Txnm Energy, Inc. · NYSE:TXNM
Txnm Energy — PNM Resources — Investor Presentation (March 2023)
32 slides from Txnm Energy's investor presentation, March 2023
Slide 1: Investor Meetings February - March 2023
Investor Meetings February - March 2023
Slide 2: Contact Information and Safe Harbor Statement
Contact Information and Safe Harbor Statement Investor Relations Contact Information Lisa Goodman Executive Director, Investor Relations and Shareholder Services 1-505-241-2160 Lisa.Goodman@pnmresources.com Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Statements m
Slide 3: PNM Resources Overview
PNM Resources Overview Energy holding company based in Albuquerque, New Mexico with two fully regulated electric utility subsidiaries • Vertically integrated utility in NYSE: PNM $4B market cap New Mexico focused on clean Service Territories and Generation Resources energy transformation • $3.5B rat
Slide 4: Create Shareholder Value, Deliver a Clean and Bright Energy Future
Create Shareholder Value, Deliver a Clean and Bright Energy Future Clean Energy Critical Electric Strong Corporate Portfolio Infrastructure Profile PNM progress towards T&D investments industry-leading goal of reliably support growth Delivering financial 100% emissions-free and integration of clean
Slide 5: Commitment to ESG Strategy
Commitment to ESG Strategy Environmental Social Governance Industry-leadings goals: Hiring, training, retention 8 of 9 Board members are • Emissions-free by 2040 and engagement programs independent, 9 years reflects full elimination of for our diverse workforce average tenure carbon from generation
Slide 6: Investment Plan and Rate Base Growth
Investment Plan and Rate Base Growth $1,027 $42 $907 $866 $40 $38 $424 Investment plan through $381 $325 2025 focused on T&D $59 $51 $68 (in millions) infrastructure, includes PNM grid modernization $503 $419 $362 $452 $391 $320 2023 2024 2025 PNM T&D PNM Generation TNMP IT Depreciation Note: Amount
Slide 7: Financial Outlook 2023 Earnings Guidance
Financial Outlook Executing our financial plans 2023 Earnings Guidance • Utility growth driven by recovery of T&D infrastructure at PNM and $2.65 Consolidated EPS $2.75 TNMP to support economic growth, grid resilience and New Mexico’s transition from PNM TNMP Corp/Other coal generation to $2.14 – $2
Slide 8: Beyond 2023: Targeted EPS Growth
Beyond 2023: Targeted EPS Growth Continued Target of 5% Ongoing EPS CAGR 2013 - 2023: 6.7% Ongoing EPS CAGR(1) EPS CAGR Track Record Target Results 2018-2023 5-6% 6.2%(1) 2019-2023 5-6% 5.7%(1) 2020-2025 5% On track $2.69 $2.70 $2.45 $2.28 $2.16 $1.94 $2.00 $1.64 $1.65 $1.49 $1.41 2013 2014 2015 201
Slide 9: Financing Plans
Financing Plans Regulated utility financing costs recovered Long-term Debt Maturities through customer rates in millions(1) • PNM 2024 Rate Change incorporates assumed financings through 2024 • TNMP cost of debt in customer rates align with $988 current market conditions $1,000 $80 $1,047 $850 milli
Slide 10: Dividend Increase and Payout Ratio
Dividend Increase and Payout Ratio Annual dividend targets middle of • Board of Directors a 50% - 60% payout ratio range increased the common dividend by $0.08 to $2.69 $2.70 $0.3675 per quarter $2.45 $2.28 • Indicated annual rate $2.16 of $1.47 per share represents 5.8% increase $1.39 $1.47 $1.16 $
Slide 11: Pending Merger Agreement with Avangrid
Pending Merger Agreement with Avangrid Merger Agreement Extended to April 2023 • Retains benefits of $300 million negotiated in New Mexico • Broad community and intervenor support remain in place for merger approval Strong Financial Strategic Rationale Profile • Benefits of scale, regulatory diversi
Slide 12: PNM
PNM
Slide 13: PNM Overview
PNM Overview Retail Operations • Transmission, Distribution and Generation service to retail customers regulated by the New Mexico Public Regulation Commission • Recovery of investments through retail rates set through general rate reviews (future test year); current authorized ROE of 9.575% and 50%
Slide 14: New Mexico Energy Policy: Energy Transition Act
New Mexico Energy Policy: Energy Transition Act Energy Transition Act enacted in 2019 by New Mexico legislature and Governor Lujan Grisham • Renewable Portfolio Standards and Carbon-Free Requirement 2045 100% Carbon-Free • Previous: 20% renewables by 2020 2040 80% Renewables • Current: 2030 50% Rene
Slide 15: Executing the Energy Transition Act
Executing the Energy Transition Act Our Goal: Carbon-Free by 2040 (5 years earlier) Reduction of MW Coal Capacity Step 1: Exit coal generation 983 22% reduction • Retire San Juan Generating Station: Retired Units 2 and 3 in 2017 (221 MWs); 762 80% Retirement of Units 1 and 4 in 2022 (562 MWs) reduct
Slide 16: NMPRC Commissioners
