Business context and reporting period
This is a combined Form 10-K for PNM Resources, Inc. (PNMR), Public Service Company of New Mexico (PNM), and Texas-New Mexico Power Company (TNMP), for the year ended December 31, 2023. PNMR is a regulated utility holding company serving about 824,000 customers in New Mexico and Texas. The filing identifies PNMR’s stock symbol as PNM. The request names TXNM Energy Inc.; the filing itself is for PNM Resources, Inc.
Key financial results
Unless otherwise noted, amounts below are for consolidated PNMR.
| Metric | 2023 | 2022 |
|---|---|---|
| Electric operating revenue | $1.939 billion | $2.250 billion |
| Net earnings attributable to PNMR | $87.8 million | $169.5 million |
| Diluted earnings per share | $1.02 | $1.97 |
| Operating cash flow | $551.2 million | $567.3 million |
| Cash used in investing activities | $1.088 billion | $950.3 million |
| Utility margin (non-GAAP) | $1.137 billion | $1.262 billion |
| Long-term debt, including current maturities | $4.526 billion | $4.078 billion |
Year-end total assets were $10.253 billion and total liabilities were $7.842 billion. Cash and cash equivalents were $2.2 million; short-term debt was $261.9 million. As of February 16, 2024, consolidated remaining credit-facility availability was $459.4 million. The company reported investment-grade debt ratings and compliance with debt covenants.
Material changes versus 2022
- PNMR-attributable earnings fell $81.8 million, or about 48%, and diluted EPS declined from $1.97 to $1.02. The largest segment decrease was PNM, whose earnings attributable to PNMR fell $67.7 million; TNMP earnings rose $2.6 million.
- PNM’s utility margin decreased $162.5 million. Significant factors included the $128.7 million SJGS settlement-related customer refund reduction to revenue, a $38.4 million PVNGS-related revenue reduction, and new capacity arrangements. Improved investment-security performance and some lower operating costs partly offset these effects.
- TNMP utility margin increased $37.8 million, supported by transmission and distribution rate adjustments and higher demand-based load. Higher depreciation, operating costs, and interest limited earnings growth.
- PNMR operating cash flow was slightly lower, while investment outflows increased, primarily reflecting higher utility-plant additions. Consolidated plant additions were $1.076 billion in 2023.
- PNMR issued 4.4 million shares under its ATM forward-sale program and received $198.2 million net proceeds. Debt financing also included new PNMR, PNM, and TNMP borrowings.
Outlook, commentary, risks and unusual items
- Rate case: The NMPRC’s January 3, 2024 final order authorized a $15.3 million annual increase in PNM non-fuel base rates effective January 15, 2024, versus PNM’s $63.8 million request. The order set a 9.26% ROE, imposed an $81.0 million Four Corners net-book-value disallowance, and required $38.4 million of PVNGS-related refunds over two years. The filing records associated 2023 impacts, including a $55.5 million Four Corners disallowance and an $8.2 million PVNGS construction-work-in-progress disallowance.
- Coal retirement and securitization: PNM and intervenors settled SJGS-related customer refund disputes for $115.0 million over one year. ETBC I issued $343.2 million of energy-transition bonds in November 2023; repayment is supported by a non-bypassable customer charge. PNM’s effort to exit Four Corners was denied by the NMPRC, and the New Mexico Supreme Court upheld that denial in July 2023. PNM says it is evaluating next steps.
- Investment and funding: PNMR projects $6.053 billion of construction spending for 2024–2028 and total capital requirements of $6.755 billion including dividends. Management expects internal cash generation, credit arrangements, and capital-market access to meet needs for at least the next 12 months, but anticipates additional long-term financing during 2024–2028. Consolidated maturities of long- and short-term debt were $658.0 million for January 2024 through February 28, 2025.
- Resource transition and reliability: PNM’s goal is an emissions-free generation portfolio by 2040; New Mexico law requires 100% zero-carbon energy by 2045. PNM had 1,277 MW of renewable capacity in service and 1,692 MW of approved resources expected by 2025. Replacement-resource delays remain a reliability risk; management expected most replacement resources to be available before the 2024 summer peak and said additional market purchases might be needed. A further 410 MW resource application for 2026 remained pending at filing time.
- Other matters: Avangrid terminated the proposed merger with PNMR effective December 31, 2023. PNMR’s agreement to sell its 50% interest in NMRD closed February 27, 2024; PNMR Development received $117.0 million at settlement and expected to use proceeds to reduce external funding needs and support regulated investment. This is a subsequent event, not a 2023 operating result.
- Principal risks include adverse rate-case outcomes or delayed cost recovery, higher financing costs and substantial capital needs, generation and replacement-resource delays, environmental regulation, Four Corners and mine-reclamation obligations, extreme weather and wildfire exposure, and cybersecurity threats. Management reported no material financial impact from cybersecurity risks as of December 31, 2023. KPMG issued unqualified audit opinions on PNMR’s consolidated financial statements and internal controls; regulatory assets and liabilities were identified as a critical audit matter.
Important facts for investors to verify
- Confirm the issuer and security being analyzed: this filing is for PNM Resources, Inc., ticker PNM, rather than a registrant named TXNM Energy Inc.
- Review subsequent regulatory developments affecting the PNM rate order, Four Corners disallowance, SJGS refunds, and PVNGS recovery and refunds.
- Track delivery and approval of replacement generation and storage, and how PNM manages summer-peak reliability and associated purchase costs.
- Assess funding for the $6.1 billion construction program, upcoming debt maturities, interest-rate exposure, and reliance on external financing.
- Evaluate whether lower 2023 earnings reflect chiefly regulatory and settlement items or indicate continuing pressure on recurring earnings and cash generation.