Document
Table of Contents

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

FORM 10-Q

(Mark One)
 [X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

Commission File
 
Name of Registrants, State of Incorporation,
 
I.R.S. Employer
 Number
 
 Address and Telephone Number
 
 Identification No.
001-32462
 
PNM Resources, Inc.
 
85-0468296
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
001-06986
 
Public Service Company of New Mexico
 
85-0019030
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
002-97230
 
Texas-New Mexico Power Company
 
75-0204070
 
 
(A Texas Corporation)
 
 
 
 
577 N. Garden Ridge Blvd.
 
 
 
 
Lewisville, Texas 75067
 
 
 
 
(972) 420-4189
 
 

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
 
PNM Resources, Inc. (“PNMR”)
YES
ü
NO
 
 
Public Service Company of New Mexico (“PNM”)
YES
ü
NO
 
 
Texas-New Mexico Power Company (“TNMP”)
YES
 
NO
ü

(NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
PNMR
YES
ü
NO
 
 
PNM
YES
ü
NO
 
 
TNMP
YES
ü
NO
 




Table of Contents

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer (Do not check if a smaller reporting company)
 
Smaller reporting company
 
Emerging growth company
PNMR
 
ü
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
PNM
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
 
 
 
TNMP
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES     NO ü

As of July 25, 2017, 79,653,624 shares of common stock, no par value per share, of PNMR were outstanding.

The total number of shares of common stock of PNM outstanding as of July 25, 2017 was 39,117,799 all held by PNMR (and none held by non-affiliates).

The total number of shares of common stock of TNMP outstanding as of July 25, 2017 was 6,358 all held indirectly by PNMR (and none held by non-affiliates).

PNM AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

This combined Form 10-Q is separately filed by PNMR, PNM, and TNMP.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  Each registrant makes no representation as to information relating to the other registrants.  When this Form 10-Q is incorporated by reference into any filing with the SEC made by PNMR, PNM, or TNMP, as a registrant, the portions of this Form 10-Q that relate to each other registrant are not incorporated by reference therein.



2

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX

 
Page No.
 
 
 
 
 
 
ITEM 5. OTHER INFORMATION


3

Table of Contents

GLOSSARY

Definitions:
  
 
2014 IRP
 
PNM’s 2014 IRP
2017 IRP
 
PNM’s 2017 IRP
ABCWUA
 
Albuquerque Bernalillo County Water Utility Authority
Afton
  
Afton Generating Station
AFUDC
 
Allowance for Funds Used During Construction
AMI
 
Advanced Metering Infrastructure
AMS
 
Advanced Meter System
AOCI
  
Accumulated Other Comprehensive Income
APS
  
Arizona Public Service Company, the operator and a co-owner of PVNGS and Four Corners
ASU
 
Accounting Standards Update
BACT
  
Best Available Control Technology
BART
  
Best Available Retrofit Technology
BDT
 
Balanced Draft Technology
BHP
  
BHP Billiton, Ltd
Board
  
Board of Directors of PNMR
BTMU
 
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
BTMU Term Loan Agreement
 
NM Capital’s $125.0 Million Unsecured Term Loan
BTU
  
British Thermal Unit
CAA
 
Clean Air Act
CCB
  
Coal Combustion Byproducts
CCN
 
Certificate of Convenience and Necessity
CIAC
 
Contributions in Aid of Construction
CO2
  
Carbon Dioxide
CSA
 
Coal Supply Agreement
CTC
  
Competition Transition Charge
DC Circuit
 
United States Court of Appeals for the District of Columbia Circuit
DOE
  
United States Department of Energy
DOI
  
United States Department of Interior
EGU
 
Electric Generating Unit
EIS
 
Environmental Impact Study
EPA
  
United States Environmental Protection Agency
ERCOT
  
Electric Reliability Council of Texas
ESA
 
Endangered Species Act
Exchange Act
 
Securities Exchange Act of 1934
Farmington
 
The City of Farmington, New Mexico
FASB
  
Financial Accounting Standards Board
FERC
  
Federal Energy Regulatory Commission
FIP
  
Federal Implementation Plan
Four Corners
  
Four Corners Power Plant
FPPAC
  
Fuel and Purchased Power Adjustment Clause
FTY
 
Future Test Year
GAAP
  
Generally Accepted Accounting Principles in the United States of America
GHG
  
Greenhouse Gas Emissions

4

Table of Contents

GWh
  
Gigawatt hours
IBEW
  
International Brotherhood of Electrical Workers
IRP
 
Integrated Resource Plan
IRS
  
Internal Revenue Service
ISFSI
 
Independent Spent Fuel Storage Installation
KW
  
Kilowatt
KWh
  
Kilowatt Hour
La Luz
  
La Luz Generating Station
LIBOR
  
London Interbank Offered Rate
Lightning Dock Geothermal
 
Lightning Dock geothermal power facility, also known as the Dale Burgett Geothermal Plant
Lordsburg
  
