Document
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 [X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

Commission File
 
Name of Registrants, State of Incorporation,
 
I.R.S. Employer
 Number
 
 Address and Telephone Number
 
 Identification No.
001-32462
 
PNM Resources, Inc.
 
85-0468296
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
001-06986
 
Public Service Company of New Mexico
 
85-0019030
 
 
(A New Mexico Corporation)
 
 
 
 
414 Silver Ave. SW
 
 
 
 
Albuquerque, New Mexico 87102-3289
 
 
 
 
(505) 241-2700
 
 
 
 
 
 
 
002-97230
 
Texas-New Mexico Power Company
 
75-0204070
 
 
(A Texas Corporation)
 
 
 
 
577 N. Garden Ridge Blvd.
 
 
 
 
Lewisville, Texas 75067
 
 
 
 
(972) 420-4189
 
 

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
 
PNM Resources, Inc. (“PNMR”)
YES
ü
NO
 
 
Public Service Company of New Mexico (“PNM”)
YES
ü
NO
 
 
Texas-New Mexico Power Company (“TNMP”)
YES
 
NO
ü

(NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether each registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 
PNMR
YES
ü
NO
 
 
PNM
YES
ü
NO
 
 
TNMP
YES
ü
NO
 




Table of Contents

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 
Large accelerated
filer
 
Accelerated
filer
 
Non-accelerated
filer (Do not check if a smaller reporting company)
 
Smaller reporting company
 
Emerging growth company
PNMR
 
ü
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
PNM
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
 
 
 
TNMP
 
   
 
 
 
   
 
 
 
ü
 
 
 
   
 
 
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES     NO ü

As of October 20, 2017, 79,653,624 shares of common stock, no par value per share, of PNMR were outstanding.

The total number of shares of common stock of PNM outstanding as of October 20, 2017 was 39,117,799 all held by PNMR (and none held by non-affiliates).

The total number of shares of common stock of TNMP outstanding as of October 20, 2017 was 6,358 all held indirectly by PNMR (and none held by non-affiliates).

PNM AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

This combined Form 10-Q is separately filed by PNMR, PNM, and TNMP.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  Each registrant makes no representation as to information relating to the other registrants.  When this Form 10-Q is incorporated by reference into any filing with the SEC made by PNMR, PNM, or TNMP, as a registrant, the portions of this Form 10-Q that relate to each other registrant are not incorporated by reference therein.



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PNM RESOURCES, INC. AND SUBSIDIARIES
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX

 
Page No.
 
 
 
 
 
 


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GLOSSARY

Definitions:
  
 
2014 IRP
 
PNM’s 2014 IRP
2017 IRP
 
PNM’s 2017 IRP
ABCWUA
 
Albuquerque Bernalillo County Water Utility Authority
Afton
  
Afton Generating Station
AFUDC
 
Allowance for Funds Used During Construction
AMI
 
Advanced Metering Infrastructure
AMS
 
Advanced Meter System
AOCI
  
Accumulated Other Comprehensive Income
APS
  
Arizona Public Service Company, the operator and a co-owner of PVNGS and Four Corners
ASU
 
Accounting Standards Update
BACT
  
Best Available Control Technology
BART
  
Best Available Retrofit Technology
BDT
 
Balanced Draft Technology
BHP
  
BHP Billiton, Ltd
Board
  
Board of Directors of PNMR
BTMU
 
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
BTMU Term Loan Agreement
 
NM Capital’s $125.0 Million Unsecured Term Loan
BTU
  
British Thermal Unit
CAA
 
Clean Air Act
CCB
  
Coal Combustion Byproduct
CCN
 
Certificate of Convenience and Necessity
CIAC
 
Contributions in Aid of Construction
CO2
  
Carbon Dioxide
CSA
 
Coal Supply Agreement
CTC
  
Competition Transition Charge
DC Circuit
 
United States Court of Appeals for the District of Columbia Circuit
DOE
  
United States Department of Energy
DOI
  
United States Department of Interior
EGU
 
Electric Generating Unit
EIS
 
Environmental Impact Study
EPA
  
United States Environmental Protection Agency
ERCOT
  
Electric Reliability Council of Texas
ESA
 
Endangered Species Act
Exchange Act
 
Securities Exchange Act of 1934
Farmington
 
The City of Farmington, New Mexico
FASB
  
Financial Accounting Standards Board
FERC
  
Federal Energy Regulatory Commission
FIP
  
Federal Implementation Plan
Four Corners
  
Four Corners Power Plant
FPPAC
  
Fuel and Purchased Power Adjustment Clause
FTY
 
Future Test Year
GAAP
  
Generally Accepted Accounting Principles in the United States of America
GHG
  
Greenhouse Gas Emissions

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GWh
  
Gigawatt hours
IRP
 
Integrated Resource Plan
IRS
  
Internal Revenue Service
ISFSI
 
Independent Spent Fuel Storage Installation
KW
  
Kilowatt
KWh
  
Kilowatt Hour
La Luz
  
La Luz Generating Station
LIBOR
  
London Interbank Offered Rate
Lightning Dock Geothermal
 
Lightning Dock geothermal power facility, also known as the Dale Burgett Geothermal Plant
Lordsburg
  
