Q1 2025 TXNM Energy Inc Earnings Call
Operator: Regular crowd shuffling.
Operator: There's an old man sitting next to me, making love to his tonic and gin.
There's an old man sitting next to me.
Love to China again, Jim.
Speaker Change: [music] memo.
Operator: He says, son, can you play me a memory? I'm not really sure how it goes. But it's sad and it's sweet and I knew it complete when I wore a young woman's clothes.
Speaker Change: I'm not really sure Howard.
Speaker Change: But.
Speaker Change: No no no.
Speaker Change: All right.
Speaker Change: Ooh.
Operator: La, la, la, dee, da, la, la, dee, da, da, da.
Speaker Change: While our then it.
Speaker Change: Oh, Oh, Oh no at all.
Operator: Sing us a song, you're the piano man. Sing us a song tonight, where we're all in the mood for a melody. You've got us feeling all right.
Operator: Good day and welcome to the TXNM Energy Q1 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone.
Speaker Change: Good day, and welcome to the TXNM Energy Q1 2025 conference call. All participants will be in listen only mode. Should you need assistance, be signally conference specialist by pressing the start key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on the touchstone zone. Two, withdraw your question, please press star, and then two.
Operator: To withdraw your question, please press star and then Please note this event is being recorded.
Speaker Change: 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: 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 TXNM Energy First Quarter 2025 Earnings. Please note that the presentations for this conference call and other supporting documents are available on our website at TXNMenergy.org.
Lisa Goodman: Thank you, Dave, and thank you everyone for joining us this morning for the TXNM Energy First Quarter 2025 earnings call. Please note that the presentations for this conference call and other supporting documents are available on our website at txnmenergy.com
Lisa Goodman: Joining me today are TXNM Energy Chair and CEO, Pat Klon. President and Chief Operating Officer, Don Carey. and Senior Vice President and Chief Financial Officer, Lisa East.
Lisa Goodman: Joining me today are TXNM Energy Chair and CEO , Park Lone, President and Chief Operating Officer, Don Cherry, and Senior Vice President and Chief Financial Officer, Lisa Eden.
Lisa Goodman: Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1996. We caution you that all of the forward-looking statements are based upon current expectations and estimates, and that TXNM Energy assumes no obligation to update this information.
Speaker Change: Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the private security's litigation reform act of 1995.
Lisa Goodman: We caution you that all of the forward-looking statements are based upon current expectations and estimates, and that TXNM Energy assumes no obligation to update this information.
Lisa Goodman: For a detailed discussion of factors affecting TXNM Energy results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as reports on Form 8-K filed with the FDA.
Lisa Goodman: For a detailed discussion of factors affecting TXNM Energy Results, please refer to our current and future annual reports on form TINK, quarterly reports on form TINQ, as well as reports on form 8K, filed with the SEC.
Lisa Goodman: With that, I will turn the call over to Pat.
With that, I will turn the call over to Pat
Pat Klon: Thank you, Lisa, and good morning, everyone, and thank you for joining us today on Billy Joel's 76th birthday. What a better way to celebrate his birthday by kicking our call off with Piano Man.
Pat Kahlon: Thank you, Lisa, and good morning, everyone, and thank you for joining us today on Billy Joules' 76th birthday.
Pat Kahlon: What a better way to celebrate his birthday by kicking our call off with Piano Man.
Pat Klon: But even more exciting than Billy Joel's birthday is that today is P&M's 108th birthday. We were founded in 1917 as the Albuquerque Gas and Electric Company, and today we're celebrating more than a century of serving our customers. So happy birthday to P&M.
Speaker Change: But even more exciting than Billy Joel's birthday is that today is PNM's 100th and 8th birthday.
Pat Kahlon: We were founded in 1917 as an Albuquerque gas and electric company, and today we're celebrating more than a century of serving our customers, so happy birthday to PNM.
Pat Klon: I'll start on slide four with our financial results and company updates. Ongoing earnings for the first quarter this year are $0.19. This keeps us on track with our expectations for the year, which reflect the mid-year implementation of new rates at PNM. We are affirming our guidance for 2025 at a range of $2.74 to $2.84 per share, along with maintaining our long-term EPS growth target of 7 to 9 percent.
Pat Kahlon: I'll start on slide four with our financial results and company updates.
Pat Kahlon: On-going earnings for the first quarter this year are 19 cents. This keeps us on track with our expectations for the year, which reflects the mid-year implementation of new rates at PNM.
Pat Kahlon: We are affirming our guidance for 2025 at a range of $2.74 to $2.84 per share along with maintaining our long-term EPS growth target of 7 to 9 percent.
Lisa Goodman: Lisa will cover the numbers in more detail.
Lisa will cover the numbers in more detail.
Pat Klon: I'm going to cover a couple of highlights for this quarter before handing things over to Don. Rate-based growth at TNMP continues to be supported by timely recovery of our investment. During the first quarter, our system resiliency plan was approved, allowing us to invest and recover $546 million in capital improvements that will enhance our ability to protect our system and respond to extreme weather events in service of our customers. In New Mexico, the unopposed stipulation in our rate case continues to move forward. Hearings in the docket were completed in February, and in April, the hearing examiners recommended approval of the stipulation.