Lordsburg Generating Station
Luna
  
Luna Energy Facility
MD&A
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MMBTU
  
Million BTUs
Moody’s
  
Moody’s Investor Services, Inc.
MW
  
Megawatt
MWh
  
Megawatt Hour
NAAQS
 
National Ambient Air Quality Standards
Navajo Acts
  
Navajo Nation Air Pollution Prevention and Control Act, Navajo Nation Safe Drinking Water Act, and Navajo Nation Pesticide Act
NDT
  
Nuclear Decommissioning Trusts for PVNGS
NEC
 
Navopache Electric Cooperative, Inc.
NEE
 
New Energy Economy
NEPA
 
National Environmental Policy Act
NERC
  
North American Electric Reliability Corporation
New Mexico Wind
 
New Mexico Wind Energy Center
NM 2015 Rate Case
 
Request for a General Increase in Electric Rates Filed by PNM on August 27, 2015
NM 2016 Rate Case
 
Request for a General Increase in Electric Rates Filed by PNM on December 7, 2016
NM Capital
 
NM Capital Utility Corporation, an unregulated wholly-owned subsidiary of PNMR
NM Supreme Court
 
New Mexico Supreme Court
NMAG
  
New Mexico Attorney General
NMED
  
New Mexico Environment Department
NMIEC
  
New Mexico Industrial Energy Consumers Inc.
NMMMD
 
The Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources Department
NMPRC
  
New Mexico Public Regulation Commission
NOx
  
Nitrogen Oxides
NOPR
 
Notice of Proposed Rulemaking
NPDES
 
National Pollutant Discharge Elimination System
NRC
  
United States Nuclear Regulatory Commission
NSPS
  
New Source Performance Standards
NSR
  
New Source Review
NTEC
 
Navajo Transitional Energy Company, LLC, an entity owned by the Navajo Nation
OCI
  
Other Comprehensive Income
OPEB
  
Other Post Employment Benefits
OSM
 
United States Office of Surface Mining Reclamation and Enforcement

5

Table of Contents

PCRBs
  
Pollution Control Revenue Bonds
PNM
  
Public Service Company of New Mexico and Subsidiaries, a wholly-owned subsidiary of PNMR
PNM 2016 Term Loan Agreement
 
PNM’s $175.0 Million Unsecured Term Loan
PNM 2017 Senior Unsecured Note Agreement
 
PNM’s Agreement for the sale of Senior Unsecured Notes, aggregating $450.0 million
PNM 2017 Term Loan Agreement
 
PNM’s $200.0 Million Unsecured Term Loan
PNM 2018 SUNs
 
PNM’s Senior Unsecured Notes to be issued under the PNM 2017 Senior Unsecured Note Agreement
PNM Multi-draw Term Loan
 
PNM’s $125.0 Million Unsecured Multi-draw Term Loan Facility
PNM New Mexico Credit Facility
 
PNM’s $50.0 Million Unsecured Revolving Credit Facility
PNM Revolving Credit Facility
 
PNM’s $400.0 Million Unsecured Revolving Credit Facility
PNMR
  
PNM Resources, Inc. and Subsidiaries
PNMR 2015 Term
   Loan Agreement
 
PNMR’s $150.0 Million Three-Year Unsecured Term Loan
PNMR 2016 One-Year Term Loan
 
PNMR’s $100.0 Million One-Year Unsecured Term Loan
PNMR 2016 Two-Year Term Loan
 
PNMR’s $100.0 Million Two-Year Unsecured Term Loan
PNMR Development
 
PNMR Development and Management Company, an unregulated wholly-owned subsidiary of PNMR
PNMR Revolving Credit Facility
 
