Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — EEI Financial Conference 2018
36 slides from Txnm Energy's conference presentation, November 2018
Slide 1: EEI Financial Conference
EEI Financial Conference November 2018
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Jimmie Blotter, Assistant Treasurer Manager, Investor Relations Director, Investor Relations and Shareholder Services U.S. 1‐505‐241‐2160 U.S. 1‐505‐241‐2227 Lisa.Goodman@pnmresources.com Jimmie.Blotter
Slide 3: Company Overview
Company Overview
Slide 4: PNM Resources Overview
PNM Resources Overview PNM Resources is a regulated electric utility holding company focused on providing environmentally responsible, affordable and reliable electricity to customers and above industry average • Energy holding company earnings and dividend growth to shareholders • Based in Albuquer
Slide 5: PNM Resources Strategic Direction and Financial Goals
PNM Resources Strategic Direction and Financial Goals • Plans to be coal‐free by 2031 Transform to • Retire and replace coal‐fired generation with Cleaner Energy cleaner energy portfolio Portfolio • Invest to maintain system reliability • Provide reliable, affordable energy while enhancing Meet cust
Slide 6: Current 2018 – 2022 Investment Plan
Current 2018 – 2022 Investment Plan $2.6B five‐year investment plan with opportunities for incremental growth Reflects $229M increase over prior plan; $176M increase at TNMP Opportunities for Incremental Growth $607 $32 $580 $29 $517 $2 $61 $10 $79 $38 $49 $20 $27 $25 $444 $20 $413 $109 $97 $20 $98
Slide 7: 2018 – 2021 Potential Earnings Power
2018 ‐ 2021 Potential Earnings Power Strong 2018 revised guidance supports continued success in executing our plan to meet growth expectations Allowed 2018 Ongoing Earnings 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Return / Guidance Midpoint Guidance Midpoint Potential Potential Equity Avg R
Slide 8: Opportunities for Incremental Growth 2020 – 2022
Opportunities for Incremental Growth 2020 ‐ 2022 New Customer Load and Infrastructure Investments • Increasing capital in Texas to support continued strong economic growth while New Mexico growth prospects are driven by load from new data center interest and existing customer expansions • In order t
Slide 9: Incremental 2018 – 2022 Investment Opportunities
Incremental 2018 – 2022 Investment Opportunities Up to $950M of incremental investment opportunities Growth Opportunities provides additional rate base growth through 2022 New Customer Load up to up to $300M and Infrastructure up to $894 Investments $780 $100 up to $100 $150 $713 Transmission and $1
Slide 10: Potential Earnings Power of Growth Opportunities by 2022
Potential Earnings Power of Growth Opportunities by 2022 2018 ‐ 2022 Earnings Growth Target: 5 ‐ 6% Growth Opportunities: Avg Rate Base EPS New Customer Load and Infrastructure up to $300M up to $0.18 Investments Transmission and Renewable up to $250M up to $0.15 Energy Expansion in New Mexico Gener
Slide 11: New Customer Load and Infrastructure Investments: Load and Economic Conditions
New Customer Load and Infrastructure Investments: Load and Economic Conditions Regulated Retail Energy Sales and Customers (weather‐normalized) Q3 2018 YTD 2018 PNM / TNMP vs. vs. 2018E 2019E Q3 2017 YTD 2017 PNM Residential & Commercial 0.8% 0.5% ~0.3% 0.3% ‐ 0.5% Total PNM Retail Load 1.1% 0.4% 0%
Slide 12: New Customer Load and Infrastructure Investments: Aging Infrastructure and Texas Demand
New Customer Load and Infrastructure Investments: Aging Infrastructure and Texas Demand Average Age of Infrastructure TNMP Demand • Texas ranks #1 in the US for total electricity PNM production and wind energy production(1) • Transmission lines: ~50 years • ERCOT summer peak demand projected to • Ov
