PNM - Earnings call transcript Q3 2018

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Operator

Good day, and welcome to the PNM Resources Third Quarter Conference Call and Webcast. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Jimmie Blotter, Director of Investor Relations. Please go ahead.

Jimmie Blotter

thank PNM for Earnings Resources and morning us Conference Jasmine, the for Third you, you, joining everyone, this Call. Thank Quarter XXXX and available that supporting pnmresources.com. note the for conference Please presentation documents our on call are website at this other

PNM several today President Chairman, our management other Chuck members are Vincent-Collawn; and CFO; and Vice team. our of Executive Joining President Pat as and Resources' me CEO, Eldred, well as executive

of to and turn information the assumes to remind all Litigation Securities call no update morning XXXX. you that be provided to the statements need that Resources estimates caution the current of We obligation should pursuant some I this are Before to statements Pat, that Reform over forward-looking based forward-looking Act of PNM information. you I this upon Private and considered the expectations

as PNM call For results, on annual on a Pat. I Form Resources' XX-K, and the And will Form with the please that, SEC. to refer XX-Q as factors discussion reports future of our current X-K filed reports well turn detailed quarterly with over reports on affecting to Form

Patricia Vincent-Collawn

us you, Third election Thank morning, a joining It's sunny day Mexico Good day. for you for everyone. New our Call. Quarter Thank Earnings beautiful, Jimmie. on

financial on Slide X and Let's begin updates. with results company the some

increased in customer in quarter and load year. $X.XX strong increases Our GAAP to saw Ongoing third third to in usage cooling Again of share to New the $X.XX degree this Mexico. share attributed both quarter the compared XXXX. of earnings quarter compared we earnings per third in XXXX are in days of growth quarter, $X.XX $X.XX are the per last

previous end XXXX earnings are upper the range now to we $X.XX. a our are narrowing of we guidance $X.XX expecting As for to as result, the

the for Mexico's continued and show up development the Last to development our In purchase Mexico New starting the our plans and an for assumptions into hub and at the in efforts XX economic shows and have first production of quarter, this We announcements to New that XXXX, adjusted for are to that Netflix year. is for results we production bring next factor a numbers, our improving in an outlook production economic quarter, and results these announced Netflix our were reflect to America results XXXX. film earnings XXXX recent purchase studio segment billion jobs upward October, These see roster PNM. up for new some years, load load North existing U.S. reflect in of its annually. we to to our X,XXX increased creating we although load growth intended noted guidance guidance consolidated is $X This complex movies. affirming TV site we studio have of it results over the and positive expectations

We several have smaller wins. also seen

We've Transmission of which preserves our cash talked allowing company's in to in important this rates investment our and more new construction jobs experiencing. growing The glass addition levels jobs of X.X% of reset the adding are Albuquerque the implemented use move case, For the equity, opened for settlement increase as a Distribution debt jobs. a the and cost years. announcements entertainment to food million. examples jobs; are new proposals are for Texas. start-up future ceramic to of on distributor and customer of difference. Ben Last chips and the next Changes the announced City developments. that last announced are of rebalancing end X.XX% in to The the ROE, also in Albuquerque. the XXX requesting and the in a support we hotel are week permanent the than creating that expanding are mixed structure that scheduled a their rates, to XX load the and a are that over preparing for is $XX.X this capital in request we assumptions technology our reflects leading projects to our filed include they On commercial by other from $XX of XXX activities case and Mexico base is five XXX providing and of between employee XXXX. XX% in strategies, Albuquerque facility New would they debt. X,XXX year, we The amount year, and XXX venue. science to such base of The to Albuquerque make territory TaskUs, positive reflects structure filed to review. TNMP's have build a a we've Albuquerque are to Keith, And from increase project before of a settlement to case of majority facility Fort and to July; been unanimous to settlement almost with come is increased just A The January this These general comprised cost who add of in E. to Worth, downtown service growth headquartered return uses about rates that compared and calls has example, plans forward developer the company outsourced wins in new week, proposed we a Mexico be announced approval New XXX-room businesses. an settlement in new as: semiconductor that growth and proprietary a announced provides a seeing million expanding X in depreciation outside a that flows sustained an new equity earlier TNMP PUCT rate beverage to

consideration remember, office. any be compliant it transform we it numbers. IRP received Resource This we've accept our agenda is into The onto this through or commissioners would On for make that plans detailed And Still, or recommendation the filed Integrated as that when commission generation to this to could over go decision end portfolio. be Chuck recommended plan a the at a now before approved still the before make before, the process. to XXXX the of New as newly as to elected step recommendation quarter's that, the a we we the October in positive on rule. XXXX turn Mexico front, a accept carry must regulatory Plan resources the for our separate additions in XX XXXX. said will I'll will With retirements look with