PNMR’s $300.0 Million Unsecured Revolving Credit Facility
PPA
  
Power Purchase Agreement
PSA
 
Power Sales Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas
PV
  
Photovoltaic
PVNGS
  
Palo Verde Nuclear Generating Station
RA
 
San Juan Project Restructuring Agreement
RCRA
  
Resource Conservation and Recovery Act
RCT
  
Reasonable Cost Threshold
REA
 
New Mexico’s Renewable Energy Act of 2004
REC
  
Renewable Energy Certificates
Red Mesa Wind
 
Red Mesa Wind Energy Center
REP
  
Retail Electricity Provider
Rio Bravo
 
Rio Bravo Generating Station
RMC
  
Risk Management Committee
ROE
 
Return on Equity
RPS
  
Renewable Energy Portfolio Standard
S&P
  
Standard and Poor’s Ratings Services
SCR
 
Selective Catalytic Reduction
SEC
  
United States Securities and Exchange Commission
SIP
  
State Implementation Plan
SJCC
  
San Juan Coal Company
SJGS
  
San Juan Generating Station

6

Table of Contents

SNCR
 
Selective Non-Catalytic Reduction
SO2
  
Sulfur Dioxide
TECA
  
Texas Electric Choice Act
Tenth Circuit
 
United States Court of Appeals for the Tenth Circuit
TNMP
  
Texas-New Mexico Power Company and Subsidiaries, a wholly-owned subsidiary of TNP
TNMP Revolving Credit Facility
  
TNMP’s $75.0 Million Secured Revolving Credit Facility
TNP
  
TNP Enterprises, Inc. and Subsidiaries, a wholly-owned subsidiary of PNMR
Tri-State
  
Tri-State Generation and Transmission Association, Inc.
Tucson
  
Tucson Electric Power Company
UG-CSA
 
Underground Coal Sales Agreement
US Supreme Court
 
Supreme Court of the United States
Valencia
 
Valencia Energy Facility
VaR
 
Value at Risk
VIE
 
Variable Interest Entity
WACC
 
Weighted Average Cost of Capital
WEG
 
WildEarth Guardians
Westmoreland
 
Westmoreland Coal Company
Westmoreland Loan
 
NM Capital’s $125.0 million loan to WSJ
WSJ
 
Westmoreland San Juan, LLC, an indirect wholly-owned subsidiary of Westmoreland

7

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
362,320

 
$
315,391

 
$
692,498

 
$
626,352

Operating Expenses:

 
 
 

 

Cost of energy
104,267

 
81,363

 
207,070

 
173,732

Administrative and general
45,122

 
45,160

 
92,655

 
92,270

Energy production costs
34,393

 
37,881

 
66,180

 
80,567

Regulatory disallowances and restructuring costs

 

 

 
774

Depreciation and amortization
57,625

 
50,955

 
114,008

 
100,784

Transmission and distribution costs
17,031

 
17,315

 
33,508

 
33,909

Taxes other than income taxes
18,777

 
17,895

 
38,012

 
37,987

Total operating expenses
277,215

 
250,569

 
551,433

 
520,023

Operating income
85,105

 
64,822

 
141,065

 
106,329

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
3,885

 
10,194

 
8,766

 
13,815

Gains on available-for-sale securities
5,663

 
4,631

 
12,324

 
10,849

Other income
3,450

 
4,265

 
8,351

 
8,530

Other (deductions)
(2,904
)
 
(4,105
)
 
(6,387
)
 
(7,104
)
Net other income and deductions
10,094

 
14,985

 
23,054

 
26,090

Interest Charges
32,332

 
33,221

 
64,031

 
64,712

Earnings before Income Taxes
62,867

 
46,586

 
100,088

 
67,707

Income Taxes
21,636

 
15,634

 
32,411

 
22,790

Net Earnings
41,231

 
30,952

 
67,677

 
44,917

(Earnings) Attributable to Valencia Non-controlling Interest
(3,544
)
 
(3,744
)
 
(6,996
)
 
(7,031
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings Attributable to PNMR
$
37,555

 
$
27,076

 
$
60,417

 
$
37,622

Net Earnings Attributable to PNMR per Common Share:
 
 
 
 
 
 
 
Basic
$
0.47

 
$
0.34

 
$
0.76

 
$
0.47

Diluted
$
0.47

 
$
0.34

 
$
0.75

 
$
0.47

Dividends Declared per Common Share
$
0.2425

 
$
0.2200

 
$
0.4850

 
$
0.4400


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.