Pat Kahlon: I'm going to cover a couple of highlights for this quarter before handing things over to Don.
Pat Kahlon: Great-based growth at TNMP continues to be supported by timely recovery of our investments.
Pat Kahlon: During the first quarter, our system resiliency plan was approved, allowing us to invest and recover 546 million in capital improvements that will enhance our ability to protect our system and respond to extreme weather events in service of our customers.
Pat Kahlon: In New Mexico, the antipose stipulation in our rate case continues to move forward.
Pat Kahlon: Hearings in the docket were completed in February and in April , the hearing examiner's recommended approval of the stipulation.
Pat Klon: We expect the Commission to make a decision in May or June ahead of the July 1st rate implementation date.
Pat Kahlon: We expect the commission to make a decision in May or June ahead of the July 1st Rate Implementation date.
Pat Klon: New Mexico completed this year's legislative session with some key bill signs. The state has seen increased levels of interest in economic development and has identified the need to expedite the build-out of infrastructure needed to serve new, large customers. The business community rallied around these site readiness bills, which were passed with strong bipartisan support. This provides an avenue for electric, gas, and water utilities to pre-build this infrastructure and is designed to allow New Mexico to become even more competitive in attracting new businesses.
Pat Kahlon: New Mexico completed this year's legislative session with some key bills signed.
Pat Kahlon: The state has seen increased levels of interest in economic development and has identified the need to expedite the build-out of infrastructure needed to serve new large customers.
Pat Kahlon: The business community rallied around these site readiness bills which were passed with strong bipartisan support.
Pat Kahlon: This provides an avenue for electric, gas, and water utilities to pre-build this infrastructure and is designed to allow New Mexico to become even more competitive in attracting new businesses.
Pat Klon: Another piece of legislation we supported was the creation of a wildfire task force. The purpose of the task force is to develop a comprehensive approach on how New Mexico can better prevent and respond to wildfires and make recommendations on solutions for this. We see this as a positive step forward in laying the groundwork for future legislation that can help protect our customers, employees, and the communities we serve.
Pat Kahlon: Another piece of legislation we supported was the creation of a wild fire task force.
Pat Kahlon: The purpose of the task force is to develop a comprehensive approach on how New Mexico can better prevent and respond to wildfires and make recommendations on solutions for this.
Pat Kahlon: We see this as a positive step forward in laying the groundwork for future legislation that can help protect our customers, employees, and the communities we serve.
Don Carey: With that, Dawn, I'll turn it over to you for more details.
Dawn: With that done, I'll turn it over to you for more details.
Don Carey: Thank you, Pat. And good morning, everyone.
Dawn: Thank you, Pat, and good morning, everyone. I'll start on slide 6 with TNMP. TNMP has already set a new system peak in the first quarter, coming in 22% higher than last year's first quarter system peak. Demand based load from traditional customers.
Don Carey: I'll start on slide six with TNMP. TNMP has already set a new system peak in the first quarter, coming in 22% higher than last year's first quarter system peak. Demand based load from traditional customers along with data centers, had a strong start to the year. Demand-based load increased 9.7%, largely driven by growth in our North and West Texas region. We're commercial businesses have grown in the areas where data centers have been located. Data center load picked up another 70 megawatts in the first quarter.
Dawn: Along with data centers, had a strong start to the year. Demand-based load increased 9.7% largely driven by growth in our north and west Texas regions.
Dawn: We're commercial businesses have grown in, the areas where data centers have been located. Data center load picked up another 70 megawatts in the first quarter. We have a couple of existing customers that are expected to increase their demand up to another 150 megawatts before the end of the year.
Don Carey: We have a couple of existing customers that are expected to increase their demand up to another 150 megawatts before the end of the year. Interconnection requests were also up 6% compared to the first quarter of last year, with a noticeable uptick in the Gulf Coast area, supporting our continued growth expectation.
Dawn: Interconnection requests were also up 6% compared to the first quarter of last year with a noticeable uptick in the Gulf Coast area, supporting our continued growth expectations.
Don Carey: Pat highlighted the regulatory success TNMP has already seen in the first quarter of this year. Our System Resiliency Plan was approved with $546 million of capital investments planned through 2027. TNMP has filed and received approval for $83 million of transmission rate-based investments made last year, and the proposed order approving recovery of $176 million of distribution rate-based investments pending final approval from the Commission this month. At the end of April, the commission formally approved the common projects in ERCOT's Permian Basin Reliability Study. TNMP will be investing approximately $750 million by 2030 to complete our share of these projects, which we added into our capital plans in February.
Pat highlighted the regulatory success.
Pat Kahlon: TNP has already seen in the first quarter of this year. Our system resiliency plan was approved with 546 million of capital investments.
Plan through 2027 [inaudible]
Pat Kahlon: TNP has filed and received approval for $38,883 million of transmission rate-based investments made last year, and the proposed order of approving recovery of $176 million of distribution rate-based investments.
pending final approval from the Commission this month.
Pat Kahlon: At the end of April , the commission formally approved the common projects in Erkutsk Permian Basin reliability study.
