PNM - Earnings call 3 2023 | TXNM Energy, Inc.

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Operator

Good day, and welcome to the PNM Resources Third Quarter 2023 Conference Call. [Operator Instructions] please note this event is being recorded. I would now like to turn the conference over to Lisa Goodman, Investor Relations. Please go ahead.

Lisa Goodman

Thank you, Dave, and thank you, everyone, for joining us this morning for the PNM Resources Third Quarter 2023 Earnings Call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com.

Treasurer, PNM Operating and Senior Officer, Chief Officer are President Pat Vice today Financial Chief and Don and me Resources' CEO, Chairman Vincent-Collawn, President, Joining Eden. Lisa Terry and

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

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

Patricia Collawn

and Coworkers can us Good joining thank morning, for you, it it, Google And Thank Day. day. is a everyone, Lisa. you real Cranky yes, on today you

Now we're day going you of cranky surely X none a and were but Summer or that Slide and celebrate to temperatures X Texas have hotter you on our $X.XX on were case. I'm compared and cranky with strategic $X.XX us impact of earnings and had we are sure coworkers year. last of start New earnings. for financial none quarter of updates. are, Ongoing results to any just those are the in third significant across the going none coworkers to Mexico

share. New arguments AVANGRID our Supreme of through a details. The Court held $X.XX XX, for with guidance our Lisa We process, Mexico is hardest are agree adjusting its to compete year merger is will part. September the range the appeal to waiting walk per this we will there was time on oral on $X.XX And when for court the decision. that the priced because and no we issue the line step yes, in the final the were

commission's was to and remand to options: the As court's steps the a previously option has extended will market, the reminder, track. or for the further the venture, NMRD of the respond If vacate on and order. joint March. Separately, through extension the there the assets to working how The a remand, December evaluate current The this through in with renewable commission. on X the next even challenging to our uphold X-month to we bids. to determine decision the are the in merger projects attractive agreement case remains the portfolio back is a commission court sale order are

the it sale turn to expect in over quarter. With early first late close We that, to quarter or the Don. I'll fourth

Joseph Tarry

at with highlights Thank PNM. and Slide I'll everyone. good you, Pat, X start operational on morning,

New $X U.S.-based its Solar wins. Mexico billion the Biden facility, development announce wind jobs in X,XXX new of President X announcements investment a those August, service of quarter. In during warned plant a Two continues visited after new facility announced the its manufacture site that soon to attention new also will in PNM Maxeon bring gigawatt towers third first Albuquerque, national economic for territory, to the the is expected plans area. manufacturing to

from decade. in and normal. system nearly at inquiries when reliability degree and PNM year's a XX% careful peak July, We seeing increasing first peak for We peak X system higher both cooling in new new planning thanks the outlook. In than teams. for for our the and to XX-year season had through PNM are almost the also maintenance Last maintained were years, was continued monitoring, our a further demand the announcements days month days system businesses expansions all-time new consecutive

Ownership new allows megawatts add capacity have and doesn't XXXX plans the to we'll in approval of the and updates resources, May Each of components upgrade capacity of week generation are to These and XXXX, solar battery it costs we utility-owned proposed other agreements in of online to XX% additions also the the of battery and and utility-owned will and carbon provide the move storage coming process generation part be energy discharge this XX% application us with filing year our proceeds. One increased solar this process the XXX extend to the time, system. these and commission in the along an customers. the the began battery battery, through portfolio. battery a the planning entire utility avoid projects battery industry retain of this which and last allows we've the at us also end This After the system. economic for to in equation, battery, to our interconnection asked maximizing an in solar contract these we of energy proposal for carbon-free charge our We On carries at it through lease megawatts year, our contract needed side development started agreements existing the benefits resources will addition resources allows term. Balancing period. the filed the resources storage ago, and Adding reserves commission maintenance also operations expected in free contract to approval RFP the for resources state for customers' as best and the filing of hedges align of you versus proposes interest, the XX for replace will XXXX. additional grid PPAs us by during the operational resources XXX-megawatt position better leverage providing inquiries. The to our with ownership standards, reached us life our resources is battery. some of risk as storage include community with of with while resources. see and order the of several mix to to customer being It our cost best in pain first value. the years.