8

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Net Earnings
$
41,231

 
$
30,952

 
$
67,677

 
$
44,917

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gains on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period, net of income tax (expense) benefit of $(2,777), $2,791, $(5,783) and $661
4,378

 
(4,362
)
 
9,120

 
(1,034
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $1,629, $(2,404), $2,701 and $1,970
(2,569
)
 
3,757

 
(4,260
)
 
(3,079
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gains) losses recognized as net periodic benefit cost, net of income tax expense (benefit) of $(626), $(537), $(1,252) and $(1,074)
987

 
839

 
1,974

 
1,678

Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $40, $178, $112 and $681
(63
)
 
(279
)
 
(176
)
 
(1,065
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $(82), $(88), $(125) and $(145)
130

 
137

 
198

 
226

Total Other Comprehensive Income (Loss)
2,863

 
92

 
6,856

 
(3,274
)
Comprehensive Income
44,094

 
31,044

 
74,533

 
41,643

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,544
)
 
(3,744
)
 
(6,996
)
 
(7,031
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(264
)
 
(264
)
Comprehensive Income Attributable to PNMR
$
40,418

 
$
27,168

 
$
67,273

 
$
34,348


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


9

Table of Contents


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
67,677

 
$
44,917

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
131,861

 
116,785

Deferred income tax expense
32,443

 
22,869

Net unrealized (gains) losses on commodity derivatives
939

 
5,219

Realized (gains) on available-for-sale securities
(12,324
)
 
(10,849
)
Stock based compensation expense
4,561

 
3,543

Regulatory disallowances and restructuring costs

 
774

Allowance for equity funds used during construction and other, net
(2,409
)
 
(207
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(12,204
)
 
3,770

Materials, supplies, and fuel stock
969

 
(1,382
)
Other current assets
2,613

 
(27,342
)
Other assets
3,186

 
885

Accounts payable
(2,052
)
 
(3,984
)
Accrued interest and taxes
(6,802
)
 
(4,283
)
Other current liabilities
(2,498
)
 
(23,255
)
Other liabilities
(4,341
)
 
(5,419
)
Net cash flows from operating activities
201,619

 
122,041

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(230,882
)
 
(378,574
)
Proceeds from sales of available-for-sale securities
358,045

 
194,014

Purchases of available-for-sale securities
(359,853
)
 
(195,619
)
Return of principal on PVNGS lessor notes

 
8,547

Investment in Westmoreland Loan

 
(122,250
)
Principal repayments on Westmoreland Loan
19,180

 

Other, net
143

 
167

Net cash flows from investing activities
(213,367
)
 
(493,715
)

The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.

10

Table of Contents


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Six Months Ended June 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Revolving credit facilities borrowings, net
86,400

 
150,800

Long-term borrowings
57,000

 
357,500

Repayment of long-term debt
(77,447
)
 
(126,156
)
Proceeds from stock option exercise
1,574

 
6,569

Awards of common stock
(13,166
)
 
(14,367
)
Dividends paid
(38,896
)
 
(35,312
)
Valencia’s transactions with its owner
(7,731
)
 
(7,394
)
Other, net
1,685

 
(1,077
)
Net cash flows from financing activities
9,419

 
330,563

 
 
 
 
Change in Cash and Cash Equivalents
(2,329
)
 
(41,111
)
Cash and Cash Equivalents at Beginning of Period
4,522

 
46,051

Cash and Cash Equivalents at End of Period
$
2,193

 
$
4,940

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
59,982

 
$
57,492

Income taxes paid (refunded), net
$
625

 
$
850

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
1,279

 
$
25,488


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


11

Table of Contents



PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
2,193

 
$
4,522

Accounts receivable, net of allowance for uncollectible accounts of $1,086 and $1,209
86,598

 
87,012

Unbilled revenues
69,849

 
58,284

Other receivables
25,282

 
28,245

Current portion of Westmoreland Loan
20,968

 
38,360

Materials, supplies, and fuel stock
67,007

 
73,027

Regulatory assets
5,720

 
3,855

Commodity derivative instruments
3,847

 
5,224

Income taxes receivable
6,723

 
6,066

Other current assets
65,400

 
73,444

Total current assets
353,587

 
378,039

Other Property and Investments:
 
 
 