Pat Kahlon: TNMP will be investing approximately $750 million by 2030 to complete our share of these projects which we added into our capital plans in February .
Don Carey: We expect to file CCNs applications for these projects in the first quarter of 2026.
Pat Kahlon: We expect to file CCN's applications for these projects in the first quarter of 2026.
Don Carey: Turning to slide 7, we have not made any additional changes to our 5-year capital plan from the updates at our year-end earnings call in February. Our plan remains focused on supporting the high level of growth in Texas with a reliable and resilient grid. The level of investments grows significantly over the five years of our plan, from $600 million this year to over $1 billion starting in 2028. Rate base grows by 17% and becomes the largest portion of our total rate base. All of the discussions in Texas around ERCOT load forecasts and higher voltage transmission lines supports the growth embedded in our plan.
Pat Kahlon: Turning to slide seven, we have not made any additional changes to our five-year capital plan from the updates at our year end earnings call in February . Our plan remains focused on supporting the high level of growth in Texas with a reliable and resilient grid.
Pat Kahlon: The level of investments grows significantly over the five years of our plan, from 600 million this year to over a billion starting in 2028. RateBase grows by 17% and becomes the largest portion of our total rate base.
Pat Kahlon: All of the discussions in Texas around IRCOT load forecasts and higher voltage transmission lines supports the growth embedded in our plans.
Don Carey: We continue to see good discussions in the Texas legislature on items that help facilitate these growth. This year's session ends June 2nd, so it's too early to know which bills will pass, but there has been some good progress. There were a handful of bills introduced this year aimed at reducing regulatory lag or strengthening credit metrics as capital spending increases. and each of these could benefit TNMP. In addition, we have been having conversations on these same topics with stakeholders as we prepare to file our general rate review later this year.
Pat Kahlon: We continue to see good discussions in the Texas legislature on items that help facilitate these growth plans.
Pat Kahlon: This year's session ends June 2nd, so it's too early to know which bills will pass but there has been some good progress.
Pat Kahlon: There were a handful of bills introduced this year aimed at reducing regulatory lack or strengthening credit metrics as capital spending increases.
Pat Kahlon: and each of these could benefit TNMP. In addition, we have been having conversations on these same topics with stakeholders as we prepare to file our general rape review later this year.
Don Carey: There are also utility bills addressing wildfire prevention, ranging from poll inspections to the approval of wildfire mitigation plans. We are pleased that the legislature recognizes the need for some definition around utility responsibility and their associated liabilities, and we will be closely following the remaining progress. The upcoming regulatory agenda includes our second TCOST and DCRF filings, and we will look to receive approval on both mechanisms before filing our general rate review in the fourth quarter, which will kick off the 180-day statutory clock. We are targeting the implementation of new rates in Q2 of next year.
Pat Kahlon: There are also utility bills addressing wildfire prevention, ranging from poll inspections to the approval of wildfire mitigation plans.
Pat Kahlon: We are pleased that the legislature recognizes the need for some definition around utility responsibility and their associated lifebillies and we will be closely following the remaining progress.
Pat Kahlon: The upcoming regulatory agenda includes our second T-Cost and DCRF filings.
and we will look to receive approval on both mechanisms.
Pat Kahlon: before filing our general rate review in the fourth quarter, which will kick off the 180-day statutory clock. We are targeting the implementation of new rates in Q2 of next year.
Don Carey: Let's move on to P&M on slide eight. The hearing examiner's recommendation to approve the unopposed stipulation in our rate review is our top highlight.
Pat Kahlon: Let's move on to PNM on slide 8. They're hearing examiner's recommendation to approve the unopposed stipulation in our rate review is our top highlight.
Don Carey: It has been quite some time since we were able to achieve this type of agreement in a rate review. The hearings were originally scheduled for two and a half weeks and ultimately were held for two days and provided a good opportunity for hearing examiners and commissioners to ask questions and discuss policy items raised in the filing. We were pleased to see the recommendation and look forward to a commission decision in May or June ahead of the implementation in July.
Pat Kahlon: It has been quite some time since we were able to achieve this type of agreement in a rate review. The hearings were originally scheduled for two and a half weeks, and ultimately were held for two days and provided a good opportunity for hearing examiners and commissioners to ask questions and discuss policy items raised in the filing.
Pat Kahlon: We were pleased to see the recommendation and look forward to commission decision in May or June ahead of the implementation in July
Don Carey: We also filed an unopposed stipulation in our 2028 resource filing for 450 megawatts of resources, including 150 megawatts solar and storage facility in the Central Consolidated School District, the same area where the San Juan coal plant was retired.
Thank you.
Pat Kahlon: We also filed an unopposed stipulation in our 28 resource filing for 450 megawatts of resources, including a 150 megawatt solar and storage facility in the Central Consolidated School District, the same area where the San Juan cold plant was retired. This was a key priority for stakeholders.
Don Carey: This was a key priority for stakeholders. Hearings and these dockets were held in one day and the hearing examiner issued their recommendation to approve the stipulation earlier this week. We expect a decision from the commission in the third quarter.