Charles Eldred

Good to you Pat. thank you, for and morning everyone, Thank joining us.

year. turning end on improvement year, strong XXXX narrowed $X.XX the to guidance be is guidance results our revised we a in in start Increased of range upper mentioned degree previous be out Let's to in to into addition Slide with X... for the days, cooling our Pat and have load, to strength previous that range. drove $X.XX this our

For expense XXXX is Corporate intact, additional the in segments. and guidance, by we between Other some experience seen interest the PNM rates. corporate, slightly total range, to have expectations. PNM have interest but driven higher and due which increasing range we is increase kept Offsetting this will load some shifting in

for third quarter X Slide results. to turning Now

at up strong -- PNM As share excuse Pat is were were indicated, me. $X.XX. ongoing PNM's up $X.XX. earnings per earnings earnings $X

such that X% tax phase-in, generation again rates formula higher the top impacted into this changes included X% property retail was with Load investments. The improvements was as: prior have Verde were favorable coming several Palo and the rate transmission Earnings quarter at strong than from effects of Unit guidance normal X capital for portfolio annual and increases than and the rate items third-party also also true-up and We that combined in interest PNM, at our from days our and our our rate the tax degree in in expense higher and were our of year bringing at earnings, base, the changes that range. the in end weather customers year. cooling depreciation

distribution As such XXXX. half management PNM, as higher maintenance I this well O&M addition plants anticipated was routine our year. year. and depreciation of vegetation as quarter, property been versus since of load, to some system AFUDC. O&M $X.XX have and work implemented These in to in last response up outages. QX last in some At This that mentioned includes second is our are compared include we tax filings in $X.XX TCOS year strong TNMP increase additional last continued as various QX Drivers items, the an expenses on partially at expense. storm-related by having offset

the able and down Westmoreland reducing $XX financing loan we income expense and million was were in repayment our of the our down the supported interest from to off of paid debt the the May. that that from $X.XX, reduction interest loan When also primarily Corporate Westmoreland in remaining loan, coal pay Finally, of earlier the increased their Other mine, resulted level.

New production. in for X to total crude we production, July to that we Slide at state, the walked been announces, in our growth resulted we both are #X this has of for numbers. see of us energy In in At with while we the continue. saw impact to Basin. Based quarters see the continues in information. wins through to of number unemployment U.S. the of significant Permian Albuquerque a load on our closing and Texas the several TNMP, the we in types in Pat Mexico gap gas turning this natural a growth our wins upticks After these employment Now the the expect Albuquerque various that year, in oil seeing and call. of the lead start numbers. economic continue growth now. lagging nation August ranking

customer third X for a half New pace of at to first -- large year. the in continue service quarter during similar the come requests

throughout see our Coast. the load area, other continue petroleum proposed also in We Gulf refineries additions including to service

in come serve have to we we're previously opportunities, fruition. more -- of service New future area. doing both to to ensure TNMP seeing being continue their Mexico In to the projects demand, development some announced of capital we are customers that the era and also We our customer this our and have Texas, several expect met economic dedicated to and needs

a new and results Santa and Kay seeing Presbyterian facility We're Fe opened R&D Lewisville about the week. our last now major others facilities these up ago the month and projections. of example, opened in manufacturing Mary showing load Hospital For a in in

for load up issued load the results. we positive our in year-to-date of last the bringing X.X%, Turning showing X.X% of average to to quarter. is quarter, end the growth upper which our guidance is PNM increased

compared customer In is X% to last addition, up count year. our close to

upper the that industrial the up over volumetric both year-to-date are to X.X% guidance of For from to revised to customer for we of X.X% load expectations numbers within account the our the XXXX. from and XXXX, end X% customer X.X% X.X% growth, increasing which TNMP, which to just and are PNM, XXXX be have now count our range moving up At a growth shows year-to-date, and expectations. we We growth X.X% to customer load last X.X% load range compared with quarter. guidance large Demand-based our load continues XXXX is is range. strong XXXX

turning our on We that to update investment we update last X our for you capital quarter an plan. would Now Slide told plans.