Long-term portion of Westmoreland Loan
54,852

 
56,640

Available-for-sale securities
295,026

 
272,977

Other investments
404

 
547

Non-utility property
3,713

 
3,404

Total other property and investments
353,995

 
333,568

Utility Plant:
 
 
 
Plant in service, held for future use, and to be abandoned
7,081,606

 
6,944,534

Less accumulated depreciation and amortization
2,395,590

 
2,334,938

 
4,686,016

 
4,609,596

Construction work in progress
252,759

 
208,206

Nuclear fuel, net of accumulated amortization of $43,196 and $43,905
88,586

 
86,913

Net utility plant
5,027,361

 
4,904,715

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
490,454

 
501,223

Goodwill
278,297

 
278,297

Commodity derivative instruments
4,106

 

Other deferred charges
76,645

 
75,238

Total deferred charges and other assets
849,502

 
854,758

 
$
6,584,445

 
$
6,471,080


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


12

Table of Contents



PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
373,500

 
$
287,100

Current installments of long-term debt
174,257

 
273,348

Accounts payable
78,324

 
86,705

Customer deposits
11,023

 
11,374

Accrued interest and taxes
55,726

 
61,871

Regulatory liabilities
5,265

 
3,609

Commodity derivative instruments
1,990

 
2,339

Dividends declared
132

 
19,448

Other current liabilities
66,353

 
59,314

Total current liabilities
766,570

 
805,108

Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs
2,199,105

 
2,119,364

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
971,440

 
940,650

Regulatory liabilities
454,952

 
455,649

Asset retirement obligations
132,261

 
127,519

Accrued pension liability and postretirement benefit cost
119,243

 
125,844

Commodity derivative instruments
4,106

 

Other deferred credits
129,794

 
140,545

Total deferred credits and other liabilities
1,811,796

 
1,790,207

Total liabilities
4,777,471

 
4,714,679

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock of Subsidiary
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNMR common stockholders’ equity:
 
 
 
Common stock (no par value; 120,000,000 shares authorized; issued and outstanding 79,653,624 shares)
1,156,630

 
1,163,661

Accumulated other comprehensive income (loss), net of income taxes
(85,595
)
 
(92,451
)
Retained earnings
656,225

 
604,742

Total PNMR common stockholders’ equity
1,727,260

 
1,675,952

Non-controlling interest in Valencia
68,185

 
68,920

Total equity
1,795,445

 
1,744,872

 
$
6,584,445

 
$
6,471,080

 
 
 
 

The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


13

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

 
Attributable to PNMR
 
Non-
controlling
Interest
in Valencia
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
Total PNMR Common Stockholders’ Equity
 
 
Total
Equity
 
(In thousands)
Balance at December 31, 2016, as originally reported
$
1,163,661

 
$
(92,451
)
 
$
604,742

 
$
1,675,952

 
$
68,920

 
$
1,744,872

Cumulative effect adjustment (Note 8)

 

 
10,382

 
10,382

 

 
10,382

Balance at January 1, 2017, as adjusted
1,163,661

 
(92,451
)
 
615,124

 
1,686,334

 
68,920

 
1,755,254

Net earnings before subsidiary preferred stock dividends

 

 
60,681

 
60,681

 
6,996

 
67,677

Total other comprehensive income

 
6,856

 

 
6,856

 

 
6,856

Subsidiary preferred stock dividends

 

 
(264
)
 
(264
)
 

 
(264
)
Dividends declared on common stock

 

 
(19,316
)
 
(19,316
)
 

 
(19,316
)
Proceeds from stock option exercise
1,574

 

 

 
1,574

 

 
1,574

Awards of common stock
(13,166
)
 

 

 
(13,166
)
 

 
(13,166
)
Stock based compensation expense
4,561

 

 

 
4,561

 

 
4,561

Valencia’s transactions with its owner

 

 

 

 
(7,731
)
 
(7,731
)
Balance at June 30, 2017
$
1,156,630

 
$
(85,595
)
 
$
656,225

 
$
1,727,260

 
$
68,185

 
$
1,795,445



The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.



