Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Non-Deal Roadshow (June 2018)
41 slides from Txnm Energy's roadshow presentation, June 2018
Slide 1: Investor Meetings
Investor Meetings June 2018 PN MOResources
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Jimmie Blotter, Assistant Treasurer Manager, Investor Relations Director, Investor Relations and Shareholder Services U.S. 1‐505‐241‐2160 U.S. 1‐505‐241‐2227 Lisa.Goodman@pnmresources.com Jimmie.Blotter
Slide 3: Company Overview
Company Overview
Slide 4: PNM Resources Overview
PNM Resources Overview PNM Resources is a regulated electric utility holding company focused on providing environmentally responsible, affordable and reliable electricity to customers and above industry average • Energy holding company earnings and dividend growth to shareholders • Based in Albuquer
Slide 5: PNM Resources Strategic Direction and Financial Goals
PNM Resources Strategic Direction and Financial Goals • Reduce carbon emissions by 87% from 2012 levels Transform to • Retire and replace coal‐fired generation with Cleaner Energy cleaner energy portfolio Portfolio • Invest to maintain system reliability • Provide reliable, affordable energy while e
Slide 6: Staying Focused and Flexible in a Changing Environment
Staying Focused and Flexible in a Changing Environment • TNMP General Rate Review, continued TCOS filings • PNM Integrated Resource Plan • Coal‐free generation • NMPRC Proposed Rulemaking Navigating portfolio by 2031; develop Workshops the Regulatory new generation portfolio Transforming Environment
Slide 7: Have you heard…PNM plans to be coal free by 2031
Have you heard…PNM plans to be coal free by 2031 Climate Change Report Climate change continues to pose risk and demand answers. We hear our stakeholders, from investors and businesses to our customers and employees who are conscientious about reducing their own impact on the environment and are con
Slide 8: Transforming PNM's Generation Supply Model
Transforming PNM’s Generation Supply Model Old Model: increase baseload New Model: invest in flexible generation generation to meet expected and transmission system to facilitate more load growth renewable energy and meet peak demand Total Supply Peak MW Generation Supply Retire / Replace Demand Bui
Slide 9: PNM's Cleaner Energy Portfolio
PNM’s Cleaner Energy Portfolio • Coal‐free generation portfolio by 2031; develop new generation portfolio that moves to increased renewable resources • Invest in storage or backup power resources to maintain system reliability • Transparency through Sustainability Portal 1 Energy Mix in 2017 Integra
Slide 10: Scaling Our System to Integrate 55% Renewables
Scaling Our System to Integrate 55% Renewables Renewable Capacity Growth 2,064 11 55% of 2000 205 total 1,384 system 11 capacity 1500 170 MW Capacity 1251 861 1000 11 142 786 466 246 4 500 49 521 20 306 597 417 204 107 187 22 0 2012 2015 2020 2025 2035 Solar Wind Solar (DG) Geothermal Current Renewa
Slide 11: Capital Forecast
Capital Forecast Targeted Consolidated 2018‐2021 Rate Base CAGR(1): 6% ‐ 7% 2018–2022 Total Capital Plan: $2.7B $680 $17 Palo Verde Unit 3 added to (In millions) rate base $170 $527 $501 $17 $500 $503 $19 $17 $17 $170 $115 $186 $170 $170 $51 $39 $81 $146 $297 $141 $126 $156 $20 $53 $96 $111 $94 $80
Slide 12: Potential Earnings Power
Potential Earnings Power Targeted earnings growth of 6% for 2018 ‐ 2021(1) • PNM growth results from the implementation of retail rates beginning in 2018, the additional investments to add 50 MW of solar to meet the 20% by 2020 RPS requirement and increased FERC Transmission business to support thir
Slide 13: Earnings Growth
Earnings Growth Achieved 8% Ongoing EPS CAGR 2012‐2017 Targeting 6% Ongoing EPS CAGR 2018‐2021 $2.21 $2.28 $2.10 $1.94 $1.87 $1.64 $1.65 $1.41 $1.49 $1.31 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Actual Ongoing EPS Midpoint Guidance / Earnings Potential 13
Slide 14: Earnings Growth: Achieving Targets
