PNM Resources Stock

PNM Resources, Inc. (PNMR), together with its subsidiaries, provides electricity and electric services in New Mexico and Texas.

The company’s electric utilities are Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP).

Regulated Operations

PNM

PNM is an electric utility that provides electric generation, transmission, and distribution service to its rate-regulated customers. PNM’s retail electric service territory covers a large area of north-central New Mexico, including the cities of Albuquerque, Rio Rancho, and Santa Fe, and certain areas of southern New Mexico. Service to retail electric customers is subject to the jurisdiction of the New Mexico Public Regulation Commission (NMPRC). Other services provided by PNM include wholesale transmission services to third parties.

PNM holds long-term, non-exclusive franchise agreements for its electric retail operations, with varying expiration dates. PNM owns 3,428 miles of electric transmission lines that interconnect with other utilities in New Mexico, Arizona, Colorado, Texas, and Utah. New Mexico is frequently characterized by its high potential for solar and wind capacity. PNM owns transmission capacity in an area of eastern New Mexico with large wind generation potential and in recent years there has been substantial interest by developers of wind generation to interconnect to PNM’s transmission system in this area.

TNMP

TNMP is a regulated utility operating and incorporated in the State of Texas. TNMP provides transmission and distribution services in Texas under the provisions of TECA (Texas Electric Choice Act) and the Texas Public Utility Regulatory Act. TNMP is subject to traditional cost-of-service regulation with respect to rates and service under the jurisdiction of the PUCT (Public Utility Commission of Texas) and certain municipalities. TNMP’s transmission and distribution activities are solely within Electric Reliability Council of Texas (ERCOT), which is the independent system operator responsible for maintaining reliable operations for the bulk electric power supply system in most of Texas. TNMP serves a market of small to medium sized communities, most of which have populations of less than 50,000. TNMP is the exclusive provider of transmission and distribution services in most areas it serves.

TNMP’s service territory consists of three non-contiguous areas. One portion of this territory extends from Lewisville, which is approximately 10 miles north of the Dallas-Fort Worth International Airport, eastward to municipalities near the Red River, and to communities north, west, and south of Fort Worth. The second portion of its service territory includes the area along the Texas Gulf Coast between Houston and Galveston, and the third portion includes areas of far west Texas between Midland and El Paso. TNMP owns 992 miles of electric transmission lines that interconnect with other utilities in Texas.

TNMP provides transmission and distribution services at regulated rates to various retail electricity providers (REPs) that, in turn, provide retail electric service to consumers within TNMP’s service area. As of December 31, 2022, 109 active REPs received transmission and distribution services from TNMP. TNMP holds long-term, non-exclusive franchise agreements for its electric transmission and distribution services.

Sources of Power

PNM

Generation Capacity

As of December 31, 2022, the total net generation capacity of facilities owned or leased by PNM was 1,606 MW (megawatt). PNM also obtains power under long-term PPAs (power purchase agreements) for the power produced by Valencia (Valencia Energy Facility), New Mexico Wind (New Mexico Wind Energy Center), Red Mesa Wind (Red Mesa Wind Energy Center), Casa Mesa Wind (Casa Mesa Wind Energy Center), La Joya Wind I (La Joya Wind Facility generating 166 MW of output that became operational in February 2021) and La Joya Wind II (La Joya Wind Facility generating 140 MW of output that became operational in June 2021), the Lightning Dock Geothermal (Lightning Dock geothermal power facility, also known as the Dale Burgett Geothermal Plant) facility, the Solar Direct solar facility, the Route 66 solar facility, and the NMRD (NM Renewable Development, LLC, owned 50% each by PNMR Development (PNMR Development and Management Company, an unregulated wholly-owned subsidiary of PNMR) and AEP OnSite Partners, LLC)-owned solar facilities.

The NMPRC has approved plans for PNM to procure energy and RECs from additional solar-PV (photovoltaic) renewable resources totaling 1,090 MW to serve retail customers and a data center located in PNM’s service territory, including the portfolio to replace SJGS (San Juan Generating Station) with solar PPAs of 550 MW combined with 270 MW of battery storage agreements. The PVNGS Leased Interest Abandonment Application (application with the NMPRC requesting approval for the decertification and abandonment of 114MW of leased PVNGS capacity) approved by the NMPRC includes solar PPAs of 300 MW combined with 300 MW of battery storage agreements. In addition, PNM had a customer distributed solar generation program that represented 239.1 MW as of December 31, 2022.

Fossil-Fueled Plants

SJGS is operated by PNM. Four Corners (Four Corners Power Plant) Units 4 and 5 are 13% owned by PNM. These units are jointly owned with APS, SRP (Salt River Project), Tucson (Tucson Electric Power Company), and NTEC (Navajo Transitional Energy Company, LLC, an entity owned by the Navajo Nation); and are operated by APS (Arizona Public Service Company, the operator and a co-owner of PVNGS and Four Corners). The Four Corners plant site is located on land within the Navajo Nation and is subject to an easement from the federal government. APS, on behalf of the Four Corners participants, negotiated amendments to extend the owners’ right to operate the plant on the site to July 2041. In June 2021, APS and the owners of Four Corners entered into agreements to operate Four Corners seasonally beginning in Fall 2023, subject to the necessary approvals, including PNM’s Four Corners Abandonment Application at the NMPRC. PNM filed the Four Corners Abandonment Application (PNM’s January 8, 2021 application for approval for the abandonment of Four Corners and issuance of a securitized financing order), which sought NMPRC approval to exit PNM’s 13% share of Four Corners as of December 31, 2024.

