Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (March 2019)
33 slides from Txnm Energy's investor presentation, March 2019
Slide 1: Investor Meetings
Investor Meetings March 2019
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 • Plans to be coal‐free by 2031 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 enhancing Meet cust
Slide 6: Consolidated Earnings Guidance (Ongoing)
Consolidated Earnings Guidance (Ongoing) 2019 Earnings Guidance $2.10 Consolidated EPS $2.18 PNM TNMP Corp/Other $1.61 – $1.65 $0.67 – $0.69 ($0.18) – ($0.16) 2019 Previous Current Consolidated EPS $2.08 ‐ $2.18 $2.10 ‐ $2.18 PNM $1.59 ‐ $1.65 $1.61 ‐ $1.65 TNMP $0.67 ‐ $0.69 $0.67 ‐ $0.69 Corporate
Slide 7: Achieving Earnings Targets
Achieving Earnings Targets Strong track record of meeting/beating annual expectations Actual Ongoing EPS vs Consensus $2.25 $2.00 $1.75 $1.50 $1.25 Actual Consensus $1.00 2012 2013 2014 2015 2016 2017 2018 Actuals $1.31 $1.41 $1.49 $1.64 $1.65 $1.94 $2.00 Consensus $1.27 $1.38 $1.48 $1.57 $1.63 $1.8
Slide 8: Dividend Growth
Dividend Growth Consistent Delivery of Dividend Growth At or Above Industry Average Expect future dividend 9% growth to mirror 9% earnings growth 10% $1.16 (approximately 5‐6%) 10% 8% $1.06 Dec ‘18 $0.97 Dec ‘17 $0.88 Dec ‘16 $0.80 Dec’ 15 Dec ‘14 $0.74 Dec ‘13 Indicative annual dividend rate • Expe
Slide 9: Earnings Growth
Earnings Growth 2018 – 2022: Targeting 5 ‐ 6% Ongoing EPS CAGR • 2014 ‐ 2018: Achieved 7.6% Ongoing EPS CAGR • 2014 ‐ 2022: Reflects 6‐7% Ongoing EPS CAGR Target: $2.43 ‐ $2.52 $2.35 $2.22 $2.14 $1.94 $2.00 $1.64 $1.65 $1.49 2014 2015 2016 2017 2018 2019 2020 2021 2022 Actual Ongoing EPS Midpoint Gu
Slide 10: 2019 – 2022 Investment Plan
2019 – 2022 Investment Plan $2.3B investment plan plus incremental growth opportunities Incremental growth opportunities • $255M moved into T&D capital at PNM and TNMP • $450M supports new transmission and replacement power • $245M awaiting future capital prioritization Total: $869 $350 Total: $588
Slide 11: 2019 ‐ 2022 Potential Earnings Power
2019 ‐ 2022 Potential Earnings Power Ongoing EPS Growth Target: 5 ‐ 6% Allowed 2019 Ongoing Earnings 2020 Earnings 2021 Earnings 2022 Earnings Return / Guidance Midpoint Potential Potential Potential Equity Ratio Avg Rate Return EPS Avg Rate EPS Avg Rate EPS Avg Rate EPS Base Base Base Base PNM Reta
Slide 12: PNM Forward Together website
| www.pnmforwardtogether.com i Together for New Mexico. PNM Home Page PNM IS WORKING TOWARD A CLEANER ENVIRONMENT. OUR PLAN a) RENEWABLE pv2og, «FAQs RECAP <
Slide 13: New Mexico Proposed Energy Policy: 100% Carbon-Free
New Mexico Proposed Energy Policy Senate Bill 489 (Energy Transition Act): passed by New Mexico legislature Supported by New Mexico Governor Lujan‐Grisham 2045 100% Carbon‐Free • Renewable Portfolio Standards and Carbon‐Free Goal 80% Renewables 2040 • Current: 20% renewables by 2020 2030 50% Renewab
Slide 14: 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 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 • PNM has set goals fo
Slide 15: 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 MW, based on 2017 Integrated Resource Plan 1308 1008 808 721 521 413 521 306 487 587 287 107 2018 2020 2025 2035 Solar Wind Note:
Slide 16: Transmission and Renewable Expansion in New Mexico