Lordsburg Generating Station
Luna
  
Luna Energy Facility
MD&A
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MMBTU
  
Million BTUs
Moody’s
  
Moody’s Investor Services, Inc.
MW
  
Megawatt
MWh
  
Megawatt Hour
NAAQS
 
National Ambient Air Quality Standards
Navajo Acts
  
Navajo Nation Air Pollution Prevention and Control Act, Navajo Nation Safe Drinking Water Act, and Navajo Nation Pesticide Act
NDT
  
Nuclear Decommissioning Trusts for PVNGS
NEC
 
Navopache Electric Cooperative, Inc.
NEE
 
New Energy Economy
NEPA
 
National Environmental Policy Act
NERC
  
North American Electric Reliability Corporation
New Mexico Wind
 
New Mexico Wind Energy Center
NM 2015 Rate Case
 
Request for a General Increase in Electric Rates Filed by PNM on August 27, 2015
NM 2016 Rate Case
 
Request for a General Increase in Electric Rates Filed by PNM on December 7, 2016
NM Capital
 
NM Capital Utility Corporation, an unregulated wholly-owned subsidiary of PNMR
NM Supreme Court
 
New Mexico Supreme Court
NMAG
  
New Mexico Attorney General
NMED
  
New Mexico Environment Department
NMIEC
  
New Mexico Industrial Energy Consumers Inc.
NMMMD
 
The Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources Department
NMPRC
  
New Mexico Public Regulation Commission
NOx
  
Nitrogen Oxides
NOPR
 
Notice of Proposed Rulemaking
NPDES
 
National Pollutant Discharge Elimination System
NRC
  
United States Nuclear Regulatory Commission
NSPS
  
New Source Performance Standards
NSR
  
New Source Review
NTEC
 
Navajo Transitional Energy Company, LLC, an entity owned by the Navajo Nation
OCI
  
Other Comprehensive Income
OPEB
  
Other Post Employment Benefits
OSM
 
United States Office of Surface Mining Reclamation and Enforcement
PCRBs
  
Pollution Control Revenue Bonds

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PNM
  
Public Service Company of New Mexico and Subsidiaries, a wholly-owned subsidiary of PNMR
PNM 2016 Term Loan Agreement
 
PNM’s $175.0 Million Unsecured Term Loan
PNM 2017 Senior Unsecured Note Agreement
 
PNM’s Agreement for the sale of Senior Unsecured Notes, aggregating $450.0 million
PNM 2017 Term Loan Agreement
 
PNM’s $200.0 Million Unsecured Term Loan
PNM 2018 SUNs
 
PNM’s Senior Unsecured Notes to be issued under the PNM 2017 Senior Unsecured Note Agreement
PNM New Mexico Credit Facility
 
PNM’s $50.0 Million Unsecured Revolving Credit Facility
PNM Revolving Credit Facility
 
PNM’s $400.0 Million Unsecured Revolving Credit Facility
PNMR
  
PNM Resources, Inc. and Subsidiaries
PNMR 2015 Term
   Loan Agreement
 
PNMR’s $150.0 Million Three-Year Unsecured Term Loan
PNMR 2016 One-Year Term Loan
 
PNMR’s $100.0 Million One-Year Unsecured Term Loan
PNMR 2016 Two-Year Term Loan
 
PNMR’s $100.0 Million Two-Year Unsecured Term Loan
PNMR Development
 
PNMR Development and Management Corporation, an unregulated wholly-owned subsidiary of PNMR
PNMR Revolving Credit Facility
 
