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What changed in TXNM ENERGY INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TXNM ENERGY INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+447 added−415 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in TXNM ENERGY INC's 2025 10-K

447 paragraphs added · 415 removed · 310 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

49 edited+11 added−10 removed56 unchanged
Biggest changeThese factors, which are neither presented in order of importance nor weighted, include: • The ability of PNM and TNMP to recover costs and earn allowed returns in regulated jurisdictions and the impact on service levels for PNM customers if the ultimate outcomes do not provide for the recovery of costs and operating and capital expenditures, as well as other impacts of federal or state regulatory and judicial actions • The ability of the Company to successfully forecast and manage its operating and capital expenditures, including aligning expenditures with the revenue levels resulting from the ultimate outcomes of regulatory proceedings • Uncertainty surrounding the status of PNM’s participation in jointly-owned generation projects • Uncertainty regarding the requirements and related costs of decommissioning power plants and reclamation of coal mines, as well as the ability to recover those costs from customers, including the potential impacts of current and future regulatory proceedings • The impacts on the electricity usage of customers and consumers due to performance of state, regional, and national economies, energy efficiency measures, weather, seasonality, alternative sources of power, advances in technology, and other changes in supply and demand • Uncertainty related to the potential for regulatory orders, legislation or rulemakings that provide for municipalization of utility assets or public ownership of utility assets, including generation resources, or which would delay or otherwise impact the procurement of necessary resources in a timely manner • The Company’s ability to maintain its debt, including convertible debt, and access the financial markets in order to repay or refinance debt as it comes due and for ongoing operations and construction expenditures due to disruptions in the capital or credit markets, actions by ratings agencies, and fluctuations in interest rates resulting from any negative impacts from regulatory proceedings, actions by the Federal Reserve, geopolitical activity, or the risk of wildfires and storms • The risks associated with the cost and completion of generation, transmission, distribution, and other projects, including uncertainty related to regulatory approvals and cost recovery, the ability of counterparties to meet their obligations under certain arrangements (including renewable energy resources, approved PPAs and ESAs), and supply chain or other outside support services that may be disrupted • The potential unavailability of cash from TXNM’s subsidiaries due to regulatory, statutory, or contractual restrictions or subsidiary earnings or cash flows • The performance of generating units, transmission systems, and distribution systems, which could be negatively affected by operational issues, fuel quality and supply chain issues (disruptions), unplanned outages, extreme weather conditions, wildfires, storms, terrorism, cybersecurity breaches, and other catastrophic events, including the costs the Company may incur to repair its facilities and/or the liabilities the Company may incur to third parties in connection with such issues beyond the extent of insurance coverage • State and federal regulation or legislation relating to environmental matters and renewable energy requirements, the resultant costs of compliance, and other impacts on the operations and economic viability of PNM’s generating plants • State and federal regulatory, legislative, executive, and judicial decisions and actions on ratemaking, and taxes, including guidance related to the interpretation of changes in tax laws, the Inflation Reduction Act of 2022, the Infrastructure Investment and Jobs Act, and other matters • Risks related to climate change, including potential financial and reputational risks resulting from increased stakeholder scrutiny related to climate change, litigation, legislative and regulatory efforts to limit GHG, including the impacts of the ETA • Employee workforce factors, including cost control efforts and issues arising out of collective bargaining agreements and labor negotiations with union employees • Variability of prices and volatility and liquidity in the wholesale power and natural gas markets, including the impacts to transmission margins • Changes in price and availability of fuel and water supplies, including the ability of the mine supplying coal to Four Corners and the companies involved in supplying nuclear fuel to provide adequate quantities of fuel • Regulatory, financial, and operational risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainties • The impacts of decreases in the values of marketable securities maintained in trusts to provide for decommissioning, reclamation, pension benefits, and other postretirement benefits, including potential increased volatility resulting from actions by the Federal Reserve to address inflationary concerns, and international developments • Uncertainty surrounding counterparty performance and credit risk, including the ability of counterparties to supply fuel and perform reclamation activities and impacts to financial support provided to facilitate reclamation and decommissioning at SJGS • The effectiveness of risk management regarding commodity transactions and counterparty risk • The outcome of legal proceedings, including the extent of insurance coverage • Changes in applicable accounting principles or policies A - 10 Table of Contents For information about the risks associated with the use of derivative financial instruments see Part II, Item 7A.
Biggest changeThese factors, which are neither presented in order of importance nor weighted, include: • The failure of Parent to obtain any equity, debt, or other financing necessary to complete the proposed Merger • The expected timing and likelihood of completion of the proposed Merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed Merger that could reduce anticipated benefits or cause the parties to abandon the transaction • The occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, including in circumstances requiring TXNM to pay a termination fee • The receipt of an unsolicited offer from another party to acquire our assets or capital stock that could interfere with the proposed Merger • The outcome of any legal proceedings, regulatory proceedings, or enforcement matters that may be instituted relating to the proposed Merger A - 9 Table of Contents • Risks related to disruption of management time from ongoing business operations due to the proposed Merger • The risk that the proposed Merger and its announcement could have an adverse effect on the ability of TXNM to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally • The announcement and pendency of the proposed Merger, during which TXNM is subject to certain operating restrictions, could have an adverse effect on TXNM’s businesses, results of operations, financial condition or cash flows • The costs incurred to consummate the proposed Merger • The risk that the price of TXNM’s common stock may fluctuate during the pendency of the proposed Merger and may decline significantly if the proposed Merger is not completed • The ability of PNM and TNMP to recover costs and earn allowed returns in regulated jurisdictions and the impact on service levels for PNM customers if the ultimate outcomes do not provide for the recovery of costs and operating and capital expenditures, as well as other impacts of federal or state regulatory and judicial actions • The ability of the Company to successfully forecast and manage its operating and capital expenditures, including aligning expenditures with the revenue levels resulting from the ultimate outcomes of regulatory proceedings • Uncertainty surrounding the status of PNM’s participation in jointly-owned generation projects • Uncertainty regarding the requirements and related costs of decommissioning power plants and reclamation of coal mines, as well as the ability to recover those costs from customers, including the potential impacts of current and future regulatory proceedings • The impacts on the electricity usage of customers and consumers due to performance of state, regional, and national economies, energy efficiency measures, weather, seasonality, alternative sources of power, advances in technology, and other changes in supply and demand • Uncertainty related to the potential for regulatory orders, legislation or rulemakings that provide for municipalization of utility assets or public ownership of utility assets, including generation resources, or which would delay or otherwise impact the procurement of necessary resources in a timely manner • The Company’s ability to maintain its debt, including convertible debt, and access the financial markets in order to repay or refinance debt as it comes due and for ongoing operations and construction expenditures due to disruptions in the capital or credit markets, actions by ratings agencies, and fluctuations in interest rates resulting from any negative impacts from regulatory proceedings, actions by the Federal Reserve, entry into the Merger Agreement, geopolitical activity, including tariffs, or the risk of wildfires and storms • The risks associated with the cost and completion of generation, transmission, distribution, and other projects, including uncertainty related to regulatory approvals and cost recovery, the ability of counterparties to meet their obligations under certain arrangements (including renewable energy resources, approved PPAs and ESAs), and supply chain or other outside support services that may be disrupted • The potential unavailability of cash from TXNM’s subsidiaries due to regulatory, statutory, or contractual restrictions or subsidiary earnings or cash flows • The performance of generating units, transmission systems, and distribution systems, which could be negatively affected by operational issues, fuel quality and supply chain issues (disruptions), unplanned outages, extreme weather conditions, wildfires, storms, terrorism, cybersecurity breaches, and other catastrophic events, including the costs the Company may incur to repair its facilities and/or the liabilities the Company may incur to third parties in connection with such issues beyond the extent of insurance coverage • State and federal regulation or legislation relating to environmental matters and renewable energy requirements, the resultant costs of compliance, and other impacts on the operations and economic viability of PNM’s generating plants • State and federal regulatory, legislative, executive, and judicial decisions and actions on ratemaking, tariffs, and taxes, including guidance related to the interpretation of changes in tax laws, the Inflation Reduction Act, the Infrastructure Investment and Jobs Act of 2021, the OBBBA, and other matters including the cancellation of grants or related funding • Risks related to climate change, including potential financial and reputational risks resulting from increased stakeholder scrutiny related to climate change, litigation, legislative and regulatory efforts to limit GHG, including the impacts of the ETA • Employee workforce factors, including cost control efforts and issues arising out of collective bargaining agreements and labor negotiations with union employees • Variability of prices and volatility and liquidity in the wholesale power and natural gas markets, including the impacts to transmission margins • Changes in price and availability of fuel and water supplies, including the ability of the mine supplying coal to Four Corners and the companies involved in supplying nuclear fuel to provide adequate quantities of fuel • Regulatory, financial, and operational risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainties • The impacts of decreases in the values of marketable securities maintained in trusts to provide for decommissioning, reclamation, pension benefits, and other postretirement benefits, including potential increased volatility resulting from actions by the Federal Reserve to address inflationary concerns, and international developments • Uncertainty surrounding counterparty performance and credit risk, including the ability of counterparties to supply fuel and perform reclamation activities and impacts to financial support provided to facilitate reclamation and decommissioning at SJGS A - 10 Table of Contents • The effectiveness of risk management regarding commodity transactions and counterparty risk • The outcome of legal proceedings, including the extent of insurance coverage • Changes in applicable accounting principles or policies For information about the risks associated with the use of derivative financial instruments see Part II, Item 7A.
PNM participates in the EIM, a real-time wholesale energy trading market operated by CAISO, which enables participating electric utilities to buy and sell energy, which has generated cost savings that are passed through to customers under PNM’s FPPAC.
PNM participates in the EIM, a real-time wholesale energy trading market operated by CAISO, which enables participating electric utilities to buy and sell energy. Participation in the EIM has generated cost savings that are passed through to customers under PNM’s FPPAC.
In addition, Note 16 contains information related to the following matters, incorporated in this item by reference: • PVNGS Decommissioning Funding • Nuclear Spent Fuel and Waste Disposal • The Energy Transition Act • Environmental Matters under the caption “The Clean Air Act” • Cooling Water Intake Structures • Effluent Limitation Guidelines • Santa Fe Generating Station • Environmental Matters under the caption “Coal Combustion Residuals Waste Disposal” COMPETITION Regulated utilities are generally not subject to competition from other utilities in areas that are under the jurisdiction of state regulatory commissions.
In addition, Note 16 contains information related to the following matters, incorporated in this item by reference: • PVNGS Decommissioning Funding • Nuclear Spent Fuel and Waste Disposal • The New Mexico Energy Transition Act • Environmental Matters under the caption “The Clean Air Act” • Cooling Water Intake Structures • Effluent Limitation Guidelines • Santa Fe Generating Station • Environmental Matters under the caption “Coal Combustion Residuals Waste Disposal” COMPETITION Regulated utilities are generally not subject to competition from other utilities in areas that are under the jurisdiction of state regulatory commissions.
OPERATIONS AND REGULATION Regulated Operations Electric power demand is generally seasonal. Power consumption in both Texas and New Mexico peaks during the hot summer months with revenues traditionally peaking during that period. The seasonality of demand for electricity in turn impacts the timing of plant maintenance and operating expense throughout the year.
