Slide 1: 2015 Earnings Review
2015 Earnings Review February 26, 2016
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: 2015 Accomplishments and Highlights
2015 Accomplishments and Highlights • PNM BART plan approved by FERC and NMPRC • PNM Future Test Year definition resolved Regulatory • PNM Transmission formula rate case settled Accomplishments • TNMP implemented two TCOS increases • TNMP AMS Reconciliation filing recommended for approval without ex
Slide 5: Q4 2015 Financial Results and Updates
Q4 2015 Financial Results and Updates Financial Results: Q4 2015(1) Q4 2014 2015 2014 Ongoing EPS $0.23 $0.24 $1.64 $1.49 GAAP EPS ($1.15)(2) $0.24 $0.20(2) $1.45 2016 Guidance of $1.55 - $1.76 affirmed Updates: BART implementation SNCRs and Balanced Draft in full operation Savings from new
Slide 6: Financial Overview
Financial Overview Chuck Eldred Executive Vice President and CFO
Slide 7: Load and Economic Conditions
Load and Economic Conditions Regulated Retail Energy Sales (weather-normalized) PNM TNMP % of 2015 Q4 2015 vs. 2015 vs. % of 2015 Q4 2015 vs. 2015 vs. Sales Q4 2014 2014 Sales Q4 2014 2014 Residential 39% 0.0% 0.0% Residential 51% 6.8% 4.2% Commercial 46% (1.9%) (2.2%) Commercial 46% (1.0%) 1.4% Ind
Slide 8: 2015 Ongoing EPS: Guidance vs Actual
2015 Ongoing EPS PNM Resources 2015 Guidance: $1.56 – $1.61 2015 Actual: $1.64 PNM Guidance: $1.13 - $1.16 Actual: $1.18 TNMP Guidance: $0.51 - $0.52 Actual: $0.52 Corp/Other Guidance: ($0.08) – ($0.07) Actual: ($0.06) 8
Slide 9: Q4 2015 Financial Summary
Q4 2015 Financial Summary Ongoing EPS $0.24 $0.03 $0.02 $0.23 $0.00 PNM TNMP Corporate Q4 2014 Q4 2015 9
Slide 10: PNM and TNMP: Q4 2015 vs Q4 2014 EPS (Ongoing)
PNM and TNMP: Q4 2015 vs Q4 2014 EPS (Ongoing) PNM Q4 2015 Key Performance Drivers ∆ EPS AFUDC $0.03 Palo Verde Unit 1 leases at half price $0.03 Weather $0.02 Palo Verde Nuclear Decommissioning Trust gains $0.02 $0.16 $0.13 Renewable rate relief $0.01 O&M increases ($0.03) Outage costs ($0.02) Expl
Slide 11: 2016 Guidance
2016 Guidance 2016 Earnings Guidance Avg Rate Base Return EPS PNM Retail (1) $2.4 B 7.3% - 8.4% $1.08 - $1.24 PNM Renewables (2) $100 M 10.0% $0.06 PNM FERC Transmission (3) $180 M 8.1% - 9.0% $0.09 - $0.10 PV3 (4) ($0.14) Items not in rates (5) $0.03 - $0.04 Total PNM $2.7 B $1.12 - $1.30 TNMP (6)
Slide 12: Strategic Goals
Above Industry Average Earnings Growth Through 2019 Strategic Goals Earn Authorized Return on Regulated Businesses Maintain Solid Investment Grade Credit Ratings Above Industry Average Earnings and Dividend Growth $1.64 $1.76 $1.41 $1.49 $1.55 $1.31 $0.74 $0.80 $0.88 $0.58 $0.66 Feb ‘12 Feb ‘13 Dec
Slide 13: Questions & Answers
Questions & Answers
Slide 14: Appendix
Appendix
Slide 15: 2017 - 2019 Potential Earnings Power
2017 - 2019 Potential Earnings Power Allowed 2017 Earnings Potential 2018 Earnings Potential 2019 Earnings Potential Return / Equity Ratio Avg Rate EPS Avg Rate EPS Avg Rate EPS Base Base Base PNM Retail (1) 10% / 50% $2.4 B $1.50 $2.6 B $1.59 $2.5 B $1.58 PNM Renewables (2) 10% / 50% $95 M $0.06 $9
Slide 16: FY 2015 Financial Summary
FY 2015 Financial Summary Ongoing EPS $0.02 $1.64 $0.08 $0.05 $1.49 TNMP Corporate PNM 2014 2015 16
Slide 17: PNM and TNMP: 2015 vs 2014 EPS (Ongoing)