PNMR’s $300.0 Million Unsecured Revolving Credit Facility
PPA
  
Power Purchase Agreement
PSA
 
Power Sales Agreement
PSD
  
Prevention of Significant Deterioration
PUCT
  
Public Utility Commission of Texas
PV
  
Photovoltaic
PVNGS
  
Palo Verde Nuclear Generating Station
RA
 
San Juan Project Restructuring Agreement
RCRA
  
Resource Conservation and Recovery Act
RCT
  
Reasonable Cost Threshold
REA
 
New Mexico’s Renewable Energy Act of 2004
REC
  
Renewable Energy Certificates
Red Mesa Wind
 
Red Mesa Wind Energy Center
REP
  
Retail Electricity Provider
RFP
 
Request For Proposal
Rio Bravo
 
Rio Bravo Generating Station
RMC
  
Risk Management Committee
ROE
 
Return on Equity
RPS
  
Renewable Energy Portfolio Standard
S&P
  
Standard and Poor’s Ratings Services
SCR
 
Selective Catalytic Reduction
SEC
  
United States Securities and Exchange Commission
SIP
  
State Implementation Plan
SJCC
  
San Juan Coal Company
SJGS
  
San Juan Generating Station
SNCR
 
Selective Non-Catalytic Reduction

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SO2
  
Sulfur Dioxide
TECA
  
Texas Electric Choice Act
Tenth Circuit
 
United States Court of Appeals for the Tenth Circuit
TNMP
  
Texas-New Mexico Power Company and Subsidiaries, a wholly-owned subsidiary of TNP
TNMP 2017 Bond Purchase Agreement
 
TNMP’s Agreement for the issuance of $60.0 Million First Mortgage Bonds
TNMP Revolving Credit Facility
  
TNMP’s $75.0 Million Secured Revolving Credit Facility
TNP
  
TNP Enterprises, Inc. and Subsidiaries, a wholly-owned subsidiary of PNMR
Tri-State
  
Tri-State Generation and Transmission Association, Inc.
Tucson
  
Tucson Electric Power Company
UG-CSA
 
Underground Coal Sales Agreement
US Supreme Court
 
Supreme Court of the United States
Valencia
 
Valencia Energy Facility
VaR
 
Value at Risk
VIE
 
Variable Interest Entity
WACC
 
Weighted Average Cost of Capital
WEG
 
WildEarth Guardians
Westmoreland
 
Westmoreland Coal Company
Westmoreland Loan
 
NM Capital’s $125.0 million loan to WSJ
WSJ
 
Westmoreland San Juan, LLC, an indirect wholly-owned subsidiary of Westmoreland

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands, except per share amounts)
Electric Operating Revenues 
$
419,900

 
$
400,374

 
$
1,112,398

 
$
1,026,726

Operating Expenses:

 
 
 

 

Cost of energy
103,748

 
108,766

 
310,818

 
282,498

Administrative and general
46,268

 
46,942

 
138,923

 
139,214

Energy production costs
31,970

 
31,460

 
98,150

 
112,026

Regulatory disallowances and restructuring costs

 
16,451

 

 
17,225

Depreciation and amortization
58,821

 
53,017

 
172,829

 
153,801

Transmission and distribution costs
16,801

 
16,056

 
50,309

 
49,965

Taxes other than income taxes
19,808

 
19,611

 
57,820

 
57,598

Total operating expenses
277,416

 
292,303

 
828,849

 
812,327

Operating income
142,484

 
108,071

 
283,549

 
214,399

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
3,582

 
4,604

 
12,348

 
18,420

Gains on available-for-sale securities
5,406

 
4,531

 
17,730

 
15,380

Other income
6,275

 
4,884

 
14,626

 
13,413

Other (deductions)
(4,571
)
 
(3,764
)
 
(10,958
)
 
(10,866
)
Net other income and deductions
10,692

 
10,255

 
33,746

 
36,347

Interest Charges
32,106

 
32,467

 
96,137

 
97,179

Earnings before Income Taxes
121,070

 
85,859

 
221,158

 
153,567

Income Taxes
42,743

 
27,303

 
75,154

 
50,094

Net Earnings
78,327

 
58,556

 
146,004

 
103,473

(Earnings) Attributable to Valencia Non-controlling Interest
(4,456
)
 
(4,006
)
 
(11,452
)
 
(11,037
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(396
)
 
(396
)
Net Earnings Attributable to PNMR
$
73,739

 
$
54,418

 
$
134,156

 
$
92,040

Net Earnings Attributable to PNMR per Common Share:
 
 
 
 
 
 
 
Basic
$
0.92

 
$
0.68

 
$
1.68

 
$
1.15

Diluted
$
0.92

 
$
0.68

 
$
1.67

 
$
1.15

Dividends Declared per Common Share
$
0.2425

 
$
0.2200

 
$
0.7275

 
$
0.6600


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.