Earnings Growth: Achieving Targets Strong track record of meeting/beating annual expectations Actual Ongoing EPS vs Consensus $2.00 $1.75 $1.50 $1.25 Actual Consensus $1.00 2012 2013 2014 2015 2016 2017 Actuals $1.31 $1.41 $1.49 $1.64 $1.65 $1.94 Consensus $1.27 $1.38 $1.48 $1.57 $1.63 $1.82 (beginn
Slide 15: Dividend Growth
Dividend Growth Consistent Delivery of Above Industry Average Dividend Growth 9% Expect future dividend 10% 10% $1.06 growth to mirror 8% $0.97 Dec ‘17 earnings growth 12% $0.88 Dec ‘16 (approximately 6%) 14% $0.80 Dec ‘15 $0.74 Dec ‘14 $0.66 $0.58 Dec ‘13 Feb ‘13 Feb ‘12 Indicative annual dividend
Slide 16: PNM Overview
PNM Overview
Slide 17: PNM: Overview
PNM: Overview • Largest vertically integrated utility (generation, transmission, distribution) located in New Mexico • 523,812 customer accounts • 15,091 miles transmission and distribution lines • 2,580 MW generation capacity • Top quartile reliability • Affordable rates 17
Slide 18: PNM: 2017 Integrated Resource Plan Additions/Retirements
PNM: 2017 Integrated Resource Plan Additions/Retirements 2,400 2,000 1,600 Geothermal 1,200 Solar MW Capacity 800 Wind Natural Gas 400 Cost‐effective proposals for storage Nuclear options will also be considered 0 Coal Retirement of remaining San Juan ‐400 Generating Station capacity after 2022, 22%
Slide 19: PNM: Load and Economic Conditions
PNM: Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized, leap‐year adjusted) Q1 2018 PNM vs. 2018E 2019E Q1 2017 PNM Residential & Commercial (0.7%) ~(0.3%) ~(0.3%) Total PNM Retail Load (0.9%) (0.7%) – 0% (0.5%) – 0.5% PNM Avg. Customers 0.7% ~0.5% per year
Slide 20: PNM: NMPRC Commissioners and Districts
PNM: NMPRC Commissioners and Districts NMPRC Districts and PNM Service Areas District Name Term Ends Party Cynthia Hall, District 1 2020(1) Democrat Vice Chairman District 2 Patrick Lyons 2018 Republican District 3 Valerie Espinoza 2020 Democrat District 4 Lynda Lovejoy 2018(1) Democrat Sandy Jones,
Slide 21: PNM: Regulatory Update
PNM: Regulatory Update Filing Action Timing Docket No. PNM Appeal of 2015 General Rate Case to New Mexico Oral arguments held October 30, 2017 No statutory timeline S‐1‐SC‐36115 Supreme Court PNM 2017 Integrated Order defining scope of proceeding Hearings scheduled to begin 17‐00174‐UT Resource Plan
Slide 22: PNM: Bills Remain Below National and Regional Averages
PNM: Bills Remain Below National and Regional Averages Comparison of Average Residential Bills(1) Western Region Average Bills by Utility Imperial Irrigation District (CA) $144.23 Salt River Project (AZ) Modesto Irrigation District (CA) Arizona Public Service Co (AZ) Entergy Texas Inc. (TX) PacifiCo
Slide 23: PNM: Pathway to Continued Success
PNM: Pathway to Continued Success • Continue to efficiently manage the business with a customer‐ centered focus, delivering reliable and affordable energy • Earn allowed return Minimize regulatory lag through timely rate case filings Synchronize revenues and expenses Use future test year • Con
Slide 24: TNMP Overview
TNMP Overview
Slide 25: TNMP: Overview
TNMP: Overview • Transmission and Distribution utility located in Texas • 249,632 end‐user accounts • 9,338 miles transmission and distribution lines • Top quartile reliability • Affordable rates 25
Slide 26: TNMP: General Rate Review
TNMP: General Rate Review Key components of filed rate increase: Revenue (in millions, except EPS) Requirement • First general rate review since Investment in core rate base $27.9 2010 Increase ROE to 10.5% 1.8 • Reflects $90m increase to rate Modified capital structure and lower cost of debt (9.0 )
Slide 27: TNMP: Load and Economic Conditions
TNMP: Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized, leap‐year adjusted) Q1 2018 TNMP vs. 2018E 2019E Q1 2017 TNMP Total Volumetric Load(1) 3.8% 2% – 3% per year TNMP Demand‐Based Load(2) 5.4% 2% – 3% 7% – 8% TNMP Avg. End Users 1.3% 1.5% – 2.0% per yea
Slide 28: TNMP: PUCT Commissioners and Regulatory Update
TNMP: PUCT Commissioners and Regulatory Update PUCT Commissioners Name Term Began Term Ends Party DeAnn Walker (Chair) Sept. 2017 Aug. 2021 Republican Arthur D’Andrea Nov. 2017 Aug. 2023 Republican Vacancy(1) Commissioners are appointed by the Governor of Texas and confirmed by the Senate. Length of
