PNM and parties file Unopposed Stipulation in 2025 Rate Request

Rhea-AI Summary

PNM, a subsidiary of TXNM Energy (NYSE: TXNM), and parties filed an unopposed stipulation for its 2025 Rate Request with the New Mexico Public Regulation Commission. The agreement includes a $105.0 million revenue increase based on a 9.45% return on equity and 51% equity capitalization on $3.0 billion rate base. The rate increase will be phased in with 50% effective July 1, 2025, and the remainder on April 1, 2026. The stipulation includes a $1.5 million contribution to the PNM Good Neighbor Fund for customer bill assistance. The original request was for $174.3 million with a 10.45% return on equity.

Positive

• Secured unopposed stipulation for rate increase approval
• Revenue increase of $105.0 million approved
• Return on equity improved from 9.26% to 9.45%
• Equity capitalization structure increased from 50% to 51%

Negative

• Approved revenue increase ($105.0M) is 40% lower than requested amount ($174.3M)
• Approved ROE of 9.45% is significantly below requested 10.45%
• Phased implementation delays full revenue recognition until April 2026

Insights

Utility Regulatory Analyst

The stipulation represents a significant regulatory milestone for TXNM, with a $105.0 million revenue increase approved through a negotiated settlement. The key financial terms include:

• ROE increase from 9.26% to 9.45%
• Equity structure improvement from 50% to 51%
• Rate base of $3.0 billion

The phased implementation starting July 2025 helps mitigate customer impact while providing steady revenue growth. This settlement, supported by major stakeholders, is notably lower than the initial $174.3 million request but provides regulatory certainty and maintains healthy returns. The establishment of regulatory assets for energy storage costs offers important financial flexibility for future investments.

Financial Analyst

This regulatory outcome delivers positive financial implications for TXNM. While the approved increase is 40% below the initial request, the negotiated terms provide a balanced framework for sustainable growth. The phased implementation creates a predictable revenue ramp-up, with the full impact realized by Q2 2026. The improved ROE and equity structure, though modest, strengthen the company's financial position. The $1.5 million Good Neighbor Fund contribution represents a minimal impact relative to the overall revenue increase. The broad stakeholder support significantly reduces regulatory risk and positions TXNM favorably for future rate cases.

ALBUQUERQUE, N.M., Nov. 26, 2024 /PRNewswire/ -- PNM, a wholly-owned subsidiary of TXNM Energy (NYSE: TXNM), and parties in its 2025 Rate Request application filed an unopposed comprehensive stipulation with the New Mexico Public Regulation Commission (NMPRC).

The stipulation provides for a phased-in approach to the increase in customer rates supporting continued investments in the grid to meet changing customer needs.

The $105.0 million increase to PNM's revenue requirements in the stipulation is based on a 9.45% return on equity and a 51% equity capitalization structure on $3.0 billion of rate base. The stipulation allows for a regulatory asset or liability to be established for any difference in Energy Storage Agreement costs from the amount filed in this case up until PNM's next filed case.

The stipulation also maintains the previously approved depreciation rates for Four Corners Power Plant and modifies PNM's current amortization period for unprotected Excess Deferred Federal Income Tax regulatory liabilities. In addition, a reduction to operating expenses is incorporated to achieve the stipulated amount of $105.0 million. The agreement also includes a $1.5 million contribution to the PNM Good Neighbor Fund to provide additional bill assistance to qualified customers.

Customer rates under the stipulation are phased in with 50% of the increase effective July 1, 2025, and the remaining increase effective April 1, 2026.

PNM's currently authorized rates are based on a 9.26% return on equity and 50% equity capitalization structure. The requested increase of $174.3 million included a 10.45% return on equity and a 52.5% equity capitalization structure on $3.0 billion of rate base.

Parties joining PNM on the stipulation include Utility Division Staff of the New Mexico Public Regulation Commission, the New Mexico Department of Justice, Albuquerque Bernalillo County Water Utility Authority, City of Albuquerque, Coalition for Clean Affordable Energy, Coalition for Community Solar Access, County of Bernalillo, New Energy Economy, New Mexico Affordable Reliable Energy Alliance, The Kroger Co., Walmart Inc and Western Resource Advocates. Other intervening parties to the application, Onward Energy Holdings, LLC and Renewable Energy Industries Association of New Mexico, do not oppose the settlement.

ADDITIONAL DETAILS ON WEBSITE
Additional information on the estimated ongoing earnings impacts of the stipulation is available at https://www.pnmresources.com/investors/events-and-presentations.aspx.

The stipulation is subject to NMPRC approval. A scheduling conference is planned for December 4 to modify the existing procedural schedule. Hearings continue to be expected to begin in mid-February. Today's filing and the application are available at https://www.txnmenergy.com/investors/rates-and-filings/pnm-nmprc-filings.aspx.

Background:
TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, New Mexico, delivers energy to more than 800,000 homes and businesses across Texas and New Mexico through its regulated utilities, TNMP and PNM. For more information, visit the company's website at www.TXNMEnergy.com.

Contacts:

Analysts                                            Media
Lisa Goodman                                   Corporate Communications
(505) 241-2160                                  (505) 241-2743

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release for TXNM Energy, Inc. ("TXNM"), Public Service Company of New Mexico ("PNM"), or Texas-New Mexico Power Company ("TNMP") (collectively, the "Company") that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies, including the unaudited financial results and earnings guidance, are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. TXNM, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements. TXNM's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company's Form 10-K, Form 10-Q filings and the information included in the Company's Forms 8-K with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

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SOURCE TXNM Energy, Inc.

FAQ

What is the approved revenue increase for TXNM's PNM subsidiary in the 2025 rate request?

The approved revenue increase is $105.0 million, based on a 9.45% return on equity and 51% equity capitalization structure on $3.0 billion of rate base.

When will TXNM implement the new rates from the 2025 rate request?

The rate increase will be implemented in two phases: 50% effective July 1, 2025, and the remaining increase effective April 1, 2026.

How much did TXNM originally request in the 2025 rate increase application?

TXNM originally requested a $174.3 million increase with a 10.45% return on equity and a 52.5% equity capitalization structure.