Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (December 2011)
28 slides from Txnm Energy's investor presentation, Dec 9, 2011
Slide 1: 2012 Earnings Guidance Presentation
2012 Earnings Guidance Presentation December 9, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this news release that relate to future events or PNM Resources’, Public Service Company of New Mexico’s (“PNM”), or Texas-New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goals, targets, and
Slide 3: Opening Remarks & Overview
Opening Remarks & Overview Pat Vincent-Collawn President and CEO
Slide 4: Strategic Direction: Repositioned as Strong Regulated Utility
Strategic Direction Repositioned as Strong Regulated Utility Strategic Goals Earn Authorized Return on our Exit Hybrid Regulated Regulated Businesses Competitive Utility Utility Business Continue to Improve Credit Ratings Provide Top Quartile Total Return 4
Slide 5: Regulatory Environment
Regulatory Environment New Mexico Current effort in the state to reform the New Mexico Public Regulation Commission (NMPRC) Douglas Howe appointed to the NMPRC by Gov. Martinez in November to serve the remainder of Jerome Block’s term Texas Rolando Pablos appointed to the Public Utility Commis
Slide 6: Regulatory Case Update
Regulatory Case Update PNM FERC transmission case • Implemented rates June 1, subject to refund • Filed supplemental testimony on September 12 • Expect administrative law judge opinion by July 2012 PNM FERC generation case • Amended sale agreement with Navopache Electric Cooperative filed with F
Slide 7: Economic Conditions
Economic Conditions Employment growth continues in GWh PNM both TX and NM 9,000 2012 Load Growth .5% - 1.5% 8,800 • Unemployment rates remain below 8,600 national levels 8,400 2012 retail load at PNM and 8,200 (2) TNMP is expected to continue to 2008 2009 2010 2011E 2012E (1) grow GWh TNMP 5,300
Slide 8: 2012 Guidance
2012 Guidance Chuck Eldred Executive Vice President and CFO
Slide 9: Consolidated EPS Guidance (Ongoing)
Guidance (Ongoing) 2011 Guidance Range $1.00 Consolidated EPS $1.05 EPS growth of 20% - 26% 2012 Guidance Range $1.20 Consolidated EPS $1.32 PNM TNMP Corp/Other $1.08 - $1.15 $0.28 - $0.32 ($0.16) – ($0.15) 9
Slide 10: 2012 EPS Guidance (Ongoing): PNM
2012 EPS Guidance (Ongoing) PNM EPS $1.08 - $1.15 $0.58 $0.72 - $0.75 2010 2011E 2012E Year-over-Year 2011E – 2012E Key Performance Drivers ∆ EPS Retail rate relief $0.29 O&M Reductions $0.09 Load growth $0.03 - $0.07 FERC generation rate relief (1) $0.00 - $0.05 FERC transmission rate relief (1) $0
Slide 11: 2012 EPS Guidance (Ongoing): TNMP
2012 EPS Guidance (Ongoing) TNMP EPS $0.28 - $0.30 $0.28 - $0.32 $0.17 2010 2011E 2012E Year-over-Year 2011E – 2012E Key Performance Drivers ∆ EPS Load growth $0.01 - $0.02 Rate relief $0.02 2011 weather ($0.06) Share repurchase $0.03 - $0.04 11
Slide 12: 2012 Rate Base Mid Point Projections
2012 Rate Base Mid Point Projections Mid Point Projected 2012 2012 Rate Base Return % of Rate Guidance Avg. Rate Base Equity to Achieve Mid Point of Base Range (In millions) Guidance Range (EPS) PNM PNM Retail 86% $1,820 50% 10% $1.13 Renewables(1) 4% $74 50% 7% $0.03 FERC Transmission(2) 7% $153 50
Slide 13: Assumptions for Potential Earnings Power
Assumptions for Potential Earnings Power Reducing regulatory lag and improving market prices could improve EPS by $0.15 to $0.20 without growing rate base Mid Point Guidance Range Potential Earnings Power Growth Potential Allowed Potential EPS Achievement Return EPS Resulting EPS Return PNM PNM Reta
Slide 14: 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 (In millions) and additional peaking capacity $287 $266 $276 $21 $12 $256 $11 $12 $223 $95 $86 $96 $12 $90 $61 $64 $58 $64 $63 $52 $107 $110 $10
Slide 15: PNM Rate Base