Transmission and Renewable Expansion in New Mexico Third‐party renewable development increases demand for transmission capacity across our system New Mexico added wind capacity at a faster rate than any other state in 2017 • 1,682 MW installed capacity, 51% Broadview increase over 2016 • El Cabo Win
Slide 17: PNM
PNM
Slide 18: PNM Load and Economic Conditions
PNM Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized) Q4 2018 2018 PNM vs. vs. 2018E 2019E Q4 2017 2017 PNM Residential & Commercial 1.3% 0.7% ~0.3% 0.3% ‐ 0.5% Total PNM Retail Load 1.3% 0.6% 0% – 0.5% 0.3% – 1.0% PNM Avg. Customers 0.9% 0.8% 0.8% ‐ 1.0%
Slide 19: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and Term PNM Service Areas District Name Party Ends District 1 Cynthia Hall 2020(1) Democrat District 2 Jefferson Byrd 2022(1) Republican Valerie Espinoza, District 3 2020 Democrat Vice‐Chair Chairman Theresa Becenti‐Aguilar, District 4 2022(1) Democ
Slide 20: PNM Regulatory Agenda
PNM Regulatory Agenda Filing Action Timing Docket No. Appeal of 2015 General Rate Case to New Mexico Oral arguments held October 30, 2017 No statutory timeline S‐1‐SC‐36115 Supreme Court Filed December 31, 2018, docket closed; Order issued in new docket to file application in support of 13‐00390‐UT
Slide 21: 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 Ongoing EPS Impact Palo Verde Nuclear Generating Station: Fai
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 Arizona Public Service Co (AZ) $140.90 Customer bill impacts of Salt River Project (AZ) Imperial Irrigation District (CA) increased investments are Entergy Texas I
Slide 23: TNMP
TNMP
Slide 24: TNMP Load and Economic Conditions
TNMP Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized) Q4 2018 2018 TNMP vs. vs. 2018E 2019E Q4 2017 2017 TNMP Total Volumetric Load(1) 3.5% 3.2% 2% – 3% per year TNMP Demand‐Based Load(2) 7.8% 6.8% 5% – 7% 6% – 8% TNMP Avg. End Users 1.3% 1.3% 1.5% – 2.0%
Slide 25: 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 26: 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 27: 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 Expected Expected to File by Expected to File by $50 May 2019 New Rates1 to File by May 2019 Expected May 2019 $40 to File by Oct 2021 $30
Slide 28: Appendix
Appendix
Slide 29: Potential Earnings Power
Potential Earnings Power Allowed 2019 Ongoing Earnings 2020 Earnings 2021 Earnings 2022 Earnings Return / Guidance Midpoint Potential Potential Potential Equity Ratio Avg Rate Return EPS Avg Rate EPS Avg Rate EPS Avg Rate EPS Base Base Base Base PNM Retail(1) 9.575% / 50% $2.4 B 9.3% $1.41 $2.4 B $1
Slide 30: Liquidity and Debt Maturity Outlook
Liquidity and Debt Maturity Outlook Long‐term Debt Maturities $353 Maintain appropriate (in millions) credit metrics $150 $300 $1,003 $172 Remain a solid $250 $35 $140 $306 $57 $100 investment grade 2019 2020 2021 2022 2023 and rated company PNM TNMP Corporate Beyond • Extended all revolving credit
Slide 31: Liquidity as of February 22, 2019
Liquidity as of February 22, 2019 PNMR PNMR PNM Develop‐ Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $25.0 $300.0 $840.0 As of 2/22/19: Short‐term debt and LOC balances $12.5 $37.6 $10.9 $50.0 $111.0 Remaining av
Slide 32: San Juan Generating Station Ownership and Participants
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) 4 507 392 77.3% Los Alamos County 7.2% (36.5 MW) Utah Associated Municipal Power Systems (UAMPS) 7.0% (35.
Slide 33: 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