Slide 1: 2011 Earnings Presentation
2011 Earnings Presentation February 29, 2012
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation that relate to future events or PNM Resources’ (“PNMR”), Public Service Company of New Mexico’s (“PNM”), or Texas-New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goals, targ
Slide 3: Opening Remarks & Overview
Opening Remarks & Overview Pat Vincent-Collawn Chairman, President and CEO
Slide 4: 2011 Key Strategic Goals and Checklist
2011 Key Strategic Goals and Checklist Earn Authorized Return on Our Maximize the Value of Our Regulated Businesses Competitive Businesses Achieve successful outcomes in: Maintain profitability of First Choice Power by achieving customer growth and increasing PNM retail rate case Achieved by
Slide 5: 2011 Financial Results and Company Updates
2011 Financial Results and Company Updates Q4 2011 Q4 2010 2011 2010 Ongoing EPS(1) $0.22 $(0.03) $1.08 $0.87 (1) (2) (3) (2) (3) GAAP EPS $1.35 $(1.18) $1.96 $(0.49) Rate relief, lower outage costs and cost control improve PNM, TNMP ongoing EPS Dividend payment increased 16% 2012 ongoing earn
Slide 6: Economic Conditions
Economic Conditions Weather-normalized load growth is steady, despite an increase in energy efficiency programs GWh PNM GWh TNMP 9000 5300 2012 Load Growth .5% - 1.5% 2012 Load Growth .5% - 1.5% 8800 5200 5100 8600 5000 8400 4900 8200 4800 (1) (1) 2008 2009 2010 2011 2012E 2008 2009 2010 2011 2012E
Slide 7: New Mexico Regulatory Update
New Mexico Regulatory Update Item Action Timing FERC transmission case Settlement discussion N/A FERC generation case Settlement discussion N/A Renewable rate rider Hearing scheduled May 14, 2012 Future-test-year Joint petition for rule- Feb. 8, 2012 rulemaking making filed NMPRC Legislation Three r
Slide 8: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 9: 2011 Financial Summary
2011 Financial Summary Ongoing EPS $0.04 ($0.19) $0.12 $0.06 $0.18 Optim $1.08 Corp / Energy (1) First Choice TNMP Other $0.87 Power (2) PNM 2010 2011 (1) Includes PNM Resources’ share of Optim Energy’s ongoing EPS through August 31, 2011 (2) Includes results through October 31, 2011 9
Slide 10: PNM and TNMP: FY 2011 vs FY 2010 EPS (Ongoing)
PNM and TNMP: FY 2011 vs FY 2010 EPS (Ongoing) PNM 2011 Key Performance Drivers ∆ EPS $0.76 Rate relief $0.21 $0.58 Lower outage costs $0.10 Load $0.04 Weather $0.03 Cost control/O&M Reductions $0.02 PV Nuclear Decommissioning Trust $0.05 PV3 toll expiration ($0.27) 2010 2011 TNMP 2011 Key Performan
Slide 11: Dividend Increase
Dividend Increase 2012 Dividend: The annual common stock $0.58 dividend is raised by $0.08 Payout ratio: Long-term target: 50% - 60% 46% (1) payout ratio Dividend yield: The Board will continue to 3.3% (2) evaluate the dividend on an (1) Assumes mid-point of the 2012 guidance range annual basi
Slide 12: Long-term goal: Top Quartile Total Return
Top Quartile Total Return Long-term goal: Provide top quartile total return to shareholders Total return goal currently at an average annual rate of 10% - 13% over a 5 year period (1) Earnings growth driven primarily by rate base growth paired with earning allowed returns Timing of rate cases
Slide 13: Key Strategic Goals and 2012 Checklist
Key Strategic Goals and 2012 Checklist 2012 Checklist Strategic Goals Earn Authorized Return on Achieve successful outcomes in: our Regulated Businesses PNM future test year rulemaking PNM FERC transmission rate case Continue to Improve Credit Ratings PNM FERC generation rate case PNM rene
Slide 14: Questions & Answers
Questions & Answers
Slide 15: Appendix
Appendix
Slide 16: PNM and TNMP: Q4 2011 vs Q4 2010 EPS (Ongoing)
PNM and TNMP: Q4 2011 vs Q4 2010 EPS (Ongoing) PNM Q4 Key Performance Drivers ∆ EPS $0.15 Rate relief $0.12 Lower outage costs $0.02 Cost control/O&M Reductions $0.02 Load $0.01 $0.03 Weather $0.01 PV3 toll expiration ($0.07) Other $0.01 Q4 2010 Q4 2011 TNMP Q4 Key Performance Drivers ∆ EPS Rate rel
Slide 17: PNM Resources: FY 2011 vs FY 2010 EPS (Ongoing)
PNM Resources: FY 2011 vs FY 2010 EPS (Ongoing) Year ended Year ended Difference Dec. 31, 2011 Dec. 31, 2010 PNM $0.76 $0.58 $0.18 TNMP 0.29 0.17 0.12 First Choice(1) 0.23 0.42 (0.19) Optim Energy(2) (0.06) (0.10) 0.04 Corporate and Other (0.14) (0.20) 0.06 Consolidated $1.08 $0.87 $0.21 (1) First C