Slide 13: Transmission and Renewable Expansion in New Mexico: Integration of Renewable Generation
Transmission and Renewable Expansion in New Mexico: Integration of Renewable Generation Integration of renewable generation requires T&D investment and addition of supporting peaking capacity PNM Planned Renewable Capacity 1,524 included in 2017 Integrated Resource Plan 11 1,500 1,189 205 11 961 MW
Slide 14: Transmission and Renewable Expansion in New Mexico: Third-Party Renewable Development
Transmission and Renewable Expansion in New Mexico: Third‐Party Renewable Development Third‐party renewable development increases demand for transmission capacity across our system New Mexico added wind capacity at a faster rate than any other state in 2017 • 1,682 MW installed capacity, 51% Broadvi
Slide 15: PNM’s Cleaner Energy Portfolio
Generation Portfolio Transformation: PNM’s Cleaner Energy Portfolio • Coal‐free generation portfolio by 2031; develop new generation portfolio that moves to increased renewable resources • Continued power from Palo Verde Nuclear Generating Station • Storage or backup power resources to maintain syst
Slide 16: Emission Reductions
Generation Portfolio Transformation: Emission Reductions • Implementation of the Integrated Resource Plan at PNM would reduce GHG by 71% in 2025 and 80% in 2035 (from 2005 levels) • Compares favorably to the United States INDC 26% ‐ 28% by 2025 and the former administration’s effort to achieve an 80
Slide 17: PNM
PNM
Slide 18: PNM Bills Remain Below National and Regional Averages
PNM Bills Remain Below National and Regional Averages Comparison of Average Residential Bills(2) Western Region Average Bills by Utility Arizona Public Service Co (AZ) $140.90 Customer bill impacts of Salt River Project (AZ) Imperial Irrigation District (CA) increased investments are Entergy Texas I
Slide 19: NMPRC Commissioners and Districts
NMPRC Commissioners and Districts NMPRC Districts and PNM Service Areas District Name Term Ends Party Cynthia Hall, District 1 2020(1) Democrat Vice Chairman Patrick Lyons 2018 Republican District 2 Jefferson Byrd 2022(1) Republican District 3 Valerie Espinoza 2020 Democrat Lynda Lovejoy 2018 Democr
Slide 20: PNM Regulatory Agenda
PNM Regulatory Agenda Filing Action Timing Docket No. PNM Appeal of 2015 General Oral arguments held October 30, Rate Case to New Mexico No statutory timeline S‐1‐SC‐36115 2017 Supreme Court Hearing Examiner Recommended PNM 2017 Integrated Decision expected in Q4 2018 or Decision to accept received
Slide 21: TNMP
TNMP
Slide 22: TNMP Rates Compare Favorably in Texas
TNMP Rates Compare Favorably in Texas Residential Total Wires Charge for 1,000 kWh Rates expected to be comparable to other IOUs after upcoming rate filings $60 Scheduled Scheduled Scheduled to File by to File by to File by May 2019 Scheduled May 2019 $50 Settlement July 2019 to File by Oct 2021 $40
Slide 23: PUCT Commissioners and TNMP Regulatory Agenda
PUCT Commissioners and TNMP Regulatory Agenda PUCT Commissioners Name Term Began Term Ends Party DeAnn Walker (Chair) Sept. 2017 Aug. 2021 Republican Arthur D’Andrea Nov. 2017 Aug. 2023 Republican Shelly Botkin June 2018 Sept. 2019 Republican Commissioners are appointed by the Governor of Texas and
Slide 24: TNMP General Rate Review Settlement
TNMP General Rate Review Settlement General Rate Review TNMP Filing Settlement Annual revenue increase $25.9M $10.0M ROE (prior authorized 10.125%) 10.5% 9.65% Capital structure 50% Equity 45% Equity (prior authorized 45% equity) Cost of debt 7.2% 6.4% Increase to rate base(1) $90M $73M Return of ex
