Slide 1: 2012 Earnings Presentation
2012 Earnings Presentation March 1, 2013
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: 2012 Financial Results and Company Updates
2012 Financial Results and Company Updates Q4 2012 Q4 2011 YE 2012 YE 2011 Ongoing EPS(1) $0.13 $0.22 $1.31 $1.08 GAAP EPS(1) $0.11 $1.35(2) $1.31 $1.96(3) Increased dividend payment 14% for 2013 Annual dividend review moved to December Affirmed 2013 ongoing earnings guidance at $1.32 - $1.42
Slide 5: 2012 Checklist
2012 Checklist 2012 Checklist Achieve successful outcomes in: PNM future test year rulemaking PNM FERC transmission rate case PNM FERC generation rate case PNM renewable rider Maintain strong electric reliability and power plant availability Control O&M and capital costs 5
Slide 6: Load Growth and Economic Conditions
Load Growth and Economic Conditions Regulated Retail Energy Sales Growth (weather-normalized) GWh PNM GWh TNMP 9,000 5,600 2013 Load Growth 0% - 1% 2013 Load Growth 1% - 3% 5,500 8,800 5,400 5,300 8,600 5,200 8,400 5,100 5,000 8,200 4,900 (1) (1) 2008 2009 2010 2011 2012 2013E 2008 2009 2010 2011 20
Slide 7: Regulatory Update
Regulatory Update Item Action Timing Docket No. FERC generation case Settlement filed December 7 Awaiting FERC final ER11-4535-000 and (Navopache Electric Cooperative, Inc.) approval ER12-72-000 FERC transmission formula rates case Filed December 31 2014 ER13-685-000 and ER13-690-000 NMPRC Delta Per
Slide 8: San Juan BART Update
San Juan BART Update State alternative plan • Shut down units 2 and 3 by year-end 2017 • Install SNCRs on units 1 and 4 by early 2016(1) • Reduce greenhouse gases and fresh water consumption • Diversify generation portfolio with replacement power 10th Circuit Litigation • Provided report on Feb.
Slide 9: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 10: 2012 Financial Summary
2012 Financial Summary Ongoing EPS $0.04 ($0.02) ($0.17) $0.38 $1.31 TNMP Corp/Other $1.08 First Choice PNM Power/Optim Energy (1) 2011 2012 (1) After August 31, 2011 Optim Energy’s financial results were not included in PNM Resources’ ongoing earnings. Sale of First Choice Power was completed on No
Slide 11: PNM and TNMP: FY 2012 vs FY 2011 EPS (Ongoing)
PNM and TNMP: FY 2012 vs FY 2011 EPS (Ongoing) PNM 2012 Key Performance Drivers ∆ EPS Retail rate relief and renewable rider $0.29 $1.14 AFUDC $0.07 O&M reductions $0.06 $0.76 FERC rate relief $0.03 Outage costs ($0.03) Interest expense ($0.03) Load ($0.05) Palo Verde 3 market price ($0.05) Other ($
Slide 12: Q4 2012 Financial Summary
Q4 2012 Financial Summary Ongoing EPS $0.01 ($0.06) $0.22 TNMP ($0.02) ($0.02) PNM $0.13 Corp/Other First Choice Power (1) Q4 2011 Q4 2012 (1) Sale of First Choice Power was completed on November 1, 2011. 12
Slide 13: Core Capital Spending
Core Capital Spending 2013 – 2017 Core Capital Plan: $1.8B PNM Rate Base CAGR: 2% - 3% 2013 Expected Depreciation: $156M (In millions) TNMP Rate Base CAGR: 7% - 9% $430 $399 $373 $6 $50 $14 $15 $14 $33 $17 $50 $301 $98 $106 $13 $7 $281 $6 $13 $84 $91 $93 $248 $244 $224 $184 $175 2013 2014 2015 2016
Slide 14: Capital Spending Under Revised State Plan
Capital Spending Under Revised State Plan PNM’s share of SNCR Estimated incremental SIP(1) capital: $343M capital costs are PNM rate base CAGR with SIP(2): 3% - 5% approximately $63M (In millions) $457 $478 $432 $20 $7 $383 Potential replacement $10 $33 $377 $197 power options: $76 • Peaking cap
Slide 15: Dividend Increase
Dividend Increase 2013 Dividend: The annual common stock dividend was raised by 14% on February 28, 2013 $0.66 Payout ratio: Long-term target: 50% - 60% payout ratio 48% (1) • Above average dividend growth expected Dividend yield: The Board will continue to evaluate the 3.0% (2) dividend consi
Slide 16: Consolidated EPS
2013 Guidance (Ongoing) $1.32 Consolidated EPS $1.42 PNM TNMP Corp/Other $1.16 - $1.23 $0.32 - $0.34 ($0.16) – ($0.15) 16
Slide 17: Key Strategic Goals and Checklist
Key Strategic Goals and Checklist 2013 Checklist Achieve successful outcomes in: NM filings for revised SIP FERC transmission formula rates FERC Gallup power sale agreement TX TCOS filing Maintain strong electric reliability and power plant availability Control O&M and capital costs
Slide 18: Questions & Answers
Questions & Answers
Slide 19: Appendix
Appendix
Slide 20: PNM and TNMP: Q4 2012 vs Q4 2011 EPS (Ongoing)
PNM and TNMP: Q4 2012 vs Q4 2011 EPS (Ongoing) PNM Q4 2012 Key Performance Drivers ∆ EPS Palo Verde Nuclear Decommissioning Trust $0.04 $0.15 AFUDC $0.03 $0.09 Load ($0.04) Outage costs ($0.06) Other ($0.03) Q4 2011 Q4 2012 TNMP Q4 2012 Key Performance Drivers ∆ EPS $0.07 $0.08 Load $0.01 Q4 2011 Q4
Slide 21: Potential Earnings Power
Potential Earnings Power Minimizing regulatory lag, improving market prices, and reducing Corporate debt could improve current EPS by $0.16 to $0.25 without rate base growth % of Mid Point Guidance Potential Earnings Power Rate Range Growth Potential Base Potential EPS Achievement Allowed Return EPS
Slide 22: PNM Plant EAF and Outages
PNM Plant EAF and Outages 90.9% 2013 - 2014 Outage Schedule 90.6% 81.7% 83.1% 83.5% 85.4% Duration Time Unit in Days Period San Juan 4 54 Q1 – Q2 2013 1 9 Q1 2014 2 50 Q1 2014 Four Corners 4 21 Q2 2013 5 73 Q1 – Q2 2014 4 13 Q4 2014 San Juan Four Corners Palo Verde Palo Verde 1 40 Q1 – Q2 2013 2012
Slide 23: Liquidity as of February 22, 2013
Liquidity as of February 22, 2013 PNM PNM Resources Resources PNM TNMP Consolidated Financing Capacity: (In millions) Revolving credit facility(1) $300.0 $400.0 $75.0 $775.0 As of 2/22/13: Short-term debt(1) and LOC balances $35.5 $111.2 $25.3 $172.0 Remaining availability 264.5 288.8 49.7 603.0 Inv
Slide 24: Regulatory Information
Regulatory Information
Slide 25: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and Term PNM Service Areas Name District Party Ends Karen Montoya District 1 2016 Democrat Patrick Lyons District 2 2014 Republican Valerie Espinoza District 3 2016 Democrat Vice Chair Theresa Becenti-Aguilar District 4 2014 Democrat Ben Hall Distric
Slide 26: Public Utility Commission of Texas Commissioners
Public Utility Commission of Texas Commissioners Term Term Name Party Began Ends Donna Nelson Aug. 2008 Aug. 2015 Republican Chairman Kenneth Anderson Sept. 2008 Aug. 2017 Republican Rolando Pablos(1) Sept. 2011 Aug. 2013 Republican Commissioners are appointed by Governor of Texas. Length of term is
Slide 27: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 28: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2011 Dec 31, 2012 Long-Term Debt (incl. current portion) PNM $1,215.5 $1,215.6 TNMP 311.0 311.6 PNMR 147.5 145.1 Consolidated $1,674.0 $1,672.3 Total Debt (incl. short-term) (1) PNM $1,281.5 $1,236.7 TNMP 311.0 311.6 PNMR 164.2 282.7 Consolida
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 Stable Stable Stable (1) Senior unsecured debt (2) Senior secured debt A-11
Slide 30: Environmental Compliance
Environmental Compliance
Slide 31: Environmental Control Equipment at Coal Units
Environmental Control Equipment at Coal Units PNM Share Low NOx Activated Coal Unit Capacity Burners/ Carbon SNCR (2) SCR (2) Baghouse (3) Scrubbers (MW) Overfired Air Injection (1) San Juan Unit 1 170 X X X X San Juan Unit 2 170 X X X X San Juan Unit 3 249 X X X X San Juan Unit 4 195 X X X X Four C
Slide 32: Impact of Proposed Environmental Regulation
Impact of Proposed Environmental Regulation Estimated Compliance Costs Comments (PNM Share) San Juan Generating Station Clean Air Act – Regional Haze (FIP) – SCR ~$385M - $425M SCR contract with Flour suspended See “Capital Spending Under Revised Clean Air Act – Regional Haze (SIP) – SNCR ~$62M - $6