is Our in rapidly. energy moving clean transition New Mexico

Corners rate to amounts credit resources removes relate rate to as we Palo this our continue New unanimous I'll and PNM decisions key a end generation proceedings, have regulatory rate In X Mexico by case transition the case X, cover Turning to settlement filing, the on in item completed, recovery the transitional from Verde those commission of change associated portfolio, expect the year. the hearings to the issues primarily of our with the The decision plants. with continue been Commission. Four Juan of the and past our we and Slide San remaining

resolving forward move path our forward carbon-free. to are issues these to We we as looking on

the advanced analysis year. In on October we the file XX, to before investments and grid our cost Our the case, we requested more proposed received is to expect the expect a support our proposal storage the to and other benefit relieve commission end filing, modernization request as for to by of decision support distribution approach at a of November. held review commission. energy. if require proposed our these renewable intervening are rate accommodate stakeholders modernization rate a in metering at filing. We will we Many distribution sites XX overloaded the from The design technologies solution current parties batteries discussed take under same in our look these grid and this possibilities of that hearings are the the approved, future feeders full in review megawatts of examiner hearing battery also our

expect We in decision half first XXXX. of the the

year. of We stakeholders filed the will that have before also with integrated end be into working been our the their input getting and resource plan

path While for is the commission discussion most ahead forward over towards modeling the carbon-free IRP not the meeting provides the approved demand direction system path our the by will goals. some years. The next and XX cost-effective commission, formally it provide filing results showing for subsequent

quickly Corners I we any I turn not new future in determinations Plant. Power the have our note the Before made to Four TNMP, of ownership on that

for exit We and replacement evaluate expires in a continue before potential ownership contract XXXX. our options to

per through $XXX XXXX, our this at growth million annual $XXX of to Now plan key The in investment growth capital years from had a turning continues walk capital to the to bring TNMP. Texas updates. projects TNMP our our again in demand for operating July and to us After of in system August. more on in that at year. which our regulatory the quarter as end shows legislative through now will year I'll includes recent level TNMP then and level growth. to than system plans plans And new X-year lead support forefront cover consistent infrastructure Texas prompted investments nation last setting revised doubled this at this plan. Lisa more and last at X. highlights exceeded million record I TNMP X twice mentioned the $XXX June, million the increasing Slide per TNMP's in to

territories the customer in growth On markets among North and housing in Coast and distribution our the service the Texas the are country. side, strongest strong, remained Gulf

For a a begin we development territory, expected working its already have community and month year in X,XXX example, who XXXX. housing construction been for announced Coast new service all this our developer is in has plans Gulf with home begun to

should area has ERCOT worked the new a a demand, proposals for have by addition our transmission later Planning be inquiries, by Texas additional requests Board for On timely Regional and system transmission in X West reputation side, expansion the considered vetted processing our this and Group manner of in in fielding teams are to to the our earn in ERCOT year. been

could interconnection new We Basin, for ERCOT which a opportunities. directed legislation, reliability will result the and are be under increase quarter additional in investment plan seeing develop requests each premium to

implemented recovery September. distribution we both update, new rates for capital and regulatory for As transmission in

semiannual plan based year, new the mechanisms DCRF both the Next and TCOS legislation. under we filings make on DCRF to

manner recovery a for annual and under finalized, efficiency received qualify also TNMP's see $X.X would fastest-growing for timely. With put also environment recover achievement. we constructive approval a for I'll rules turn to million as segment filing could those legislation are mechanisms of rules, in $X.X with investments our submit energy of All recovery capital million for we T&D additional of includes Lisa. TNMP this year the the the new into our resilience of prior remains over for investments program a incentive that, it business recovery program costs, bonus settlement which regulatory to with place

Elisabeth Eden

in you, Weather Earnings third were Slide Texas, both of a morning, quarter. driver on New with I'll share was start the at $X.XX in changes quarter Mexico quarter Don, XXXX. year-over-year XXXX third third in the to earnings. quarter the to $X.XX per summary positive and significant $X.XX and everyone. of good the of XX in Thank compared a adding

we place. On rates interest larger transmission depreciation, volumes. new O&M of from by on The and for interest put industrial a tax increases load previously the weather partially with reflects earnings Continued PNM, Lower Slide increase and we biggest distribution year-over-year, had TNMP. and some base property our to classes associated residential at At our remains investments also and XX, by for at On utilities our offset both at was investments. corporate recovery TNMP I'll higher of commercial weather-normalized sales basis, partially in of continue added cover growth ahead both hedges rate mitigated behind impact planned the earnings. while expenses PNM see customers and expectations our ramp-up schedule. the rate