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PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Net Earnings
$
78,327

 
$
58,556

 
$
146,004

 
$
103,473

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gains on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(2,871), $(1,877), $(8,654), and $(1,216)
4,528

 
2,933

 
13,648

 
1,899

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,601, $1,985, $4,302, and $3,955
(2,526
)
 
(3,101
)
 
(6,786
)
 
(6,180
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gains) losses recognized as net periodic benefit cost, net of income tax expense (benefit) of $(626), $(537), $(1,878), and $(1,611)
987

 
839

 
2,961

 
2,517

Fair Value Adjustment for Cash Flow Hedges:
 
 
 
 
 
 
 
Change in fair market value, net of income tax (expense) benefit of $(4), $(172), $108, and $509
6

 
269

 
(170
)
 
(796
)
Reclassification adjustment for (gains) losses included in net earnings, net of income tax expense (benefit) of $(62), $(79), $(187), and $(224)
99

 
123

 
297

 
349

Total Other Comprehensive Income (Loss)
3,094

 
1,063

 
9,950

 
(2,211
)
Comprehensive Income
81,421

 
59,619

 
155,954

 
101,262

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(4,456
)
 
(4,006
)
 
(11,452
)
 
(11,037
)
Preferred Stock Dividend Requirements of Subsidiary
(132
)
 
(132
)
 
(396
)
 
(396
)
Comprehensive Income Attributable to PNMR
$
76,833

 
$
55,481

 
$
144,106

 
$
89,829


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


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PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
146,004

 
$
103,473

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
200,286

 
178,137

Deferred income tax expense
75,224

 
50,302

Net unrealized (gains) losses on commodity derivatives
968

 
2,179

Realized (gains) on available-for-sale securities
(17,730
)
 
(15,380
)
Stock based compensation expense
5,322

 
4,401

Regulatory disallowances and restructuring costs

 
17,225

Allowance for equity funds used during construction
(6,217
)
 
(3,058
)
Other, net
1,409

 
2,104

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(21,077
)
 
(1,145
)
Materials, supplies, and fuel stock
(203
)
 
(4,629
)
Other current assets
22,761

 
(11,819
)
Other assets
(5,981
)
 
1,916

Accounts payable
3,729

 
6,192

Accrued interest and taxes
20,722

 
20,816

Other current liabilities
(1,588
)
 
(19,431
)
Other liabilities
(6,292
)
 
(10,297
)
Net cash flows from operating activities
417,337

 
320,986

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Additions to utility and non-utility plant
(353,423
)
 
(502,530
)
Proceeds from sales of available-for-sale securities
456,577

 
280,989

Purchases of available-for-sale securities
(461,126
)
 
(284,706
)
Return of principal on PVNGS lessor notes

 
8,547

Investment in Westmoreland Loan

 
(122,250
)
Principal repayments on Westmoreland Loan
28,770

 
15,000

Other, net
160

 
179

Net cash flows from investing activities
(329,042
)
 
(604,771
)

The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.

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PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Revolving credit facilities borrowings (repayments), net
(20,600
)
 
105,300

Long-term borrowings
317,000

 
503,500

Repayment of long-term debt
(263,323
)
 
(288,157
)
Proceeds from stock option exercise
1,739

 
6,668

Awards of common stock
(13,816
)
 
(14,920
)
Dividends paid
(58,344
)
 
(52,967
)
Valencia’s transactions with its owner
(12,963
)
 
(12,327
)
Amounts received under transmission interconnection arrangements
11,879

 
3,262

Refunds paid under transmission interconnection arrangements
(9,368
)
 
(2,246
)
Other, net
(1,872
)
 
(2,698
)
Net cash flows from financing activities
(49,668
)
 
245,415

 
 
 
 
Change in Cash and Cash Equivalents
38,627

 
(38,370
)
Cash and Cash Equivalents at Beginning of Period
4,522

 
46,051

Cash and Cash Equivalents at End of Period
$
43,149

 
$
7,681

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
75,356

 
$
75,537

Income taxes paid (refunded), net
$
625

 
$
850

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
(4,499
)
 
$
30,208


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


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PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
43,149

 
$
4,522

Accounts receivable, net of allowance for uncollectible accounts of $1,063 and $1,209
107,428

 
87,012

Unbilled revenues
57,241

 
58,284

Other receivables
16,567

 
28,245

Current portion of Westmoreland Loan
12,272

 
38,360

Materials, supplies, and fuel stock
68,179

 
73,027

Regulatory assets
3,424

 
3,855

Commodity derivative instruments
3,093

 
5,224

Income taxes receivable
6,761

 
6,066

Other current assets
56,421

 
73,444

Total current assets
374,535

 
378,039

Other Property and Investments:
 
 
 
Long-term portion of Westmoreland Loan
53,958

 
56,640

Available-for-sale securities
306,444

 
272,977

Other investments
386

 
547

Non-utility property
3,404

 
3,404

Total other property and investments
364,192

 
333,568

Utility Plant:
 
 
 