OPERATIONS AND REGULATION Regulated Operations Electric power demand is generally seasonal. Power consumption in both Texas and New Mexico increases during the hot summer months with revenues traditionally peaking during that period. The seasonality of demand for electricity in turn impacts the timing of plant maintenance and operating expense throughout the year.
However, PNM and TNMP are subject to customer conservation and energy efficiency activities, as well as initiatives to utilize alternative energy sources, including self-generation, or otherwise bypass the PNM and TNMP systems. PNM is subject to varying degrees of competition in certain territories adjacent to or within the areas it serves.
PNM and TNMP are also subject to customer conservation and energy efficiency activities, as well as initiatives to utilize alternative energy sources, including self-generation, to otherwise bypass the PNM and TNMP systems. PNM is subject to varying degrees of competition in certain territories adjacent to or within the areas it serves.
The activities of PNMR Development and the equity method investment in NMRD are also included in Corporate and Other, until the close of the sale of NMRD on February 27, 2024. A - 4 Table of Contents SOURCES OF POWER TNMP TNMP provides only transmission and distribution services and does not sell power.
The activities of PNMR Development and the equity method investment in NMRD were also included in Corporate and Other, until the close of the sale of NMRD on February 27, 2024. A - 4 Table of Contents SOURCES OF POWER TNMP TNMP provides only transmission and distribution services and does not sell power.
Management regularly reports to the Compensation and Human Capital Committee of the Board on human capital management topics, including corporate culture, diversity and inclusion, employee development and compensation and benefits. The Compensation and Human Capital Committee has oversight of talent retention and development and succession planning, and the Board provides input on important decisions in each of these areas.
Management regularly reports to the Compensation and Human Capital Committee of the Board on human capital management topics, including corporate culture, employee development and compensation and benefits. The Compensation and Human Capital Committee has oversight of talent retention and development and succession planning, and the Board provides input on important decisions in each of these areas.
PNM owns 3,444 miles of electric transmission lines that interconnect with other utilities in New Mexico, Arizona, Colorado, Texas, and Utah. New Mexico is frequently characterized by its high potential for solar and wind capacity.
PNM owns 3,450 miles of electric transmission lines that interconnect with other utilities in New Mexico, Arizona, Colorado, Texas, and Utah. New Mexico is frequently characterized by its high potential for solar and wind capacity.
As of December 31, 2024, PNM had 380 employees in its power plant and operations areas that are currently covered by a collective bargaining agreement with the IBEW Local 611 that is in effect through April 30, 2026.
As of December 31, 2025, PNM had 389 employees in its power plant and operations areas that are currently covered by a collective bargaining agreement with the IBEW Local 611 that is in effect through April 30, 2026.
A - 2 Table of Contents TNMP holds long-term, non-exclusive franchise agreements for its electric transmission and distribution services. These agreements have varying expiration dates, and some have expired. TNMP intends to negotiate and execute new or amended franchise agreements with municipalities where the agreements have expired or will be expiring.
TNMP holds long-term, non-exclusive franchise agreements for its electric transmission and distribution services. These agreements have varying expiration dates, and some have expired. TNMP intends to negotiate and execute new or amended franchise agreements with municipalities where the agreements have expired or will be expiring.
The largest retail electric customer served by PNM accounted for 4.2% of its retail electric revenues for the year ended December 31, 2024. Other services provided by PNM include wholesale transmission services to third parties.
The largest retail electric customer served by PNM accounted for 5.4% of its retail electric revenues for the year ended December 31, 2025. Other services provided by PNM include wholesale transmission services to third parties.
Key components include an increase of $105.0 million in retail revenues with the first phase effective July 1, 2025 and the second phase effective April 1, 2026, reflecting an ROE of 9.45%. In October 2024, the NMPRC approved PNM’s Grid Modernization Plan.
The approval includes an increase of $105.0 million in retail revenues with the first phase effective July 1, 2025, and the second phase effective April 1, 2026, reflecting an ROE of 9.45%. In October 2024, the NMPRC approved PNM’s Grid Modernization Plan.
The second portion of its service territory includes the area along the Texas Gulf Coast between Houston and Galveston, and the third portion includes areas of far west Texas between Midland and El Paso. TNMP owns 1,022 miles of electric transmission lines that interconnect with other utilities in Texas.
The second portion of its service territory includes the area A - 2 Table of Contents along the Texas Gulf Coast between Houston and Galveston, and the third portion includes areas of far west Texas between Midland and El Paso. TNMP owns 1,049 miles of electric transmission lines that interconnect with other utilities in Texas.
PNM was incorporated in the State of New Mexico in 1917. PNM’s retail electric service territory covers a large area of north-central New Mexico, including the cities of Albuquerque, Rio Rancho, and Santa Fe, and certain areas of southern New Mexico as well as 9 sovereign nations. Service to retail electric customers is subject to the jurisdiction of the NMPRC.
PNM’s retail electric service territory covers a large area of north-central New Mexico, including the cities of Albuquerque, Rio Rancho, and Santa Fe, and certain areas of southern New Mexico as well as 9 sovereign nations. Service to retail electric customers is subject to the jurisdiction of the NMPRC.
A - 6 Table of Contents Plant Operating Statistics Equivalent availability of PNM’s major base-load generating stations was: Plant Operator 2024 2023 Four Corners APS 78.1% 61.2% PVNGS APS 91.8 91.4 Joint Projects SJGS, PVNGS, Four Corners, and Luna are joint projects each owned or leased by several different entities.
A - 6 Table of Contents Plant Operating Statistics Equivalent availability of PNM’s major base-load generating stations was: Plant Operator 2025 2024 Four Corners APS 75.2% 78.1% PVNGS APS 92.3 91.8 Joint Projects SJGS, PVNGS, Four Corners, and Luna are joint projects each owned or leased by several different entities.
As of December 31, 2024, TNMP had 206 employees represented by IBEW Local 66 covered by a collective bargaining agreement that is in effect through August 31, 2027.
As of December 31, 2025, TNMP had 229 employees represented by IBEW Local 66 covered by a collective bargaining agreement that is in effect through August 31, 2027.
A - 9 Table of Contents Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements.
Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements.
PNM Generation Capacity PNM’s capacity in electric generating facilities in commercial operation as of December 31, 2024 are as follows: Generation Percent of Capacity Generation Type Name Location (MW) Capacity Solar PNM-owned solar Twenty sites in New Mexico 158 3.7 % Solar Britton Los Lunas, New Mexico 50 1.2 Solar Encino Los Lunas, New Mexico 50 1.2 Solar Encino North Los Lunas, New Mexico 50 1.2 Solar Solar Direct Rio Arriba County, New Mexico 50 1.2 Solar Route 66 Cibola County, New Mexico 50 1.2 Solar Arroyo McKinley County, New Mexico 300 7.0 Solar Sky Ranch Valencia County, New Mexico 190 4.5 Solar Jicarilla I Rio Arriba County, New Mexico 50 1.2 Solar Atrisco Bernalillo County, New Mexico 300 7.0 Solar San Juan San Juan County, New Mexico 200 4.7 Solar Other Los Lunas, New Mexico 30 0.7 Wind New Mexico Wind House, New Mexico 200 4.7 Wind Red Mesa Wind Seboyeta, New Mexico 102 2.4 Wind Casa Mesa Wind House, New Mexico 50 1.2 Wind La Joya Wind I Torrance, New Mexico 166 3.9 Wind La Joya Wind II Torrance, New Mexico 140 3.3 Geothermal Lightning Dock Geothermal Lordsburg, New Mexico 11 0.3 Renewable resources 2,147 50.3 Energy storage PNM-owned battery Valencia County & Bernalillo County, New Mexico 12 0.3 Energy storage Arroyo McKinley County, New Mexico 150 3.5 Energy storage Jicarilla Rio Arriba County, New Mexico 20 0.5 Energy storage Sky Ranch Valencia County, New Mexico 50 1.2 Energy storage San Juan San Juan County, New Mexico 100 2.3 Energy storage Atrisco Bernalillo County, New Mexico 300 7.0 Energy storage resources 632 14.8 Gas Reeves Station Albuquerque, New Mexico 146 3.4 Gas Afton (combined cycle) La Mesa, New Mexico 235 5.5 Gas Lordsburg Lordsburg, New Mexico 85 2.0 Gas Luna (combined cycle) Deming, New Mexico 190 4.5 Gas/Oil Rio Bravo Albuquerque, New Mexico 149 3.5 Gas Valencia Belen, New Mexico 155 3.6 Gas La Luz Belen, New Mexico 41 1.0 Gas-fired resources 1,001 23.5 Nuclear PVNGS Wintersburg, Arizona 288 6.7 Coal Four Corners Fruitland, New Mexico 200 4.7 4,268 100.0 % Renewable and Energy Storage Resources In addition to PNM’s owned and contracted solar facilities, PNM has a customer distributed solar generation program that represented 308.5 MW at December 31, 2024.
PNM PNM’s capacity in commercial operation as of December 31, 2025, are as follows: Generation Percent of Capacity Generation Type Name Location (MW) Capacity Solar PNM-owned solar Twenty sites in New Mexico 158 3.3 % Solar Britton Torrance County, New Mexico 50 1.1 Solar Encino Sandoval County, New Mexico 50 1.1 Solar Encino North Sandoval County, New Mexico 50 1.1 Solar Solar Direct Rio Arriba County, New Mexico 50 1.1 Solar Route 66 Cibola County, New Mexico 50 1.1 Solar Arroyo McKinley County, New Mexico 300 6.3 Solar Sky Ranch Valencia County, New Mexico 190 4.0 Solar Jicarilla I Rio Arriba County, New Mexico 50 1.1 Solar Atrisco Bernalillo County, New Mexico 300 6.3 Solar San Juan San Juan County, New Mexico 200 4.2 Solar TAG Sandoval County, New Mexico 140 3.0 Solar Quail Ranch Bernalillo County, New Mexico 100 2.1 Solar Community Solar Multiple sites in New Mexico 25 0.5 Solar Other Los Lunas, New Mexico 30 0.6 Wind New Mexico Wind House, New Mexico 200 4.2 Wind Red Mesa Wind Seboyeta, New Mexico 102 2.2 Wind Casa Mesa Wind House, New Mexico 50 1.1 Wind La Joya Wind I Torrance, New Mexico 166 3.5 Wind La Joya Wind II Torrance, New Mexico 140 3.0 Geothermal Lightning Dock Geothermal Lordsburg, New Mexico 11 0.2 Renewable resources 2,412 51.0 Energy storage PNM-owned battery Valencia County & Bernalillo County, New Mexico 12 0.3 Energy storage Arroyo McKinley County, New Mexico 150 3.2 Energy storage Jicarilla Rio Arriba County, New Mexico 20 0.4 Energy storage Sky Ranch Valencia County, New Mexico 50 1.1 Energy storage Sky Ranch II Valencia County, New Mexico 100 2.1 Energy storage San Juan San Juan County, New Mexico 100 2.1 Energy storage Atrisco Bernalillo County, New Mexico 300 6.3 Energy storage TAG Sandoval County, New Mexico 50 1.1 Energy storage Route 66 Cibola County, New Mexico 50 1.1 Energy storage resources 832 17.6 Gas Reeves Station Albuquerque, New Mexico 146 3.1 Gas Afton (combined cycle) La Mesa, New Mexico 235 5.0 Gas Lordsburg Lordsburg, New Mexico 85 1.8 Gas Luna (combined cycle) Deming, New Mexico 190 4.0 Gas/Oil Rio Bravo Albuquerque, New Mexico 149 3.1 Gas Valencia Belen, New Mexico 155 3.3 Gas La Luz Belen, New Mexico 41 0.9 Gas-fired resources 1,001 21.1 Nuclear PVNGS Wintersburg, Arizona 288 6.1 Coal Four Corners Fruitland, New Mexico 200 4.2 4,733 100.0 % Renewable and Energy Storage Resources In addition to PNM’s owned and contracted solar facilities, PNM has a customer distributed solar generation program that represented 334.1 MW at December 31, 2025.