TNMP, updated other seen system our times flat. very only hit quarter changes for have total new the below along over year quarter because as calls of to small. At reduce customers. to few higher-than-expected cause July expectations a have to conservation. particularly or peaks and not temperatures, earnings be usage demand-based we been with impact from low the net of their see meant reductions third in The We the we for volumetric bills these began hotter load and close and their growth from remains both all and expectations, customers normalized load some Weather our June crypto has

and our We full volumetric have for for expectations updated both year the demand-based load.

low to in XX%. and demand-based X% come is X% expected and volumetric between XX% load TNMP between come to in expect and We while

to Slide XX. Turning

on our We substations, this feeders. Texas have the Don additional wood and transformation by and new of are reliability is support where In legislature updated at mentioned, and an circuits to Coast as XXXX billion. Gulf funding steel rolled out located. $X.X trading load systems year. Texas adding total supported replacing and for the we of level This high and At area, through our poles increased resiliency distribution provide and TNMP, North means for projects a our capital demand plan

new adding rulemaking plan. investments tie TCOS These recovered additional of For all resiliency new existing transmission legislation the The can been mechanisms. lines. are This of investments on opportunities higher our be loads, the means in to provide interconnection DCRF or cross-send to of have prioritized in align X for which regions. with process but under voltage points recovery they new may

$XXX is also Don just out, new customer year. resources the now TNMP's million over to discussed growing As and capital are per to earlier. accommodate PNM's pointed needs growing capital spending expansions

We customer bills. added with the the impact have balanced capital on

we've On the will investments the the battery investments all be out order go graph in for through storage, CCN filing called yellow, in have battery own to to approved.

the our year the reflect the corresponding these rate the timing proceedings. We to to grid in These bottom table at base plans In also recovery. grows X.X%. rate at provide X of rate back more investments. FERC at utilize of timely jurisdictions base page, shifted TNMP regulatory the rate we and provided for have X modernization base the grows PNM XX.X% mechanisms shift

our for rest growth, on earnings update and Turning of our including Slide plans. financing to year an I'll long-term XX, guidance the provide the

quarter are $X.XX. year transmission margins utilities. third trust. increased both lower performance first part for the range the partially earnings earnings guidance decommissioning fixed our These by XXXX our second year summer $X.XX at transmission with higher margins temperatures the the the Higher expense, We income in in the of to interest a raising in to of hot and offset of combined half lower are in changes

On of proceeds issuance quarter, with equity $XXX our to of sales the under and fulfilling $XXX the program completed year third strengthen San sales us from help NMRD, Juan securitization ATM of $XXX future combined sale plan this the the million growth. of of the equity and million our year. those during position shares through of before we this million for $XXX We bonds equity settle will million needs the side, balance forward contracts forward The year-end. sheet for the another

on of help approximately As equity have $XXX capital we million investments. to average we growth a look in our forward, assumed fund year

change, options And financing as As our usual, our market we optimize will funding. open. other leave to consider conditions we opportunities

the interest of to variable place set. have the in continue mitigate through million $XXX $XXX of rates We interest impact end hedges year our rate in of the million rate on to hedges and XXXX

debt. look the extending in environment. With Looking base on the forward, for comfortable financing if I'll we stand-alone are current out we assumptions, basis, target this Under back over issue permanent X% financing our to a to more business we market turn that, growth these finance XXXX will as Pat. growth rate we're our it to

Patricia Collawn

Lisa. you, Thank

addition Coworkers today In also Day Day. is to Global Champaign Cranky

Resources at the Sustainability and open transfer San at plant I the largest to there Navajo Chamber in PNM for from assistance Day Intelligence Business before X infrastructure and Service of the of of project local was Year I'd to the it PNM. for and our of awarded XX coal giving. water at customer our annual at its TNMP, business like years our So of of spirit TNMP the Group the of month recent up named and celebrations. This we Commerce. critical toast, Nation. a Day questions, celebrated of was We Champagne our PNM held Annual to share the some Initiative Juan Foundation Safety PNM summer, just hosted

everyone each efforts, to we raise open glass for involved Dave, these a up in to So let's you. questions. it of

Operator

Instructions] first The with Citi. comes [Operator Ryan question from Levine

Ryan Levine

In equity of terms you part plan. plan, $XXX needs baseline highlighted financing as so your of of million the

embedded renewable the that beyond portfolio? today Texas any what's forecast? presentation that in give clarify, color little it potential outlined you contemplate that capital incremental in or more assumes And to it like in can a of just your success So does around what's

Elisabeth Eden

Yes.