Plant in service, held for future use, and to be abandoned
7,133,646

 
6,944,534

Less accumulated depreciation and amortization
2,431,695

 
2,334,938

 
4,701,951

 
4,609,596

Construction work in progress
301,466

 
208,206

Nuclear fuel, net of accumulated amortization of $49,895 and $43,905
88,702

 
86,913

Net utility plant
5,092,119

 
4,904,715

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
489,416

 
501,223

Goodwill
278,297

 
278,297

Commodity derivative instruments
3,846

 

Other deferred charges
94,849

 
75,238

Total deferred charges and other assets
866,408

 
854,758

 
$
6,697,254

 
$
6,471,080


The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


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Table of Contents



PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$
266,500

 
$
287,100

Current installments of long-term debt
165,312

 
273,348

Accounts payable
89,882

 
86,705

Customer deposits
10,951

 
11,374

Accrued interest and taxes
83,288

 
61,871

Regulatory liabilities
7,156

 
3,609

Commodity derivative instruments
1,279

 
2,339

Dividends declared
19,448

 
19,448

Other current liabilities
67,069

 
59,314

Total current liabilities
710,885

 
805,108

Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs
2,282,390

 
2,119,364

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
1,015,967

 
940,650

Regulatory liabilities
456,740

 
455,649

Asset retirement obligations
133,841

 
127,519

Accrued pension liability and postretirement benefit cost
116,812

 
125,844

Commodity derivative instruments
3,846

 

Other deferred credits
132,098

 
140,545

Total deferred credits and other liabilities
1,859,304

 
1,790,207

Total liabilities
4,852,579

 
4,714,679

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock of Subsidiary
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNMR common stockholders’ equity:
 
 
 
Common stock (no par value; 120,000,000 shares authorized; issued and outstanding 79,653,624 shares)
1,156,906

 
1,163,661

Accumulated other comprehensive income (loss), net of income taxes
(82,501
)
 
(92,451
)
Retained earnings
691,332

 
604,742

Total PNMR common stockholders’ equity
1,765,737

 
1,675,952

Non-controlling interest in Valencia
67,409

 
68,920

Total equity
1,833,146

 
1,744,872

 
$
6,697,254

 
$
6,471,080

 
 
 
 

The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.


13

Table of Contents

PNM RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)

 
Attributable to PNMR
 
Non-
controlling
Interest
in Valencia
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
Total PNMR Common Stockholders’ Equity
 
 
Total
Equity
 
(In thousands)
Balance at December 31, 2016, as originally reported
$
1,163,661

 
$
(92,451
)
 
$
604,742

 
$
1,675,952

 
$
68,920

 
$
1,744,872

Cumulative effect adjustment (Note 8)

 

 
10,382

 
10,382

 

 
10,382

Balance at January 1, 2017, as adjusted
1,163,661

 
(92,451
)
 
615,124

 
1,686,334

 
68,920

 
1,755,254

Net earnings before subsidiary preferred stock dividends

 

 
134,552

 
134,552

 
11,452

 
146,004

Total other comprehensive income

 
9,950

 

 
9,950

 

 
9,950

Subsidiary preferred stock dividends

 

 
(396
)
 
(396
)
 

 
(396
)
Dividends declared on common stock

 

 
(57,948
)
 
(57,948
)
 

 
(57,948
)
Proceeds from stock option exercise
1,739

 

 

 
1,739

 

 
1,739

Awards of common stock
(13,816
)
 

 

 
(13,816
)
 

 
(13,816
)
Stock based compensation expense
5,322

 

 

 
5,322

 

 
5,322

Valencia’s transactions with its owner

 

 

 

 
(12,963
)
 
(12,963
)
Balance at September 30, 2017
$
1,156,906

 
$
(82,501
)
 
$
691,332

 
$
1,765,737

 
$
67,409

 
$
1,833,146



The accompanying notes, as they relate to PNMR, are an integral part of these condensed consolidated financial statements.



14

Table of Contents


PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Electric Operating Revenues
$
327,254

 
$
311,276

 
$
854,909

 
$
780,228

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
82,367

 
88,565

 
246,635

 
222,376

Administrative and general
42,026

 
41,370

 
127,012

 
122,553

Energy production costs
31,970

 
31,460

 
98,150

 
112,026

Regulatory disallowances and restructuring costs

 
16,451

 

 
17,225

Depreciation and amortization
36,764

 
33,312

 
109,228

 
97,778

Transmission and distribution costs
10,207

 
9,311

 
30,301

 
29,868

Taxes other than income taxes
10,668

 
10,750

 
32,837

 
33,289

Total operating expenses
214,002

 
231,219

 
644,163

 
635,115

Operating income
113,252

 
80,057

 
210,746

 
145,113

Other Income and Deductions:
 
 
 
 
 
 
 