PNM and TNMP: 2015 vs 2014 EPS (Ongoing) PNM 2015 Key Performance Drivers Palo Verde Unit 1 leases at half price ∆ EPS $0.12 AFUDC $0.09 Palo Verde Nuclear Decommissioning Trust gains $0.05 Refined coal $0.03 $1.10 $1.18 El Paso natural gas tariff $0.03 Renewable rate relief $0.02 Weather $0.02 2003
Slide 18: Capital Forecast
Capital Forecast 2016 – 2019 Total Capital Plan: $1.7B PNM 2015-2019 Rate Base CAGR: 5 - 7%(1) TNMP 2015-2019 Rate Base CAGR: 7 - 9% (In millions) $547 $36 Palo Verde Unit 3 added to rate base $115 $415 $398 $19 $14 $352 $99 $101 $15 $114 $117 $132 $102 $298 $127 $213 $239 $238 $232 $163 $167 $93 20
Slide 19: Weather Impact
Weather Impact PNM Q4 2015 Q4 2014 2015 Normal(1) Heating Degree Days 1,560 1,442 1,599 Cooling Degree Days 43 4 16 EPS Impact $0.01 ($0.01) compared to normal TNMP Q4 2015 Q4 2014 2015 Normal(1) Heating Degree Days 492 688 672 Cooling Degree Days 305 255 281 EPS Impact ($0.01) $0.00 compared to nor
Slide 20: PNM Plant EAF and Outages
PNM Plant EAF and Outages 2016 - 2017 Outage Schedule Duration Time Unit in Days Period 91.8% 92.4% San Juan 76.5% 78.1% 1 7 Q1 2016 65.8% 66.8% 3 13 Q1 2016 2 16 Q1 2016 4 15 Q2 2016 Four Corners 72 Q1-Q2 2016 5 94 Q4 2017 4 21 Q1-Q2 2016 Palo Verde 34 Q2 2016 1 San Juan Four Corners Palo Verde 34
Slide 21: Balance Sheet and Credit Metrics
Balance Sheet and Credit Metrics
Slide 22: Liquidity as of February 19, 2016
Liquidity as of February 19, 2016 PNM Corporate/ Resources PNM TNMP Other Consolidated Financing Capacity(1): (In millions) Revolving credit facilities $450.0 $75.0 $300.0 $825.0 As of 2/19/16: Short-term debt and LOC balances $99.4 $15.1 $112.3 $226.8 Remaining availability 350.6 59.9 187.7 598.2 I
Slide 23: Selected Balance Sheet Information
Selected Balance Sheet Information (In millions) Dec 31, 2014 (1) Dec 31, 2015 Long-Term Debt (incl. current portion) PNM $1,482.5 $1,580.7 TNMP 361.2 361.4 Corporate/Other 118.6 149.9 Consolidated $1,962.4 $2,091.9 Total Debt (incl. short-term) (2) PNM $1,482.5 $1,580.7 TNMP 366.2 420.4 Corporate/O
Slide 24: Credit Ratings
Credit Ratings PNMR S&P Moody’s Credit rating BBB+(1) Baa3(1) Issuer outlook Stable Stable PNM S&P Moody’s Credit rating BBB+(2) Baa2(2) Issuer outlook Stable Stable TNMP S&P Moody’s Credit rating A(3) A1(3) Issuer outlook Stable Stable (1) Issuer/Corporate rating (2) Senior unsecured (3) Senior sec
Slide 25: Environmental Compliance
Environmental Compliance
Slide 26: Environmental Control Equipment at Coal Units
Environmental Control Equipment at Coal Units PNM Share Low NOx Activated Coal Unit Capacity Burners/ Carbon SNCR (3) SCR (3) Baghouse (4) Scrubbers (MW) Overfired Air Injection (2) San Juan Unit 1 170 X X X X X San Juan Unit 2 (1) 170 X X X X San Juan Unit 3 (1) 248 X X X X San Juan Unit 4 195 X X
Slide 27: Impact of Environmental Regulation- SJGS
Impact of Environmental Regulation- SJGS Estimated Compliance Costs San Juan Generating Station Comments (PNM Share) Clean Air Act – Regional Haze(1) $78M SNCR technology on 2 units; Retire 2 units. (State Alternative) – SNCR Balanced draft will assist with NAAQS compliance. On October 1, 2015, EPA
Slide 28: Impact of Environmental Regulation- Four Corners
Impact of Environmental Regulation- Four Corners Estimated Compliance Costs Four Corners (Units 4 and 5) Comments (PNM Share) Final BART determination filed with EPA on December 30, 2013. Impact to PNM: Clean Air Act – Regional Haze – SCR $94M SCR controls for NOx on Units 4 & 5 by July 31, 2018. On