SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 19, 1995
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(June 27, 1995)
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PUBLIC SERVICE COMPANY OF NEW MEXICO
(Exact Name of Registrant as Specified in its Charter)
Commission
New Mexico File Number 1-6986 85-0019030
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
Alvarado Square, Albuquerque, New Mexico 87158
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(Address of Principal Executive Offices) (Zip Code)
(505) 241-2700
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(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address if Changed, Since Last Report)
ITEM 5. Other Events
Gas Assets Sale
As previously reported, in February 1994, an agreement was executed with
Williams Gas Processing--Blanco, Inc. ("Williams") for the sale of
substantially all of the assets of Sunterra Gas Gathering Company and
Sunterra Gas Processing Company, wholly-owned subsidiaries of the Company,
and for the sale of Northwest and Southeast gas gathering and processing
facilities of the Company. The agreement provided for a cash selling price
of $155 million, subject to certain adjustments. (See PART II, ITEM 7.--
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--OTHER ISSUES FACING THE COMPANY--SALE OF GAS GATHERING AND
PROCESSING ASSETS" in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "1994 Form 10-K") and PART I, ITEM 2.--
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS--OTHER ISSUES FACING THE COMPANY--Gas Assets Sale" in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995.)
On June 27, 1995, the Company received a final order from the New Mexico
Public Utility Commission ("NMPUC"), approving the sale. Under the terms of
the stipulated agreement reached in the NMPUC proceeding and adopted by the
order issued by the NMPUC, the Company's gas customers will receive
approximately $35 million from the sale in the form of a reduction in their
bills over the next six years. After six years, the amount of the gain will
be recalculated to reflect expenses associated with the transaction, which
are "actually, appropriately and legitimately made" and "prudently incurred".
Any resulting differences may be refunded or billed to customers over a one
year period.
On June 30, 1995, the closing of the sale was consummated. The Company and
its subsidiaries received cash proceeds of $154.1 million from Williams. An
after-tax gain of approximately $13.1 million, or $.31 per share, was
recorded in the second quarter of 1995.
Sale of Sangre de Cristo Water Company ("SDCW")
As previously reported, in February 1994, the Company and the City of Santa
Fe (the "City") entered into a purchase and sale agreement for the Company's
water division. (See PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--OTHER ISSUES FACING THE
COMPANY--SALE OF SDCW" in the Company's 1994 Form 10-K, PART I, ITEM 2 in the
Company's quarterly report on Form 10-Q for the quarter ended March 31, 1995
and ITEM 5.--"Other Event--Sale of Sangre de Cristo Water Company ("SDCW")"
in the Company's Current Report on Form 8-K dated June 2, 1995.)
On July 3, 1995, the closing of the sale was consummated. As a result, the
Company received $51.2 million (exclusive of current assets netted against
current liabilities) from the sale of assets and will record an after-tax
gain of approximately $6.3 million, or $.15 per share in the third quarter
earnings. As a part of the sales agreement, the Company will continue to
operate the water utility for up to four years for a fee under a contract
with the City.
Application of A Portion of Asset Sales Proceeds
As of July 13, 1995, the Company paid off short-term borrowings incurred for
the retirement of Palo Verde Lease Obligation Bonds in March 1995 and has
committed to retire three of the Company's outstanding series of cumulative
preferred stock.
On July 6, 1995, the Company gave notice of its election to redeem all of the
Company's 8.48% Series, 8.80% Series and 8.75% Series of cumulative preferred
stock (the "Preferred Stock") outstanding as of July 6, 1995, and the Company
deposited the redemption price of approximately $64 million (including
accrued dividends) with a redemption agent. As a result, the stock transfer
books with respect to the Preferred Stock were closed as of the July 6 record
date. The regular quarterly dividend will be paid on July 15, 1995 and
accrued dividends will be paid through August 7, 1995, the redemption date.
Ojo Line Extension ("OLE") Transmission Project
As previously reported, OLE, a proposed 345 Kv transmission line, has faced
considerable opposition by persons concerned primarily about the
environmental impacts of the project. OLE was designed to provide a needed
improvement to the Company's northern New Mexico transmission system and to
allow greater delivery of power into the Company's two largest service
territories, the greater Albuquerque area and the Santa Fe/Las Vegas area.
(See PART II, ITEM 7.--"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS--OTHER ISSUES FACING THE COMPANY--
TRANSMISSION ISSUES--OLE Transmission Project" in the Company's 1994 Form 10-
K.)
On July 5, 1995, the NMPUC hearing examiner issued a recommended decision,
recommending disapproval of the OLE transmission project. The due date for
the Company's response to the hearing examiner's recommendation is August 7,
1995. The Company intends to file objections. The Company strongly believes
that OLE is still the least cost technical solution for the New Mexico bulk
power systems' need that was not contested by the intervenors in the case.
The Company has spent approximately $16 million on the project to date. The
Company is currently evaluating the issues relating to the OLE project to
determine appropriate accounting treatment for the project costs. The
Company is not able to predict the outcome of the NMPUC's final decision.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Public Service Company of New Mexico
(Registrant)
Date: July 19, 1995 /s/ Donna M. Burnett
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Donna M. Burnett
Corporate Controller and
Chief Accounting Officer