Interest income
1,782

 
1,509

 
6,457

 
8,549

Gains on available-for-sale securities
5,406

 
4,531

 
17,730

 
15,380

Other income
3,762

 
3,239

 
10,270

 
9,578

Other (deductions)
(2,826
)
 
(2,790
)
 
(8,076
)
 
(7,653
)
Net other income and deductions
8,124

 
6,489

 
26,381

 
25,854

Interest Charges
20,451

 
22,213

 
62,393

 
66,494

Earnings before Income Taxes
100,925

 
64,333

 
174,734

 
104,473

Income Taxes
35,642

 
19,343

 
58,865

 
32,131

Net Earnings
65,283

 
44,990

 
115,869

 
72,342

(Earnings) Attributable to Valencia Non-controlling Interest
(4,456
)
 
(4,006
)
 
(11,452
)
 
(11,037
)
Net Earnings Attributable to PNM
60,827

 
40,984

 
104,417

 
61,305

Preferred Stock Dividends Requirements
(132
)
 
(132
)
 
(396
)
 
(396
)
Net Earnings Available for PNM Common Stock
$
60,695

 
$
40,852

 
$
104,021

 
$
60,909


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


15

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Net Earnings
$
65,283

 
$
44,990

 
$
115,869

 
$
72,342

Other Comprehensive Income (Loss):
 
 
 
 
 
 
 
Unrealized Gains on Available-for-Sale Securities:
 
 
 
 
 
 
 
Unrealized holding gains arising during the period, net of income tax (expense) of $(2,871), $(1,877), $(8,654), and $(1,216)
4,528

 
2,933

 
13,648

 
1,899

Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $1,601, $1,985, $4,302, and $3,955
(2,526
)
 
(3,101
)
 
(6,786
)
 
(6,180
)
Pension Liability Adjustment:
 
 
 
 
 
 
 
Reclassification adjustment for amortization of experience (gains) losses recognized as net periodic benefit cost, net of income tax expense (benefit) of $(626), $(537), $(1,878), and $(1,611)
987

 
839

 
2,961

 
2,517

Total Other Comprehensive Income (Loss)
2,989

 
671

 
9,823

 
(1,764
)
Comprehensive Income
68,272

 
45,661

 
125,692

 
70,578

Comprehensive (Income) Attributable to Valencia Non-controlling Interest
(4,456
)
 
(4,006
)
 
(11,452
)
 
(11,037
)
Comprehensive Income Attributable to PNM
$
63,816

 
$
41,655

 
$
114,240

 
$
59,541


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


16

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
115,869

 
$
72,342

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
134,541

 
122,344

Deferred income tax expense
59,866

 
33,175

Net unrealized (gains) losses on commodity derivatives
968

 
2,179

Realized (gains) on available-for-sale securities
(17,730
)
 
(15,380
)
Regulatory disallowances and restructuring costs

 
17,225

Allowance for equity funds used during construction
(5,908
)
 
(2,654
)
Other, net
1,705

 
2,091

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(13,881
)
 
8,283

Materials, supplies, and fuel stock
1,385

 
(7,731
)
Other current assets
24,488

 
(4,005
)
Other assets
6,925

 
10,117

Accounts payable
123

 
6,819

Accrued interest and taxes
16,221

 
16,146

Other current liabilities
(17,988
)
 
(18,908
)
Other liabilities
(8,792
)
 
(13,401
)
Net cash flows from operating activities
297,792

 
228,642

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(206,499
)
 
(377,637
)
Proceeds from sales of available-for-sale securities
456,577

 
280,989

Purchases of available-for-sale securities
(461,126
)
 
(284,706
)
Return of principal on PVNGS lessor notes

 
8,547

Other, net
150

 
171

Net cash flows from investing activities
(210,898
)
 
(372,636
)

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


17

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Financing Activities:
 
 
 
Revolving credit facilities borrowings (repayments), net
(61,000
)
 
42,400

Long-term borrowings
257,000

 
321,000

Repayment of long-term debt
(232,000
)
 
(271,000
)
Equity contribution from parent

 
28,142

Dividends paid
(396
)
 
(4,538
)
Valencia’s transactions with its owner
(12,963
)
 
(12,327
)
Amounts received under transmission interconnection arrangements
11,879

 
3,262

Refunds paid under transmission interconnection arrangements
(9,368
)
 
(2,246
)
Other, net
(1,000
)
 
(1,944
)
Net cash flows from financing activities
(47,848
)
 
102,749

 
 
 
 
Change in Cash and Cash Equivalents
39,046

 
(41,245
)
Cash and Cash Equivalents at Beginning of Period
324

 
43,138

Cash and Cash Equivalents at End of Period
$
39,370

 
$
1,893

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
48,627

 
$
53,791

Income taxes paid (refunded), net
$

 
$

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
(9,399
)
 