Pat Kahlon: hearings and these dockets were held in one day and the hearing examiner issued their recommendation to approve the stipulation earlier this week. We expect a decision from the commission in the third quarter.
Don Carey: As Pat mentioned, New Mexico's 60 day legislative session ended in March and a key priority from the business community was for site readiness. The bill's primary objective allows utilities to prepare sites and build capacity to serve these customers in advance. It also shortens the regulatory approval timeline and allows utilities to defer costs until they can be included in a rate case proceeding.
Pat Kahlon: As Pat mentioned, New Mexico's 60-day legislative session ended in March and a key priority from the business community was for site readiness. The Bill's primary objective allows utilities to prepare sites and build capacity to serve these customers in advance.
Pat Kahlon: It also shortens the regulatory approval timeline and allows utilities to defer costs until they can be included in a rate case proceeding.
Don Carey: These bills have been signed into law and we are excited to see their impact along with the proposals that will come from the Wildfire Task Force. Another bill, HB91, added a key tool that has been missing from rate making. The Commission did not have the ability to approve rates specific to low-income customers. This will be an important tool that can be used in our next rate review.
Pat Kahlon: These bills have been signed into law and we are excited to see their impact along with the proposals that will come from the wildfire task force.
[inaudible]
Pat Kahlon: Another bill, 1891, added a key tool that has been missing from ratemaking. The commission did not have the ability to approve rate specific to low-income customers.
Pat Kahlon: This will be an important tool that they can be used in our next rate review.
Don Carey: Turning to slide 9, I'll cover the current outlook at PNM. Again, we have not made any changes to our 5-year capital investment plan, and we remain focused on balancing the needs of our system with customer rate impact. One area coming into greater focus for PNM is transmission development. We completed a 20-year transmission study late last year and have been holding discussions with stakeholders, including the Commission, last week. We were able to share details about how additional investments could improve our system and meet the growing demands of our customers, along with ways these investments could utilize resources in New Mexico to provide benefits to our customers.
Pat Kahlon: Turning to slide 9, I'll cover the current outlook at PNM. Again, we have not made any changes to our five-year capital investment plan, and we remain focused on balancing the needs of our system with customer rate impacts.
Pat Kahlon: One area coming into greater focus for PNM's transmission development
Pat Kahlon: We completed a 20-year transmission study late last year and have been holding discussions with stakeholders, including the Commission, last week.
Pat Kahlon: We were able to share details about how additional investments could improve our system and meet the growing demands of our customers along with ways these investments could utilize resources in New Mexico to provide benefits to our customers.
Don Carey: We have a number of upcoming items on our regulatory agenda. We will look for a decision on our rate review in Q2 and our 2028 resource application in Q3. We will make our annual update to FERC formula rates in June. We will also we will also be proposing the build out of two small transmission lines later this year that would improve our ability to serve our customers, perform maintenance on existing lines and facilitate economic development. These investments have already been included in our capital plan.
Pat Kahlon: We have a number of upcoming items on our regulatory agenda.
Pat Kahlon: We will look for a decision on our rate review in Q2 and our 2028 resource application in Q3. We will make our annual update to a FERC formula rate in June .
Pat Kahlon: We will also be proposing the build out of two small transmission lines later this year that would improve our ability to serve our customers, perform maintenance on the existing lines and facilitate economic development. These investments have already been included in our capital plan.
Don Carey: We currently have an RFP outstanding for new resources available between twenty twenty nine and twenty thirty two. We forecasted a need of at least five hundred megawatts of new capacity by twenty thirty with the actual amount dependent upon the type of resources selected from the independently monitored process. We expect to file a resource application to propose our selected resources at the beginning of next year. Our current capital plan does not include any amounts for this, and we will incorporate any new amounts after that application is filed.
Pat Kahlon: We currently have an RFP outstanding for new resources available between 2029 and 2032.
Pat Kahlon: We forecasted a need of at least 500 megawatts of new capacity by 2030 with the actual amount depended upon the type of resources selected from the independently monitored process.
Pat Kahlon: We expect to file a resource application to propose our selected resources at the beginning of next year Our current capital plan does not include any amounts for this and we will incorporate any new amounts after that application is filed with that I'll turn it over to Lisa for a few more detail look at the numbers
Lisa Goodman: With that, I'll turn it over to Lisa for a few more detailed look at the. Thank you Don and good morning everyone. I'll start on slide 11 with a recap of first Ongoing earnings per share were Transcription by CastingWords Thank you all for joining us today. of New Reef Recovery at PNM until the second Overall earnings benefited from recovery of capital and Retail Low Growth at Bowdoin. Including the impact Three days or higher at TNM. partially offsetting lower heating degree day. These increases were offset by new demand charges from energy storage agreements implemented at PNM in late 2021.
Lisa: Thank you, Don, and good morning, everyone. I'll start on slide 11 with a recap of first quarter results.
I'm going earnings per share, we're 19 cents [inaudible]
Lisa: This is consistent with the expectation provided for the first quarter and reflects the absence of new rate recovery of P&M until the second half of the year.
Lisa: Overall earning, benefited from recovery of capital investment through T-CAUS and DCRF mechanisms at TNMT and retail low growth at both utilities, including the impact of weather.
