TNMP Files 2025 - 2027 System Resiliency Plan

Rhea-AI Summary

TNMP, a subsidiary of TXNM Energy, Inc. (NYSE: TXNM), has filed its first System Resiliency Plan (SRP) with the Public Utility Commission of Texas. The plan outlines $600 million in capital investments and $151 million in related costs over three years to enhance the resiliency of its distribution system. The SRP includes eight Resiliency Measures focusing on distribution system improvements, modernization, vegetation management, wildfire mitigation, flood mitigation, enhanced technology, and security. This data-driven approach aims to address various risks across TNMP's diverse service territory in Texas. The plan is subject to PUCT approval, with investments recoverable primarily through semi-annual Distribution Cost Recovery Factor filings.

Positive

• TNMP is investing $600 million in capital and $151 million in related costs over 3 years to improve system resiliency
• The plan includes eight comprehensive Resiliency Measures to enhance infrastructure and service reliability
• Investments are prioritized based on customer benefit and risk reduction
• The company can recover investments through semi-annual Distribution Cost Recovery Factor filings

Negative

• The $751 million total investment may impact the company's financial position in the short term
• The plan is subject to PUCT approval, which introduces regulatory uncertainty
• Recovery of some expenses will be deferred, potentially affecting near-term financial results

Insights

Financial Analyst

TNMP's $600 million capital investment and $151 million in related costs over three years represent a significant financial commitment. This $751 million total outlay for system resiliency could impact TXNM Energy's financial position and future earnings potential. The ability to recover these investments through semi-annual Distribution Cost Recovery Factor filings is important for maintaining financial stability.

Investors should note the deferral of depreciation and certain expenses until recovery begins, which could affect short-term financial metrics. The 180-day PUCT approval process adds an element of regulatory risk. If approved, this investment could potentially lead to increased revenue stability and reduced operational risks, positively impacting long-term shareholder value.

Utility Infrastructure Expert

The System Resiliency Plan (SRP) demonstrates TNMP's proactive approach to infrastructure modernization. The eight Resiliency Measures outlined cover critical areas such as wildfire mitigation, flood mitigation and cybersecurity, addressing diverse risks across TNMP's non-contiguous service areas. This comprehensive strategy aligns with industry best practices for grid hardening and resilience.

The focus on customer benefit and lower-performing areas suggests a targeted approach that could lead to improved reliability metrics and customer satisfaction. The inclusion of operational and cybersecurity technologies indicates a forward-thinking stance on emerging threats. Overall, this plan positions TNMP well to meet future challenges in the evolving utility landscape.

Regulatory Affairs Specialist

The filing of the System Resiliency Plan with the Public Utility Commission of Texas (PUCT) is a significant regulatory step for TNMP. The 180-day approval process introduces a period of regulatory uncertainty, but aligns with Texas legislation. The plan's data-driven approach and focus on customer benefits could strengthen its case for approval.

The proposed semi-annual Distribution Cost Recovery Factor filings for investment recovery represent a balanced approach, potentially allowing for more timely cost recovery while maintaining regulatory oversight. This mechanism, if approved, could provide a more predictable path for future infrastructure investments. Investors should monitor the PUCT's response closely, as it will set a precedent for future resilience-focused regulatory filings in Texas.

ALBUQUERQUE, N.M., Aug. 29, 2024 /PRNewswire/ -- TNMP, the Texas subsidiary of TXNM Energy, Inc. (NYSE: TXNM), filed its first System Resiliency Plan (SRP) with the Public Utility Commission of Texas (PUCT) designed to benefit customers through enhanced resiliency of its distribution system.

The filed plan includes measures totaling $600 million of capital investments and $151 million of other related costs over 3 years and was developed using a comprehensive and data-driven approach which evaluated various types of resiliency events posing material risk to the safe and reliable operation of TNMP's distribution system.

"Service to our customers is paramount and TNMP has been consistently increasing investments in system hardening and modernization to strengthen our service to customers," said Pat Vincent-Collawn, TXNM Energy Chairman and CEO. "This filing demonstrates TNMP's continued commitment to ensuring the reliability and resiliency of our infrastructure during high-risk events across each diverse region of our service territory."

TNMP's service territory includes non-contiguous areas across different regions of Texas, ranging from small communities and rural areas to communities around large metropolitan areas, each with unique risks. Investments in the SRP are prioritized based on customer benefit, physical protection of infrastructure, foundational investments in operational and cybersecurity technologies, wildfire risk reduction and a focus on lower-performing areas.

Eight different Resiliency Measures are outlined in the SRP with associated programs and infrastructure impacts to improve the system's ability to prevent, withstand, mitigate and/or more promptly recover from resiliency events: Distribution System Resiliency, Distribution System Protection Modernization, Vegetation Management, Wildfire Mitigation, Flood Mitigation, Enhanced Operations System Technology,  Cybersecurity and Physical Security Resiliency.

The SRP is subject to PUCT approval over 180 days as stated in Texas legislation. Recovery of investments and costs are permissible primarily through semi-annual Distribution Cost Recovery Factor filings, with deferral of depreciation and other certain expenses until recovery begins. The filing can be found at https://www.txnmenergy.com/investors/rates-and-filings/tnmp-puct-filings.aspx.

Background:
TXNM Energy (NYSE: TXNM), an energy holding company based in Albuquerque, N.M., 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) 241-27838

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 total investment proposed in TNMP's System Resiliency Plan?

TNMP's System Resiliency Plan proposes a total investment of $751 million, comprising $600 million in capital investments and $151 million in other related costs over a 3-year period from 2025 to 2027.

What are the key areas of focus in TNMP's System Resiliency Plan?

The plan focuses on eight Resiliency Measures: Distribution System Resiliency, Distribution System Protection Modernization, Vegetation Management, Wildfire Mitigation, Flood Mitigation, Enhanced Operations System Technology, Cybersecurity, and Physical Security Resiliency.

How will TNMP recover the costs associated with the System Resiliency Plan?

TNMP plans to recover investments and costs primarily through semi-annual Distribution Cost Recovery Factor filings, with deferral of depreciation and certain other expenses until recovery begins.

When did TXNM Energy (NYSE: TXNM) subsidiary TNMP file its System Resiliency Plan?

TNMP filed its System Resiliency Plan with the Public Utility Commission of Texas on August 29, 2024.