14

Table of Contents


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Electric Operating Revenues
$
276,097

 
$
233,346

 
$
527,655

 
$
468,952

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
82,952

 
61,367

 
164,268

 
133,811

Administrative and general
41,936

 
39,152

 
84,984

 
81,181

Energy production costs
34,393

 
37,881

 
66,180

 
80,567

Regulatory disallowances and restructuring costs

 

 

 
774

Depreciation and amortization
36,448

 
32,602

 
72,464

 
64,466

Transmission and distribution costs
10,175

 
10,241

 
20,094

 
20,557

Taxes other than income taxes
11,029

 
10,343

 
22,169

 
22,540

Total operating expenses
216,933

 
191,586

 
430,159

 
403,896

Operating income
59,164

 
41,760

 
97,496

 
65,056

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
1,858

 
5,518

 
4,675

 
7,040

Gains on available-for-sale securities
5,663

 
4,631

 
12,324

 
10,849

Other income
2,665

 
2,953

 
6,508

 
6,339

Other (deductions)
(2,428
)
 
(3,202
)
 
(5,250
)
 
(4,863
)
Net other income and deductions
7,758

 
9,900

 
18,257

 
19,365

Interest Charges
20,931

 
22,690

 
41,943

 
44,281

Earnings before Income Taxes
45,991

 
28,970

 
73,810

 
40,140

Income Taxes
15,515

 
9,177

 
23,223

 
12,788

Net Earnings
30,476

 
19,793

 
50,587

 
27,352

(Earnings) Attributable to Valencia Non-controlling Interest
(3,544
)
 
(3,744
)
 
(6,996
)
 
(7,031
)
Net Earnings Attributable to PNM
26,932

 
16,049

 
43,591

 
20,321

Preferred Stock Dividends Requirements
(132
)
 
(132
)
 
(264
)
 
(264
)
Net Earnings Available for PNM Common Stock
$
26,800

 
$
15,917

 
$
43,327

 
$
20,057


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


15

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Net Earnings
$
30,476

 
$
19,793

 
$
50,587

 
$
27,352

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gains on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains (losses) arising during the period, net of income tax (expense) benefit of $(2,777), $2,791, $(5,783), and $661
4,378

 
(4,362
)
 
9,120

 
(1,034
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $1,629, $(2,404), $2,701, and $1,970
(2,569
)
 
3,757

 
(4,260
)
 
(3,079
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gains) losses recognized as net periodic benefit cost, net of income tax expense (benefit) of $(626), $(537), $(1,252), and $(1,074)
987

 
839

 
1,974

 
1,678

Total Other Comprehensive Income (Loss)
2,796

 
234

 
6,834

 
(2,435
)
Comprehensive Income
33,272

 
20,027

 
57,421

 
24,917

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(3,544
)
 
(3,744
)
 
(6,996
)
 
(7,031
)
Comprehensive Income Attributable to PNM
$
29,728

 
$
16,283

 
$
50,425

 
$
17,886


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


16

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
50,587

 
$
27,352

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
88,864

 
80,688

Deferred income tax expense
23,685

 
13,180

Net unrealized (gains) losses on commodity derivatives
939

 
5,219

Realized (gains) on available-for-sale securities
(12,324
)
 
(10,849
)
Regulatory disallowances and restructuring costs

 
774

Allowance for equity funds used during construction and other, net
(2,278
)
 
(221
)
Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(8,846
)
 
8,572

Materials, supplies, and fuel stock
1,591

 
(4,924
)
Other current assets
5,623

 
(18,964
)
Other assets
8,539

 
6,582

Accounts payable
(754
)
 
822

Accrued interest and taxes
(1,520
)
 
736

Other current liabilities
9,220

 
(15,511
)
Other liabilities
(6,949
)
 
(6,871
)
Net cash flows from operating activities
156,377

 
86,585

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(125,698
)
 
(302,721
)
Proceeds from sales of available-for-sale securities
358,045

 
194,014

Purchases of available-for-sale securities
(359,853
)
 
(195,619
)
Return of principal on PVNGS lessor notes

 
8,547

Other, net
143

 
167

Net cash flows from investing activities
(127,363
)
 
(295,612
)

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


17

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Six Months Ended June 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Revolving credit facilities borrowings, net
(23,000
)
 
126,000

Long-term borrowings
57,000

 
175,000

Repayment of long-term debt
(57,000
)
 
(125,000
)
Equity contribution from parent

 
4,142

Dividends paid
(264
)
 
(4,406
)
Valencia’s transactions with its owner
(7,731
)
 
