Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — EEI Financial Conference 2019
38 slides from Txnm Energy's conference presentation, November 2019
Slide 1: EEI Financial Conference
EEI Financial Conference November 2019
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Director, Investor Relations and Shareholder Services U.S. 1-505-241-2160 Lisa.Goodman@pnmresources.com Safe Harbor Statement Statements made in this presentation for PNM Resources, Inc. (“PNMR”), Publi
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 earnings and dividend growth to shareholders • Energy holding company • Based in Albuquer
Slide 5: PNM Resources Strategic Direction and Financial Goals
PNM Resources Strategic Direction and Financial Goals • Plans to be coal-free by 2031 Transform to • Goal to be emissions-free by 2040 Cleaner Energy • Retire and replace coal-fired generation with Portfolio cleaner energy portfolio • Invest to maintain system reliability • Provide reliable, afforda
Slide 6: 2019 – 2023 Investment Plan
2019 – 2023 Investment Plan $3.9B investment plan results in 9.6% rate base growth $317M increase in TNMP investments $991 $21 $818 $177 $27 $27 $771 $25 $48 $694 $68 $22 $641 $109 $268 $21 $37 $72 $128 $53 $94 $77 $60 $82 $176 $182 $202 (in millions) $99 $173 $125 $345 $306 $342 $322 $337 $275 $348
Slide 7: 2019 - 2023 Potential Earnings Power
2019 - 2023 Potential Earnings Power Earnings Growth Target 5-6%; reflects updated investment plan • Additional earnings potential at TNMP strengthens target • Equity financing plans continue to reflect modeling assumptions that will be optimized 2019 Ongoing 2020 Earnings 2021 Earnings 2022 Earning
Slide 8: Earnings Growth 2018 – 2023: Targeting 5-6% Ongoing EPS CAGR
Earnings Growth 2018 – 2023: Targeting 5 - 6% Ongoing EPS CAGR • 2014 - 2018: Achieved 7.6% Ongoing EPS CAGR • 2014 - 2023: Reflects 6-7% Ongoing EPS CAGR $2.68 5-6% Target: $2.54 $2.55-$2.68 $2.42 $2.20 $2.08 $1.94 $2.00 $1.64 $1.65 $1.49 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Actual Ong
Slide 9: Dividend Growth
Dividend Growth Consistent Delivery of Dividend Growth At or Above Industry Average Expect future dividend growth to mirror earnings growth (approximately 5-6%) $1.41- $1.34- $1.46 $1.28- $1.38 9% $1.22- $1.30 9% $1.23 10% 10% $1.16 8% $1.06 Dec ‘18 $0.97 Dec ‘17 $0.88 $0.80 Dec ‘16 Dec’ 15 Dec ‘14
Slide 10: Liquidity and Debt Maturity Outlook
Liquidity and Debt Maturity Outlook Long-term Debt Maturities Maintain appropriate (in millions) $658 credit metrics $35 $140 $300 $1,003 $350 $57 Remain a solid $306 investment grade 2020 2021 2022 2023 and Beyond PNM TNMP Corporate rated company • Completed: • Extended $700M revolving credit facil
Slide 11: Generation Portfolio Transformation
Generation Portfolio Transformation
Slide 12: New Mexico Energy Policy: 100% Carbon-Free
New Mexico Energy Policy Senate Bill 489 (Energy Transition Act): passed in 2019 legislative session and signed by New Mexico Governor Lujan Grisham; effective June 14, 2019 2045 100% Carbon-Free • Renewable Portfolio Standards and Carbon-Free Goal 2040 80% Renewables • Current: 20% renewables by 20
Slide 13: Exit from Coal Generation, Emission Reductions
Exit from Coal Generation, Emission Reductions • The shutdown of Units 2 and 3 at PNM San Juan Generating Station in December 2017 reduced CO₂ emissions at this plant by 54% below 2005 levels • The 2017 Integrated Resource Plan called for a complete exit from coal generation by the end of 2031 • New
Slide 14: San Juan Abandonment, Securitization and Replacement Power