We million fund to $XXX continue refined PNM. spend more the the continues the future. are reforecasted -- We in XXXX. to capital spending to also through growing into We've dollars we'll Texas the demand continuing as grow, continues to business invest at more the business. -- customer in And business now to plan

protection will incremental at associated growth San power We And for both and flexible of One PNM to later opportunities the in which we reliability. made we that our the total XXX today. venture to have modernizing cover of mitigating protection while plan investment already moved is our completed have this system other projects, risk. In plans. AEP reflected T&D upgrade with noteworthy on have our megawatts also operational underway. dollars service grow the have long-term investment I plans We've for item we're upgrading T&D adjustments planned This options for Between to Juan current deliver with slide to entire ways discussion. and renewable that is is our focused replacement joint we PNM's system reflect solar a our strengthen and XX% to to generation and our our area, reliability customers. transmission

earnings income $X.XX with XXXX. covers cost from debt JV earnings earnings-accretive, of in for potential the the and slightly activities of the Our about power is representing the

and expect beyond. we little more about a those to XXXX $X.XX to forward, become up getting Going in accretive, earnings

Our investment in $XXX million plans XXXX now $XXX total more in million XXXX. than and

coming know will Although the be trending opportunities beginning in investment's on several we come -- chart incremental have down that XXXX, will that also shortly. growth we

Now X. turning Slide to

power power earnings Using PNM, investment expectations. and rate compound our those XXXX $X.XX in a last filed potential new also total in the growth settlement refinancing plans, revised about years. to well was plan also changes 'XX settlement case $X.XX $XXX week. than XXXX through updated X.X% million as In brings compound this to about X%. have that rather XXXX rates for Corporate are midpoint of be made investments. and X%. guidance case rate used reflect slight no PNM for X%. of growth XXXX to XX%. to were reflect annual These investment and potential earnings reflects $X.XX in both that the revised Court growth TNMP's earnings is We X% the $X.XX, the about of calculated our for midpoint growth earnings the rate -- we of XXXX of growth year's the ROE as now Supreme showed would compounded This April made. at XXXX revised the the midpoint to rate X.XX% reflect reflecting was adjustments and each potential XXXX and potential and for guidance guidance items. XXXX the Potential earnings base debt settlement $X.XX without XXXX previous at annual changes XXXX At Other After significant of We've potential targeted XXXX. to growth our expected This we TNMP's the in TNMP, the

growth to the see opportunities Now introduce in future back to incremental Pat the we

Patricia Vincent-Collawn

We that we to the to are opportunities through economic growth Continuing talk investment items capital see incremental future. in plans starting on earnings we're just you power that seeing XX, the that reviewed. we are of traction. going to evidence believe development Chuck. focus potential are Slide and the gain These New that Thanks, Chuck Mexico's

tipping that work need And in for Mexico. to to energy and ways now be Slide our it, continues Texas turn creative they also XX. are the finding point to are way believe energy customers we transformation in we deliver We with the at We strong. New to

be Mexico customer expansion portfolio renewable for transmission and Our and in incremental New opportunities categorized and growth can infrastructure energy generation X into transformation. investments, load areas: New

we is infrastructure have and load customer seeing to a investments the investments New this of been and support our continuation growth. trends load corresponding

accommodates or with Texas Mexico, we continued expanding service to noted earlier, ensure strong capital have additional In moving continued considering Chuck that As their we infrastructure in are economy. to that allocate New area. to our talking customers their are

renewable We meet their to are timing partnering with we growth, them solutions to understand the and providing of goals. growth in those any specific are

for more our Our to also of they customers evolve it, make need their current energy modernization how and mix well the as their in generation and how ability as adaptable. is when resource and usage profiles more view to use our infrastructure ready replacement and grid the as will be choices load and responsive

