PNM 2016 earnings come in at $116.8M

PNM Resources reported nearly $117 million in net earnings in 2016, despite regulatory challenges and ongoing declines in retail sales at the company’s local utility, Public Service Company of New Mexico.

Net earnings actually climbed dramatically last year, from $15.6 million in 2015 to $116.8 million. But that reflects a $102.6 million after-tax write-off in 2015 for unrecovered investment at the San Juan Generating Station near Farmington, where PNM is shutting two of four generating units to comply with environmental regulations. That led to a $91.4 million net-earnings loss at the end of 2015.

Last year’s ongoing earnings, which exclude one-=time gains and charges such as the San Juan write-off, do reflect a small improvement in PNM Resources’ performance. Ongoing earnings climbed from $131.5 million in 2015 to $132.4 million last year.

Nevertheless, the parent company still faces challenges at its New Mexico utility, which reported $76.9 million in net earnings for 2016. That’s up from a $15.8 million loss in 2015, reflecting the San Juan write-off, but it’s down by 11.4 percent from 2014.

The New Mexico Public Regulatory Commission slashed PNM’s request for a 14 percent rate hike by nearly half last year, from $123.5 million to $65.7 million.

“In 2016, we made progress by creating value for our customers, communities and

shareholders, despite a challenging year of rate case litigation in New Mexico,” PNM Resources Chairman, President and CEO Pat Vincent-Collawn said in a statement. “As we further our efforts in 2017, we will continue to seek fair regulatory outcomes that balance the interests of customers and investors.”

The company filed a new request in December for a 14 percent increase in overall average system rates. Settlement talks with parties in the new case will take place this month, Vincent-Collawn told investors in a conference call on Tuesday.

Meanwhile, PNM faces ongoing declines in retail sales. Residential demand remained flat last year. And while commercial sales grew by 0.5 percent, industrial demand plummeted by 8.8 percent. That led to an overall 0.7 percent decline in load for the year, Chief Financial Officer Chuck Eldred told investors.

The company didn’t discuss industrial decline on Tuesday. But in the past, it’s said lower demand at Intel Corp.’s Rio Rancho plant is a major factor.

In contrast, the company’s other utility, Texas New Mexico Power, reported a 3 percent jump in retail demand in 2016. That utility reported $41.7 million in net earnings last year, virtually unchanged from 2015.