Public Service Company Of New Mexico · OTC:PNMXO
Public Service Company Of New Mexico — PNM Resources — Edison Electric Institute Annual Finance Committee Meeting 2004
19 slides from Public Service Company Of New Mexico's conference presentation, May 20, 2004
Slide 1: PNM Resources
PNM Resources Edison Electric Institute Annual Finance Committee Meeting May 20 – 21, 2004 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements made in this presentation and documents we file with the SEC that relate to future events or our expectations, projections, estimates, intentions, goals, targets and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. You are caution
Slide 3: PNM Resources: Electric & Gas Utility + Merchant Provider = A Merchant Utility
PNM Resources: Electric & Gas Utility + Merchant Provider = A Merchant Utility PNM Resources Utility Corp/Avistar Wholesale 84% 16% NM Electric Transmission Gas Services Retail 9% 23% 68% Long-Term Forward Short-Term Contracts Sales Sales 80% 20% *As of 12/31/03 3
Slide 4: Stock Split
Stock Split • 3-for-2 stock split • Effective June 14, 2004 • $0.16 dividend equivalent to last quarter’s $0.24 dividend • Aims to broaden retail base, increase trading activity 4
Slide 5: Electric & Gas Utility
Electric & Gas Utility • 452,000 Gas Service Customers (PVNGS) • 396,000 Electric Customers • 2.4% Compound Annual Growth in KWh retail sales 5
Slide 6: Wholesale Electric Marketing Strengths
Wholesale Electric Marketing Strengths • Asset-backed marketing • Relationship based marketing • In wholesale market since the 1980s • Successful in high and low-priced markets • Operationally trained energy marketers • Stringent risk management • Not impacted by FERC issues • Focus on 5 to 10 year
Slide 7: Broad Wholesale Reach
Broad Wholesale Reach Mead Mead Four Corners Mead Four Corners New MexicoNew Mexico Palo Verde Palo Verde Palo Verde New Mexico 7
Slide 8: Well Balanced Fuel Mix
Well Balanced Fuel Mix • Integrated portfolio with joint dispatch of system resources Fuel Mix LT Contracts Coal • 2,461MW Portfolio 21% 39% 1,874 MW owned Renewables 387 MW LT purchase 8% 200 MW renewables Nuclear 16% Gas 16% • Excellent asset mix of coal, nuclear, gas and renewables 8
Slide 9: The PNM Advantage
The PNM Advantage We Deliver: Stability Reliability Integrity Innovation Growth 9
Slide 10: Stable Regulatory Environment
Stable Regulatory Environment Electric Gas • Traditional cost of service • $22M revenue increase regulation in NM approved 1/04 • Rate path set through • Residential increase in 2007/2008 effect 4/1 • Rate reductions in 9/03 • New rates add about ($21m) and 9/05 ($14M) $0.21 to EPS in 2004, $0.33 in
Slide 11: Stable Base for Growth – Electric Rate Reductions Fully Mitigated
Stable Base for Growth – Electric Rate Reductions Fully Mitigated Decreases = Increases 1) Electric rate reduction 1) Gas Rate Increase (first phase 2004) = (2004) = $22M/year $21M/year 2) Debt Refinancing 2) Electric rate reduction (2003) = $14M/year (second phase 2005) = $14M/year 11
Slide 12: Financial Strength
Financial Strength Liquidity Cash Flow • $300M Revolver • 2003 cash flow from • $300M commercial paper operations is $231M program compared to $97M in • $90M A/R Securitization 2002 • Refinanced $482M for • $90M free cash flow* in annual savings of $12M 2003, compared to $(137)M in 2002 • Tax exempt
Slide 13: World Class Utility Service
World Class Utility Service #1 in system reliability #1 in customer call-in satisfaction #3 in overall customer satisfaction Top quartile plant performance State, national and international environmental management recognition 13
Slide 14: Implementing renewable energy profitably
• Implementing renewable energy profitably • Introducing new technologies to reduce plant costs • Lowering fuel costs at San Juan Generating Station • Developing new water initiatives 14
Slide 15: Growing Service Territory
Growing Service Territory • 3% Electric growth in 2003 • 2% Gas growth in 2003 • NM job growth 6th highest • Housing starts up 15% • Construction jobs up 8.4% • Jobless rate 5.0% well below national average (NM Dept. of Labor, NM Business Weekly) 15
Slide 16: Wholesale Growth
Wholesale Growth • Added 553 MW of generation in past 3 years • A niche strategy tailored to building long-term wholesale relationships • 330MW added to long- term sales contracts last year • Targeting 200 MW of long-term contracts in 2004 • Exploring additions to generation portfolio focused on Sou
Slide 17: Growth Path for the Future
Growth Path for the Future • 3% Retail service growth offsets 3% inflation • 1.5% productivity growth • Underground coal mine savings projected at $500M over 15 years* • FERC transmission rate case • Additional gas rate case • New long-term wholesale contracts • Generation additions *Reduction from
Slide 18: 2004 Earnings Guidance
2004 Earnings Guidance Cost Short Term Control Electric Prices Wholesale $2.15 Growth Weather Plant Availability $1.90 18
Slide 19: The PNM Advantage
The PNM Advantage Returns Outpace Competition • Stability Repeatable earnings from 150% regulated utility + long-term wholesale 125% contracts, known rate path, strong 100% balance sheet 75% • Reliability Number 1 in system reliability, number 1 in customer call-in 50% satisfaction, number 3 in over
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