to as benefits a revisit prepared with is customers. We are AMI, proven to this technology

filing a be energy our XXXX. in next asked, efficiency filing the will pilot for we As Mexico has in commission New program

solutions the of our renewable engage in understand energy work and their stakeholders are growth poised see. expansion area Transmission provide Mexico. needs for second New and that to to that Mexico New We is we with

that across on As have to energy. move in increased West the and parties capacity look seen our wind standards, new states for third we've need to abundance renewable transmission the of system capitalize New the Mexico on

sixth New for States the Mexico has potential United land-based been potential. ranked for second solar in energy and wind

accommodate renewables the in we'll to supportive enhancements those are our necessary discussions Mexico make We integrate to of New to more resources. grid and

Corners to leader its Power Generating the through Juan New we help renewable the work Plant, and the to the of of XXXX retirement a look exit from for we potential as potential our as Four in Mexico opportunities mark look ahead make process Station Finally, also energy. San in

variety X noted We we All contained sizable Resource RFP, plants Integrated have of We peaking bids a solutions. of that included received as issued and Plan an that replacement previously our gas Source power. however, the construction the

to that advances energy in into a resource system that our mix. this can we transform technology begin to also integrate and will renewable storage further continue We make expect resources to utilize energy our

achieve collaborating portfolio This sustainable kicks could to over a energy legislative or We are to with Juan in for most towards cleaner who January. truly have we stakeholders abandonment been look this things in to include: transition, other off to XXXX legislature the turn the the of the the standard, economical going Securitization policies clean the a now, to pivotal resources. These on issues these is the through of way of that for renewable standard a to to energy financial exciting energy will walk session we impacts financing this New energy-related alternative spring. allow San ahead I'm Increases we for is file advocating legislative for before the Chuck define transition and and point opportunities. future. Mexico,

Charles Eldred

Thanks, on Pat, bars represent The blue investment that we XXXX and to turning to Slide discussed. this XX. slide previously plans XXXX

horizon. growth over However, plan indicates potential our of $XXX million the incremental time future

and for load due plans projects confidentiality These also renewable needs are for and is focus our all our been their years, time customer and could past expansion New growth, and to At transformation be infrastructure. overhead electric refreshed. the their over partner infrastructure, investment the over the distribution planned aging that covers the our years. of XX Likewise, not portfolio age could equipment Mexico to as protective and At and infrastructure and in $XXX is energy both generation and to which to comes their the had to a up transmission years. to New replace are infrastructure The elements, ensure renewable growth Texas approaching assets several be our contains represent to the load and PNM, XX our aging largely plan system energy and necessary on in of to have reliability be frame infrastructure portion life transformation replacing driven existing million. has in meet investments opportunities $XXX reason over TNMP, timing. reaching million line by Many line This Transmission new goals we're New is early-stage these system At PNM, potential $XXX investment these the years. we've maintain average opportunities are met. including to is Mexico is and capital age new the customers average up is million. substation XX grid's with the requirements. for cycles to and for

We more will delivery much years apply ultimately should cost. help our maintenance growth new for operating assets control in service in customer also future we time, and be improve as order further bolster to flexibility doing over reliability, enable and technology to and future our

wants also pilot a We proceed modernization to the redefine automated New will when commission to the for to how that with do program plan help Mexico. in and meters

Whether PNM we joint support in New opportunities third-party potential venture, through renewables Mexico are to renewable and invest or our to or transmission our for development, the ourselves, building solar renewable supports confident real. either wind and the investing system transmission we're at energy opportunities expansion. are that

our August scheduled and customer also in and filing lower would balance greater in the integration of of market. hearing to This A month. energy a front is next renewable cost. We commission enable made the energy join

of cost be the transformation. are, and the the for that storage of power battery securitization process also help the define Juan gas, abandonment portfolio consider a undepreciated renewables and outcome generation and finalize of plans will the As needs financing proposed. replacement San low-cost what legislation Furthermore, for the the San the will Juan the IRP seeking approval of finalization of mix we will addressing

considering system. capital we these needs significant over and upcoming years, plans across the will the prioritize We the have