ITEM 1. BUSINESS THE COMPANY Overview TXNM Energy, Inc., formerly PNM Resources, Inc. (“PNMR”), is a holding company with two regulated electric utilities, PNM and TNMP, serving approximately 834,000 residential, commercial, and industrial customers in New Mexico and Texas. PNMR was incorporated in the State of New Mexico in 2000.
ITEM 1. BUSINESS THE COMPANY Overview TXNM Energy, Inc. (“TXNM”), is a holding company with two regulated electric utilities, PNM and TNMP, serving approximately 842,000 residential, commercial, and industrial customers in New Mexico and Texas. TXNM was incorporated in the State of New Mexico in 2000.
See Note 17 for additional information about PNM’s SJGS Abandonment Application, PNM’s Four Corners Abandonment Application, and PNM’s IRP, which all focus on a carbon-free electricity portfolio by 2040. Natural Gas The natural gas used as fuel for the electric generating plants is procured on the open market and delivered by third-party transportation providers.
See Note 17 for additional information about PNM’s SJGS Abandonment Application, PNM’s Four Corners Abandonment Application, and PNM’s IRP. Natural Gas The natural gas used as fuel for the electric generating plants is procured on the open market and delivered by third-party transportation providers.
The Albuquerque, Rio Rancho, and Santa Fe metropolitan areas accounted for 39.4%, 7.7% and 5.5% of PNM’s 2024 revenues. No other franchise area represents more than 5%. PNM also earns revenues from its electric retail operations in its service areas that do not require franchise agreements.
The Albuquerque, Rio Rancho, Los Lunas, and Santa Fe metropolitan areas accounted for 41.3%, 8.5%, 5.7% and 5.9% of PNM’s 2025 revenues. No other franchise area represents more than 5%. PNM also earns revenues from its electric retail operations in its service areas that do not require franchise agreements.
Certain natural gas plants of PNM’s are generally used as peaking resources that are highly relied upon during seasonally high load periods and/or during periods of extreme weather, which also may be the times natural gas has the highest demand from other users.
Certain natural gas plants of PNM’s are generally used as peaking resources that are highly relied upon during seasonally high load periods and/or during periods of extreme weather, which also may be the times natural gas has the highest demand from other users. Nuclear Fuel and Waste PNM is one of several participants in PVNGS.
The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory, which are expected to be in service by summer of 2026.
The A - 5 Table of Contents NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory, some of which are expected to be in service by summer of 2026 and others that will be available for the 2028 summer peak.
Data center load, including distribution and transmission, has increased 13.7% in 2024 compared to 2023. As of December 31, 2024, 126 active REPs receive transmission and distribution services from TNMP. In 2024, the two largest REPs accounted for 26% and 20% of TNMP’s operating revenues. No other consumer accounted for more than 10% of revenues.
Data center load, including distribution and transmission, has increased 70.5% in 2025 compared to 2024. As of December 31, 2025, 125 active REPs receive transmission and distribution services from TNMP. In 2025, the two largest REPs accounted for 24% and 19% of TNMP’s operating revenues. No other consumer accounted for more than 10% of revenues.
For its volumetric load consumers billed on KWh usage, TNMP experienced an increase of 1.8% in its weather normalized retail load in 2024 compared to 2023. For its weather normalized demand-based load, excluding retail transmission and data center consumers, TNMP experienced an increase of 2.4% in 2024 compared to 2023.
For its volumetric load consumers billed on KWh usage, TNMP experienced an increase of 2.8% in its weather normalized retail load in 2025 compared to 2024. For its weather normalized demand-based load, excluding retail transmission consumers, TNMP experienced an increase of 5.3% in 2025 compared to 2024.
Transparency, collaboration, and innovation create both individual and organizational focus on achieving key results. Aligned with the core value of safety, we continued an in-depth safety culture initiative with training and actionable plans integrated into leadership development. In addition, we incorporate mental and physical well-being into our culture through a robust employee wellness program.
Aligned with the core value of safety, we continued an in-depth safety culture initiative with training and actionable plans integrated into leadership development. In addition, we incorporate mental and physical well-being into our culture through a robust employee wellness program.
These resources and their currently expected operation dates are as follows: Generation Expected Capacity Type Resource For Operation (MW) NMPRC Approved Solar Meta Data Center 2025 140 Energy storage Meta Data Center 2025 50 Solar 2026 Resource Application 2026 100 Energy storage 2026 Resource Application 2026 100 Energy storage 2026 Resource Application 2026 100 Energy storage 2026 Resource Application 2026 50 PNM-owned battery 2026 Resource Application 2026 60 600 NMPRC Approval Pending Gas 2028 Resource Application 2028 167 PNM-owned solar 2028 Resource Application 2028 100 PNM-owned battery 2028 Resource Application 2028 30 Energy storage 2028 Resource Application 2028 150 Energy storage 2028 Resource Application 2028 150 597 Fossil‑Fueled Plants Four Corners Units 4 and 5 are 13% owned by PNM.
These resources and their currently expected operation dates are as follows: Generation Expected Capacity Type Application Operation (MW) NMPRC approved Energy storage 2026 Resource Application 2026 100 PNM-owned battery 2026 Resource Application 2026 60 Gas 2028 Resource Application 2028 12 PNM-owned solar 2028 Resource Application 2028 100 PNM-owned battery 2028 Resource Application 2028 50 Energy storage 2028 Resource Application 2028 150 Energy storage 2028 Resource Application 2028 150 Solar Meta Resources 2026 100 Solar Meta Resources 2026 90 Solar Meta Resources 2027 100 Energy storage Meta Resources 2026 100 Energy storage Meta Resources 2026 68 Energy storage Meta Resources 2027 100 1,180 NMPRC approval pending Energy storage PNM-owned BESS Project 2027 30 Fossil‑Fueled Plants Four Corners Units 4 and 5 are 13% owned by PNM.
These franchise agreements allow the utility to access public rights-of-way for placement of its electric facilities. To the extent franchise agreements expire in some areas PNM serves, PNM remains obligated under New Mexico state law to provide service to customers in these areas, and therefore, the expirations should not have a material adverse impact.
To the A - 3 Table of Contents extent franchise agreements expire in some areas PNM serves, PNM remains obligated under New Mexico state law to provide service to customers in these areas, and therefore, the expirations should not have a material adverse impact.
Regulation encompasses the utility’s electric rates, service, accounting, issuances of securities, construction of major new generation, abandonment of existing generation, types of generation resources, transmission and distribution facilities, and other matters. PNM’s weather-normalized residential load increased by 1.5% and its weather normalized commercial load was flat in 2024 compared to 2023.
Regulation encompasses the utility’s electric rates, service, accounting, issuances of securities, construction of major new generation, abandonment of existing generation, types of generation resources, transmission and distribution facilities, and other matters. PNM experienced increases in weather normalized residential load of 0.1%, in commercial load of 1.0%, and industrial load of 14.3% compared to 2024.
Employees The following table sets forth the number of employees of TXNM, PNM, and TNMP as of December 31, 2024: TXNM PNM TNMP Corporate (1) 444 — — PNM 868 868 — TNMP 383 — 383 Total 1,695 868 383 (1) Represents employees of PNMR Services Company.
Employees The following table sets forth the number of employees of TXNM, PNM, and TNMP as of December 31, 2025: TXNM PNM TNMP Corporate (1) 440 — — PNM 870 870 — TNMP 445 — 445 Total 1,755 870 445 (1) Represents employees of PNMR Services Company.
If adjusted for these approved plans, the table above would reflect the percentage of generation capacity from renewable resources of 52.1%, energy A - 5 Table of Contents storage resources of 19.2%, nuclear resources of 5.6%, and fossil-fueled resources of 23.1%.
If adjusted for these approved plans, the table above would reflect the percentage of generation capacity from renewable resources of 49.8%, energy storage resources of 26.0%, nuclear resources of 4.7%, and fossil-fueled resources of 19.6%.
In New Mexico, PNM does not have direct competition for services provided to its retail electric customers. In Texas, TNMP is not currently in any direct retail competition with any other regulated electric utility.
In New Mexico, PNM does not have direct competition for services provided to its retail electric customers. In Texas, TNMP is not currently in any direct retail competition with any other regulated electric utility. However, as with other regulated transmission and distribution utilities and cooperatives, TNMP competes to attract new customers to locate within its service territory.
Our corporate websites are: • TXNM: www.txnmenergy.co m • PNM: www.pnm.com • TNMP: www.tnmp.com A - 1 Table of Contents TXNM’s corporate website includes a dedicated section providing key environmental and other sustainability information related to PNM’s and TNMP’s operations.
Participants will not receive information that was not requested and can unsubscribe at any time. Our corporate websites are: • TXNM: www.txnmenergy.co m • PNM: www.pnm.com • TNMP: www.tnmp.com TXNM’s corporate website includes a dedicated section providing key environmental and other sustainability information related to PNM’s and TNMP’s operations.
PNM owns transmission capacity in an area of eastern New Mexico with large wind generation potential and in recent years there has been substantial interest by developers of wind generation to interconnect to PNM’s transmission system in this area.
PNM owns transmission capacity in an area of eastern New Mexico with large wind generation potential and in recent years there has been substantial interest by developers of wind generation to interconnect to PNM’s transmission system in this area. Regulatory Activities NMPRC Regulated Retail Rate Proceedings On May 15, 2025, the NMPRC approved PNM’s general increase in retail electric rates.
FUEL PNM The percentages (on the basis of KWh) of PNM’s generation of electricity, including Valencia, fueled by coal, nuclear fuel, and gas and oil, and the average costs to PNM of those fuels per MMBTU were as follows: Coal Nuclear Gas Percent of Generation Average Cost Percent of Generation Average Cost Percent of Generation Average Cost 2024 8.2 % $ 8.81 43.3 % $ 0.86 41.2 % $ 0.97 2023 12.8 4.19 32.3 0.73 49.9 3.42 In 2024 and 2023, 7.3% and 5.0% of PNM’s generation was from utility-owned solar, which has no fuel cost.
FUEL PNM The percentages (on the basis of KWh) of PNM’s generation of electricity, including Valencia, fueled by coal, nuclear fuel, and gas and oil, and the average costs to PNM of those fuels per MMBTU were as follows: Coal Nuclear Gas Percent of Generation Average Cost Percent of Generation Average Cost Percent of Generation Average Cost 2025 4 % $ 9.11 23 % $ 0.71 16 % $ 1.80 2024 5 8.81 24 0.86 23 0.97 In 2025 and 2024, 57% and 48% of PNM’s generation was from wind and solar resources (including PPAs), which have no fuel cost.
