------------------
9.        AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
          PERSON
                   4,653,600
--------------------------------------------------------------------------------
10.       CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES          [_]
          CERTAIN SHARES
--------------------------------------------------------------------------------
11.       PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9

                   9.3%
--------------------------------------------------------------------------------
12.       TYPE OF REPORTING PERSON

                   IN
--------------------------------------------------------------------------------



-------------------------                             --------------------------
 CUSIP No. 283677854                 13G/A                Page 6 of 12 Pages
-------------------------                             --------------------------

--------------------------------------------------------------------------------
1.        NAMES OF REPORTING PERSONS
          I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                   Highfields Capital Ltd.
--------------------------------------------------------------------------------
2.        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP          (a)  [_]
                                                                    (b)  [_]
--------------------------------------------------------------------------------
3.        SEC USE ONLY

--------------------------------------------------------------------------------
4.        CITIZENSHIP OR PLACE OF ORGANIZATION

                   Cayman Islands, B.W.I.
--------------------------------------------------------------------------------
        NUMBER OF       5.    SOLE VOTING POWER   3,293,725
         SHARES         --------------------------------------------------------
      BENEFICIALLY      6.    SHARED VOTING POWER   0
        OWNED BY        --------------------------------------------------------
          EACH          7.    SOLE DISPOSITIVE POWER   3,293,725
        REPORTING       --------------------------------------------------------
       PERSON WITH      8.    SHARED DISPOSITIVE POWER   0
--------------------------------------------------------------------------------
9.        AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
          PERSON
                   3,293,725
--------------------------------------------------------------------------------
10.       CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES          [_]
          CERTAIN SHARES
--------------------------------------------------------------------------------
11.       PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9

                   6.6%
--------------------------------------------------------------------------------
12.       TYPE OF REPORTING PERSON

                   PN
--------------------------------------------------------------------------------



-----------------------                                -------------------------
CUSIP No. 283677854                  13G/A                Page 7 of 12 Pages
-----------------------                                -------------------------

Item 1(a).  Name of Issuer:

            El Paso Electric Company

Item 1(b).  Address of Issuer's Principal Executive Offices:

            Stanton Tower, 100 North Stanton, El Paso, Texas 79901

Item 2(a).  Name of Person Filing:

            This statement is being filed by the following persons with
            respect to the shares of Common Stock of the Issuer directly
            owned by Highfields Capital I LP, Highfields Capital II LP and
            Highfields Capital Ltd. (collectively, the "Funds"):

            (i)    Highfields Capital Management LP, a Delaware limited
                   partnership ("Highfields Capital Management") and investment
                   manager to each of the Funds;

            (ii)   Highfields GP LLC, a Delaware limited liability company
                   ("Highfields GP") and the General Partner of Highfields
                   Capital Management;

            (iii)  Jonathon S. Jacobson, a Managing Member of Highfields GP;
                   and

            (iv)   Richard L. Grubman, a Managing Member of Highfields GP.

            This statement is also being filed by Highfields Capital Ltd., an
            exempted limited company organized under the laws of the Cayman
            Islands, B.W.I., with respect to the shares of Common Stock of
            the Issuer owned by Highfields Capital Ltd. (which shares of
            Common Stock are also included in the filings for Highfields
            Capital Management, Highfields GP, Mr. Jacobson and Mr. Grubman).

            Highfields Capital Management, Highfields GP, Mr. Jacobson, Mr.
            Grubman and Highfields Capital Ltd. are sometimes individually
            referred to herein as a "Reporting Person" and collectively as the
            "Reporting Persons."

Item 2(b).  Address of Principal Business Office or, if None, Residence:

            Address for Highfields Capital Management, Highfields GP,
            Mr. Jacobson and Mr. Grubman:
            c/o Highfields Capital Management
            200 Clarendon Street, 51st Floor
            Boston, Massachusetts 02116




-----------------------                                -------------------------
CUSIP No. 283677854                  13G/A                Page 8 of 12 Pages
-----------------------                                -------------------------

            Address for Highfields Capital Ltd.:
            c/o Goldman Sachs (Cayman) Trust, Limited
            Harbour Centre, Second Floor
            George Town, Grand Cayman
            Cayman Islands, B.W.I.

Item 2(c).  Citizenship:

            Highfields Capital Management - Delaware
            Highfields GP - Delaware
            Jonathon S. Jacobson - United States
            Richard L. Grubman - United States
            Highfields Capital Ltd. - Cayman Islands, B.W.I.

Item 2(d).  Title of Class of Securities:

            Common Stock, no par value

Item 2(e).  CUSIP Number:

            283677854

Item 3.     If This Statement is Filed Pursuant to Rule 13d-1(b), or 13d-2(b) or
            (c), Check Whether the Person Filing is a:

            (a)   [_]   Broker or dealer registered under Section 15 of the
                        Exchange Act.

            (b)   [_]   Bank as defined in Section 3(a)(6) of the Exchange Act.

            (c)   [_]   Insurance company as defined in Section 3(a)(19) of the
                        Exchange Act.

            (d)   [_]   Investment company registered under Section 8 of the
                        Investment Company Act.