Slide Now XX. turning to

power these base for Here, replacement rate you I've to incremental are these potential Juan. already potential amounts. can earnings up the Together, in San including about see resources represent grow growth opportunities. these earnings talked of $X.XX, amounts potential the to

investment-grade to a our as these capital using it through credit XXXX guidance. Resources ratings. turn with X% the XXXX, that which the related maintain prioritization in of allocations to reduction adding plan After timing to now new consider considerations, midpoint value shareholders. that debt the XXXX equity, the incremental Pat. $X.XX over growth earnings strong enhances growth our base. to Clearly, I'll the X% execute and incremental growth up is to mix of that expect power. earnings we increased and rate target to an we So that that of opportunities We'd view we to those need the back PNM potential presents growth, based the we $X.XX, balanced also opportunity This finance to And ensuring to believe investment the of the provides results

Patricia Vincent-Collawn

Chuck. Thanks,

December specific and Since reminder. we XXXX have quick affirmed event we guidance year. earnings guidance a have given for earnings do today, previously this Just to not it plans a

board any in Our know address let will we dividend the you changes. and December, of will

on continue the target We to of XX% to dividend a ratio payout XX%.

are In our terms for think of the satisfaction and our that that customers right customers, the these plans, right our indicate we we take to in steps scores latest direction. are our moving believe customer

our with benefit we them about As Operator, we feedback open positive to again how message today. and for forward questions. up our communities, for you seeing let's joining the Thank continue. look plants us it their share customers

Operator

[Operator Instructions].

KeyBanc. question Crowdell of The from comes Anthony first

Anthony Crowdell

couple a of quickly housekeeping items. Just

into of a buckets. you you you of that was, I bunch a believe, together? guess utility, different one grouping up slides of On just was the on that it Are now? to on PNM XX, the broke break the Slide prepared utility, $X.XX, that guys you I'm Or things. driver up phase-in. I give, combination Previously, and retail

Charles Eldred

lumped just together. just No, break together. Lisa, it back And buckets it she'll that and to it familiar with. down call probably grouped the you're more we We

Anthony Crowdell

Got will provide addressed? the dividend be where meeting the of date the Board it. Do you

Patricia Vincent-Collawn

me, -- the it last The of meeting, first or December. board the December in Thursday date is X. the excuse

Anthony Crowdell

has the on and behind -- grown. driver is Any earnings Slide your parent slide, expenses X? Okay. higher on interest potential segment rising Others on driver Corporate cost

Charles Eldred

really And Others then down we're have to cap balance drivers, some hedges you in XXXX. the in contributions we recapitalize our due, equity interest $XXX comes their that roll go million. you a off of out And into that would the have as refinancing PNM and Yes, see And it's you structures. amount sons expense, capital back actually segment, we if also considerable in corporate mentioned. XXXX, which XXXX, of making the TNMP and $XXX contributions, Corporate to rising million

So we have, cap Anthony, structure things of pursued in we the consider some optimizing might doing. the

equity So reflects know to made at of point, this will maturities and these we fact contributions what that businesses. the the be and fund the capital growth

Anthony Crowdell

are And XXXX XXXX? I apologize, disclosed you haven't issuances assuming yet? you or Or in equity that

Patricia Vincent-Collawn

put it No, earnings the slide. we power on

would So would off XXXX, $XXX to earnings you in an the $XX that million up of that roughly see ATM have program. of to in million equity power we be

And under slide can that program. the power ATM so see on earnings you

Anthony Crowdell

of lot get slide, off growth. And a because I don't of the put there, took these Slide why reason pulling now pulled Is yet, incremental then, Kay that historically, the and the moving just there you've include is resources opportunities. the generation of that considering they Netflix Mary always is and colors. moving And down all and there, curious all guess, X. Slide certain X, that you're out of those it. great you've positives less removed -- that growth Got things, is additional call, curious, but with given and traditional incremental on are in And you've it's stuff beginning

Charles Eldred

Yes.

would the that And of that to there to you go the seen seen and a you for that put in have and if to today, large for capital XXXX have we you we're is XXXX of XXXX. back that's at that had we the amount opportunities, if capital actually million add have that out amount replacement look $XXX from the slide to before would pull back you capital way growth power forecast increases and you XXXX, generation the without increasing So the TNMP. last