In addition, PNM experienced an increase in industrial load of 12.5% compared to 2023. The system peak demands for retail customers are as follows: System Peak Demands 2024 2023 2022 (Megawatts) Summer 2,147 2,162 2,139 Winter 1,643 1,545 1,526 PNM holds long-term, non-exclusive franchise agreements for its electric retail operations, with varying expiration dates.
The system peak demands for retail customers are as follows: System Peak Demands 2025 2024 2023 (Megawatts) Summer 2,106 2,147 2,162 Winter 1,614 1,643 1,545 PNM holds long-term, non-exclusive franchise agreements for its electric retail operations, with varying expiration dates. These franchise agreements allow the utility to access public rights-of-way for placement of its electric facilities.
PNM is subject to competition from regional utilities and merchant power suppliers with similar opportunities to generate and sell energy at market-based prices and larger trading entities that do not own or operate generating assets.
PNM is subject to competition from regional utilities and merchant power suppliers with similar opportunities to generate and sell energy at market-based prices and larger trading entities that do not own or operate generating assets. HUMAN CAPITAL RESOURCES TXNM depends on over 1,700 dedicated employees to deliver outstanding customer service and transform into a carbon-free generation future.
This information highlights plans for PNM to be coal-free no later than 2031 and to have a carbon-free generating portfolio by 2040. The contents of these websites are not a part of this Form 10-K and the inclusion of our website address in this report is an inactive textual reference only.
The contents of these websites are not a part of this Form 10-K and the inclusion of our website address in this report is an inactive textual reference only.
Financial information relating to amounts of revenue, net earnings, and total assets of reportable segments is contained in MD&A and Note 2. WEBSITES The TXNM website is an important source of Company information. New or updated information for public access is routinely posted.
Financial information relating to amounts of revenue, net earnings, and total assets of reportable segments is contained in MD&A and Note 2.
A - 7 Table of Contents Nuclear Fuel and Waste PNM is one of several participants in PVNGS. The PVNGS participants are continually identifying their future nuclear fuel resource needs and negotiating arrangements to fill those needs. Additional needed supplies are covered through existing inventories or spot market transactions.
The PVNGS participants are continually identifying their future nuclear fuel resource needs and negotiating arrangements to fill those needs. Additional needed supplies are covered through existing inventories or spot market transactions. The PVNGS participants have contracted for 77% of PVNGS’s requirements for uranium concentrates through 2026 and an average of 42% through 2031.
PNM also plans to join the EDAM, which is a voluntary day-ahead regional market that expands on CAISO’s EIM market, as early as 2027.
PNM also plans to join the EDAM, which is a voluntary day-ahead regional market that expands on CAISO’s EIM market, as early as 2027. PNM joined the WRAP in April 2023 to promote region-wide coordination between power providers for assessing and addressing resource adequacy.
In addition, PNM has filed an application with the NMPRC seeking approval of resources to be available for the 2028 summer peak, which are necessary for PNM to meet forecasted peak load requirements to serve its customers and to continue progress towards a carbon-free generating portfolio.
These approved resources are necessary for PNM to meet forecasted peak load requirements to serve its customers and to continue progress towards a carbon-free generating portfolio.
TXNM encourages analysts, investors, and other interested parties to register on the website to automatically receive Company information by e-mail. This information includes news releases, notices of webcasts, and filings with the SEC. Participants will not receive information that was not requested and can unsubscribe at any time.
See Note 17. WEBSITES The TXNM website is an important source of Company information. New or updated information for public access is routinely posted. TXNM encourages analysts, investors, and other interested parties to register on the website to automatically receive Company information by e-mail. This information includes news releases, notices of webcasts, and filings with the SEC.
The PUCT approved interim adjustments to TNMP’s distribution revenue requirement of $15.6 million in July 2024 and $7.7 million in November 2024. The PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs.
The PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs. In March 2025, the PUCT approved TNMP’s first SRP, designed to benefit customers through enhanced resiliency of its distribution system.
Compensation equity is reviewed three times per year, and we perform a robust annual succession planning process, including an evaluation of our programs for diversity and inclusion. Governance The Board agrees that human capital management is an important component of TXNM’s continued growth and success, and is essential for its ability to attract, retain and develop talented and skilled employees.
We are committed to leadership development and mentorship programs, which ensure our leaders’ success and provide diverse learning plans for all employees. Governance The Board agrees that human capital management is an important component of TXNM’s continued growth and success, and is essential for its ability to attract, retain and develop talented and skilled employees.
A - 8 Table of Contents HUMAN CAPITAL RESOURCES TXNM depends on over 1,600 dedicated employees to deliver outstanding customer service and transform into a carbon-free generation future. Culture Our inclusive workforce makes the Company successful through our core values of safety, caring, and integrity. Our culture fosters an accountability and behavioral mindset to sustain shared purpose.
A - 8 Table of Contents Culture Our inclusive workforce makes the Company successful through our core values of safety, caring, and integrity. Our culture fosters an accountability and behavioral mindset to sustain shared purpose. Transparency, collaboration, and innovation create both individual and organizational focus on achieving key results.
The PVNGS participants have contracted for 100% of PVNGS’s requirements for uranium concentrates through 2025 and an average of 50% through 2030. For conversion services, 100% are contracted through 2025 and an average of 86% through 2030. For enrichment services an average of 75% is contracted through 2028. For fuel assembly fabrication 100% is contracted through 2027.
For conversion services, 90% are contracted through A - 7 Table of Contents 2026 and an average of 68% through 2031. For enrichment services, 100% is contracted through 2026 and an average of 57% is contracted through 2028. For fuel assembly fabrication, 100% is contracted through 2027.
The PUCT approved interim adjustments to TNMP’s transmission rates of $13.1 million in March 2024 and $3.9 million in September 2024. On January 24, 2025, TNMP filed an application to further update its transmission rates, which would increase revenues by $11.5 million annually. The application is pending before the PUCT.
The PUCT approved interim adjustments to TNMP’s transmission rates of $11.5 million annually in March 2025 and $12.3 million annually in September 2025. The PUCT approved interim adjustments to TNMP’s distribution rates of $25.0 million annually in June 2025 and $1.8 million annually in November 2025.
The settlement includes $565.8 million of capital investments over 2025 through 2027, reflecting 94% of TNMP’s proposed plan investments. The settlement also encompasses $128.2 million of operations and maintenance expenses associated with several programs, including vegetation management and wildfire mitigation. PNM Operational Information PNM is an electric utility that provides electric generation, transmission, and distribution service to its rate-regulated customers.
The approved SRP includes $545.8 million of capital investments and $86.1 million of operations and maintenance expenses associated with several programs, including vegetation management and wildfire mitigation in 2025 through 2027.
Removed
In 2024, PNMR amended its Articles of Incorporation to change its name to TXNM Energy, Inc. (“TXNM”) and its common stock trades on the New York Stock Exchange under the symbol TXNM.
Added
Proposed Merger with Blackstone Infrastructure On May 18, 2025, TXNM, Parent, and Merger Sub (both Parent and Merger Sub are affiliates of Blackstone Infrastructure) entered into the Merger Agreement pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct, wholly-owned subsidiary of Parent.
Removed
In August 2024, TNMP filed its first SRP with the PUCT designed to benefit customers through enhanced resiliency of its distribution system. The SRP is subject to PUCT approval over 180 days as stated in Texas legislation. In December 2024, TNMP filed an unopposed settlement with the PUCT.
Added
Pursuant to the Merger Agreement, each issued and outstanding share of the common stock of TXNM (other than those listed in Note 22) at the Effective Time will be converted into the right to receive $61.25 in cash, without interest.
Removed
A - 3 Table of Contents Regulatory Activities NMPRC Regulated Retail Rate Proceedings In June 2024, PNM filed an application with the NMPRC for a general increase in retail electric rates.
Added
The proposed Merger has been unanimously approved by the Board and was approved by the TXNM shareholders at a special meeting held on August 28, 2025.
Removed
The application proposed an increase of $174.3 million in retail revenues which is comprised of a $92.2 million increase in base rates and a $82.1 million increase in revenues collected under PNM’s FPPAC and reflects an ROE of 10.45%.
Added
Consummation of the Merger remains subject to the satisfaction or waiver of certain customary conditions, including, without limitation, no Legal Restraint (as defined in Note 22), and the receipt of certain required regulatory approvals (including the PUCT, the NMPRC, FERC, the FCC, and the NRC).
Removed
The proposed base rate changes would be implemented in two phases, with the first phase effective July 1, 2025 and the second phase effective January 1, 2026. In November 2024, PNM filed its unopposed comprehensive stipulation with the NMPRC.
Added
TXNM has filed applications for regulatory approval of the Merger with the NMPRC, PUCT, FERC, and FCC (Note 17). The Merger Agreement does not contain any financing condition and is currently expected to close in the second half of 2026.
Removed
PNM also engages in activities to optimize its existing jurisdictional assets and long-term power agreements through transacting in the hour-ahead, day-ahead, week-ahead, and month-ahead bilateral markets that allows PNM to market any excess generation not required to fulfill retail load and contractual commitments.
Added
A - 1 Table of Contents On December 11, 2025, TXNM and Blackstone Infrastructure reached a unanimous settlement with parties in the Merger proceeding filed with the PUCT, that was approved on February 6, 2026. On January 23, 2026, the FCC consented to the transfer of control and on February 20, 2026, the FERC approved the proposed Merger.
Removed
PNM joined the WRAP in April 2023, which is a first-of-its-kind program in the West that adds a region-wide coordination between power providers for assessing and addressing resource adequacy. WRAP is currently in the non-binding phases of the program, which is expected to continue through the summer of 2027.
Added
In November 2025, TNMP filed the TNMP Base Rate Review with the PUCT, requesting recovery of $2.8 billion of rate base, a requested ROE of 10.4%, and a 47.54% equity ratio.
Removed
We are committed to leadership development and mentorship programs, which ensure our leaders’ success and provide diverse learning plans for all employees. Diversity and Inclusion Our core values also drive a culture committed to diversity and inclusion. Our diverse workforce enables the Company to provide exceptional value to our customers and stakeholders.
Added
The TNMP Base Rate Review also includes increases in operations and maintenance expenses that are not recovered through semi-annual TCOS and DCRF filings, excludes increases in interest expense resulting from refinancing of debt associated with the proposed Merger, and requests recovery of $20.5 million associated with Hurricane Beryl restoration costs over a five-year period.
Removed
Our 1,695 employees include 35% represented by a bargaining unit, 27% women, 56% minorities, 15% identified as disabled, and 9% veterans. Our diversity goal at the Company is for our workforce to mirror the communities we serve.
Added
If approved by the PUCT, the new rates are expected to become effective in mid-2026. PNM Operational Information PNM is an electric utility that provides electric generation, transmission, and distribution service to its rate-regulated customers. PNM was incorporated in the State of New Mexico in 1917.
Removed
To enhance diversity, we take a multi-tiered approach, including required training for all employees on topics including Americans with Disability Act and diversity in the workplace and leaders are trained in unconscious bias, incorporating diversity into our hiring process and undertaking targeted recruitment with organizations supporting diverse candidates.