include year. million next equity do of does we is year the And the the $XXX done years. that NMRD already that or not the sales year, as on expecting X doing well as $XXX which average next we're we're what So the of this we that to million looking are end for towards early

Ryan Levine

And any from the to And next or to is extend closing regarding that fourth line that did there could year? bit. sale, you upping speak is fourth a the as why line from early delay maybe time you little you to the could time or quarter maybe color quarter

Elisabeth Eden

is and the through We first the filing have objective next process going end a it slip that in sale. of the towards of year, do through year. our go but into We're beginning the can Yes. bid to

little XX. know, that what's as a And may November don't take happen going also you time. know So on we to

taking into So we're that well. account as

Patricia Collawn

We're takes lengthening our regulatory everything time we longer expected. than

So .

Ryan Levine

then does a positioned. only hedged for And what in for rate is terms at, hedge that's the Calendar interest how [indiscernible] that year? Okay. of the terms the At it hedge, Or of partial is how that extent and hedge that structured? year rate is in XXXX,

Elisabeth Eden

a Brian, total have the this price million hedge we average Yes, in is X.X%. is around of $XXX --

and -- year. calendar goes for it so And entire the

Operator

Zimbardo from of question next . The with comes Paul Bank America.

Paul Zimbardo

on XXXX to was are could the more into little investment Just hoping add well plan? renewable scale? as new like that X-year batteries plus a in drill I you just opportunities whether as outlook, the there more

Joseph Tarry

batteries things to was Paul, on right feeder. feeder feel, kind absolutely. megawatts And are a X to relieve XX that of that's And that at you couple that I mentioned the feeders give A each we the now, XX-megawatt constraints. capacity. Yes. have of

able feeders for right to kind options the as rooftop always connect benefit solar. those forward to of feeder constraints. being able customer customer there's So look to those provide we and because now, tremendous they're there of not And

Obviously, talked options. So our capital that's XXXX in We've included plan. those RFP. our about are

we're now working through We have as right will RFP a XXXX well. that

pushes there. it out kind that of So

would do. we opportunities be our customer -- those always that overall that's and But we with balanced grid element of always it in have impacts resilience. to So that Texas, file financing there's as the

Paul Zimbardo

about I probably seems of high some from know kind or you takes CAGR additional X% base don't or Understood that rate Great. the And equity lag, at there. you conservatism? Okay. cost if to have something help parent or cushion of but And so, EPS walk the X.X% CAGR? XX.X% know which could a level, there, like else? it that's I in there's regulatory kind

Elisabeth Eden

Yes. Good question.

things. would I say So several

based You but construct it's have still Texas, regulatory in test historical year. a great on

some historical do you also And we rate lag. so year. test thing, have timing then there's regulatory same And of cases. a first, The have

have and and -- a financing, standpoint. that, equity beyond from you both so debt And holdco the

difference that earnings think I up down really So what makes the rate things base growth. to the those growth are X% between

Paul Zimbardo

Great. Okay.

lag the regulatory from different and pattern, just really nothing So historical financing.

Elisabeth Eden

Correct.

Operator

next Our with Securities. Wells Jonathan from question comes Fargo Reeder

Jonathan Reeder

could Supreme cart Court's understanding PRC, I what they if back issues was have does can the PRC wondering the can define the options, your of on the launch? PRC you remain expand order if to they do the automatically address fix? or Or narrowly

Patricia Collawn

I but are if ahead I'll merger Halloween answer one, today to and you're ask thought in question. us our your not going we're base cost go

commission order be to have it get kind But what determine squishy to to commission I a Supreme on answer, oral exact remand fixed. our I what they will And on what questioning it wish an And reopen, says, to answer just I the where the So what back argument, determine them process. a that's think the remand the remand should listen their know maybe to do. were as Supreme the again, do. back little it's squishy of if can but belief either depending they had assuming they we a I that even and gives is the can next can't on latitude Court wide don't. you obviously, step. Court they But

Jonathan Reeder

Okay.

do commission if, the you does I mean the I have latitude Supreme... wide think So guess, even

Patricia Collawn

to wide the have wide address They but outside they obviously of order, they have the order. latitude Order, go can't latitude.

Jonathan Reeder

Okay. comes how will to be Yes. interesting right. It see that All out.