TNMP's the and investment running for previously comparisons million of what TNMP, So now growth. for million in can you over was go back $XXX under make $XXX we're

to the was for how I lot on opportunities of making really the to the That's So capital. that, take incremental power and look be more by power, capital the do point a then San we and results allocate driven going at begin has what what capital from securitization to prioritize of allocation a the replacement opportunities certainty then replacement the And renewables same to we'll we about and is driven with understand for we'll real. Juan. the continue we transmission with with growth T&D will the third that by we in opportunities have infrastructure time, currently with are aging negotiations and business, the capital that have have as about At also, which address we but investment parties that PNM. opportunity are for in we'll the be earlier, growth and Texas, at the commented I the into opportunities the core in

get rate ahead ahead we our the capital prioritization, X% commission, want of growth between about capital but of don't all support and we get to is plans. X% that XXXX. and adequate have a But opportunities this how to timing So allocate XXXX we based sufficiently are certainty, adequate on want comfortable our to we to and don't

Anthony Crowdell

And I great. update Okay, Any hearing? on Court Supreme the last promise, question.

Charles Eldred

Thing updated time. last

Patricia Vincent-Collawn

post that and cases, check yet. new we every They day. website nothing No,

Operator

of Lynch. comes question Merrill Dumoulin-Smith of Julien America Bank the line from of Next

Nicholas Campanella

It's Nick Campanella on for Julien.

heard right on for XXXX potential? to you $X.XX sure of at contemplated TNMP. your want note Just the make Is refi the earnings I in X.X% that the

Charles Eldred

the a Yes. full in have back go earnings that a year $X.XX the you footnote it's potential in appendix, on that slide And refinancing. for if you reference,

Nicholas Campanella

Got it.

covered of that you terms portion I'm -- can Okay. the you current on if you ATM you of the and upside that, be saw touched dilution can the I us equity. equity that? -- that the funding outlined. then Can equity magnitude I covered already. in just it and of from sorry that you And available? debt in both that And said be have remind relative to know of $X.XX of

Charles Eldred

incremental really it's more opportunity. to Well, growth that

really, with investment-grade base that the to ensure debt financing we're investment, we the of new hold. equity balance rate we up the, and if $XXX that of successful million ratings to So and currently growth mix have we proper would then

equity, common to of it could what mix in some our converts we some then have incremental debt. a and be it's mandatory could currently it So all forecast. But be

Operator

Next of Mizuho question comes of line Securities the from USA. Paul Fremont

Paul Fremont

on for at changing 'XX earnings the 'XX, What for the I potential would if come sort down guess of X, be power the the second from power earnings the quarter? numbers somewhat. I Slide and end look has potential explanation high

Charles Eldred

Yes.

that XXXX. if Paul, XXXX, -- that $X.XX go would you to be with Slide $X.XX X, would you see be started would in at XXXX, in we'd midpoint you So be and midpoint if

at additional of structure and PNM case interest cap of there's the So that, talked negative, $X.XX in in offset, mentioned, with businesses, the TNMP, would And we rebalancing the putting category, reflective then XXXX. amount reflect a TNMP's we cost reduced is equity and where of -- capital support the and Other capital associated the the the debt as significant to some And by we the increase reflect what just slight contributions before XXXX and to into as well. -- of I file amount XXXX, Corporate rate at by really, TNMP really in in at for about. we we're and the $X.XX the to that's Other that both XX-XX the growth a Corporate and hold

amount the to all, of in drag all higher the make companies. we that contributions reflected have is interest of the operating and down rates really So to either debt equity

Paul Fremont

intervener with legislature, I have proposal, pursue assume the do from And parties right? you have a to support then And on spoken will the for you parties? other which and other intervener securitization, -- you securitization

Patricia Vincent-Collawn

the And very through. up Yes, our of drafted -- right only governor potential bill, and broad from Paul, environmental area, the other our staffers bill we've actually in both not candidates, the in a case, folks group a it's but interveners now, being stakeholders, that's there's legislature. Farmington groups, worked with not worked

And so It of some we've can broad pretty wide got forms. support of that. take variety a

think I to up this energy-related bills the lot there's be legislature going of a at year.