San Juan Abandonment, Securitization and Replacement Power ● Requests ● $283M undepreciated ● Recommended Abandonment Replacement Power Securitization abandonment of San investment in San Juan, scenario balances Juan coal plant after proceeds available to environment, cost and participation fund rep
Slide 15: Energy Transition Act Applicability - Intervenor Positions
Energy Transition Act Applicability - Intervenor Positions Abandonment/ Replacement Intervenor(s) Briefs Securitization Power Comments (19-00018-UT) (19-00195-UT) Board of County Commissioners for the Contingent upon provision of funds to the San Juan County of San Juan and the City of community
Slide 16: Recommended Replacement Power Scenario Details
Recommended Replacement Power Scenario Details • Competitive RFP processes resulted in a cost-effective mix of resources owned by PNM and third-party providers • To manage the risks of integrating new battery storage technology, total storage capacity does not exceed 5% of peak load and the capacity
Slide 17: Integration of Renewable Generation
Integration of Renewable Generation Integration of renewable generation requires T&D investment and addition of supporting backup capacity Growing Solar and Wind Capacity Based on Recommended San Juan Replacement Scenario (MW) 1,955 1,402 956 854 681 493 521 1,137 356 721 333 137 2018 2020 2025 2035
Slide 18: Transmission and Renewable Expansion in New Mexico
Transmission and Renewable Expansion in New Mexico New Mexico has abundant solar and wind resources Third-party development increases demand for transmission capacity New Mexico added wind capacity at a higher growth rate than any other state in 2017 and currently has projects under construction or
Slide 19: PNM
PNM
Slide 20: PNM Load and Economic Conditions
PNM Load and Economic Conditions Regulated Retail Energy Sales and Customers Economic indicators continue to be positive Q3 2019 YTD 2019 PNM vs. vs. 2019E Weather and Load improved Q3 EPS by $0.05 Q3 2018 YTD 2018 • 14% increase in cooling degree days Total PNM Retail Load(1) 0.3% 0.0% 0.0% – 1.0%
Slide 21: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts Term District Name Party NMPRC Districts and Ends PNM Service Areas District 1 Cynthia Hall 2020(1) Democrat District 2 Jefferson Byrd 2022(1) Republican Valerie Espinoza, District 3 2020 Democrat Vice-Chairman Theresa Becenti-Aguilar, District 4 2022(1) Democrat Ch
Slide 22: PNM Regulatory Agenda
PNM Regulatory Agenda Filing Action Timing Docket No. PNM: NMPRC approved acquisition on October 2, 19-00129-UT Western Spirit Transmission Line 2019; FERC approved acquisition on August 8, Acquisition planned for mid-2021 ER19-1824-000 2019 and incremental rate effective July 9, 2019 EC19-90-000 NM
Slide 23: 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 Arizona Public Service Co (AZ) $137.51 Customer bill impacts of LADWP (CA) Imperial Irrigation District (CA) increased investments are Salt River Project (AZ) Ente
Slide 24: TNMP
TNMP
Slide 25: TNMP Load and Economic Conditions
TNMP Load and Economic Conditions Regulated Retail Energy Sales and Customers Q3 2019 YTD 2019 Texas growth continues to lead nation TNMP vs. vs. 2019E Q3 2018 YTD 2018 Weather and Load improved Q3 EPS by $0.02 Demand-Based Load(2) 5.4% 4.3% 4.0% – 5.0% • 10% increase in cooling degree days TNMP Avg
Slide 26: PUCT Commissioners and TNMP Regulatory Agenda
PUCT Commissioners and TNMP Regulatory Agenda PUCT Commissioners Name Term Began Term Ends Party DeAnn Walker (Chair) Sept. 2017 Aug. 2021 Republican Arthur D’Andrea Nov. 2017 Aug. 2023 Republican Shelly Botkin June 2018 Sept. 2019 Republican Commissioners are appointed by the Governor of Texas and