Slide 29: TNMP: Rates Compare Favorably in Texas
TNMP: Rates Compare Favorably in Texas Residential Total Wires Charge for 1,000 kWh Rates expected to be comparable to other IOUs after upcoming rate filings $60 $50 As Filed $40 $30 $20 $10 $‐ Oncor TNMP Centerpoint AEP North AEP Central Source: TDU tariffs for retail delivery service effective Mar
Slide 30: TNMP: Pathway to Continued Success
TNMP: Pathway to Continued Success • Continue to efficiently manage the business with an end user‐ centered focus, delivering reliable and affordable energy • Continue to earn allowed rate of return through timely execution of transmission cost of service and general rate case filings Additional i
Slide 31: Financial Overview
Financial Overview
Slide 32: Financial Overview: Consolidated Earnings Guidance (Ongoing)
Financial Overview: Consolidated Earnings Guidance (Ongoing) 2018 Earnings Guidance $1.82 Consolidated EPS $1.92 PNM TNMP Corp/Other $1.39 ‐ $1.46 $0.54 ‐ $0.56 ($0.11) – ($0.10) 2019 Earnings Guidance $2.04 Consolidated EPS $2.16 PNM TNMP Corp/Other $1.54 ‐ $1.61 $0.63 ‐ $0.66 ($0.13) – ($0.11) 32
Slide 33: Financial Overview: Liquidity and Debt Maturity Outlook
Financial Overview: Liquidity and Debt Maturity Outlook Long‐term Debt Maturities $293 Maintain appropriate (in millions) $1,060 credit metrics $300 $172 Remain a solid $200 $100 $306 $100 investment grade 2018 2019 2020 2021 2022 and rated company PNM TNMP Corporate Beyond • Extended all revolving
Slide 34: Financial Overview: Liquidity as of April 23, 2018
Financial Overview: Liquidity as of April 23, 2018 PNMR PNMR PNM Develop‐ Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $24.5 $300.0 $839.5 As of 4/23/18: Short‐term debt and LOC balances $2.5 $40.5 $24.5 $102.6 $1
Slide 35: Appendix
Appendix
Slide 36: Emissions Reductions and Conservation Efforts
Emissions Reductions and Conservation Efforts NOx SO2 PM10 Mercury Energy Efficiency Year MWh (tons) (tons) (tons) (pounds) PNM began its energy efficiency programs in 2007. 2017 9,876 2,727 10.2 7,551,094 Since then, the programs have provided more than $67 million in customer rebates and helped sa
Slide 37: Potential Earnings Power
Potential Earnings Power Allowed 2018 Ongoing Earnings 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Return / Guidance Midpoint Guidance Midpoint Potential Potential Equity Avg Rate Avg Rate Avg Rate Avg Rate Return EPS Return EPS EPS EPS Ratio Base Base Base Base 9.575% / PNM Retail(1) $2.3 B 8
Slide 38: PNM 2017 Integrated Resource Plan: Coal-Free Generation Portfolio by 2031
PNM 2017 Integrated Resource Plan Plans for Coal‐Free Generation Portfolio by 2031 Coal Capacity Roadmap for meeting customer demand over 20‐year horizon, 2017: 983 MW provides foundation for the selection of future resources Solicits and Filed with NMPRC 2018: 762 MW Revisited every 22% reduction i
Slide 39: PNM New Mexico Supreme Court Appeal
PNM New Mexico Supreme Court Appeal • PNM filed Notice of Appeal with New Mexico Supreme Court on September 30, 2016 • PNM filed Statement of Issues on October 26, 2016 detailing items for appeal: Appealed Item Conclusion Resulting Impact Palo Verde Nuclear Generating Station: 64 MW Unit 2 capacity
Slide 40: PNM San Juan Generating Station Ownership and Participants
PNM San Juan Generating Station Ownership and Participants Total PNM PNM Unit Other Participants/Ownership MW MW Ownership 1 340 170 50% Tucson Electric 50% (170 MW) City of Farmington 8.5% (43 MW) Los Alamos County 7.2% (36.5 MW) 4 507 327 64.5% Utah Associated Municipal Power Systems (UAMPS) 7.0%
Slide 41: PNM Palo Verde Nuclear Generating Station Unit 1 and 2 Leases
PNM Palo Verde Nuclear Generating Station Unit 1 and 2 Leases MW Owned vs. Leased Unit 1 Unit 2 Owned 2.3% 30 MW Owned 9.5% 124 MW Leased 7.9% 104 MW Leased 0.7% 10 MW Total 10.2% 134 MW Total 10.2% 134 MW Lease Expiration • Unit 1: January 15, 2015; exercised option to extend leases to 2023 • Unit