Lisa: Degree dates were higher as PNMP, partially offsetting lower heating degree dates experienced in New Mexico.
Lisa: These increases were offset by new demand charges from energy storage agreements implemented at PNM in late 2024, lower transmission margins, higher insurance premium, and the timing of plans outage costs.
Lisa Goodman: Lower transmission margins, higher insurance premiums, and the timing of plant outages. Remember that under our unopposed rate stipulation, any changes to our demand are deferred to the balance sheet. Producing variability in these crops once the new rate request has been implemented.
Lisa: Remember that under our unopposed race stipulation, any changes to our demand charges.
Lisa: Our deferred to the balance sheet, reducing variability in these costs, once the new race requests have been improved.
Lisa: The appreciation, property tax and interest expense associated with new investment increased year-over-year. Detailed drivers for each of our segments are available in the appendix.
Lisa Goodman: Associated with new investments, increased year Detailed drivers for each of our segments are available in We have affirmed our guidance range for 2025 of $2.74. We have updated the quarterly EPS distribution in this. to reflect our latest. The third quarter continues to account for more than half of our EPS.
Lisa: We have affirmed our guidance range for 2025 of $2.74 to $2.84.
Lisa: We have updated the quarterly EPS distribution in the appendix to reflect our latest assumption
Lisa: The third quarter continues to account for more than half of our EPS for the year.
Lisa Goodman: The capital plan on slide 12 remains the same as the plan we showed at the end of the video.
Lisa: The capital plan on slide 12 remains the same as the plan we showed at the end of February .
Lisa Goodman: We expect tariffs to have about a 2% impact. into our capital. and Priority. We're mindful of customer and we'll balance this with system needs as we work to mitigate any issues.
Lisa: We expect tariffs to have about a 2% impact on these plans as we move forward and we will incorporate any changes into our capital allocation and prioritization process.
Lisa: We're mindful of customer impact and we'll balance this with system needs as we work to mitigate any increases.
Lisa Goodman: I'll wrap up with our earnings power on slide 13. There are no changes from what we disclosed in February. which included a number of incremental capital increase our growth.
Lisa: I'll wrap up with our earnings power on slide 13. There are no changes from what we disclosed in February , which included a number of incremental capital opportunities and increased our growth
Lisa Goodman: continue to target EPS growth of 7-9% 2025-2029, and the earnings power supports the upper half of this We feel confident in our ability to execute on With that, I'll turn it back over.
Lisa: We continue to target EPS growth of 79% from 2025 through 2029, and the earnings power supports the upper half of this range.
Lisa: We feel confident in our ability to execute on this plan. With that, I'll turn it back over to Pat.
Pat Klon: Thank you, Lisa. Before I open it up for questions, I want to take a moment to thank our teams across New Mexico and Texas. These are exciting times for us as we build out our systems and prepare for growth. Our teams are stepping up to the plate, and I am proud to lead these teams and watch our employees grow and succeed.
Pat Kahlon: Thank you, Lisa. Before I open it up for questions, I want to take a moment to thank our teams across New Mexico and Texas.
Pat Kahlon: These are exciting times for us as we build out our systems and prepare for growth. Our teams are stepping up to the plate and I am proud to lead these teams and watch our employees grow and succeed.
Operator: Dave, with that, let's open it up for questions. We will begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then.
Dave, with that, let's open it up for questions.
Speaker Change: We will begin the question any in procession to ask a question you may press star than one on your
Speaker Change: If you are using a speaker phone, please pick up your hands up before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two.
Nicholas Campanella: Our first question comes from Nick. Campanelli with Arclays. Please go ahead. All right.
Moderator: Our first question comes from Nick Campanelli with Arclays. Please go ahead.
Operator: Hey, everyone, and happy birthday. Thank you. Morning.
All right, hey everyone and happy birthday.
Nicholas Campanella: So, hey, a lot of good comments on legislation in your preparedness, but I was just curious, this House Bill of 5247 involving the Permian transmission projects, I just wanted to confirm that you would be in scope for that, and maybe you can kind of talk about how that impacts your earned ROEs in a normal rate year or allows you to maybe accelerate some more capital and how that can kind of impact what's assumed on the TNMP side. Thank you. Hey, thanks, Nick. And you're referring to 5247, House Bill 5247, the unified track. Correct. Yeah, no, we see that as beneficial to TNMP, as you are probably very familiar with, and others on the call, that allows you to, you know, kind of group everything together.
Thank you.
Morning.
Speaker Change: I was just curious, this house bill is $52,447 involving the Permian Transmission Project.
Speaker Change: I just wanted to confirm that you know there would be a scope for that and maybe you can kind of talk about how that impacts your earned our reads in a normal rate year or allows you to maybe accelerate some more capital and how that can impact what's assumed on the TNMP side. Thank you.
Speaker Change: Hey, thanks Nick, and you're referring to 5247, House Bill 5247, the Unified Tracker.
Thank you for watching. Visit www.FEMA.gov
Correct.