(7,394
)
Other, net
1,683

 
(369
)
Net cash flows from financing activities
(29,312
)
 
167,973

 
 
 
 
Change in Cash and Cash Equivalents
(298
)
 
(41,054
)
Cash and Cash Equivalents at Beginning of Period
324

 
43,138

Cash and Cash Equivalents at End of Period
$
26

 
$
2,084

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
39,584

 
$
40,838

Income taxes paid (refunded), net
$

 
$

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
(5,392
)
 
$
21,157


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


18

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
26

 
$
324

Accounts receivable, net of allowance for uncollectible accounts of $1,086 and $1,209
62,368

 
65,003

Unbilled revenues
58,717

 
48,289

Other receivables
22,925

 
25,514

Affiliate receivables
10,643

 
8,886

Materials, supplies, and fuel stock
62,810

 
64,401

Regulatory assets
1,880

 
3,442

Commodity derivative instruments
3,847

 
5,224

Income taxes receivable
26,269

 
25,807

Other current assets
59,357

 
67,355

Total current assets
308,842

 
314,245

Other Property and Investments:
 
 
 
Available-for-sale securities
295,026

 
272,977

Other investments
173

 
316

Non-utility property
96

 
96

Total other property and investments
295,295

 
273,389

Utility Plant:
 
 
 
Plant in service, held for future use, and to be abandoned
5,420,475

 
5,359,211

Less accumulated depreciation and amortization
1,854,466

 
1,809,528

 
3,566,009

 
3,549,683

Construction work in progress
201,443

 
158,122

Nuclear fuel, net of accumulated amortization of $43,196 and $43,905
88,586

 
86,913

Net utility plant
3,856,038

 
3,794,718

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
354,886

 
365,413

Goodwill
51,632

 
51,632

Commodity derivative instruments
4,106

 

Other deferred charges
68,608

 
68,149

Total deferred charges and other assets
479,232

 
485,194

 
$
4,939,407

 
$
4,867,546

 
 
 
 

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


19

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
38,000

 
$
61,000

Current installments of long-term debt

 
231,880

Accounts payable
60,205

 
55,566

Affiliate payables
38,178

 
23,183

Customer deposits
11,023

 
11,374

Accrued interest and taxes
33,761

 
34,819

Regulatory liabilities
5,265

 
3,517

Commodity derivative instruments
1,990

 
2,339

Dividends declared
132

 
132

Other current liabilities
46,784

 
33,551

Total current liabilities
235,338

 
457,361

Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs
1,631,912

 
1,399,489

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
773,188

 
748,666

Regulatory liabilities
421,947

 
423,701

Asset retirement obligations
131,305

 
126,601

Accrued pension liability and postretirement benefit cost
109,023

 
114,427

Commodity derivative instruments
4,106

 

Other deferred credits
104,841

 
118,980

Total deferred credits and liabilities
1,544,410

 
1,532,375

Total liabilities
3,411,660

 
3,389,225

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNM common stockholder’s equity:
 
 
 
Common stock (no par value; 40,000,000 shares authorized; issued and outstanding 39,117,799 shares)
1,264,918

 
1,264,918

Accumulated other comprehensive income (loss), net of income taxes
(85,594
)
 
(92,428
)
Retained earnings
268,709

 
225,382

Total PNM common stockholder’s equity
1,448,033

 
1,397,872

Non-controlling interest in Valencia
68,185

 
68,920

Total equity
1,516,218

 
1,466,792

 
$
4,939,407

 
$
4,867,546


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

20

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
 
Attributable to PNM
 
 
 
 
 
 
 
 
 
Total PNM
Common
Stockholder’s
Equity
 
Non-
controlling
 Interest in Valencia
 
 
 
 
 
 
 
 
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
 
 
Total
Equity
 
 
 
 
 
 
 
(In thousands)
Balance at December 31, 2016
$
1,264,918

 
$
(92,428
)
 
$
225,382

 
$
1,397,872

 
$
68,920

 
$
1,466,792

Net earnings

 

 
43,591

 
43,591

 
6,996

 
50,587

Total other comprehensive income

 
6,834

 

 
6,834

 

 
6,834

Dividends declared on preferred stock

 

 
(264
)
 
(264
)
 

 
(264
)
Valencia’s transactions with its owner

 

 

 

 
(7,731
)
 
(7,731
)
Balance at June 30, 2017
$
1,264,918

 
$
(85,594
)
 
