ALBUQUERQUE, N.M., May 30, 2018 /PRNewswire/ — PNM Resources’ (NYSE: PNM) transmission and distribution utility in Texas, TNMP, today filed its anticipated general rate review. The filing is TNMP’s first general rate review since current rates were approved in 2011 and provides for a realignment of rate recovery between transmission and distribution investments. The net increase to rate base is $90 million, which is incremental to previous Transmission Cost of Service (TCOS) filings and Advanced Metering System (AMS) investments.
The filing reflects an annual increase to base rates of $25.9 million, based on a requested return on equity of 10.5% and capital structure comprised of 50% debt and 50% equity. Current rates are based on an allowed return on equity of 10.125% and a 45% equity ratio. TNMP has also requested $7.7 million of new rate rider recovery primarily for Hurricane Harvey restoration and additional vegetation management costs. If approved by the Public Utility Commission of Texas, new rates are expected to become effective in early 2019 and increase the average residential customer bill by 11 percent.
“Our service territory in Texas has experienced significant growth over the last several years and we have increased our capital investment in the system to accommodate this growth while maintaining reliability for both new and existing customers,” said Pat Vincent-Collawn, PNM Resources’ chairman, president and CEO. “Our use of semi-annual TCOS filings has provided recovery for our transmission investments, but this filing provides the opportunity to reset base rates between our transmission and distribution businesses. We have worked to minimize cost increases in Texas and keep our rates affordable, and the income tax savings from federal tax reform reduces the impact of this filing to our customers.”
The base rate increase includes the integration of AMS recovery into base rates, including collection of the remaining unrecovered investment. Updates to depreciation rates and the pass-through of federal tax reform savings also impact the filed increase but do not result in changes to net earnings. Schedule 1 below summarizes the key components of the rate filing.
Documents related to the rate filing can be found at: http://www.pnmresources.com/investors/rates-and-filings.aspx.
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Schedule 1 |
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Revenue |
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(in millions) |
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Key components of filed rate increase: |
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Investment in core rate base |
$27.9 |
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Increase ROE to 10.5% |
1.8 |
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Modified capital structure and lower cost of debt |
(9.0) |
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Other |
1.9 |
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Subtotal |
22.6 |
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Adjust for load growth |
(19.8) |
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Subtotal base rate increase to pre-tax net earnings |
$2.8 |
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Changes to costs passed through rates: |
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Modified depreciation rates |
$9.6 |
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Reduction in corporate income tax rate (35% to 21%) |
(3.6) |
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Return of excess deferred federal income tax reduction |
(7.8) |
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Subtotal |
(1.8) |
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AMS consolidation into base rates: |
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Integration of AMS recovery into base rates |
$16.9 |
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Collection of remaining unrecovered AMS investment |
8.0 |
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Subtotal |
24.9 |
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Filed increase to base rates (retail and transmission) |
$25.9 |
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Background:
PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2017 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,580 megawatts of generation capacity and provides electricity to more than 773,000 homes and businesses in New Mexico and Texas. For more information, visit the company’s website at www.PNMResources.com.
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CONTACTS: |
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Analysts |
Media |
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Lisa Goodman |
Pahl Shipley |
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(505) 241-2160 |
(505) 241-2782 |
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this news release that relate to future events or Texas-New Mexico Power Company’s (“TNMP”) expectations, projections, estimates, intentions, goals, targets, and strategies 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. TNMP assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, TNMP cautions readers not to place undue reliance on these statements. TNMP’s business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond its 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 and Form 10-Q filings with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.
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SOURCE PNM Resources, Inc.
