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PNM and TXNM Energy's 2025 Rate Request Unopposed Stipulation

In an essential step towards enhancing their operational stability and addressing evolving customer needs, PNM, a subsidiary of TXNM Energy, has successfully filed an unopposed stipulation concerning its 2025 Rate Request. This important legal stride was communicated to the New Mexico Public Regulation Commission (NMPRC) on November 26, 2024.

Overview of the Stipulation

The stipulation proposes a structured approach to increase customer rates, ensuring that the necessary revenue will support significant investments in PNM's infrastructure. Specifically, the stipulation outlines a raise in revenue by $105 million, predicated on a 9.45% return on equity and a 51% equity capitalization structure applied to a $3 billion rate base. Notably, this proposal also accommodates the establishment of a regulatory asset or liability contingent on discrepancies in Energy Storage Agreement costs relative to the filed amounts as we approach PNM's next rate request.

Additionally, the stipulation maintains the approved depreciation rates for the Four Corners Power Plant and adjusts PNM's current amortization period related to unprotected Excess Deferred Federal Income Tax. A decrease in operational expenses has also been factored into this arrangement to meet the stipulated revenue increase of $105 million. Furthermore, the agreement allocates $1.5 million towards the PNM Good Neighbor Fund, aimed at offering additional bill assistance to those customers who qualify.

Implementation Timeline

The implementation of customer rate adjustments is set to occur in phases. According to the stipulation, 50% of the increase will be effective starting July 1, 2025, while the remaining portion will take effect on April 1, 2026. This gradual increase allows for a smoother transition for customers who will see adjustments to their bills over time.

Comparison with Previous Rates

Currently, PNM operates under rates premised on a 9.26% return on equity and a balanced equity capitalization of 50%. This rate adjustment request of $174.3 million proposed earlier included expectations for a higher return on equity of 10.45% and an increased equity capitalization structure of 52.5% on the same $3 billion base. The adjustments reflect ongoing shifts in operational costs and investment necessities within the energy sector.

Collaborative Efforts

PNM's collaboration with numerous parties on this stipulation underscores a united front in addressing regulatory needs. Key participants in this agreement include several state agencies, municipalities, and organizations devoted to renewable energy advocacy, such as the New Mexico Department of Justice, the City of Albuquerque, and notable corporations like Walmart and Kroger. Their consensus represents a broad acknowledgment of the necessity to refine PNM’s financial models to better serve the community's energy demands.

Additionally, organizations such as the Coalition for Clean Affordable Energy and the Renewable Energy Industries Association of New Mexico, although parties to the negotiations, do not oppose the settlement, pointing toward a collective effort to navigate the complexities of energy regulation within New Mexico.

Next Steps

With the stipulation’s success pending NMPRC approval, a scheduling conference is set for December 4 to update the procedural timeline. Hearings aimed at finalizing details are expected to kick off by mid-February. For those interested, additional information regarding the ongoing financial implications of this stipulation can be found on TXNM Energy’s investor relations page.

TXNM Energy, based in Albuquerque, is noteworthy for supplying energy to an extensive customer base across Texas and New Mexico, ensuring that over 800,000 households and businesses receive reliable and adequate energy supplies. This stipulation marks another milestone in PNM's continuous efforts to evolve and meet the demands of its customers while maintaining financial viability in a changing energy landscape.

For further details, refer to TXNM Energy's dedicated resource pages, which feature the application and other related paperwork.