Slide 27: TNMP General Rate Review Settlement
TNMP General Rate Review Settlement • Settlement approved December 20, 2018 • Rates implemented January 2019 Key Components of Approved Settlement Annual revenue increase $10.0M ROE (prior authorized 10.125%) 9.65% Capital structure 45% Equity (prior authorized 45% equity) Cost of debt 6.4% Increase
Slide 28: TNMP Rates Comparable in Texas
TNMP Rates Comparable in Texas Rates expected to be comparable to other IOUs after pending rate filings Residential Total Wires Charge for 1,000 kWh Current $60 Current rate filing Current rate filing pending Current rate filing New Rates1 pending $50 rate filing pending pending $40 $30 $20 $10 $- O
Slide 29: Appendix
Appendix
Slide 30: 2019 Consolidated Ongoing Earnings Guidance
2019 Consolidated Ongoing Earnings Guidance 2019 Earnings Guidance $2.05 Consolidated EPS $2.11 PNM TNMP Corp/Other $1.59 – $1.62 $0.66 – $0.68 ($0.20) – ($0.19) 30
Slide 31: 2019 - 2023 Potential Earnings Power
2019 - 2023 Potential Earnings Power 2019 Ongoing Earnings 2020 Earnings 2021 Earnings 2022 Earnings 2023 Earnings Allowed Guidance Midpoint Potential Potential Potential Potential Return / Equity Avg Avg Avg Avg Avg Ratio Rate Return EPS Rate EPS Rate EPS Rate EPS Rate EPS Base Base Base Base Base
Slide 32: Liquidity as of October 25, 2019
Liquidity as of October 25, 2019 PNMR PNMR PNM Develop- Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $40.0 $300.0 $855.0 As of 10/25/19: Short-term debt and LOC balances $2.5 $15.4 $38.9 $84.1 $140.9 Remaining ava
Slide 33: San Juan and Four Corners Generating Stations Ownership and Participants
San Juan and Four Corners Generating Stations Ownership and Participants San Juan Generating Station 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) 4 507 392 77.3% Los Alamos County 7.2% (36.5 MW) Utah Associ
Slide 34: Palo Verde Nuclear Generating Station Ownership and Leases
Palo Verde Nuclear Generating Station Ownership and Leases MW Owned vs. Leased Unit 1 Unit 2 Unit 3 Owned 2.3% 30 MW Owned 9.5% 124 MW Owned 10.2% 134 MW Leased 7.9% 104 MW Leased 0.7% 10 MW Leased 0% 0 MW Total 10.2% 134 MW Total 10.2% 134 MW Total 10.2% 134 MW Lease Expiration • Unit 1: January 15
Slide 35: Battery Storage Integration
Battery Storage Integration The following slides come to life with Augmented Reality (AR) powered by RealityX2 This new technology runs in your smartphone or tablet and overlays a digital/virtual world on top of your physical reality. Experience AR for yourself by visiting the App store to download
Slide 36: The Case for Battery Storage
The Case for Battery Storage • Historically, large fossil fuel and nuclear plants were constructed to meet a constantly growing energy demand with 24/7 reliability • Battery storage provides a solution for an increasing amount of intermittent renewables resources without sacrificing reliability Util
Slide 37: Battery Technology
Battery Technology • Battery storage technology has evolved from lead acid batteries to lithium ion batteries in a variety of applications, including utility- scale energy storage • Flow batteries represent the next evolution of battery technology Utilize the app to see inside each battery and 37 he
Slide 38: Utility Integration and PNM Plans
Utility Integration and PNM Plans • The PNM Prosperity Project was an early pioneer for grid-connected battery storage • PNM has proposed plans for future integration of battery storage through purchase power agreements and utility-owned facilities Utilize the app to tour the PNM Prosperity Project