TNMP files Unopposed Settlement in System Resiliency Plan

Rhea-AI Summary

TNMP, a subsidiary of TXNM Energy (NYSE: TXNM), has filed an unopposed settlement with the Public Utility Commission of Texas (PUCT) for its System Resiliency Plan. The settlement includes $565.8 million in capital investments planned for 2025-2027, representing 94% of TNMP's proposed plan investments. Additionally, the agreement encompasses $128.2 million in operations and maintenance expenses for programs including vegetation management and wildfire mitigation. These costs can be deferred to the balance sheet and included in future Distribution Cost Recovery Factor filings. The plan was developed using a data-driven approach to address resiliency events that pose material risks to TNMP's distribution system operations.

Positive

• Secured unopposed settlement agreement for $565.8M capital investment plan
• Obtained approval for $128.2M in operations and maintenance expenses
• Achieved 94% approval rate of proposed plan investments
• Costs can be deferred to balance sheet for future recovery

Negative

• Significant capital expenditure requirement of $565.8M over three years
• Large operational expense commitment of $128.2M

Insights

Financial Analyst

The $565.8 million capital investment plan and $128.2 million in operations expenses represent significant infrastructure spending that will strengthen TNMP's distribution system. The settlement's approval rate of 94% of proposed investments indicates strong regulatory support. This comprehensive system resiliency initiative should help reduce future operational risks and maintenance costs while potentially improving service reliability. The ability to defer program costs to the balance sheet and recover them through future Distribution Cost Recovery Factor filings provides financial flexibility and helps manage the impact on immediate cash flows. This settlement demonstrates proactive risk management and regulatory collaboration, which typically supports stable utility returns.

Utility Infrastructure Expert

The System Resiliency Plan represents a strategic approach to grid modernization and risk mitigation. The substantial investment in vegetation management and wildfire mitigation programs addresses critical infrastructure vulnerabilities in Texas's challenging climate conditions. The data-driven methodology used to identify material risks shows sophisticated planning that should translate to improved grid reliability and reduced system failures. The three-year implementation timeline (2025-2027) allows for systematic upgrades while spreading capital expenditure. This type of comprehensive infrastructure investment typically leads to lower maintenance costs and fewer service interruptions, benefiting both the utility's operational efficiency and customer satisfaction.

ALBUQUERQUE, N.M., Dec. 12, 2024 /PRNewswire/ -- TNMP, a wholly-owned subsidiary of TXNM Energy (NYSE: TXNM), filed an unopposed settlement yesterday in its application with the Public Utility Commission of Texas (PUCT) for approval of a System Resiliency Plan.

TNMP's filed System Resiliency Plan was developed using a comprehensive and data-driven approach which evaluated various types of resiliency events posing material risk to the safe and reliable operation of TNMP's distribution system.

The settlement includes $565.8 million of capital investments over 2025 through 2027, reflecting 94 percent of TNMP's proposed plan investments. The settlement also encompasses $128.2 million of operations and maintenance expenses associated with several programs, including vegetation management and wildfire mitigation. These program costs may be deferred to the balance sheet and included in future Distribution Cost Recovery Factor filings.  

The settlement is subject to PUCT approval. The filed settlement and application can be found at https://www.txnmenergy.com/investors/rates-and-filings/tnmp-puct-filings.aspx.

Background:
TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, New Mexico, delivers energy to more than 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM. For more information, visit the company's website at www.TXNMEnergy.com.

Contacts:

Analysts	Media
Lisa Goodman	Corporate Communications
(505) 241-2160	(505) 241-2743

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release for TXNM Energy, Inc. ("TXNM"), 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. TXNM, 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, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements. TXNM'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, 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 TXNM Energy, Inc.

FAQ

What is the total value of TNMP's System Resiliency Plan settlement for 2025-2027?

The total settlement value includes $565.8 million in capital investments and $128.2 million in operations and maintenance expenses, totaling $694 million.

What percentage of TNMP's proposed plan investments was approved in the settlement?

The settlement approved 94% of TNMP's proposed plan investments.

What types of maintenance programs are included in TNMP's $128.2M operational expenses?

The operational expenses cover programs including vegetation management and wildfire mitigation.

How will TNMP handle the operations and maintenance expenses in their financial reporting?

The program costs can be deferred to the balance sheet and included in future Distribution Cost Recovery Factor filings.

When will TNMP's System Resiliency Plan investments begin?

The capital investments are planned to begin in 2025 and continue through 2027.