Speaker Change: Yeah, no, we see that as beneficial to TNMP as you are probably very familiar with and others on the call that allows you to, you know, kind of group everything together. It kind of looks and smells a lot like the system resiliency.
Pat Klon: It kind of looks and smells a lot like the system resiliency recovery mechanism where you can defer pretty much everything to the balance sheet and earn on it and then bring it in so you eliminate regulatory lag associated with it. So I think the way to think about it is it would be beneficial to TNMP from an EPS perspective.
Speaker Change: Recovery, Mechanism, where you can defer pretty much everything to the balance sheet and earn on it and then bring it in so you eliminate regulatory lag associated with it.
Speaker Change: So, I think the way to think about it is, it would be beneficial to TNMP from an EPS perspective. Timing at Cascoles will be a little bit different because, you know, T-COS and T-COS specifically as it relates to the premium basin, you get to file twice a year, but here you'd file it once a year.
Nicholas Campanella: Timing of cash flows will be a little bit different because, you know, TCOS and, yeah, TCOS specifically as it relates to premium basin, you get to file twice a year, but here you'd file it once a Okay, that's great. Appreciate that.
Pat Klon: And then, look, I just wanted to address that, you know, on prior calls, when you kind of especially when you came out of the AGR process, you still seem to acknowledge the benefits of size and scale, you know, mostly from a viewpoint of sourcing more efficient capital to finance what is a very large and growing rate plan or large and growing CapEx plan. So just maybe you can kind of give us an updated view on how you're thinking about that today. And if anything's kind of changing your mind. No, Nick, the board still holds the same views that they did that going into, you know, an environment of large growth that the size and scale can really help with a large capital plan.
Okay, that's great. I appreciate that. And then…
Speaker Change: Look, I just wanted to address that on prior calls, especially when you came out of the AGR process you still seem to acknowledge the benefits of size and scale, mostly from a viewpoint of sourcing more efficient capital to finance what is a very large and growing rate plan, large and growing CAPX plan.
Speaker Change: So just maybe you can kind of give us an updated view on how you're thinking about that today and if anything's kind of changing your mind.
Speaker Change: No, Nick. The board still holds the same views that they did that going into an environment of large growth that the size and scale can really help with the large capital plan. So nothing has changed there.
Pat Klon: So nothing has changed there.
Nicholas Campanella: Okay, and then just one last one, if I can, you know, I know Lisa announced her retirement date and the, you know, the effective date in that was March 15th, or no sooner than March 15th.
Speaker Change: Okay, and then just one last move I can, I know Lisa I'm not the retirement date and the effective date on that was March 15th or no sooner than March 15th, so now that we're just in May, maybe just an update on how you're viewing that role as a team.
Pat Klon: So, you know, now that we're just in May, maybe just an update on how you're viewing that role as a team. We are enjoying the fact that we still have Lisa Eden services with us and we are we're going to celebrate that and when we have news on another CFO, we will let everybody know. Okay, thank you. Thanks.
Speaker Change: We are enjoying the fact that we still have Lisa Eden services with us and we are we're going to celebrate that and when we have news on another CFO we will let everybody know.
Okay, thank you. Thanks Thanks.
Brian Russo: And the next question comes from Julian Dumoulin-Smith with Jeffries. Please go ahead. Hi, good morning.
Speaker Change: And the next question comes from Julien Dumoulin Smith with Jeffries, please go ahead
Operator: It's Brian Russo on for Julian. Morning, Brian.
Yeah, good morning, it's Brian Russo on for Julien.
Hi Brian
Brian Russo: Hey, just on the upcoming TNMP base rate case, what are the major drivers of the case? Is it kind of less about regulatory lag, more about rate design and cap structure? And can you remind us what is the actual balance sheet equity ratio for TNMP as of March? Yeah, I think it will be rate design primarily, obviously we'll look at capital structure as well too. Currently the capital structure at TXNM Energy is 45% equity, and so those will be the factors. But a big part of it is rate design, we haven't been in in seven years, we're starting our seventh year here, so it's important to get that rate design adjusted.
Speaker Change: Warren Brian . Hey, just, you know, on the upcoming TNP base spray case, what are the major drivers of the case? Is it kind of less about regulatory lag, more about rate design and cap structure? And can you remind us what is the actual balance sheet equity ratio for TNP as of March? Yeah.
Speaker Change: Yeah, I think it will be a rate design primarily, obviously we'll look at it.
Speaker Change: Capital Structure as well, currently using Capital Structure at TNC, it's 25 hours a day, and so those will be the factors but a big part of its rate design. We haven't been in in seven years. We're starting our 70 year here, so it's important to get that rate design to jump.
Brian Russo: Okay, good.
Don Carey: And then on the TNMP Permian Basin CapEx, it's $750 million, but it seems heavily weighted towards 2030, or half of the CapEx is for that one year. Just curious, you know, what your confidence level is on the execution timeline? And then secondarily, are there any maybe indirect upside CapEx for the 765 KV projects that are approved, understanding that TNMP is not going to directly participate in the 765, but just, you know, curious if there's any ancillary type CapEx. Yeah, on the first part of your question, we are confident in being able to deliver on the approximately $750 million of capital.