Slide 18: PNM Plant EAF and Outages
PNM Plant EAF and Outages 89.1% 90.2% 86.9% 86.4%(2) 2012 and 2013 Outage Schedule 81.2%(1) 81.3% Duration Time Unit in Days Period San Juan 2 47 Q1 – Q2 2012 3 54 Q3 – Q4 2012 4 47 Q1 – Q2 2013 1 40 Q4 2013 Four Corners 5 13 Q1 2012 4 21 Q2 2013 San Juan Four Corners Palo Verde Palo Verde 3 44 Q1 -
Slide 19: PNM Resources 5-Year Capital Plan
PNM Resources 5-Year Capital Plan 2012 - 2016 Amounts do not include Total Capital Plan: $1.3B potential capital spending at PNM including SCRs, renewables and additional peaking capacity (In millions) $287 $266 $276 $21 $12 $256 $11 $12 $223 $95 $86 $96 $12 $90 $61 $64 $58 $64 $63 $52 $107 $110 $10
Slide 20: PNM 5-Year Potential Capital Additions
PNM 5-Year Potential Capital Additions 2012 – 2016 Total Potential Capital(1): $0.7B (In millions) $28 $3 $58 $53 $58 $151 $28 $122 $96 $55 $20 2012 2013 2014 2015 2016 SCRs(2) Renewables Additional peaking capacity Amounts may not visually add due to rounding (1) Not all potential capital expenditu
Slide 21: Earnings (Ongoing) and Dividend Trends
Earnings (Ongoing) and Dividend Trends Earnings per Share(1) (Ongoing) Dividends Per Share (2) $1.26 $0.91 $0.58 $0.50 $0.50 $0.55 2010 2011 2012E 2010 2011 2012E (1) Results of ongoing earnings excluding First Choice Power and Optim (2) Represents mid-point of range A-7
Slide 22: 2012 Guidance (Ongoing)
2012 Guidance (Ongoing) $1.20 Consolidated EPS $1.32 PNM TNMP Corp/Other $1.08 - $1.15 $0.28 - $0.32 ($0.16) – ($0.15) A-8
Slide 23: Regulatory Information
Regulatory Information
Slide 24: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and Term PNM Services Areas Name District Party Ends Jason Marks District 1 2012 Democrat Patrick Lyons District 2 2014 Republican Chairman Douglas Howe District 3 2012 Independent Theresa Becenti-Aguilar District 4 2014 Democrat Vice Chair Ben Hall
Slide 25: Utility Rate Base and Return
Utility Rate Base and Return Rate Projected Allowed % of Rate PNM Test Period (1) Base in 2012 Avg. Equity ROE Increase Base Filing Rate Base Ratio Retail Current Rates June 30, 2010 $1.8B $1.8B 86% 51.28% 10.00% $72.1M Renewables July 31, 2012 $68M $74M 4% 50.61% 10.00% $18.0M FERC Transmission Cur
Slide 26: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 27: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2010 Dec 31, 2011 Long-Term Debt (incl. current portion) PNM $1,055.7 $1,215.5 TNMP 310.3 311.0 PNMR 199.8 147.5 Consolidated $1,565.8 $1,674.0 Total Debt (incl. short-term) (1) PNM $1,245.7 $1,281.5 TNMP 310.3 311.0 PNMR 231.8 164.2 Consolida
Slide 28: Liquidity as of Feb. 22, 2011
Liquidity as of Feb. 22, 2011 PNM PNM Resources Resources PNM TNMP Consolidated Financing Capacity: (In millions) Revolving Credit Facility $300.0 $400.0 $75.0 $775.0 Local lines of credit (LOC) 5.0 - - 5.0 Total Capacity $305.0 $400.0 $75.0 $780.0 As of 2/22/12: Short-term debt and LOC balances $38
Slide 29: Credit Ratings
Credit Ratings Moody’s PNMR PNM TNMP Debt rating Ba1(1) Baa3(1) A3(2) Outlook Stable Stable Stable S&P PNMR PNM TNMP Debt rating BB (1) BBB- (1) BBB (2) Outlook Positive Positive Positive (1) Senior unsecured debt (2) Senior secured debt A-15
Slide 30: Environmental Compliance
Environmental Compliance
Slide 31: San Juan – BART Timeline
San Juan – BART Timeline Proposed Federal Implementation Plan issued in January 2011 Called for SCR technology on all four units within three years PNM estimate of costs @ between $750M - $1B (total plant costs) Proposed State Implementation Plan revisions filed with EPA in July 2011 Calle
Slide 32: Environmental Control Equipment at Coal Units
Environmental Control Equipment at Coal Units Activated PNM Share Coal Unit Carbon SNCR (2) SCR (2) Baghouse (3) Scrubbers Capacity (MW) Injection (1) San Juan Unit 1 170 X X X San Juan Unit 2 170 X X X San Juan Unit 3 249 X X X San Juan Unit 4 194 X X X Four Corners Unit 4 97.5 X X Four Corners Uni
Slide 33: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) San Juan Generating Station See “San Juan – BART Timeline” Clean Air Act – Regional Haze (FIP) – SCR ~$340M - $460M slide State of NM submitted with EPA in Clean Air Act – Regional Haze (SIP) – SNCR ~$36M ear