Slide 25: Financial Overview
Financial Overview
Slide 26: 2018 – 2022 Earnings Growth
2018 – 2022 Earnings Growth 2018 – 2022: Targeting 5 ‐ 6% Ongoing EPS CAGR • 2013 ‐ 2017: Achieved 8% Ongoing EPS CAGR • 2013 ‐ 2021: Reflects 6% Ongoing EPS CAGR Target: $2.39‐$2.49 $2.31 $2.39 $2.22 $2.13 $1.97 $1.94 $1.65 $1.64 $1.49 $1.41 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Actual
Slide 27: Earnings Growth: Achieving Targets
Earnings Growth: Achieving Targets Strong track record of meeting/beating annual expectations Actual Ongoing EPS vs Consensus $2.00 $1.75 $1.50 $1.25 Actual Consensus $1.00 2012 2013 2014 2015 2016 2017 2018 Actuals $1.31 $1.41 $1.49 $1.64 $1.65 $1.94 $1.97 1 Consensus $1.27 $1.38 $1.48 $1.57 $1.63
Slide 28: Dividend Growth
Dividend Growth Consistent Delivery of Above Industry Average Dividend Growth 9% Expect future dividend 10% $1.06 growth to mirror 10% $0.97 8% Dec ‘17 earnings growth 12% $0.88 Dec ‘16 (approximately 5‐6%) $0.80 Dec ‘15 $0.74 Dec ‘14 $0.66 Dec ‘13 Feb ‘13 Indicative annual dividend rate • Expect ab
Slide 29: Consolidated Earnings and Quarterly Earnings Distribution Guidance
Consolidated Earnings and Quarterly Earnings Distribution Guidance (Ongoing) Consolidated Earnings Guidance 2018 Previous Narrowed Consolidated EPS $1.91 ‐ $1.98 $1.95 ‐ $1.98 PNM $1.48 ‐ $1.52 $1.51 ‐ $1.52 TNMP $0.60 ‐ $0.62 $0.62 ‐ $0.63 Corporate/Other ($0.17) – ($0.16) ($0.18) – ($0.17) Segment
Slide 30: Financial Overview: Liquidity and Debt Maturity Outlook
Financial Overview: Liquidity and Debt Maturity Outlook Long‐term Debt Maturities $353 Maintain appropriate (in millions) $1,060 credit metrics $300 $172 Remain a solid $200 $20 $100 $306 $100 investment grade 2018 2019 2020 2021 2022 and rated company PNM TNMP Corporate Beyond • Extended all revolv
Slide 31: Appendix
Appendix
Slide 32: Potential Earnings Power
Potential Earnings Power Allowed 2018 Ongoing Earnings 2019 Ongoing Earnings 2020 Earnings 2021 Earnings Return / Guidance Midpoint Guidance Midpoint Potential Potential Equity Avg Rate Return EPS Avg Rate Return EPS Avg Rate EPS Avg Rate EPS Ratio Base Base Base Base 9.575% / PNM Retail(1) $2.3 B 9
Slide 33: Liquidity as of October 30, 2018
Liquidity as of October 30, 2018 PNMR PNMR PNM Develop‐ Corporate Resources PNM TNMP ment /Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $24.5 $300.0 $839.5 As of 10/30/18: Short‐term debt and LOC balances $2.5 $27.6 $24.5 $131.2 $185.8 Remaining av
Slide 34: PNM New Mexico Supreme Court Appeal
PNM New Mexico Supreme Court Appeal • PNM filed Notice of Appeal with New Mexico Supreme Court on September 30, 2016 • PNM filed Statement of Issues on October 26, 2016 detailing items for appeal: Appealed Item Conclusion Resulting Impact Ongoing EPS Impact Palo Verde Nuclear Generating Station: Fai
Slide 35: PNM San Juan Generating Station Ownership and Participants
PNM San Juan Generating Station Ownership and Participants Total PNM PNM Unit Other Participants/Ownership MW MW Ownership 1 340 170 50% Tucson Electric 50% (170 MW) City of Farmington 8.5% (43 MW) Los Alamos County 7.2% (36.5 MW) 4 507 327 64.5% Utah Associated Municipal Power Systems (UAMPS) 7.0%
Slide 36: PNM Palo Verde Nuclear Generating Station Unit 1 and 2 Leases
PNM Palo Verde Nuclear Generating Station Unit 1 and 2 Leases MW Owned vs. Leased Unit 1 Unit 2 Owned 2.3% 30 MW Owned 9.5% 124 MW Leased 7.9% 104 MW Leased 0.7% 10 MW Total 10.2% 134 MW Total 10.2% 134 MW Lease Expiration • Unit 1: January 15, 2015; exercised option to extend leases to 2023 • Unit