Speaker Change: Okay, good. And then on the TNMP Permian Basin cat-backs, it's 750 million, but it seems heavily weighted towards 2030 or half of the cat-backs is for that one year. Just curious, you know, what your confidence level is on the execution.
Speaker Change: On the first part of your question, we are confident in being able to deliver on the approximately $750 million of capital we'll file our CCM. The commission is kind of stage those CCN. So that they can come in in time based on the overall design and so our first set of CCM will be filed early part of next year, we're already.
Don Carey: We'll file our CCNs. The Commission has kind of staged those CCNs so that they can come in in time based on the overall design. And so our first set of CCNs will be filed early part of next year. We're already down the path of getting and ordering all the equipment that we need associated with it. On the 765KV, not any indirect as we're aware of at this time, but we do look at the overall size of 765 when you look at the whole state of opportunities as we look forward in Texas.
Speaker Change: The battle of getting an ordering all the equipment that we need associated with it so.
Speaker Change: On the 765 kv.
Speaker Change: Not any not any indirect that we're aware of at this time, but.
Speaker Change: We do look at the overall size of 765, when you look at the whole.
Speaker Change: So I hope David opportunities as we look forward to investors.
Speaker Change: Yes.
Don Carey: Thank you. Is there still the plan to refinance the remaining parent level debt later this year with equity-like securities or junior subordinated notes? We have a term loan, the majority of the term loan is not expiring until mid of next year and so we have ample of time to refinance.
Speaker Change: Thank you is it still the plan to refinance the remaining parent level debt.
Speaker Change: Later this year.
Speaker Change: <unk>.
Equity like securities or junior subordinated notes.
Speaker Change: Brian.
Speaker Change: Okay.
Speaker Change: Thanks Stefan.
Speaker Change: We have a term loan the majority of the term loan is not expiring until mid of next year and so we have ample of time to refinance that holding company debt with equity like securities.
Don Carey: holding company that with And then lastly, the RFP at PNM. You mentioned 500 megawatts, but is it up to several thousand megawatts by 2032? Just trying to bookend what the capex upside might be at PNM, the earliest in early 2026. Yeah, no, absolutely. So when you look at the 2032 RFP, it was anywhere from 900 megawatts up to 2900 megawatts, depending upon the types of resources that were selected. Okay, great.
Speaker Change: Alright, and then lastly, the DRP PNM, you mentioned 500 megawatts, but is it up to.
Speaker Change: Megawatts by.
Speaker Change: 2032, just trying to bookend, what the capex upside might be at PNM.
The earliest and early 'twenty 'twenty, yes.
Speaker Change: Yeah, no absolutely. So when you look at that 29% to 32032.
Speaker Change: RFP it was anywhere from 900 megawatts up to 2900 megawatts depending upon.
Speaker Change: Depending upon the types of resources that were in the last day or so.
Speaker Change: Okay, great. Thank you very much.
Don Carey: Thank you very much.
Operator: Thank you.
Speaker Change: Thank you. Thank you.
Michael Lonegan: And the next question comes from Michael Lonegan with Evercore ISI. Please go ahead. Hi, good morning. Thanks for taking my question. Morning.
Speaker Change: And the next question comes from Michael <unk> with Evercore ISI. Please go ahead.
Michael: Hi, good morning, Thanks for taking my questions.
Speaker Change: Good morning, good morning.
Michael Lonegan: This is a follow up on the New Mexico RFP process. Just wondering, you know, how is it progressing? You know, are tariffs making it more complicated?
Speaker Change: This is a follow up on the new Mexico RFP process, just wondering how is it progressing our tariff, making it more complicated and when you talked about the size of megawatts, but can you talk about your targeted ownership there.
Michael Lonegan: And, you know, you talked about the size of megawatts, but, you know, can you talk about your targeted ownership there? In New Mexico, we have an independent evaluator that participates with us, which is a good thing because as you kind of work through the process, they file their report with the commission that helps justify the resources that are needed. And I think that's important as we go through the RFP process, and that's how it's been established. So our timeline is going as expected. There will be abilities for folks to identify based on May 1st what their resources are and the prices.
Speaker Change: In new Mexico, we follow we have an independent evaluated that participates with us which.
Which is a good thing because as you kind of work through the process. They file their report with the commission that helps justify the resources that are needed and I think that's important as we go through the RFP process and Thats, how its been establish our timeline is going.
Speaker Change: As expected there will be abilities for our folks to identify based on may 1st what their their resources are in the prices and are working with the independent evaluated if tariff prices change.
Michael Lonegan: And working with the independent evaluator, if tariff prices change, those will probably be incorporated, but we'll work jointly with the independent evaluator. I don't want to get out in front of that process because, again, it's working together. So we will do what's right for customers as it relates to the types of resources and who owns them and who doesn't.
Speaker Change: Those will probably be incorporated but will work jointly with independent evaluate or I don't want to get out in front of that process because again, it's working together so we.
Speaker Change: We will do what's right for customers as it relates to the types of resources, and who owns them and who doesn't own them. So.
Speaker Change: Great. Thanks, and then on the topic of tariffs what are you seeing as far as the impact as it relates to your capital plan.
