ALBUQUERQUE, N.M., Nov. 2, 2018 /PRNewswire/ — PNM Resources’ (NYSE: PNM) transmission and distribution utility in Texas, TNMP, has filed an unopposed settlement with Texas state regulators in its general rate review. The settlement calls for a return on equity of 9.65 percent and a capital structure of 55 percent debt and 45 percent equity. If approved by the Public Utilities Commission of Texas (PUCT), new rates are expected to be implemented in January 2019. TNMP’s general rate review filing in May 2018 was its first since current rates were approved in 2011.

PNM Resources (PRNewsFoto/PNM Resources, Inc.) (PRNewsfoto/PNM Resources, Inc.)

«The unopposed settlement is evidence of the atmosphere in Texas where parties recognize the importance of a regulated utility’s financial health as capital investments are made to support the state’s continued growth,» said Pat Vincent-Collawn, PNM Resources’ chairman, president and CEO. «The settlement returns savings from federal tax reform to customers and lays the groundwork for continued growth and recovery of capital investments, including the restoration work that was done following Hurricane Harvey.»

The settlement reflects a $10 million net increase to base rates for retail and wholesale customers and a $73 million increase to rate base, which is incremental to previous Transmission Cost of Service (TCOS) filings and Advanced Metering System (AMS) investments. Although some amounts were excluded from the originally filed rate base, these are largely related to transmission projects that are expected to be included in subsequent TCOS filings. The settlement approves the depreciation rates proposed by TNMP and shortened the period to return part of the excess deferred income taxes to customers. Consistent with TNMP’s filing, the increase includes the integration of AMS recovery into base rates, including collection of the remaining unrecovered investment. Schedule 1 below summarizes the key components of the rate filing.

Management also affirmed its consolidated ongoing earnings guidance of $2.08 to $2.18 per diluted share for 2019.

Documents related to the rate filing can be found at: http://www.pnmresources.com/investors/rates-and-filings.aspx.

Schedule 1

Changes to
Filed Increase

(in millions)

Filed increase to base rates (retail and transmission)

$25.9

ROE (10.5% filed, 9.65% settlement)

(4.4)

Capital structure (50/50 filed, 55/45 settlement) and cost of debt (7.2% filed, 6.4% settlement)

(5.9)

Rate base reductions

(1.8)

Return of excess deferred federal income tax reduction

(3.2)

Other

(0.6)

Stipulated increase to base rates (retail and transmission)

$10.0

Background:
PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2017 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,580 megawatts of generation capacity and provides electricity to more than 773,000 homes and businesses in New Mexico and Texas. For more information, visit the company’s website at www.PNMResources.com.

CONTACTS:

Analysts

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(505) 241-2160

(505) 259-8063

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to future events or PNM Resources, Inc.’s («PNMR»), Public Service Company of New Mexico’s («PNM»), or Texas-New Mexico Power Company’s («TNMP») (collectively, the «Company») expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. PNMR, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR, PNM, and TNMP caution readers not to place undue reliance on these statements. PNMR’s, PNM’s, and TNMP’s business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company’s Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

Non-GAAP Financial Measures
GAAP refers to generally accepted accounting principles in the U.S. Ongoing earnings is a non-GAAP financial measure that excludes the impact of net unrealized mark-to-market gains and losses on economic hedges, the net change in unrealized gains and losses on investment securities, pension expense related to previously a disposed of gas distribution business, and certain non-recurring, infrequent, and other items that are not indicative of fundamental changes in the earnings capacity of the Company’s operations. The Company uses ongoing earnings and ongoing earnings per diluted share (or ongoing diluted earnings per share) to evaluate the operations of the Company and to establish goals, including those used for certain aspects of incentive compensation, for management and employees. While the Company believes these financial measures are appropriate and useful for investors, they are not measures presented in accordance with GAAP. The Company does not intend for these measures, or any piece of these measures, to represent any financial measure as defined by GAAP. Furthermore, the Company’s calculations of these measures as presented may or may not be comparable to similarly titled measures used by other companies. The Company uses ongoing earnings guidance to provide investors with management’s expectations of ongoing financial performance over the period presented. While the Company believes ongoing earnings guidance is an appropriate measure, it is not a measure presented in accordance with GAAP. The Company does not intend for ongoing earnings guidance to represent an expectation of net earnings as defined by GAAP. Since the future differences between GAAP and ongoing earnings are frequently outside the control of the Company, management is generally not able to estimate the impact of the reconciling items between forecasted GAAP net earnings and ongoing earnings guidance, nor their probable impact on GAAP net earnings without unreasonable effort, therefore, management is generally not able to provide a corresponding GAAP equivalent for ongoing earnings guidance.

 

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SOURCE PNM Resources, Inc.