PNM owns 100% of Reeves, Afton (Afton Generating Station), Rio Bravo (Rio Bravo Generating Station), Lordsburg (Lordsburg Generating Station), and La Luz (La Luz Generating Station) and one-third of Luna (Luna Energy Facility). The remaining interests in Luna are owned equally by Tucson and Samchully Power & Utilities 1, LLC. PNM is also entitled to the entire output of Valencia under a PPA. Reeves, Lordsburg, Rio Bravo, La Luz, and Valencia are used primarily for peaking power and transmission support. Valencia is a variable interest entity and is consolidated by PNM.

Nuclear Plant

PNM is participating in the three units of PVNGS (Palo Verde Nuclear Generating Station) with APS (the operating agent), SRP, EPE (El Paso Electric Company), SCE (Southern California Edison Company), SCPPA (Southern California Public Power Authority), and the Department of Water and Power of the City of Los Angeles. PNM has ownership interests of 2.3% in Unit 1, 9.4% in Unit 2, and 10.2% in Unit 3 and has leasehold interests of 0.8% in Unit 2. The lease payments for the leased portions of PVNGS are recovered through retail rates approved by the NMPRC.

Renewables

As of December 31, 2022, PNM owned 158 MW of solar facilities in commercial operation. In addition, PNM purchases renewable power under long-term PPAs to serve New Mexico retail customers, including a data center located in PNM’s service territory. As of December 31, 2022, renewable energy procured under these agreements from wind, solar-PV, and geothermal facilities aggregated to 658 MW, 230 MW, and 11 MW. These agreements have expiration dates beginning in January 2035 and extending through May 2047. The NMPRC has approved PNM’s request to enter into additional PPAs for renewable energy for an additional 1,090 MW of energy from solar-PV facilities combined with 620 MW of battery storage agreements with an anticipated 350 MW expected to come online in 2023. The entire portfolio of replacement resources approved by the NMPRC in PNM’s SJGS Abandonment Application includes replacement of SJGS capacity with the procurement of 550 MW of solar PPAs combined with 270 MW of battery storage agreements. The PVNGS Leased Interest Abandonment Application approved by the NMPRC for replacement of 114 MW of PVNGS capacity and to ensure system reliability and load needs are met includes procurement of 300 MW of solar PPAs combined with 300 MW of battery storage agreements. In addition, the NMPRC issued an order that will allow PNM to service a data center for an additional 190 MW of solar PPA combined with 50 MW of battery storage and a 50 MW solar PPA expected to be operational in 2023.

TNMP

TNMP provides only transmission and distribution services and does not sell power.

Coal

SJGS and Four Corners are coal-fired generating plants that obtain their coal requirements from mines near the plants. The coal supply contract for SJGS expired on September 30, 2022. The coal supply arrangement for Four Corners runs through July 6, 2031.

Natural Gas

The natural gas used as fuel for the electric generating plants is procured on the open market and delivered by third-party transportation providers. The supply of natural gas can be subject to disruptions due to extreme weather events and/or pipeline or facility outages. PNM has contracted for firm gas transmission capacity to minimize the potential for disruptions due to extreme weather events. Certain of PNM’s natural gas plants are generally used as peaking resources that are highly relied upon during seasonally high load periods and/or during periods of extreme weather, which also may be the times natural gas has the highest demand from other users. Substantially all of PNM’s natural gas costs are recovered through the FPPAC (Fuel and Purchased Power Adjustment Clause).

Nuclear Fuel and Waste

PNM is one of several participants in PVNGS. The PVNGS participants are continually identifying their future nuclear fuel resource needs and negotiating arrangements to fill those needs.

Environmental Matters

In addition, PVNGS is subject to the jurisdiction of the United States Nuclear Regulatory Commission (NRC), which has the authority to issue permits and licenses and to regulate nuclear facilities in order to protect the health and safety of the public from radioactive hazards and to conduct environmental reviews.

Properties

PNM

As of December 31, 2022, PNM owned, or jointly owned, 3,428 miles of electric transmission lines; 5,767 miles of distribution overhead lines; 6,057 miles of underground distribution lines (excluding street lighting); and 250 substations. PNM owns and leases interests in PVNGS Units 1 and 2 and related property, communication, office and other equipment, office space, vehicles, and real estate. PNM also owns service and office facilities throughout its service territory.

TNMP

TNMP’s facilities consist primarily of transmission and distribution facilities located in its service areas. TNMP also owns and leases vehicles, service facilities, and office locations throughout its service territory. As of December 31, 2022, TNMP owned 992 miles of overhead electric transmission lines, 7,319 miles of overhead distribution lines, 1,433 miles of underground distribution lines, and 128 substations. Substantially all of TNMP’s property is pledged to secure its first mortgage bonds.

History

PNM Resources, Inc. was founded in 1882. The company was incorporated in 2000.