Added
The first annual Grid Modernization Plan review was approved in February 2026, updating key portions of the strategy, including increasing investments from approximately $344 million to $367 million for the first six years, and decreasing projected operations and maintenance costs by approximately 18%.
Added
On October 28, 2025, PNM notified the Western Power Pool that it has elected to withdraw from WRAP and will not proceed into the binding phase. PNM will seek to align resource adequacy coordination with others in the EDAM regional market to maximize customer benefits.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+36 added−23 removed124 unchanged
Biggest changeIncreases in tax rates may not be immediately recoverable through PNM’s and TNMP’s regulated rates, reducing earnings. Tax laws and regulations may also negatively impact the relative value of some resource investments over others, making those investments less competitive.
Biggest changeTax laws and regulations may also negatively impact the relative value of some resource investments over others, making those investments less competitive. In July 2025, President Trump signed the OBBBA, significantly altering the landscape of climate action and clean energy initiatives in the United States.
The Company’s business could be hurt from the impacts on the local economies associated with these customer groups as well as directly from the large industrial customers for a number of reasons including federally-mandated base closures, significant curtailment of the activities at the bases or national laboratories, and closure of industrial facilities or significant curtailment of their activities.
The Company’s business could be hurt from the impacts on the local economies associated with these customer groups as well as directly from the large industrial customers for a number of reasons including federally-mandated base closures, significant curtailment of the funding of or activities at the bases or national laboratories, and closure of industrial facilities or significant curtailment of their activities.
In addition, a change in GAAP required that all changes in the fair value of equity securities recorded on the Company’s balance sheet be reflected in earnings, which results in increased volatility in earnings. Impairments of goodwill and long-lived assets of TXNM, PNM, and TNMP could adversely affect the Company’s business, financial position, liquidity, and results of operations.
In addition, a change in GAAP required that all changes in the fair value of equity securities recorded on the Company’s balance sheet be reflected in earnings, which result in increased volatility in earnings. Impairments of goodwill and long-lived assets of TXNM, PNM, and TNMP could adversely affect the Company’s business, financial position, liquidity, and results of operations.
These effects could adversely impact the Company by: • reducing usage and/or demand for electricity by our customers in New Mexico and Texas; • causing delays and disruptions in the availability of and timely delivery of materials and components used in our operations; • causing delays and disruptions in the supply chain resulting in disruptions in the commercial operation dates of certain projects; • causing a deterioration in the credit quality of our counterparties, including power purchase agreement providers, contractors or retail customers, that could result in credit losses; • causing impairments of goodwill or long-lived assets and adversely impacting the Company’s ability to develop, construct and operate facilities; A - 16 Table of Contents • impacting the Company’s ability to meet the requirements of the covenants in our existing credit facilities, including covenants regarding debt to capitalization; • causing a deterioration in our financial metrics or the business environment that impacts our credit ratings; • decreasing the value of our investment securities held in trusts for pension and other postretirement benefits, and for nuclear decommissioning, SJGS decommissioning, and coal mine reclamation, which could lead to increased funding requirements; • impacting our liquidity position and cost of and ability to access funds from financial institutions and capital markets; and • causing other unpredictable events.
These effects could adversely impact the Company by: • reducing usage and/or demand for electricity by our customers in New Mexico and Texas • causing delays and disruptions in the availability of and timely delivery of materials and components used in our operations • causing delays and disruptions in the supply chain resulting in disruptions in the commercial operation dates of certain projects • causing a deterioration in the credit quality of our counterparties, including power purchase agreement providers, contractors or retail customers, that could result in credit losses • causing impairments of goodwill or long-lived assets and adversely impacting the Company’s ability to develop, construct and operate facilities • impacting the Company’s ability to meet the requirements of the covenants in our existing credit facilities, including covenants regarding debt to capitalization • causing a deterioration in our financial metrics or the business environment that impacts our credit ratings • decreasing the value of our investment securities held in trusts for pension and other postretirement benefits, and for nuclear decommissioning, SJGS decommissioning, and coal mine reclamation, which could lead to increased funding requirements • impacting our liquidity position and cost of and ability to access funds from financial institutions and capital markets • causing other unpredictable events.
For example, the Convertible Notes Indenture requires TXNM, subject to certain exceptions, to repurchase the Convertible Notes for cash upon the occurrence of a fundamental change (as defined in the Convertible Notes Indenture) and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change (as defined in the Convertible Notes Indenture).
For example, the indenture governing the Convertible Notes requires TXNM, subject to certain exceptions, to repurchase the Convertible Notes for cash upon the occurrence of a fundamental change (as defined in the indenture) and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change (as defined in the indenture).
These risks are in three main areas, including 1) risk of completion of replacement resources prior to planned generation unit retirements, 2) increasing levels of renewable generation presenting risks of uncertainty and variability that will be further compounded as neighboring systems transition towards increasing levels of renewable resources, and 3) risks for mitigating possible resource volatility through a shrinking energy market.
These risks are in three main areas, including 1) risk of completion of replacement A - 15 Table of Contents resources prior to planned generation unit retirements, 2) increasing levels of renewable generation presenting risks of uncertainty and variability that will be further compounded as neighboring systems transition towards increasing levels of renewable resources, and 3) risks for mitigating possible resource volatility through a shrinking energy market.
TXNM has an arrangement with a bank under which the bank has issued $30.3 million of letters of credit in favor of sureties in order for the sureties to post reclamation bonds that are required under the miner’s operating permit.
TXNM has an arrangement with a bank under which the bank has issued $19.3 million of letters of credit in favor of sureties in order for the sureties to post reclamation bonds that are required under the miner’s operating permit.
Despite TXNM’s current consolidated debt levels, TXNM and its subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in its debt instruments, some of which may be senior indebtedness or secured debt.
Despite TXNM’s current consolidated debt levels, TXNM and its subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in the Merger Agreement and its debt instruments, some of which may be senior indebtedness or secured debt.
It is also possible that unsatisfactory outcomes of these matters, the financial impact of climate change regulation or legislation, other environmental regulations, the result of litigation, the adequacy and timeliness of cost recovery mechanisms, and other business considerations, could jeopardize the economic viability of certain generating facilities or the ability or willingness of individual participants to continue their participation through the periods currently contemplated in the agreements governing those facilities.
It is also possible that unsatisfactory outcomes of these matters, the financial impact of climate change regulation or legislation, other environmental regulations, the result of litigation, the adequacy and timeliness of cost recovery mechanisms, A - 11 Table of Contents and other business considerations, could jeopardize the economic viability of certain generating facilities or the ability or willingness of individual participants to continue their participation through the periods currently contemplated in the agreements governing those facilities.
Although there is uncertainty about the timing and form of the implementation of EPA’s regulations regarding GHG emissions, climate change, CCRs, power plant emissions, changes to the ambient air quality A - 12 Table of Contents standards, and other environmental issues, the promulgation and implementation of such regulations could have a material impact on operations.
Although there is uncertainty about the timing and form of the implementation of EPA’s regulations regarding GHG emissions, climate change, CCRs, power plant emissions, changes to the ambient air quality standards, and other environmental issues, the promulgation and implementation of such regulations could have a material impact on operations.
These advances in technology have reduced the costs of these alternative methods of producing power to a level that is competitive with that of central station power production. In addition, advances made in the capabilities of energy storage have A - 13 Table of Contents further decreased power production and peak usage through the dispatch of more battery systems.
These advances in technology have reduced the costs of these alternative methods of producing power to a level that is competitive with that of central station power production. In addition, advances made in the capabilities of energy storage have further decreased power production and peak usage through the dispatch of more battery systems.
However, despite steps the Company may take to detect, mitigate, and/or eliminate threats and respond to security incidents, the techniques used by those who wish to obtain unauthorized access, and possibly disable or sabotage systems and/or abscond with information and data, change frequently and continue to evolve with the use of artificial intelligence and the Company may not be able to protect against all such actions.
However, despite steps the Company may take to detect, mitigate, and/or eliminate threats and respond to security incidents, the techniques used by those who wish to obtain unauthorized access, and possibly disable or sabotage systems and/or abscond with information and data, change A - 14 Table of Contents frequently and continue to evolve with the use of artificial intelligence and the Company may not be able to protect against all such actions.
TXNM and its subsidiaries currently have a significant amount of indebtedness, including the Convertible Notes. This significant amount of indebtedness could limit TXNM’s ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, stock repurchases or other purposes.
TXNM and its subsidiaries currently have a significant amount of indebtedness, including the Convertible Notes and TXNM 2025 Junior Subs. This significant amount of indebtedness could limit TXNM’s ability to obtain additional financing for working capital, capital expenditures, acquisitions, debt service requirements, stock repurchases or other purposes.
In the regular course of business, the utilities handle a range of sensitive security and customer information. PNM and TNMP are A - 14 Table of Contents subject to the rules of various agencies and the laws of various states, related to safeguarding and maintaining the confidentiality of this information. Cyber-attacks regularly occur, and generally are unsuccessful.
In the regular course of business, the utilities handle a range of sensitive security and customer information. PNM and TNMP are subject to the rules of various agencies and the laws of various states, related to safeguarding and maintaining the confidentiality of this information. Cyber-attacks regularly occur and generally are unsuccessful.
Timely regulatory recovery of costs associated with any environmental-related regulations would be needed to maintain a strong financial and operational profile. The above factors could adversely affect the Company’s business, financial position, results of operations, and liquidity.
Timely regulatory recovery of costs associated with any environmental-related A - 12 Table of Contents regulations would be needed to maintain a strong financial and operational profile. The above factors could adversely affect the Company’s business, financial position, results of operations, and liquidity.
TXNM and its subsidiaries’ ability to make scheduled payments of the principal of, to pay interest on or to refinance, its indebtedness, including the Convertible Notes, depends on its future performance, which is subject to economic, financial, competitive and other factors beyond its control.
TXNM and its subsidiaries’ ability to make scheduled payments of the principal of, to pay interest on or to refinance, its indebtedness, including the Convertible Notes and TXNM 2025 Junior Subs, depends on its future performance, which is subject to economic, financial, competitive and other factors beyond its control.
As these technologies become more cost competitive or can be used by third parties to supply power at lower prices than PNM is able to offer, PNM’s energy sales and/or regulated returns could be eroded, and the value of its generating facilities could be reduced.
As these technologies become more cost competitive or can be used by A - 13 Table of Contents third parties to supply power at lower prices than PNM is able to offer, PNM’s energy sales and/or regulated returns could be eroded, and the value of its generating facilities could be reduced.
A - 19 Table of Contents Disruption in the credit and capital markets may impact the Company’s strategy and ability to raise capital. TXNM and its subsidiaries rely on access to both short-term and longer-term capital markets as sources of liquidity for any capital requirements not satisfied by cash flow from operations.
Disruption in the credit and capital markets may impact the Company’s strategy and ability to raise capital. TXNM and its subsidiaries rely on access to both short-term and longer-term capital markets as sources of liquidity for any capital requirements not satisfied by cash flow from operations.
A - 11 Table of Contents TXNM’s utilities are subject to numerous comprehensive federal, state, tribal, and local environmental laws and regulations, including those related to climate change as well as increased stakeholder actions related to sustainability matters and reducing GHG, which may impose significant compliance costs and may significantly limit or affect their operations and financial results.