$
268,709

 
$
1,448,033

 
$
68,185

 
$
1,516,218



The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

21

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Electric Operating Revenues
$
86,223

 
$
82,045

 
$
164,843

 
$
157,400

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
21,315

 
19,996

 
42,802

 
39,921

Administrative and general
9,235

 
10,204

 
19,638

 
19,794

Depreciation and amortization
15,597

 
14,897

 
30,968

 
29,406

Transmission and distribution costs
6,856

 
7,074

 
13,414

 
13,352

Taxes other than income taxes
6,934

 
6,499

 
13,770

 
12,998

Total operating expenses
59,937

 
58,670

 
120,592

 
115,471

Operating income
26,286

 
23,375

 
44,251

 
41,929

Other Income and Deductions:
 
 
 
 
 
 
 
Other income
541

 
1,031

 
1,363

 
1,624

Other (deductions)
(109
)
 
(354
)
 
(198
)
 
(339
)
Net other income and deductions
432

 
677

 
1,165

 
1,285

Interest Charges
7,510

 
7,473

 
14,915

 
14,841

Earnings before Income Taxes
19,208

 
16,579

 
30,501

 
28,373

Income Taxes
7,004

 
6,071

 
10,693

 
10,408

Net Earnings
$
12,204

 
$
10,508

 
$
19,808

 
$
17,965


The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.



22

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Six Months Ended June 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
19,808

 
$
17,965

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
31,877

 
30,270

Deferred income tax expense
4,894

 
(22
)
Allowance for equity funds used during construction and other, net
(130
)
 
14

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(3,358
)
 
(4,802
)
Materials and supplies
(622
)
 
3,542

Other current assets
(3,897
)
 
(6,941
)
Other assets
(5,747
)
 
(6,297
)
Accounts payable
138

 
(2,986
)
Accrued interest and taxes
(308
)
 
5,275

Other current liabilities
1,957

 
1,279

Other liabilities
717

 
(6
)
Net cash flows from operating activities
45,329

 
37,291

Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(78,940
)
 
(59,795
)
Net cash flows from investing activities
(78,940
)
 
(59,795
)
Cash Flow From Financing Activities:
 
 
 
Revolving credit facilities borrowings (repayments), net
47,000

 
(29,000
)
Short-term borrowings (repayments) – affiliate, net
3,400

 
(300
)
Long-term borrowings

 
60,000

Dividends paid
(17,459
)
 
(7,456
)
Other, net

 
(740
)
Net cash flows from financing activities
32,941

 
22,504

 
 
 
 
Change in Cash and Cash Equivalents
(670
)
 

Cash and Cash Equivalents at Beginning of Period
671

 
1
Cash and Cash Equivalents at End of Period
$
1

 
$
1

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
13,999

 
$
13,118

Income taxes paid (refunded), net
$
750

 
$
850

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
1,700

 
$
2,681


The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.



23

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1

 
$
671

Accounts receivable
24,230

 
22,009

Unbilled revenues
11,132

 
9,995

Other receivables
1,747

 
2,090

Materials and supplies
4,197

 
8,626

Regulatory assets
3,840

 
413

Other current assets
1,841

 
1,031

Total current assets
46,988

 
44,835

Other Property and Investments:
 
 
 
Other investments
231

 
231

Non-utility property
2,549

 
2,240

Total other property and investments
2,780

 
2,471

Utility Plant:
 
 
 
Plant in service and plant held for future use
1,425,439

 
1,380,584

Less accumulated depreciation and amortization
445,900

 
429,397

 
979,539

 
951,187

Construction work in progress
40,196

 
16,978

Net utility plant
1,019,735

 
968,165

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
135,568

 
135,810

Goodwill
226,665

 
226,665

Other deferred charges
5,811

 
5,277

Total deferred charges and other assets
368,044

 
367,752

 
$
1,437,547

 
$
1,383,223


The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

24

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
June 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
47,000

 
$

Short-term debt – affiliate
8,000

 
4,600

Accounts payable
10,096

 
16,709

Affiliate payables
4,347

 
3,793

Accrued interest and taxes
45,274

 
45,581

Regulatory liabilities

 
92

Other current liabilities
3,628

 
2,134

Total current liabilities
118,345

 
72,909

Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs
421,024

 
420,875

Deferred Credits and Other Liabilities: