Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (March 2024)
33 slides from Txnm Energy's investor presentation, March 2024
Slide 1: Investor Meetings
Investor Meetings March 2024 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Preliminary Unaudited Financial Results The preliminary unaudited financial results for the fiscal year ended December 31, 2023, included in this presentation represent the most current information available to management and are not a comprehensive statement of the financial r
Slide 3: PNM Resources Overview
PNM Resources Overview Energy holding company based in Albuquerque, New Mexico with two fully regulated electric utility subsidiaries NYSE: PNM $3B market cap • Vertically integrated utility in New Mexico focused on clean energy Service Territories and Generation Resources transformation • $2.8B Ret
Slide 4: PNM Resources Vision: Create a Clean and Bright Energy Future
PNM Resources Vision: Create a Clean and Bright Energy Future Clean Energy Critical Electric Strong Corporate Portfolio Infrastructure Profile PNM progress towards T&D investments in Delivering financial industry-leading goal of reliability and resiliency results, investment-grade 100% emissions-fre
Slide 5: PNM Resources Standalone Profile - Strategic Growth
PNM Resources Standalone Profile - Strategic Growth Sound basis for growth • Driven by need for investments supporting grid reliability and modernization • Enables clean energy goals and economic expansion Increased diversification of rate base • Consistent, measured approach to growth among regulat
Slide 6: PNM Resources Standalone Profile - Execution of Financial Plans
PNM Resources Standalone Profile - Execution of Financial Plans Strong track record of achieving financial targets • Consistent execution on plans • Delivering results on invested capital to $2.69 $2.82 meet customer needs $2.28 $2.45 $2.16 $1.31 $1.39 $1.47 $1.16 $1.23 Dec ‘20 Feb ‘22 Dec ‘22 Dec ‘
Slide 7: Investment Plan 2024 – 2028
Investment Plan 2024 – 2028 5-year investment plan of $6.1 billion $1,273 $1,273 $1,176 $48 $1,153 $1,178 $49 $44 $45 $47 $508 $524 $641 $557 $610 $84 (in millions) $89 $120 $69 $78 $18 $73 $69 $506 $441 $372 $513 $407 $460 $437 $452 $463 $514 2024 2025 2026 2027 2028 PNM T&D PNM Battery Storage PNM
Slide 8: Financing Plans
Financing Plans 2023 Financings Long-term Debt Maturities in millions(1) • $200M equity (4.4M shares issued Dec. 2023) • $115M NMRD sales proceeds received in Feb 2024 $1,113 • $343M Securitization bonds issued Nov. 2023, providing low-cost financing for customers • $600M of variable rate hedges in
Slide 9: 2024 - 2028 Potential Earnings Power
2024 - 2028 Potential Earnings Power 6% - 7% Earnings Growth 2024-2028 2024 2025 Earnings 2026 Earnings 2027 Earnings 2028 Earnings Allowed Guidance Equity Potential Potential Potential Potential Midpoint Return / Avg Avg Avg Avg Avg Ratio Rate EPS Rate EPS Rate EPS Rate EPS Rate EPS Base Base Base
Slide 10: Dividend Increase and Payout Ratio
Dividend Increase and Payout Ratio Annual dividend targets middle of • Continued dividend a 50% - 60% payout ratio range growth targeting 50% - 60% payout ratio $1.55 $1.39 $1.47 • Board of Directors $1.31 $1.23 increased the common dividend by $0.08 to $0.3875 per quarter 54% 53% 52% 52% 57% payout
Slide 11: TNMP
TNMP
Slide 12: TNMP Overview
TNMP Overview Transmission and Distribution Utility (TDU) within Deregulated ERCOT Market TNMP System Peak • Consistent growth in TNMP service territory 2,545 Continued nation-leading economic growth 1,796 2,030 MWs System demand has grown 42% over the last 5 years Constructive legislative and
Slide 13: TNMP Regulated Rate Recovery
TNMP Regulated Rate Recovery Recovery Framework • Historical test year recover non-capital costs and set the TNMP Capital Spending authorized ROE for all rate mechanisms, supplemented by capital (millions) $641 recovery mechanisms: • Transmission cost of service mechanism (TCOS) allows for semi- ann
Slide 14: PNM
Laer PNM nana ~~
Slide 15: PNM Overview
PNM Overview Increasing system demands PNM System Peak 2,131 New system peaks reached in 2022 and 2023 2,030 2,008 MWs Reflects need for additional resources and infrastructure 2013 2022 2023 Investment plans focused on T&D infrastructure to support clean energy transition and meet growing custo
Slide 16: Executing the Energy Transition Act
Executing the Energy Transition Act Our Goal: Carbon-Free by 2040 (5 years earlier than state mandate) Step 1: Exit coal generation Retire San Juan Generating Station: completed in 2022 (783 MWs) 2021 2022 2023 Reduction of MW Coal Capacity Coal Coal 983 22% reduction 7% 7% Renewables Coal Renewab
Slide 17: PNM Retail Customer Affordability
PNM Retail Customer Affordability Customer impacts of increased Avg Residential Bill(1) infrastructure investments are mitigated by: $132.15 $121.57 • Energy Transition Act is achieving the goals for the clean energy transition with customer benefits, as the exit $73.95 from coal and securitization
Slide 18: Transmission Development Potential
Transmission Development Potential New Mexico’s location in the West and concentration of solar and wind resources demonstrates the potential for renewable development and associated transmission needs Predominance of Renewables Resources in Center of Country and Load Centers on Coasts Source: NREL
Slide 19: Appendix
Appendix
Slide 20: Commitment to ESG Strategy
Commitment to ESG Strategy Environmental Social Governance Industry-leading goals: Hiring, training, retention and 8 of 9 Board members are • Emissions-free by 2040 engagement programs for our independent, 9 years average reflects full elimination of diverse workforce with a focus tenure carbon from
Slide 21: Load and Economic Conditions
Load and Economic Conditions TNMP Continued growth at TNMP TNMP 2023 2024E Volumetric growth expected to return to 2022 levels, as 2023 was impacted by extreme weather events Volumetric Load(1) 0% 2.5% - 3.5% Demand-based load increases in 2023 reflect incremental Demand-Based Load(2) 14.1% 1.5%
Slide 22: TNMP and PNM Key Regulatory Proceedings
TNMP and PNM Key Regulatory Proceedings Filing Action Timing Docket No. TNMP PUCT Transmission Cost of Filed January 25, 2024 Rates expected to be implemented March 2024 56155 Service (1st 2024 filing) Energy Efficiency Cost Filed May 26, 2023, unanimous settlement approved Rates implemented March 1
Slide 23: PUCT Commissioners
PUCT Commissioners Name Term Began Term Ends Party Thomas Gleeson(1) (Chair) Jan. 19, 2024 Sept. 1, 2029 Republican Kathleen Jackson Aug. 5, 2022 Sept. 1, 2027 Republican Lori Cobos(2) Sept. 1, 2021 Sept. 1, 2027 Republican Jimmy Glotfelty Aug. 6, 2021 Sept. 1, 2025 Republican Vacancy Commissioners
Slide 24: TNMP Rate Recovery Framework
TNMP Rate Recovery Framework DCRF (Distribution TCOS (Transmission General Rate Review Cost Recovery Factor) Cost of Service) Standard rate review involving comprehensive Pre-defined schedules, includes filing, discovery, interveners, Pre-defined schedules; Staff earnings test; Staff Process hearing
Slide 25: TNMP Wildfire Preparation and Mitigation Plans
TNMP Wildfire Preparation and Mitigation Plans • Identification of higher-risk areas and prioritization of efforts TNMP Vegetation Management ($M) • Non-contiguous service territory across Texas diversifies overall risk • 15% of total T&D line miles are underground $8.7 $8.1 • Transmission lines pat
Slide 26: NMPRC Commissioners
NMPRC Commissioners Name Term Began Term Ends Party Patrick O'Connell (Chair) January 1, 2023 December 31, 2028 Democrat Gabriel Aguilera January 1, 2023 December 31, 2026 Democrat James Ellison January 10, 2023 December 31, 2024 Independent Commissioners confirmed by the New Mexico Senate on Feb. 8
Slide 27: PNM Regulated Rate Recovery
PNM Regulated Rate Recovery Recovery Framework Recent/Current Filings Transmission Distribution Generation • Allows for future test year filings and utilizes specific rate rider mechanisms (fuel clause, renewables, energy efficiency) • Transmission investments allocated 12 MW Distribution Battery St
Slide 28: PNM 2024 Rate Change Outcome
PNM 2024 Rate Change Outcome NMPRC Order Jan 3, 2024: 2024 Rate Change Outcome Revenue • Recovery of $2.4B incremental rate base (Reflects changes since 2018) Req ($m) and six years of O&M cost increases Reduction in ROE to 9.26% ($6.1) • Disappointing ROE and reductions to No return on leasehold im
Slide 29: PNM Generation Shared Ownership
PNM Generation Shared Ownership Palo Verde Nuclear Generating Station - MW Owned vs Leased Owned Capacity Leased Capacity Unit 1 2.3% 30 MW Unit 1 - (1) - (1) Unit 2 9.4% 124 MW Unit 2 0.8% 10 MW Unit 3 10.2% 134 MW Unit 3 - - Total 21.9% 288 MW Total 0.8% 10 MW (1) 104 MW Unit 1 leases expired Jan.
Slide 30: PNM Wildfire Preparation and Mitigation Plans
PNM Wildfire Preparation and Mitigation Plans • Identification of higher-risk areas and prioritization of efforts PNM Vegetation • 40% of total T&D line miles are underground, 18% of total T&D line Management ($M) miles considered to be in Hazardous Fire Areas (HFAs), which are $8.0 $6.5 patrolled a
Slide 31: 2024 - 2028 Potential Earnings Power
2024 - 2028 Potential Earnings Power 2024 2025 Earnings 2026 Earnings 2027 Earnings 2028 Earnings Allowed Guidance Equity Potential Potential Potential Potential Midpoint Return / Avg Avg Avg Avg Avg Ratio Rate EPS Rate EPS Rate EPS Rate EPS Rate EPS Base Base Base Base Base 9.26% / PNM Retail 50% $
Slide 32: Liquidity as of December 29, 2023
Liquidity as of December 29, 2023 Corporate/ PNM Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $100.0 $300.0 $840.0 As of 12/29/23: Short-term debt and LOC balances 137.5 55.1 72.4 265.0 Remaining availability 302.5 44.9 227.6 575.0 Inv
Slide 33: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec. 31, 2022 Dec. 31, 2023 Long-Term Debt (incl. current portion) (1) PNM $2,000.9 $2,261.8 TNMP 1,076.9 1,260.9 Corporate/Other 999.6 999.1 Consolidated $4,077.4 $4,521.8 Total Debt (incl. short-term) (1,2) PNM $2,186.8 $2,399.3 TNMP 1,113.6 1,316.0