TXNM’s utilities are subject to numerous comprehensive federal, state, tribal, and local environmental laws and regulations, including those related to climate change as well as increased stakeholder actions related to sustainability matters and reducing GHG, which may impose significant compliance costs and may significantly limit or affect their operations and financial results.
General economic conditions of the nation and/or specific areas can affect the Company’s customers and suppliers. Economic recession or downturn may result in decreased consumption by customers and increased bad debt expense, and could also negatively impact suppliers, all of which could negatively affect the Company.
A - 16 Table of Contents General economic conditions of the nation and/or specific areas can affect the Company’s customers and suppliers. Economic recession or downturn may result in decreased consumption by customers and increased bad debt expense, and could also negatively impact suppliers, all of which could negatively affect the Company.
This could negatively impact the Company’s ability to incur additional indebtedness on acceptable terms and would result in an increase in the interest rates applicable under the Company’s credit facilities. The Company’s cash flow and capital resources may be insufficient to pay interest and principal on debt in the future.
This could negatively impact the Company’s ability to incur additional indebtedness on acceptable terms and would result in an increase in the A - 20 Table of Contents interest rates applicable under the Company’s credit facilities. The Company’s cash flow and capital resources may be insufficient to pay interest and principal on debt in the future.
However, it is possible that liabilities associated with nuclear operations could exceed the amount of insurance coverage. See Note 16. A - 15 Table of Contents Peak demand for power could exceed forecasted supply capacity, resulting in increased costs for purchasing capacity in the market or building additional generation facilities and/or energy storage facilities.
However, it is possible that liabilities associated with nuclear operations could exceed the amount of insurance coverage. See Note 16. Peak demand for power could exceed forecasted supply capacity, resulting in increased costs for purchasing capacity in the market or building additional generation facilities and/or energy storage facilities. PNM is obligated to supply power to retail customers.
Significant impairments could adversely affect the Company’s business, financial position, liquidity, and results of operations. A - 20 Table of Contents The impacts and implementation of U.S. tax reform legislation may negatively impact TXNM’s, PNM’s, and TNMP’s businesses, financial position, results of operations, and cash flows.
Significant impairments could adversely affect the Company’s business, financial position, liquidity, and results of operations. The impacts and implementation of U.S. tax reform legislation may negatively impact TXNM’s, PNM’s, and TNMP’s businesses, financial position, results of operations, and cash flows. Changes in tax laws may negatively impact TXNM’s, PNM’s, and TNMP’s businesses, financial position, results of operations, and cash flows.
PNM also has various financial covenants that limit the transfer of assets, through dividends or other means and the Federal Power Act imposes certain restrictions on dividends paid by public utilities, including that dividends cannot be paid from paid-in capital.
PNM also has various financial covenants that limit the transfer of assets, through dividends or other means and the Federal Power Act imposes certain restrictions on dividends paid by public utilities, including that dividends cannot be paid from paid-in capital. The Merger Agreement also restricts TXNM from paying dividends outside of regular quarterly dividends.
TXNM is not restricted under the terms of the Convertible Notes Indenture from incurring additional debt, securing existing or future debt, recapitalizing its debt or taking a number of other actions.
TXNM is not restricted under the terms of the indentures governing the Convertible Notes or the TXNM 2025 Junior Subs from incurring additional debt, securing existing or future debt, recapitalizing its debt or taking a number of other actions.
In general, the Company relies on its short-term credit facilities as the initial source to finance construction expenditures. This results in increased borrowings under the facilities over time. The Company is currently projecting total construction expenditures for the years 2025-2029 to be $7.8 billion.
In general, the Company relies on its short-term credit facilities as the initial source to finance construction expenditures. This results in increased borrowings under the facilities over time. The Company is currently projecting total construction expenditures for the years 2026-2030 to be $10.2 billion.
The rates PNM charges its customers are regulated by the NMPRC and FERC. TNMP is regulated by the PUCT. The Company is in a period requiring significant capital investment and is projecting total construction expenditures for the years 2025-2029 to be $7.8 billion.
The rates PNM charges its customers are regulated by the NMPRC and FERC. TNMP is regulated by the PUCT. The Company is in a period requiring significant capital investment and is projecting total construction expenditures for the years 2026-2030 to be $10.2 billion.
PNM is obligated to supply power to retail customers. As PNM continues to complete the significant transition in generation resources necessary to achieve 100% carbon emission-free generation by 2040, there are certain potential deliverability and cost risks associated with this transition.
As PNM continues to complete the significant transition in generation resources necessary to achieve 100% carbon emission-free generation, there are certain potential deliverability and cost risks associated with this transition.
TXNM’s restated articles of incorporation and by-laws include a number of provisions that may have the effect of discouraging persons from acquiring large blocks of TXNM’s common stock or delaying or preventing a change in control of TXNM.
In addition to the restrictions in the Merger Agreement discussed above, TXNM’s restated articles of incorporation and by-laws include a number of provisions that may have the effect of discouraging persons from acquiring large blocks of A - 21 Table of Contents TXNM’s common stock or delaying or preventing a change in control of TXNM.
Declines in market values could result in increased funding of the trusts, the recognition of losses as impairments for the NDT and coal mine reclamation trusts, SJGS decommissioning trust, and additional expense for the benefit plans.
The current asset allocation exposes the NDT investment portfolio to market and macroeconomic factors. Declines in market values could result in increased funding of the trusts, the recognition of losses as impairments for the NDT and coal mine reclamation trusts, SJGS decommissioning trust, and additional expense for the benefit plans.
PNM currently depends on fossil-fueled generation for 28.2% of its electricity. As discussed under Climate Change Issues, this type of generation is subject to existing and future EPA or state regulations requiring GHG reductions. The anticipated expansion of federal and state regulations could result in additional operating restrictions on facilities and increased generation and compliance costs.
As discussed under Climate Change Issues, the existing and future EPA or state regulations regarding GHG reductions for this type of generation are under review. The expansion of federal and state regulations could result in additional operating restrictions on facilities and increased generation and compliance costs.
In addition, TXNM and its operating subsidiaries may underestimate the costs of litigation due to the uncertainty inherent in these matters. These events could have negative impacts on the Company’s financial position, results of operations, and cash flows.
In addition, TXNM and its operating subsidiaries may underestimate the costs of litigation due to the uncertainty inherent in these matters. These events could have negative impacts on the Company’s financial position, results of operations, and cash flows. Risks Relating to the Proposed Merger with Blackstone Infrastructure There is no assurance when or if the proposed Merger will be completed.
TXNM’s Credit Agreement restricts its ability to incur additional indebtedness, including secured indebtedness, but if the TXNM Credit Agreement matures or is repaid, TXNM may not be subject to such restrictions under the terms of any subsequent indebtedness. The conditional conversion feature of the Convertible Notes, if triggered, may adversely affect TXNM’s financial condition and operating results.
TXNM’s Credit Agreement restricts its ability to incur additional indebtedness, including secured indebtedness, but if the TXNM Credit Agreement matures or is repaid, TXNM may not be subject to such restrictions under the terms of any subsequent indebtedness. The fundamental change repurchase features of the Convertible Notes may delay or prevent an otherwise beneficial attempt to acquire TXNM.
TXNM may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on its debt obligations. Despite TXNM’s current consolidated debt levels, TXNM and its subsidiaries may still incur substantially more debt or take other actions which would intensify the risks discussed above.
A - 19 Table of Contents Despite TXNM’s current consolidated debt levels, TXNM and its subsidiaries may still incur substantially more debt or take other actions which would intensify the risks discussed above.
Changes in tax laws may negatively impact TXNM’s, PNM’s, and TNMP’s businesses, financial position, results of operations, and cash flows. The Company possesses tax credits and other carryforwards, the value of which could be diminished by new laws or the Company’s ability to timely utilize them.
The Company possesses tax credits and other carryforwards, the value of which could be diminished by new laws or the Company’s ability to timely utilize them. Increases in tax rates may not be immediately recoverable through PNM’s and TNMP’s regulated rates, reducing earnings.
The fundamental change repurchase features of the Convertible Notes and the TNMP first mortgage bonds may delay or prevent an otherwise beneficial attempt to acquire TXNM. Certain provisions in the indenture governing the Convertible Notes and the TNMP first mortgage bonds may make it more difficult or expensive for a third party to acquire TXNM.
Certain provisions in the indenture governing the Convertible Notes may make it more difficult or expensive for a third party to acquire TXNM.
Following the transfer of the PVNGS Unit 1 Leased Interest to SRP in January 2023 and the expiration of the leased interest in Unit 2 in January 2024, PNM currently has a 7.3% undivided interest in PVNGS. PVNGS represented 6.7% of PNM’s total generating capacity as of December 31, 2024.
PNM has a 7.3% undivided interest in PVNGS that represented 6.1% of PNM’s total generating capacity as of December 31, 2025.
Failure to comply with applicable environmental laws and regulations also could result in civil liability arising out of government enforcement actions or private claims.
If PNM fails to timely obtain, maintain, or comply with any required environmental regulatory approval, operations at affected facilities could be suspended or could subject PNM to additional expenses and potential penalties. Failure to comply with applicable environmental laws and regulations also could result in civil liability arising out of government enforcement actions or private claims.
Without timely cost recovery and the authorization to earn a reasonable return on invested capital, the Company’s liquidity and results of operations could be negatively impacted. In June 2024, PNM filed the 2025 Rate Request for a two-phase implementation of a $3.0 billion increase in total rate base.
Without timely cost recovery and the authorization to earn a reasonable return on invested capital, the Company’s liquidity and results of operations could be negatively impacted. In November 2025, TNMP filed its Base Rate Review requesting recovery of $2.8 billion of rate base as of June 30, 2025, a requested ROE of 10.4%, and a 47.54% equity ratio.
A - 17 Table of Contents Financial Risks TXNM has counterparty credit risk in connection with financial support that was provided to facilitate the coal supply arrangement for SJGS. Adverse developments from these factors could have a negative impact on the business, financial condition, results of operations, and cash flows of PNM and TXNM.
Adverse developments from these factors could have a negative impact on the business, financial condition, results of operations, and cash flows of PNM and TXNM.
Under the Biden Administration, EPA and other federal agencies have sought to expand climate change regulations and work to aggressively reduce GHG emissions.
Under the Biden Administration, EPA and other federal agencies sought to expand climate change regulations and worked to aggressively reduce GHG emissions. On January 20, 2025, President Trump signed an executive order directing all agencies, including EPA, to review all agency actions and suspend, revise, or rescind those identified as imposing an undue burden on domestic energy resources.
Removed
The increase includes investments in transmission, distribution, and generation facilities to ensure safe, reliable delivery of electricity and a request for an ROE of 10.45%. An adverse outcome in the 2025 Rate Request could negatively impact PNM’s financial position, results of operation, and cash flows. See Note 17.
Added
The TNMP Base Rate Review also includes increases in operations and maintenance expenses that are not recovered through semi-annual TCOS and DCRF filings, excludes increases in interest expense resulting from refinancing of debt associated with the proposed Merger, and requests recovery of $20.5 million associated with Hurricane Beryl restoration costs.