Michael Lonegan: Great, thanks. And then, you know, on the topic of tariffs, what are you seeing, you know, as far as the impact as it relates to your capital? Yeah, Mike, I think Lisa said about 2%. It's in line with what other utilities are saying. It's not, it's not real large right now. Okay.
Speaker Change: Yes, Mike I think Lisa said about 2% in.
Speaker Change: In line with what other utilities are saying it's not.
Speaker Change: Not real large right now.
Speaker Change: Okay, and then lastly for me the New Mexico, I know you've talked about pursuing transmission development to support the growing demand I know you have $185 million of transmission build in your current five year Capex plan. Just wondering what you see is the size of the.
Michael Lonegan: And then, you know, lastly, for me, in New Mexico, you know, you've talked about pursuing transmission development to support the growing demand. And I know you have $185 million of transmission billed in your current five-year CapEx plan.
Michael Lonegan: Just wondering what you see as the size of the incremental investment opportunity over the five-year period and beyond. You know, over the five-year period, because transmission takes a little bit of time to develop, probably just a little bit more, but when you get outside that five-year period, to kind of give you a feel of, and these were transmission studies that were done, that we presented to the Commission last week, you know, when you kind of take into consideration statewide the transmission that needs to be built, it's in the round of about $4 billion in transmission.
Speaker Change: Incremental investment opportunity over the five year period and beyond.
Speaker Change: Over the five year period, because transmission it takes a little bit of time to develop.
Speaker Change: Just a little bit more but when you get outside that five year period to kind of give you a fill of these retransmission studies that were done that we presented to the commission last week.
Speaker Change: You've kind of taken into consideration statewide the transmission that needs to be built it's in the round about $4 billion in transmission. So.
Speaker Change: Over that 20 year.
Operator: over that 20 years.
Speaker Change: Thanks for taking my question.
Speaker Change: Thank you.
Speaker Change: And the next question comes from Anthony <unk>.
Anthony Crowdell: The next question comes from Anthony Crowdell with Mizzou Ho. Please go ahead. Hey, good morning, team. I can't believe Nick really want to get rid of Lisa that quick. I know, I know. Thank you, Anthony. Yeah, I mean remember that. Remember that. I will.
Speaker Change: With Mizuho. Please go ahead.
Anthony: Hey, good morning team I can't believe Nick do you want to get rid of Liza that quick.
Speaker Change: Just I guess China.
Anthony: Thank you Anthony.
Anthony: Yeah, I mean remember that remember that well.
Anthony: I guess just actually following up on one of the next questions.
Anthony Crowdell: I guess just actually following up on one of Nick's questions. Talking about the Texas legislation, HB, I think it's 57, I forgot the number, 5247. I believe, and it may have been changed, and maybe that's my question, that to qualify for that legislation you had to spend, I thought it was like 3x of depreciation. Is that accurate? As the bill stands now, does TNMP, would they qualify under that legislation? Yes, that is correct on the 300% above depreciation. And yes, TNP would, would, would fit. Great.
Anthony: Talking about the Texas legislation HB I think it's 57 I forgot the number 50 247.
Anthony: I believe and it may have been changing maybe thats. My question that to qualify for that legislation you had to spend I thought it was like three acts of depreciation.
Anthony: Is that accurate and is as the bill stands now does.
Anthony: <unk> would they qualify under that legislation.
Anthony: Yes that is correct on the 300% above depreciation and yes, TNMP wood wood would fit that.
Anthony: Great and now here is.
Anthony Crowdell: And now here's a off the beaten path question. Um, before most calls, you guys usually have like a message. in the music that you select before the call, like after the AGR deal, I think it was like Elton John, I'm Still Standing, and there was like a message there. This is Piano Man and I didn't get the message and I'm wondering was there a message or just you guys are big Billy Joel fans? We're big Billy Joel fans. No hidden messages today. Okay, thanks. Thanks for taking my questions. Congrats. Thank you.
Anthony: Off the beaten path question.
Speaker Change: The foremost calls you guys usually have like a message.
Speaker Change: Then the music that you select before the call right. After the AGR deal I think it was like Elton John I'm still standing.
And there was like a message there.
Speaker Change: This is piano man and I didn't get the message I'm wondering was there a message.
Speaker Change: You guys are big Billy Joel fans.
Speaker Change: We're we're big Billy Joel fans no hidden messages today.
Okay. Thanks, Thanks for taking my questions Congrats.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press star and then one.
Operator: Again, if you have a question, please press star and then.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Pat colon for any closing remarks.
Operator: This concludes our question and answer session.
Pat Klon: I'd like to turn the conference back over to Pat Kahlon for any closing. Thank you, Dave, and thank you all for joining us this morning.
Speaker Change: Thank you Dave and thank you all for joining US. This morning, and then as you raised the glass Tonight. Please raise one to Billy Joel for 76 and PNM for 109.
Pat Klon: And as you raise a glass tonight, please raise one to Billy Joel for 76 and PNM for 109. Thank you all. Stay safe.
Speaker Change: Thank you all stay safe.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: conference has now concluded. Thank you for attending today's presentation. You may now