$
20,200


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


18

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
39,370

 
$
324

Accounts receivable, net of allowance for uncollectible accounts of $1,063 and $1,209
79,668

 
65,003

Unbilled revenues
45,800

 
48,289

Other receivables
13,510

 
25,514

Affiliate receivables
8,944

 
8,886

Materials, supplies, and fuel stock
63,016

 
64,401

Regulatory assets
2,526

 
3,442

Commodity derivative instruments
3,093

 
5,224

Income taxes receivable
26,808

 
25,807

Other current assets
48,883

 
67,355

Total current assets
331,618

 
314,245

Other Property and Investments:
 
 
 
Available-for-sale securities
306,444

 
272,977

Other investments
166

 
316

Non-utility property
96

 
96

Total other property and investments
306,706

 
273,389

Utility Plant:
 
 
 
Plant in service, held for future use, and to be abandoned
5,463,764

 
5,359,211

Less accumulated depreciation and amortization
1,881,371

 
1,809,528

 
3,582,393

 
3,549,683

Construction work in progress
223,677

 
158,122

Nuclear fuel, net of accumulated amortization of $49,895 and $43,905
88,702

 
86,913

Net utility plant
3,894,772

 
3,794,718

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
349,453

 
365,413

Goodwill
51,632

 
51,632

Commodity derivative instruments
3,846

 

Other deferred charges
85,789

 
68,149

Total deferred charges and other assets
490,720

 
485,194

 
$
5,023,816

 
$
4,867,546

 
 
 
 

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.


19

Table of Contents



PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt
$

 
$
61,000

Current installments of long-term debt

 
231,880

Accounts payable
65,088

 
55,566

Affiliate payables
9,738

 
23,183

Customer deposits
10,951

 
11,374

Accrued interest and taxes
52,041

 
34,819

Regulatory liabilities
7,138

 
3,517

Commodity derivative instruments
1,279

 
2,339

Dividends declared
132

 
132

Transmission interconnection arrangement liabilities
12,167

 
522

Other current liabilities
32,532

 
33,029

Total current liabilities
191,066

 
457,361

Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs
1,657,396

 
1,399,489

Deferred Credits and Other Liabilities:
 
 
 
Accumulated deferred income taxes
810,995

 
748,666

Regulatory liabilities
423,477

 
423,701

Asset retirement obligations
132,878

 
126,601

Accrued pension liability and postretirement benefit cost
106,742

 
114,427

Commodity derivative instruments
3,846

 

Other deferred credits
106,762

 
118,980

Total deferred credits and liabilities
1,584,700

 
1,532,375

Total liabilities
3,433,162

 
3,389,225

Commitments and Contingencies (See Note 11)


 


Cumulative Preferred Stock
 
 
 
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)
11,529

 
11,529

Equity:
 
 
 
PNM common stockholder’s equity:
 
 
 
Common stock (no par value; 40,000,000 shares authorized; issued and outstanding 39,117,799 shares)
1,264,918

 
1,264,918

Accumulated other comprehensive income (loss), net of income taxes
(82,605
)
 
(92,428
)
Retained earnings
329,403

 
225,382

Total PNM common stockholder’s equity
1,511,716

 
1,397,872

Non-controlling interest in Valencia
67,409

 
68,920

Total equity
1,579,125

 
1,466,792

 
$
5,023,816

 
$
4,867,546


The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

20

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Unaudited)
 
Attributable to PNM
 
 
 
 
 
 
 
 
 
Total PNM
Common
Stockholder’s
Equity
 
Non-
controlling
 Interest in Valencia
 
 
 
 
 
 
 
 
 
 
 
Common
Stock
 
AOCI
 
Retained
Earnings
 
 
 
Total
Equity
 
 
 
 
 
 
 
(In thousands)
Balance at December 31, 2016
$
1,264,918

 
$
(92,428
)
 
$
225,382

 
$
1,397,872

 
$
68,920

 
$
1,466,792

Net earnings

 

 
104,417

 
104,417

 
11,452

 
115,869

Total other comprehensive income

 
9,823

 

 
9,823

 

 
9,823

Dividends declared on preferred stock

 

 
(396
)
 
(396
)
 

 
(396
)
Valencia’s transactions with its owner

 

 

 

 
(12,963
)
 
(12,963
)
Balance at September 30, 2017
$
1,264,918

 
$
(82,605
)
 
$
329,403

 
$
1,511,716

 
$
67,409

 
$
1,579,125



The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

21

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Electric Operating Revenues
$
92,646

 
$
89,098

 
$
257,489

 
$
246,498

Operating Expenses:
 
 
 
 
 
 
 