Removed
Although it is uncertain how the current Trump Administration will ultimately act with respect to these regulations, many state agencies, environmental advocacy groups, and other organizations will continue to focus on decarbonization with enhanced attention on GHG from fossil-fueled generation facilities. See discussion above and Note 17, regarding PNM’s abandonment applications and the ETA.
Added
The order also expressly directs EPA to submit joint recommendations on the legality and continuing applicability of the 2009 Endangerment Finding for GHG. On January 7, 2026, EPA sent the proposed rule rescinding the 2009 Endangerment Finding to OMB.
Removed
In the first round of the CAA regional haze program, BART determinations were made for both SJGS and Four Corners, requiring the facilities to reduce the levels of visibility-impairing emissions, including NOx, through the installation of control technology, resulting in operating cost increases.
Added
On February 12, 2026, the final rule was finalized as proposed, repealing all GHG emission standards for certain vehicles and engines promulgated on the basis of the Endangerment Finding.
Removed
Deadlines for SIPs for the second planning period were in July 2021 which NMED was unable to meet. NMED is currently preparing its next regional haze SIP and notified PNM that it will not be required to submit a regional haze four-factor analysis for SJGS since PNM retired its share of SJGS in 2022.
Added
While the Endangerment Finding did not directly impose any requirements on EGUs, EPA has cited the Endangerment Finding as a basis for its authority to regulate GHG emissions from EGUs under CAA Section 111. PNM currently depends on fossil-fueled generation for 25.3% of its electricity.
Removed
In February 2024, EPA proposed to impose a federal implementation plan on New Mexico to address the interstate transport of ozone and its precursors, referred to by EPA as the “good neighbor” rule.
Added
Completion of the proposed Merger is subject to the satisfaction or waiver of a number of conditions as set forth in the Merger Agreement, including regulatory approvals and other customary closing conditions.
Removed
If finalized as proposed, compliance with the rule would require specified fossil fuel-fired generating resources to participate in an ozone-season NOx emission allowance trading program that will limit total NOx emissions from all affected units within the state of New Mexico.
Added
There can be no assurance that the conditions to completion of the proposed Merger will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the proposed Merger.
Removed
In December 2024, EPA pulled its proposed rule from the OMB and did not specify if and when the rule might be resubmitted for review. If PNM fails to timely obtain, maintain, or comply with any required environmental regulatory approval, operations at affected facilities could be suspended or could subject PNM to additional expenses and potential penalties.
Added
In addition, each of Blackstone Infrastructure and TXNM may unilaterally terminate the Merger Agreement under certain circumstances, and Blackstone Infrastructure and TXNM may agree at any time to terminate the Merger Agreement, even though TXNM shareholders already approved the Merger Agreement at a special meeting on August 28, 2025 (and thereby approved the Merger and the other transactions contemplated by the Merger Agreement).
Removed
In the event the conditional conversion feature of the Convertible Notes is triggered, holders of Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option.
Added
A - 17 Table of Contents Blackstone Infrastructure and TXNM may be unable to obtain the regulatory approvals required to complete the proposed Merger.
Removed
If one or more holders elect to convert their Convertible Notes, to the extent TXNM is required to pay cash to settle a portion of its conversion obligation, it could adversely affect TXNM’s liquidity.
Added
In addition to other conditions set forth in the Merger Agreement, completion of the proposed Merger is conditioned upon the receipt of various state and U.S. federal regulatory approvals, including, but not limited to, expiration or termination of the applicable waiting period under HSR Act and approval by NMPRC, PUCT, FERC, FCC, and NRC.
Removed
In addition, even if holders do not elect to convert their Convertible Notes, to the extent TXNM is required to pay cash to settle a portion of its conversion obligations, TXNM would be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of its net working capital.
Added
Blackstone Infrastructure and TXNM have made and will make various filings and submissions and will pursue all required consents, orders and approvals in accordance with the Merger Agreement.
Removed
The accounting method for the Convertible Notes could have a material effect on TXNM’s reported financial results.
Added
These consents, orders and approvals may impose requirements, limitations or costs or place restrictions, and if such consents, orders and approvals require an extended period of time to be obtained, such extended period of time could increase the chance that an event occurs that constitutes a material adverse effect with respect to TXNM and thereby may allow Blackstone Infrastructure not to complete the proposed Merger.
Removed
In August 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which amends the accounting standards for convertible debt instruments that may be settled entirely or partially in cash upon conversion.
Added
Such extended period of time also may increase the chance that other adverse effects with respect to TXNM could occur, such as the loss of key personnel. Further, no assurance can be given that the required consents, orders and approvals will be obtained or that the required conditions to closing will be satisfied.
Removed
ASU 2020-06 eliminates requirements to separately account for liability and equity components of such convertible debt instruments and eliminates the ability to use the treasury stock method for calculating diluted earnings per share for A - 18 Table of Contents convertible instruments whose principal amount may be settled using shares.
Added
The announcement and pendency of the proposed Merger, during which TXNM is subject to certain operating restrictions, could have an adverse effect on TXNM’s businesses, results of operations, financial condition, or cash flows. The announcement and pendency of the proposed Merger could disrupt TXNM’s businesses, and uncertainty about the effect of the Merger may have an adverse effect on TXNM.
Removed
Instead, ASU 2020-06 requires (i) the entire amount of the security to be presented as a liability on the balance sheet and (ii) application of the “if-converted” method for calculating diluted earnings per share.
Added
These uncertainties could disrupt the business of TXNM and cause suppliers, vendors, partners, and others that deal with TXNM to defer entering into contracts with TXNM or making other decisions concerning TXNM or seek to change or cancel existing business relationships with TXNM.
Removed
Under the “if-converted” method, diluted earnings per share will generally be calculated assuming that all the Convertible Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which could adversely affect TXNM’s diluted earnings per share.
Added
In addition, TXNM’s employees may experience uncertainty regarding their roles after the Merger; for example, employees may depart either before the completion of the Merger because of such uncertainty and issues relating to the difficulty of coordination or a desire not to remain following the Merger; and the pendency of the Merger may adversely affect TXNM’s ability to retain, recruit, and motivate key personnel.
Removed
However, if the principal amount of the convertible debt security, such as the Convertible Notes, being converted is required to be paid in cash and only the excess is permitted to be settled in shares, the if-converted method will produce a similar result as the “treasury stock” method prior to the adoption of ASU 2020-06 for such convertible debt security.
Added
Additionally, the attention of TXNM’s management may be directed towards the completion of the Merger including obtaining regulatory approvals and other transaction-related considerations and may be diverted from the day-to-day business operations of TXNM and matters related to the Merger may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to TXNM.
Removed
ASU 2020-06 became effective for TXNM as of the start of fiscal year end 2022 and as such TXNM did not bifurcate the liability and equity components of the Convertible Notes on its balance sheet and TXNM used the if-converted method of calculating diluted earnings per share.
Added
Additionally, the Merger requires TXNM to obtain Blackstone Infrastructure’s consent prior to taking certain specified actions while the Merger is pending. These restrictions may prevent TXNM from pursuing otherwise attractive business opportunities or other capital structure alternatives and making other changes to its business or executing certain of its business strategies prior to the completion of the Merger.
Removed
To the extent TXNM is required to pay cash to settle the principal amount of the Convertible Notes upon conversion, with only the excess permitted to be settled in shares of TXNM’s common stock, the application of the if-converted method will produce a similar result as the treasury stock method prior to the adoption of ASU 2020-06.
Added
Further, the Merger may give rise to potential liabilities, including as a result of pending and future shareholder lawsuits relating to the Merger. Any of these matters could adversely affect the businesses of, or harm the results of operations, financial condition or cash flows of TXNM. TXNM will incur substantial transaction fees and costs in connection with the proposed Merger.
Removed
The effect of the treasury stock method is that the shares issuable upon conversion of such Convertible Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such Convertible Notes exceeds their principal amount.
Added
TXNM has incurred and expects to incur additional material non-recurring expenses in connection with the proposed Merger and completion of the transactions contemplated by the Merger Agreement.
Removed
The requirement that the principal amount of the Convertible Notes upon conversion must be paid in cash could adversely affect TXNM’s liquidity. TXNM cannot be sure whether other changes may be made to the current accounting standards related to the Convertible Notes, or otherwise, that could have a material effect on its reported financial results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CIO has significant information technology and program management experience and has served many years in the Company’s information security organization. The CIO is a Certified Project Management Professional and Change Management Registered Practitioner. In addition, the CIO has a B.B.A. in business computer systems and an MBA.
Biggest changeThe CIO updates senior management on these matters and works closely with the General Counsel to oversee compliance with legal, regulatory, and contractual security requirements. The CIO has significant technology and program management experience and has served many years in the Company’s information technology organization. The CIO is a Certified Project Management Professional and Change Management Registered Practitioner.
As of December 31, 2024, our financial condition, results of operations or business strategy have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
As of December 31, 2025, our financial condition, results of operations or business strategy have not been materially affected by risks from cybersecurity threats, including as a result of previously identified cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.
These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing, and other exercises focused on A - 21 Table of Contents evaluating the effectiveness of the Company’s cybersecurity measures and planning.
These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability testing, and other exercises focused on evaluating the effectiveness of the Company’s cybersecurity measures and planning.
Specifically, the Audit and Ethics Committee assists the Board in its oversight responsibilities regarding the company-wide security risk management practices, including overseeing the practices, procedures, and controls that management uses to identify, assess, respond to, remediate, and mitigate risks related to cybersecurity. The Audit and Ethics Committee provides oversight of management’s efforts to identify and mitigate cyber risk.
Specifically, the Audit and Ethics Committee assist the Board in its oversight responsibilities regarding the company-wide security risk management practices, including overseeing the practices, procedures, and controls that management uses to identify, assess, respond to, remediate, and mitigate risks related to cybersecurity. The Audit and Ethics Committee provide oversight of management’s efforts to identify and mitigate cyber risk.
Cybersecurity Governance Management’s role in assessing and managing the Company’s material risks from cybersecurity threats The Company’s management is responsible for managing cybersecurity risk and bringing to the Audit and Ethics Committee and Board’s attention the most significant cybersecurity risks facing the Company. The CIO oversees the Company’s Cybersecurity Program and reports to the Company’s President and Chief Operating Officer.
A - 22 Table of Contents Cybersecurity Governance Management’s role in assessing and managing the Company’s material risks from cybersecurity threats The Company’s management is responsible for managing cybersecurity risk and bringing to the Audit and Ethics Committee and Board’s attention the most significant cybersecurity risks facing the Company.
The Audit and Ethics Committee’s oversight of cyber risk management assists in the Board’s assessment of the adequacy of resources, funding, and focus within the Company with respect to cyber risk.
The Board has adopted a Cyber Risk Policy which is overseen by the Audit and Ethics Committee. The Audit and Ethics Committee’s oversight of cyber risk management assists in the Board’s assessment of the adequacy of resources, funding, and focus within the Company with respect to cyber risk.
The CIO leads the development, implementation, and enforcement of security policies and data breach resiliency plans, as well as works with internal and external cybersecurity and IT teams to monitor and maintain the security of the Company’s IT infrastructure. The CIO is supported by a team of enterprise information, system security, and risk professionals.