Senate. more when an it's have who and a process after the that's So today, who's But in our House we going is know the governor well. we'll ongoing little clarity and

Paul Fremont

session? the And is legislative how long

Patricia Vincent-Collawn

It year. this is XX days

Paul Fremont

seen outlook far further, Or so sales basis, the you Do terms sort up the come as for on on potential sales that what this longer-term a continue for Okay. And you're to ability seeing on to it in I see you the based you've of up? industrial move guess year. growth? based guess, see I of to you're looks sort do that raising if what of growth

Charles Eldred

Yes.

So for Industrial it's mind, XX%. keep PNM only about load, in

not a we centers do it So very is -- significant additional are driver. data come opportunities serious that to Mexico. But for through could seeing we some

starting of show also within -- is any some we or do commercial reflective Normally, is there some revisit in call certainly, some opportunity. additional residential, dollars of spend has load. we're commercial, the but load the signs we see improvement. February that as we on We'll side. to So opportunities of the of when the TNMP this increased, and that mostly to type about what operations PNM But to see and seeing whether not we any differently feel that the need not

also we offsetting but additional as load in that adjustments some we the within that planned PNM, to improvements with made well. some of So have operations expenses show some increase

So guidance at careful we're February but the take if a to that look XXXX. XXXX, outlook not for about differently very see in we'll we the changing think for

Operator

from Ali comes question of of Agha the SunTrust. Next line

Ali Agha

to get Chuck, settlement. or thinking little First your question, wanted on into insight TNMP the a Pat

higher You were to the agreed you planning. lower a not were ROE as to able get and equity component

of this that settlement. the could the litigation, that even through So goes was on to if outcome thinking that fair, wanted your Just get a worse? there be sense

Patricia Vincent-Collawn

at you ROE. good ROE. When Texas about some pretty company, coming it's And No, out pretty a T&D actually ones the have been ROE, in that that's Ali, for a the better lately. than I'll it's start the -- of talking look

that what we we we get asked weren't to for. going knew So

Chuck that So settlement. the about a fair talk I'll I And a let that, was think little bit equity.

Charles Eldred

probably bit get equity that to was and out, more we we hold I clear unanimous a the us and were for out to X X.XX%. you think push were the for could mean, bring the we of interveners structure successful XX-XX staff and RA to at ratios it basis was a maintain to X.X%, a Yes, at X.X% negotiations, longer the all towards harder likely little points best was could another agreement parties and T&D XX-XX the XX% cap come a you to tell about were the push where and X.X%, accommodations companies, the through out to -- the equity heavy

I have So litigation us would don't helped think any.

matter it could a we any we of day, and were regardless have, the that the parties end other the And results negotiations an reach or best of clearly of achieved was that litigation think agreement. effective very that I some approach. involved to we felt the at

Patricia Vincent-Collawn

-- has about agenda. think a open integrated, off XX/X it, the has SPS X.X% got they're ROE. vertically And usually which higher typically you a meeting coming If

So happy that very ROE got. we we're with

Ali Agha

to heard be then, target, to you'd When CapEx rate secondly, that, X% to right? Got you if be X% Is growth need about that opportunities to I firmed think it. And right, incremental and we those also the long-term clear. achieve materialize up. wanted

Charles Eldred

be have the X% very the maintaining do order to you into capital a achieve Yes, and and But get variation are the objective. that the and we'd the the that base growth allocate so how you capital the drive to potential $XXX of to X%. all projects the million, reflective it's across amount planning some just to need can would matter up want of we And in earnings business realistic. to math of these again, confidentiality to rate

is certainty the understand we'll So growth to focus as see begin business. update prioritization and execute we're look what And continue as towards needs we that comfortable we'll to our to X% each the that. X% the the is at to around expectation plan reasonable, capital we we

Ali Agha

push see work, big what that of some that against of you do you from the will capital think affordability, you Or that constraints of some all customer constraint be that to could that? about customer could when of prevent amount? rates, other putting how And a all constraints spending

Patricia Vincent-Collawn

if some Much securitization, you'll worry the of that, Ali. affordability, filing very, really to transmission it's you'll -- the look retirement good generation always renewables. with our export be here. some is We still built And you at so generation, be about of very that. the affordability, there's But void with

Remember the to that down those our So reform tax rates took customers. to goes customers.