PNM Rate Base Avg. Rate Base Rate base CAGR is 2% (In millions) Growth in rate base is $2,500 offset by tax benefits of $2,000 bonus depreciation and utilization of NOLs $1,500 • NOLs are expected to last through 2013 $1,000 Focus is on closing rate $500 base return gap for FERC $0 Potential
Slide 16: PNM 5-Year Potential Capital Additions
PNM 5-Year Potential Capital Additions 2012 – 2016 Total Potential Capital(1): $0.7B Adding ½ of the potential (In millions) capital to PNM’s rate base would result in an additional 2% of CAGR $28 $3 $58 $53 $58 $151 $122 $28 $96 $20 $55 2012 2013 2014 2015 2016 SCRs(2) Renewables Additional peaking
Slide 17: TNMP Rate Base
TNMP Rate Base Rate base CAGR is 8% Avg. Rate Base (In millions) $125M of additional $600 investments over the $500 next four years in Texas under favorable $400 regulatory construct $300 $534 • Rebuild, replace and $454 $482 $200 upgrade existing transmission $100 • Install and upgrade $0 subst
Slide 18: 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 19: Questions & Answers
Questions & Answers
Slide 20: Appendix
Appendix
Slide 21: PNM Assumptions
PNM Assumptions 2011 2012 amounts shown are before tax Assumptions Assumptions Retail rate increase (effective August 21, 2011) $31M $72M FERC Transmission rate increase $0 - $5.5M $0 – $9.6M FERC Generation rate increase – Navopache contract - $0 - $6.5M(1) Weather $9.6M - 2011 PV Nuclear Decommiss
Slide 22: TNMP Assumptions
TNMP Assumptions 2011 2012 amounts shown are before tax Assumptions Assumptions Retail rate increase $9.7M $10.2M Incremental TCOS increases $0.1M $1.0M Weather $9.0M - Incremental load growth 1.5% - 2.5% 0.5% - 1.5% 1% = $1.8M Pension expense/(income) $(1.3)M $(0.7)M Pension contribution $1.6M $5.3
Slide 23: Corp and Other Key Drivers and Assumptions (Ongoing)
Corp and Other Key Drivers and Assumptions (Ongoing) Corporate and Other(1) 2010 2011E 2012E $(0.17) - $(0.15) $(0.16) - $(0.15) $(0.20) 2011E – 2012E Key Performance Drivers Year-over-Year ∆ EPS Interest $0.03 Share repurchase(2) $(0.02) (1) Reflects costs at the PNM Resources holding company, main
Slide 24: EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)
EBITDA and Quarterly Earnings Distribution Guidance (Ongoing) Ongoing EBITDA (In millions) 2011E 2012E Consolidated PNMR $420 - $427 $439 - $458 Regulated Businesses PNM $274 - $278 $320 - $330 TNMP $113 - $116 $114 - $119 Competitive Businesses First Choice Power $34 - $37 N/A Optim Energy(1) $40.6
Slide 25: PNM Plant EAF and Outages
PNM Plant EAF and Outages 90.1% 88.6% 2011 and 2012 Outage Schedule Time Unit Duration 84.2% Period San Juan 80.8% 2 47 Q1 – Q2 2012 79.5% 3 54 Q3 – Q4 2012 77.8%(1) Four Corners 4 10 Q4 2011 5 13 Q1 2012 Palo Verde 1 37 Q4 2011 San Juan Four Corners Palo Verde 3 40 Q1 - Q2 2012 2011E 2012E 2 40 Q4
Slide 26: 2012 Financing Assumptions
2012 Financing Assumptions Renewed PNM and PNM Resources revolvers on October 31, 2011 Old Pricing New Pricing Old Capacity New Capacity PNM Libor + 0.65% Libor + 1.50% $368M $400M PNMR Libor + 1.25% Libor + 1.75% $517M $300M Closed $160M of PNM SUNs on October 12, 2011 • Coupon: 5.35% • Tenor:
Slide 27: Think New Mexico
Think New Mexico An independent results-oriented advocacy group Demonstrated success through several policy changes Advocating legislation to place the NMPRC reforms on the 2012 ballot Refocus and narrow the jurisdiction to regulating utilities and telecommunications Increase qualification
Slide 28: San Juan - BART Update
San Juan - BART Update EPA BART determination: SCR technology • Total estimated costs: $750M or more • PNM’s share of estimated costs (~46%): minimum of $345M PNM petitioned EPA to reconsider its determination and to issue a stay of its rule PNM also appealed EPA’s decision in court (US Court
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