Cost of energy
21,381

 
20,201

 
64,183

 
60,122

Administrative and general
10,765

 
9,588

 
30,402

 
29,382

Depreciation and amortization
16,424

 
16,354

 
47,392

 
45,760

Transmission and distribution costs
6,594

 
6,745

 
20,008

 
20,097

Taxes other than income taxes
8,008

 
7,851

 
21,778

 
20,849

Total operating expenses
63,172

 
60,739

 
183,763

 
176,210

Operating income
29,474

 
28,359

 
73,726

 
70,288

Other Income and Deductions:
 
 
 
 
 
 
 
Other income
2,258

 
1,376

 
3,621

 
2,999

Other (deductions)
(1,030
)
 
(521
)
 
(1,229
)
 
(860
)
Net other income and deductions
1,228

 
855

 
2,392

 
2,139

Interest Charges
7,704

 
7,308

 
22,619

 
22,150

Earnings before Income Taxes
22,998

 
21,906

 
53,499

 
50,277

Income Taxes
8,271

 
8,053

 
18,964

 
18,460

Net Earnings
$
14,727

 
$
13,853

 
$
34,535

 
$
31,817


The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.



22

Table of Contents


TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash Flows From Operating Activities:
 
 
 
Net earnings
$
34,535

 
$
31,817

Adjustments to reconcile net earnings to net cash flows from operating activities:
 
 
 
Depreciation and amortization
48,754

 
47,055

Deferred income tax expense
8,578

 
(739
)
Allowance for equity funds used during construction
(309
)
 
(405
)
Other, net
(296
)
 
14

Changes in certain assets and liabilities:
 
 
 
Accounts receivable and unbilled revenues
(7,196
)
 
(9,428
)
Materials and supplies
(1,588
)
 
3,102

Other current assets
(1,674
)
 
(3,570
)
Other assets
(13,799
)
 
(8,415
)
Accounts payable
669

 
(6,758
)
Accrued interest and taxes
13,550

 
22,896

Other current liabilities
945

 
(363
)
Other liabilities
1,633

 
399

Net cash flows from operating activities
83,802

 
75,605

Cash Flows From Investing Activities:
 
 
 
Utility plant additions
(106,914
)
 
(93,048
)
Net cash flows from investing activities
(106,914
)
 
(93,048
)
Cash Flow From Financing Activities:
 
 
 
Revolving credit facilities borrowings (repayments), net

 
(59,000
)
Short-term borrowings (repayments) – affiliate, net
(4,600
)
 
(11,800
)
Long-term borrowings
60,000

 
60,000

Equity contribution from parent

 
50,000

Dividends paid
(29,663
)
 
(17,965
)
Other, net
(874
)
 
(775
)
Net cash flows from financing activities
24,863

 
20,460

 
 
 
 
Change in Cash and Cash Equivalents
1,751

 
3,017

Cash and Cash Equivalents at Beginning of Period
671

 
1
Cash and Cash Equivalents at End of Period
$
2,422

 
$
3,018

 
 
 
 
Supplemental Cash Flow Disclosures:
 
 
 
Interest paid, net of amounts capitalized
$
16,721

 
$
15,642

Income taxes paid (refunded), net
$
750

 
$
850

 
 
 
 
Supplemental schedule of noncash investing activities:
 
 
 
(Increase) decrease in accrued plant additions
$
(251
)
 
$
(10
)

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.



23

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands)
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
2,422

 
$
671

Accounts receivable
27,760

 
22,009

Unbilled revenues
11,441

 
9,995

Other receivables
2,698

 
2,090

Materials and supplies
5,163

 
8,626

Regulatory assets
898

 
413

Other current assets
1,609

 
1,031

Total current assets
51,991

 
44,835

Other Property and Investments:
 
 
 
Other investments
220

 
231

Non-utility property
2,240

 
2,240

Total other property and investments
2,460

 
2,471

Utility Plant:
 
 
 
Plant in service and plant held for future use
1,433,901

 
1,380,584

Less accumulated depreciation and amortization
449,476

 
429,397

 
984,425

 
951,187

Construction work in progress
53,545

 
16,978

Net utility plant
1,037,970

 
968,165

Deferred Charges and Other Assets:
 
 
 
Regulatory assets
139,963

 
135,810

Goodwill
226,665

 
226,665

Other deferred charges
6,170

 
5,277

Total deferred charges and other assets
372,798

 
367,752

 
$
1,465,219

 
$
1,383,223


The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

24

Table of Contents



TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
A WHOLLY-OWNED SUBSIDIARY OF PNM RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
September 30,
2017
 
December 31,
2016
 
(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current Liabilities:
 
 
 
Short-term debt – affiliate
$

 
$
4,600

Accounts payable