            (e)   [_]   An investment adviser in accordance with Rule 13d-1(b)
                        (1)(ii)(E);

            (f)   [_]   An employee benefit plan or endowment fund in accordance
                        with Rule 13d-1(b)(1)(ii)(F);

            (g)   [_]   A parent holding company or control person in accordance
                        with Rule 13d-1(b)(1)(ii)(G);

            (h)   [_]   A savings association as defined in Section 3(b) of the
                        Federal Deposit Insurance Act;



-----------------------                                -------------------------
CUSIP No. 283677854                  13G/A                Page 9 of 12 Pages
-----------------------                                -------------------------

            (i)   [_]   A church plan that is excluded from the definition of an
                        investment company under Section 3(c)(14) of the
                        Investment Company Act;

            (j)   [_]   Group, in accordance with Rule 13d-1(b)(1)(ii)(J).

Item 4.     Ownership.

            Provide the following information regarding the aggregate
            number and percentage of the class of securities of the issuer
            identified in Item 1.

            For Highfields Capital Management, Highfields GP, Mr. Jacobson and
            Mr. Grubman:

            (a)   Amount beneficially owned:

                  4,653,600 shares of Common Stock

            (b)   Percent of class:

                  9.3%

            (c)   Number of shares as to which such person has:

                  (i)   Sole power to vote or to direct the vote:  4,653,600

                  (ii)  Shared power to vote or to direct the vote:  0

                  (iii) Sole power to dispose or to direct the disposition of:
                        4,653,600

                  (iv)  Shared power to dispose or to direct the disposition of:
                        0

            For Highfields Capital Ltd.:

            (a)   Amount beneficially owned:

                  3,293,725 shares of Common Stock

            (b)   Percent of class:

                  6.6%

            (c)   Number of shares as to which such person has:

                  (i)   Sole power to vote or to direct the vote:  3,293,725



--------------------                                      ----------------------
CUSIP No. 283677854                 13G/A                  Page 10 of 12 Pages
--------------------                                      ----------------------

               (ii)   Shared power to vote or to direct the vote:  0

               (iii)  Sole power to dispose or to direct the disposition of:
                      3,293,725

               (iv)   Shared power to dispose or to direct the disposition of:
                      0

Item 5.   Ownership of Five Percent or Less of a Class.

          Not applicable.

Item 6.   Ownership of More than Five Percent on Behalf of Another Person.

          The shares beneficially owned by Highfields Capital Management,
          Highfields GP, Mr. Jacobson and Mr. Grubman are owned by the Funds.
          Highfields Ltd. owns 6.6% of the shares; both Highfields Capital I LP
          and Highfields Capital II LP individually own less than 5% of the
          shares. Highfields Capital Management serves as the investment manager
          to each of the Funds. Each of Highfields Capital Management,
          Highfields GP, Mr. Jacobson and Mr. Grubman has the power to direct
          the dividends from or the proceeds of the sale of the shares owned by
          the Funds.

Item 7.   Identification and Classification of the Subsidiary Which Acquired the
          Security Being Reported on by the Parent Holding Company.

          Not applicable.

Item 8.   Identification and Classification of Members of the Group.

          Not applicable.

Item 9.   Notice of Dissolution of Group.

          Not applicable.

Item 10.  Certification.

          By signing below I certify that, to the best of my knowledge and
          belief, the securities referred to above were not acquired and are not
          held for the purpose of or with the effect of changing or influencing
          the control of the issuer of the securities and were not acquired and
          are not held in connection with or as a participant in any transaction
          having that purpose or effect.



--------------------                                      ----------------------
CUSIP No. 283677854                 13G/A                  Page 11 of 12 Pages
--------------------                                      ----------------------

                                    SIGNATURE

     After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

                                                 February 14, 2003
                                     -------------------------------------------
                                                       Date

                                     HIGHFIELDS CAPITAL MANAGEMENT LP

                                     By:  Highfields GP LLC, its General Partner

                                     /s/ Kenneth H. Colburn
                                     -------------------------------------------
                                                     Signature

                                     Kenneth H. Colburn, Authorized Signatory
                                     -------------------------------------------
                                                     Name/Title


                                     HIGHFIELDS GP LLC

                                     /s/ Kenneth H. Colburn
                                     -------------------------------------------
                                                     Signature

                                     Kenneth H. Colburn, Authorized Signatory
                                     -------------------------------------------
                                                     Name/Title


                                     JONATHON S. JACOBSON

                                     /s/ Kenneth H. Colburn
                                     -------------------------------------------
                                                     Signature

                                     Kenneth H. Colburn, Authorized Signatory
                                     -------------------------------------------
                                                     Name/Title


                                     RICHARD L. GRUBMAN

                                     /s/ Kenneth H. Colburn
                                     -------------------------------------------
                                                     Signature

                                     Kenneth H. Colburn, Authorized Signatory
                                     -------------------------------------------
                                                     Name/Title



--------------------                                      ----------------------
CUSIP No. 283677854                 13G/A                  Page 12 of 12 Pages
--------------------                                      ----------------------

                                    HIGHFIELDS CAPITAL LTD.

                                    By:  Highfields Capital Management LP, its
                                         Investment Manager

                                    By:  Highfields GP LLC, its General Partner

                                    /s/ Kenneth H. Colburn
                                    --------------------------------------------
                                                     Signature

                                    Kenneth H. Colburn, Authorized Signatory
                                    --------------------------------------------
                                                     Name/Title