But talk be there, a out as there's about, and a -- of us work. we there real of Chuck careful in capital the we lot lot and said, So our confidence which that that like that, planning is momentum prospects need good just likely. can't out unfortunately gives to very, very

Ali Agha

in, be triggers the looking How incremental this firming we this? up should And Okay. that any particular on From last this, capital? tracking question. as eye we should of outside milestones tracking we the keep an best are

Charles Eldred

Well, as session, groundwork the that RPS I next in and securitization replacement aging again, in mentioned will as New of of see And the running think we think, power. begin the to Possibility, we be mentioned, earlier, Pat in increases bill through potential Texas in the infrastructure certainly, will the the growth how lay continue both PNM. as addressing, Mexico. State the needs I opportunities, about

opportunities, and So would the investment come what as for. on as help play. in business because capital once spent and securitization will as a certainty gain we just And other will other to allocate begin I begin transmission see the the infrastructure for greater and then into to that bill well it focus we where more it's to third-party us that,

Patricia Vincent-Collawn

March. of Our on the January of the legislation begins session and XXth on ends XXth

of kind that's that. the for timeframe So

Ali Agha

I time, earliest, file you at New see. next when a the rate the Mexico And can case? lastly, Pat, is

Charles Eldred

XXXX, with Yes, the talked we about January XXXX. end of effective of XXXX,

Operator

line Research next Lasan the [Operator question of Instructions]. the And Consulting. of from Auvila comes Johong

Lasan Johong

is on you the deduction transmission, for of, first the year? make possibility guys? like, that in a you investment the XXX% take To Independent that advantage

Patricia Vincent-Collawn

No.

jurisdiction. we'll not we looking now. at at think, lot transmission are could There's utility that's are and this and at transmission really, right But joining that balance energy I looking a company We independent opportunities time. the the and build within as far of as we an go market, FERC within

Lasan Johong

it sounds like right? and Did be like and combination All hear right. opportunity, towards power though. I good you're renewables more might plants it moving gas X of kind a of Sounds a abandoning moving the replacement Pat, storage. that as towards

Patricia Vincent-Collawn

get still to some the think make the No, technology what believe that might gas curve to need talking have. some about IRP, I and on we in going there when that solutions what different look support load but are we sure we that we all can we're in the the be we to renewables we system meet at

Lasan Johong

you those So bigger Or plants more maybe hadn't gas renewables that than going are two smaller keep add saying you you're two envisioned plants? gas before? and to

Charles Eldred

large gas represented in that No, I Juan. San think units previously replacement had power peaking what we about the talked two our earnings at

able the load order system need to all renewables it. more with units see, to we are the beginning the renewable picking system, as profile we're on energy to in smaller comes to the So on that then the quickstart changes, balance

megawatts had large or units So probably likely be say, indicated. a more number previously of, a representing different of close X X smaller X couple we than hundred to peaking would units any

Lasan Johong

Okay. But renewables does add power? to that mean that to replace you're going more

Charles Eldred

units and of storage as also. gas would a potentially renewables well combination energy peaking There and be

Patricia Vincent-Collawn

way we have And within the operate shifting we're that we make potentially the could resources just on for of that system. the of about the more sense our renewables talking bucket system amount and

Lasan Johong

going what know be. split's to that don't you But

Charles Eldred

we're in process.right... No, an RFP

Patricia Vincent-Collawn

say, liberty at to yes. not We're Process.

Operator

back closing would our Pat conference like concludes question-and-answer Vincent-Collawn for remarks. This to to I session. over any turn the

Patricia Vincent-Collawn

look this very of voted, day, have thank We already haven't, And on And if time joining Thank all. with Day. us week. Thank EEI you morning. you next you. vote all you many sure visiting this please at I'm many but you the for Election take to you to forward important of

Operator

The conference attending has concluded. Thank for today's now you presentation.

disconnect. You may now

TXNM Energy (TXNM) 11 Nov 182018 Q3 Earnings call transcript