That of... right. then the terms understatement be Yes. So might in

then? about shows in $X.XX like should correctly, in has like Slide understanding positive Mexico how like normal it So XX been thinking be EPS 'XX I'm $X.XX above year-to-date for weather-normalized weather New If we Texas. and

midpoint we full range, guidance at fair? if subtract $X.XX, EPS Like of, actually from I is that be is how your the guidance put that it? of which below weather-normalized should it Is it, So thinking 'XX $X.XX $X.XX, $X.XX. kind year initial would I $X.XX think new of 'XX to call that

Elisabeth Eden

and nuclear third maintenance in allocation the the that quarter, that in to weather Texas There's know, and New Mexico. happens, some we're fixed extra been as But we across other do income. -- strong at utilities. asset terms offsets of when you had both we've trust, decommissioning we of use our XX% an Well, have as also also opportunity XX%

And income both an fixed expense has dragging also of is some then so this that to do later as we're market as to well when equity year. also impact securitization have the we that issuance interest and due the planning exposure timing

Patricia Collawn

say is thing that the Jon, biggest O&M. our we I dynamically would manage

some And resiliency always can safety field so have of we the that they do to folks and dollars, it the reliability when we in so extra system. the give opportunity that and the in invest the

there. that's So the flex biggest

Jonathan Reeder

Okay.

as So yes, kind the that. like not something it performing that versus should we of flexing expected of think as you business or

Patricia Collawn

Correct.

Jonathan Reeder

And is then just sense. up in what last, better understand makes That question, I to new of think to CapEx following plan. kind the or trying Paul's isn't

project, that's So by represented yellow . the that's battery storage bars, the on utility in there, right? XX-megawatt and

Patricia Collawn

correct. That's

Jonathan Reeder

Okay. of better this the point? in projects battery And of the lack for then CCN, that's XX-megawatt word, at storage there copycat not a

Joseph Tarry

XX that's there. It's not just all there. in It's is megawatts the in

Jonathan Reeder

in any projects of what those alluded in baked then potential Are Texas your to And that you remarks? about prepared Okay. transmission in?

Elisabeth Eden

Yes, all in. they are baked

Jonathan Reeder

is like approval, we what's risk? stuff -- categorize at I kind there know in, like regulatory certain in the projects depending kind like that amount any of the locked guess view already of to upside. Are through potential you on should maybe there in budget like of that a Okay. that, way not walked I or

Joseph Tarry

that. for was it projects though those unopposed would through. even XX-megawatt we that to is process, regulatory flow get completely expect there strong Texas, are in in The approval the

we Grid see expect budget. issues Grid we in year, mod get do don't to the did but that in X back we mod, arena. any So move capital

but fluid, So those are that projects have are on capabilities we themselves. to deliver

Patricia Collawn

capital something lots there to we doesn't We've of got can being then always approved. have probability in all other desires. get if of high have They flip things And have approved. we

always enough fill the pipeline. to there's So

Jonathan Reeder

you got stuff might Yes, So back anything slip but to. that you think would -- other that out

Joseph Tarry

that And impact. Jonathan, we with customer always balance

always we're Pat of So And both. as system. the harden looking we combination at there's projects additional always said, the as the

Elisabeth Eden

And growth particularly demand tremendous Yes. I Texas, both in on in if see have mean, the you Texas, side. we

so Texas particular, you strong. that's about resiliency good is And with really us in invest in area And in. the when that legislative think ride need capital along, for the investments a coming for session to the is

Operator

next comes Lee with question Mizuho. Our from Brandon

Unknown Analyst

of but questions Most wondering, over $XXX -- so just have asked, for thanks few my of million been years. next the disclosure on equity the the

lieu if ways wondering alternative like any in there's issuing you noncore selling could or Just something equity raise like of it, assets that?

Patricia Collawn

alternatives, don't issuing equity have We do is assets. noncore are way the best Those but it. any to obviously we really think

are invest core piece on of business, than a is rather selling and in to and the sell return a our get in our We and I'd it to and else business. to the like business of in the NMRD process business. And everything we'd continue obviously equity raise invest

So.

Operator

Callon further concludes [Operator questions. no Instructions] to At conference the to any like time, this question-and-answer closing we Vincent session. Pat turn would our This remarks. over for have I

Patricia Collawn

and Dave, morning. joining you, Thank for you thank this us all

a EI, to this safe and have all. and We a of your couple toast [indiscernible], coworkers and many weeks you are to in you raise Thank you and sure happy forward make evening Halloween. of seeing looking the at cranky non-cranky

Operator

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

You may now disconnect.

TXNM Energy (TXNM) 27 Oct 232023 Q3 Earnings call transcript