NMPRC Commissioners Name Term Began Term Ends Party Gabriel Aguilera January 1, 2023 December 31, 2026 Democrat Patrick O'Connell January 1, 2023 December 31, 2028 Democrat James Ellison January 10, 2023 December 31, 2024 Independent Commissioners confirmed by the New Mexico Senate on Feb. 8, 2023 C
Slide 17: PNM Regulatory Agenda
PNM Regulatory Agenda Filing Action Timing Docket No. PNM/AVANGRID filed NM Supreme Court appeal of No statutory timeframe for appeal or addressing 20-00222-UT Merger transaction approval NMPRC denial on Jan. 3, 2022, briefing scheduled request for oral argument; appeal noticed on S-1-SC-39152 compl
Slide 18: PNM Customer Affordability
PNM Customer Affordability 2024 Rate Change Avg Residential Bill(1) • Energy Transition Act is achieving the clean $135.04 $125.58 energy transition with benefits to customers • T&D investments partially offset by $82.90 National Avg Regional Avg generation portfolio changes reduced bill impact to c
Slide 19: FERC Wholesale Transmission
FERC Wholesale Transmission • High wind and solar energy potential in New Mexico has increased the demand for wholesale transmission capacity from renewable developers • New Mexico has limited available transmission capacity, combined with resource scarcity across the Western US, leading to increase
Slide 20: TNMP
Pres PNV(C Resources’
Slide 21: TNMP Overview
TNMP Overview Transmission and Distribution Utility (TDU) within Deregulated ERCOT Market • Transmission and Distribution service to consumers regulated by the Public Utility Commission of Texas • Semi-annual recovery of transmission investments and annual recovery of distribution investments; Recov
Slide 22: TNMP Infrastructure Investment
TNMP Infrastructure Investment Investment driven by Economic Growth TNMP Annual Investment Plan • Rapid demand-based load growth over recent years in the Historical Growth Commercial and Industrial classes drives need for increased $435 electrification and reliability / system upgrade investments $
Slide 23: TNMP Rate Recovery Framework
TNMP Rate Recovery Framework DCOS (Distribution TCOS (Transmission General Rate Review Cost of Service) Cost of Service) Standard rate review Pre-defined schedules limited to involving comprehensive distribution investments with filing, discovery, interveners, discovery, interveners, hearings; Pre-d
Slide 24: PUCT Commissioners and TNMP Regulatory Agenda
PUCT Commissioners and TNMP Regulatory Agenda PUCT Commissioners Name Term Began Term Ends Party Peter Lake (Chairman) April 12, 2021 Sept. 1, 2023 Republican Will McAdams April 1, 2021 Sept. 1, 2025 Republican Lori Cobos(1) Sept. 1, 2021 Sept. 1, 2027 Republican Jimmy Glotfelty Aug. 6, 2021 Sept. 1
Slide 25: Appendix
Appendix
Slide 26: AVANGRID and PNM Resources Strategic Merger Approvals
AVANGRID and PNM Resources Strategic Merger Approvals Merger agreement extended to April 2023, can be extended through July 2023 Filing Docket No. Approvals/Clearances Proxy filing / Shareholder approval N/A Approved 2/12/2021 Department of Justice (Hart-Scott-Rodino Waiting period expired 1/20/2021
Slide 27: New Mexico Supreme Court Appeals – Statement of Issues
New Mexico Supreme Court Appeals – Statement of Issues Four Corners (filed Jan. 21, 2022), case S-1-SC-39138 Merger (filed Feb. 2, 2022), case S-1-SC-39152 • The NMPRC’s denial of abandonment and issuance of • The decision was based on inadmissible hearsay evidence financing order was: and informati
Slide 28: PNM Near Term Resource Portfolio Changes
PNM Near Term Resource Portfolio Changes 2022 2023 2024 • Retirement of • Return of PV • Return of PV SJGS Units 1 and Leases (104 Lease (10 MW) 4 (562 MW) MW) • Proposed exit of • Replacement • 350 MW solar FC (200 MW) at power delayed and 170 MW 12/31/2024 storage added • 500 MW solar and 400 MW s
Slide 29: San Juan Generating Station Retirement
San Juan Generating Station Retirement Abandonment, Securitization and Replacement Power • July 1, 2019: PNM filed for abandonment, securitization Securitization reduces customer and replacement financing costs, supports impacted • January 2020: NM Supreme Court confirmed applicability workers and c
Slide 30: Four Corners Coal Plant Ownership and Proposed Exit
Four Corners Coal Plant Ownership and Proposed Exit Total PNM PNM Unit Other Participants/Ownership MW MW Ownership Arizona Public Service Company 63% (485 MW) Navajo Transitional Energy Company 7% (54 MW) 4 770 100 13% Salt River Project 10% (77 MW) Tucson Electric Power 7% (54 MW) Arizona Public S
Slide 31: Palo Verde Nuclear Generating Station Ownership and Leases
Palo Verde Nuclear Generating Station Ownership and Leases 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. 16, 2023 Yea
Slide 32: Debt Balances
Debt Balances (In millions) Dec. 31, 2021 Dec. 31, 2022 Long-Term Debt (incl. current portion) (1) PNM $1,881.1 $2,000.9 TNMP 918.1 1,076.9 Corporate/Other 899.7 999.6 Consolidated $3,698.9 $4,077.4 Total Debt (incl. short-term) (1,2) PNM $1,888.5 $2,186.8 TNMP 918.5 1,113.6 Corporate/Other 954.6 1,