ALBUQUERQUE, N.M., Dec. 11, 2023 /PRNewswire/ -- On December 8, the Hearing Examiners of the New Mexico Public Regulation Commission (NMPRC) issued recommended decisions in the Public Service Company of New Mexico (PNM), a wholly-owned subsidiary of PNM Resources (NYSE: PNM), application for a 2024 change in customer base rates and its application for 12 megawatts of distribution battery storage.
2024 Rate Review Filing
The recommended decision equates to a revenue increase of $6.1 million, based on a 9.26% return on equity and a 50% equity capitalization structure of $2,557 million of rate base. PNM's $63.8 million request included a 10.25% return on equity and 52% equity capitalization ratio of its $2,713 million rate base. The current authorized rates are based on a 9.575% return on equity with a 50% equity capitalization ratio.
"We understand the sensitivity to any cost increase in today's environment and have taken steps to offset nearly six years of inflationary costs on customer bills. However, this recommendation to disallow recovery for traditional legacy power sources as we step forward to lead New Mexico's energy transition is disappointing," said Pat Vincent-Collawn, Chairman and CEO of PNM Resources. "We will file our exceptions to the recommendation with the Commission to seek a more constructive outcome balancing the interests of all our stakeholders."
Adjustments related to traditional legacy power sources in the recommended decision include:
- Disallowance of $64 million of rate base investments in the Four Corners coal plant;
- No return on a $39 million regulatory asset associated with Palo Verde leasehold improvements, as well as a separate recommendation to retroactively refund $38 million associated with expiration of Palo Verde leases, and
- Maintaining current useful lives of existing gas plants beyond 2040, versus PNM's proposal to change these dates to 2040.
The recommendation also postpones recovery of $55 million of delayed rate base investments that may be requested again in future filings and $11 million of adjustments to forecasted annual costs.
Parties to the case have an opportunity to file exceptions to the recommended decision, along with responses to other parties' exceptions, before NMPRC consideration of a final order. The statutory period for a decision in the case ends January 4, 2024.
Distribution Battery Filing
The recommended decision in this case calls for approval of PNM's proposal to add 12 megawatts of distribution-level battery storage to expand the capacity of overloaded feeders at two locations. This innovative solution supports reliability and resilience of the grid and accommodates more renewable energy in these areas. The proposal was unopposed by intervening parties.
The project reflects $33 million of capital expenditures included in PNM's investment plans and is expected to be operational in 2024. PNM has indicated this type of solution could be implemented more broadly across its system and expects to file additional proposals.
Parties to the case have an opportunity to file exceptions to the recommended decision before NMPRC consideration of a final order. PNM requested approval of its proposal by the end of the 2023.
The recommended decisions and additional materials pertaining to the filings are available at https://www.pnmresources.com/investors/rates-and-filings.aspx.
Background:
PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2022 consolidated operating revenues of $2.2 billion. Through its regulated utilities, PNM and TNMP, PNM Resources provides electricity to more than 800,000 homes and businesses in New Mexico and Texas. PNM serves its customers with a diverse mix of generation and purchased power resources totaling 2.7 gigawatts of capacity, with a goal to achieve 100% emissions-free energy by 2040. For more information, visit the company's website at www.PNMResources.com.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release for PNM Resources, Inc. ("PNMR"), Public Service Company of New Mexico ("PNM"), or Texas-New Mexico Power Company ("TNMP") (collectively, the "Company") that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies, including the unaudited financial results and earnings guidance, 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 and apply only as of the date of this report. 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. Additionally, there are risks and uncertainties in connection with the proposed acquisition of the Company by Avangrid, Inc. (the "Merger") which may adversely affect the Company's business, future opportunities, employees and common stock, including without limitation, (i) the expected timing and likelihood of completion of the pending Merger, including the timing, receipt and terms and conditions of any remaining required governmental and regulatory approvals of the pending Merger that could reduce anticipated benefits or cause the parties to abandon the transaction, (ii) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (iii) the risk that the parties may not be able to satisfy the conditions to the proposed Merger in a timely manner or at all, and (iv) the risk that the proposed transaction and its announcement could have an adverse effect on the ability of the Company to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company's Form 10-K, Form 10-Q filings and the information included in the Company's Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.
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SOURCE PNM Resources, Inc.
