PNM’s earnings rise nearly 39% in Q2

Revenue generation by local utility division posts robust growth

PNM Resources reported a nearly 39 percent jump in net earnings in second-quarter 2017, reflecting significant improvement in revenue generation at the company’s local utility, Public Service Company of New Mexico.

The parent firm’s net income reached $37.6 million in the April-June period, up from $27.1 million in the same quarter last year. That comes on top of a robust first quarter, pushing up net earnings for the first half of this year by nearly 61 percent to $60.4 million. That’s up from $37.6 million in the JanuaryJune period last year.

The company reaffirmed its 2017 earnings guidance of between $1.77 to $1.87 per share in a conference call with investors Friday morning.

“We’ve had a strong start to 2017,” Chief Financial Officer Chuck Eldred told investors. “Both our utilities in New Mexico and Texas are doing well.”

Moody’s updated the outlook for both PNM Resources and its New Mexico utility to “positive” in June, said Chairman, President and CEO Pat Vincent-Collawn. “Positive second quarter financial results keep us on track with our annual earnings guidance.” The improved earnings come from a marked increase in revenue at the parent firm’s local utility, fueled largely by a 10 percent hike last October in average residential rates for PNM customers.

PNM’s net earnings grew by nearly 69 percent in the second quarter, from $15.9 million in the April-June period in 2016 to $26.8 million this year. Earnings for the first half of 2017 more than doubled, to $43.3 million this year.

More robust growth may be coming in the next two years if the New Mexico Public Regula-

tion Commission approves another 9 percent rate hike PNM is requesting in its current rate case. The utility reached a settlement agreement in May with nearly all parties involved in that case, lowering its initial request from 14 percent before to 9 percent now.

If approved, it would be phased in over two years, in 2018 and 2019. Public hearings are scheduled to begin Aug. 7.

PNM is also benefiting from a slow improvement in New Mexico’s economy and sweltering summer heat, both of which have stunted the decline in electric demand experienced in recent years.

Residential demand grew by 0.4 percent in the first half of 2017. Commercial and industrial demand fell in the same period, by 1 percent and 2.4 percent, respectively. But that’s a slower decline than in previous years.

“We’re looking for stabilization in load growth going forward, rather than the significant declines we’ve seen in recent years,” Eldred said.

Meanwhile, PNM Resources’ other utility, Texas New Mexico Power, reported $12.2 million in net earnings in the second quarter, and $19.8 million for the first half of the year. That’s up from $10.5 million in second-quarter 2016, and $18 million in the January-June period last year.