The CIO oversees the Company’s Cybersecurity Program and reports to the Company’s Senior Vice President of Corporate Services. The CIO leads the development, implementation, and enforcement of security policies and data breach resiliency plans, as well as works with internal and external cybersecurity and IT teams to monitor and maintain the security of the Company’s IT infrastructure.
Board oversight of risks from cybersecurity threats Cybersecurity risk oversight remains a priority for the Board who is responsible for oversight of the Company’s information security program, including compliance and risk management and the review of cybersecurity risks. The Board has adopted a Cyber Risk Policy which is overseen by the Audit and Ethics Committee.
In addition, the CIO has a B.B.A. in business computer systems and an MBA. Board oversight of risks from cybersecurity threats Cybersecurity risk oversight remains a priority for the Board who is responsible for oversight of the Company’s information security program, including compliance and risk management and the review of cybersecurity risks.
The CIO receives reports on cybersecurity threats on an ongoing basis and regularly reviews risk management measures implemented by the Company to identify and mitigate data security and cybersecurity risks. The CIO updates senior management on these matters and works closely with the General Counsel to oversee compliance with legal, regulatory, and contractual security requirements.
The CIO is supported by a team of enterprise information, system security, and risk professionals. The CIO receives reports on cybersecurity threats on an ongoing basis and regularly reviews risk management measures implemented by the Company to identify and mitigate data security and cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changePNM owns and leases communication, office and other equipment, office space, vehicles, energy storage facilities, and real estate. PNM also owns service and office facilities throughout its service territory. See Note 8 for additional information concerning leases. A - 22 Table of Contents TNMP TNMP’s facilities consist primarily of transmission and distribution facilities located in its service areas.
Biggest changePNM owns and leases communication, office and other equipment, office space, vehicles, energy storage facilities, and real estate. PNM also owns service and office facilities throughout its service territory. See Note 8 for additional information concerning leases. TNMP TNMP’s facilities consist primarily of transmission and distribution facilities located in its service areas.
TNMP also owns and leases vehicles, service facilities, and office locations throughout its service territory. As of December 31, 2024, TNMP owned 1,022 miles of overhead electric transmission lines, 7,348 miles of overhead distribution lines, 1,576 miles of underground distribution lines, and 107 substations. Substantially all of TNMP’s property is pledged to secure its first mortgage bonds. See Note 7.
TNMP also owns and leases vehicles, service facilities, and office locations throughout its service territory. As of December 31, 2025, TNMP owned 1,049 miles of overhead electric transmission lines, 7,346 miles of overhead distribution lines, 1,633 miles of underground distribution lines, and 106 substations. Substantially all of TNMP’s property is pledged to secure its first mortgage bonds. See Note 7.
As of December 31, 2024, PNM owned, or jointly owned, 3,444 miles of electric transmission lines, 5,776 miles of distribution overhead lines, 6,179 miles of underground distribution lines (excluding street lighting), and 232 substations. PNM’s electric transmission and distribution lines are generally located within easements and rights-of-way on public, private, and Native American lands.
As of December 31, 2025, PNM owned, or jointly owned, 3,450 miles of electric transmission lines, 5,774 miles of distribution overhead lines, 6,251 miles of underground distribution lines (excluding street lighting), and 250 substations. PNM’s electric transmission and distribution lines are generally located within easements and rights-of-way on public, private, and Native American lands.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+1 added−1 removed1 unchanged
Removed
Note 16 • Cooling Water Intake Structures • Santa Fe Generating Station Note 17 • PNM – 2025 Rate Change • PNM – 2024 Rate Request • PNM – Integrated Resource Plan • PNM – 2028 Resource Application • PNM – Community Solar Act • TNMP – System Resiliency Plan • TNMP – Transmission Cost of Service Rates • TNMP – Periodic Distribution Rate Adjustment
Added
Note 16 • TXNM – Merger Related Litigation A - 23 Table of Contents Note 17 • TXNM – Merger Related Regulatory Applications • PNM – Integrated Resource Plans • PNM – Grid Modernization Plan • PNM – BESS Project • PNM – SB 170 Projects • PNM – Rio Puerco-Pajarito-Prosperity CCN • TNMP – Base Rate Review • TNMP – Transmission Cost of Service Rates • TNMP – Periodic Distribution Rate Adjustment

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

4 edited+1 added−0 removed0 unchanged
Biggest changeEden 59 Senior Vice President and Chief Financial Officer April 2024 Senior Vice President, Chief Financial Officer and Treasurer May 2022 Vice President and Treasurer February 2021 Vice President and Chief Information Officer January 2020 Vice President, Human Resources April 2018 B. G.
Biggest changeMonroy 47 Senior Vice President and Chief Financial Officer May 2025 PNM Vice President, Regulatory December 2023 PNM Vice President, Regulatory and TXNM Corporate Controller July 2022 Vice President and Corporate Controller January 2020 B. G.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. SUPPLEMENTAL ITEM – INFORMATION ABOUT EXECUTIVE OFFICERS OF TXNM ENERGY, INC. All officers are elected annually by the Board of TXNM. Executive officers, their ages as of February 14, 2025 and offices held for the past five years are as follows: Name Age Office Initial Effective Date P. K.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. SUPPLEMENTAL ITEM – INFORMATION ABOUT EXECUTIVE OFFICERS OF TXNM ENERGY, INC. All officers are elected annually by the Board of TXNM. Executive officers, their ages as of February 13, 2026, and offices held for the past five years are as follows: Name Age Office Initial Effective Date P. K.
Iverson 62 General Counsel, Senior Vice President Regulatory and Public Policy, and Corporate Secretary September 2024 Senior Vice President, General Counsel and Chief Compliance Officer at Black Hills Corporation April 2016 A - 23 Table of Contents PART II
Iverson 63 General Counsel, Senior Vice President Regulatory and Public Policy, and Corporate Secretary September 2024 Senior Vice President, General Counsel and Chief Compliance Officer at Black Hills Corporation April 2016 M. M.
Collawn 66 Chairman and Chief Executive Officer May 2022 Chairman, President, and Chief Executive Officer January 2012 J. D. Tarry 54 President and Chief Operating Officer May 2022 Senior Vice President and Chief Financial Officer January 2020 Vice President, Controller and Treasurer September 2018 E. A.
Collawn 67 Executive Chairman July 2025 Chairman and Chief Executive Officer May 2022 Chairman, President, and Chief Executive Officer January 2012 J. D. Tarry 55 President and Chief Executive Officer July 2025 President and Chief Operating Officer May 2022 Senior Vice President and Chief Financial Officer January 2020 H. E.
Added
Jacobson 47 Senior Vice President, Corporate Services April 2025 Partner of Forward Solutions, LLC June 2022 Owner of Monique and Associates, LLC January 2019 A - 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee Note 6 for a discussion on limitations on the payments of dividends and the payment of future dividends, as well as dividends paid by PNM and TNMP. See Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Biggest changeTXNM uses ongoing earnings to evaluate the operations of the Company and to establish goals, including those used for certain aspects of incentive compensation, for management and employees. See Note 6 for a discussion on limitations on the payments of dividends and the payment of future dividends, as well as dividends paid by PNM and TNMP.
The Board declared dividends on common stock considered to be for the second quarter of $0.3875 per share in July 2024 and $0.3675 per share in August 2023. The Board declared dividends on common stock considered to be for the third quarter of $0.3875 per share in September 2024 and $0.3675 per share in September 2023.
The Board declared dividends on common stock considered to be for the second quarter of $0.4075 per share in July 2025 and $0.3875 per share in July 2024. The Board declared dividends on common stock considered to be for the third quarter of $0.4075 per share in September 2025 and $0.3875 per share in September 2024.
TXNM targets a long-term dividend payout ratio of 5% of ongoing earnings per share growth, which is a non-GAAP financial measure, that excludes from GAAP earnings certain non-recurring, infrequent, and other items that are not indicative of fundamental changes in the earnings capacity of the Company’s operations.
TXNM targets long-term earnings growth with a dividend payout ratio between 50 and 60 percent of ongoing earnings, which is a non-GAAP financial measure, that excludes from GAAP earnings certain non-recurring, infrequent, and other items that are not indicative of fundamental changes in the earnings capacity of the Company’s operations.
In December 2024, the Board increased the quarterly dividend from $0.3875 to $0.4075 per share. In December 2023, the Board increased the quarterly dividend from $0.3675 to $0.3875 per share.
In December 2025, the Board increased the quarterly dividend from $0.4075 to $0.4225 per share. In December 2024, the Board increased the quarterly dividend from $0.3875 to $0.4075 per share.
Preferred Stock As of December 31, 2024, PNM has 115,293 shares of cumulative preferred stock outstanding. PNM is not aware of any active trading market for its cumulative preferred stock. Quarterly cash dividends were paid on PNM’s outstanding cumulative preferred stock at the stated rates during 2024 and 2023. TXNM and TNMP do not have any preferred stock outstanding.
PNM is not aware of any active trading market for its cumulative preferred stock. Quarterly cash dividends were paid on PNM’s outstanding cumulative preferred stock at the stated rates during 2025 and 2024. TXNM and TNMP do not have any preferred stock outstanding. Sales of Unregistered Securities None. ITEM 6. [RESERVED]
On February 14, 2025, there were 6,662 holders of record of TXNM’s common stock. There have been no issuer purchases of equity securities. All of PNM’s and TNMP’s common stock is owned by TXNM and is not listed for trading on any stock exchange.
On August 2, 2024, TXNM increased the number of authorized shares of its common stock from 120,000,000 to 200,000,000. On February 13, 2026, there were 6,354 holders of record of TXNM’s common stock. There have been no issuer purchases of equity securities.
Removed
TXNM uses ongoing earnings to evaluate the operations of the Company and to establish goals, including those used for certain aspects of incentive compensation, for management and employees. On August 2, 2024, TXNM increased the number of authorized shares of its common stock from 120,000,000 to 200,000,000.
Added
All of PNM’s and TNMP’s common stock is owned by TXNM and is not listed for trading on any stock exchange. See Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Preferred Stock As of December 31, 2025, PNM has 115,293 shares of cumulative preferred stock outstanding.
Removed
Sales of Unregistered Securities None. ITEM 6. [RESERVED]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeITEM 6. [RESERVED] A - 24 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A - 24 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK A - 55 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA B - 1
Biggest changeITEM 6. [RESERVED] A - 25 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A - 25 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK A - 56 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA B - 1

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

178 edited+87 added−68 removed144 unchanged
Biggest changeOperating results – 2024 compared to 2023 The following table summarizes the significant changes to gross margin: Year Ended December 31, 2024 Change Gross margin: (In millions) Utility margin (see below) $ 203.9 Depreciation and amortization (see below) (44.2) Higher plant maintenance costs for the remaining interests in PVNGS and Four Corners, offset by lower costs at gas fired plants and the disposition of the PVNGS Unit 2 Leased Interests (0.8) Higher employee related expenses offset by lower outside services, and vegetation management expenses, excluding administrative costs (0.2) Other (0.8) Net Change $ 157.9 A - 38 Table of Contents The following table summarizes the significant changes to utility margin: Year Ended December 31, 2024 Change Utility margin: (In millions) Retail customer usage/load – Weather normalized retail KWh sales increased 1.5% for residential customers and 12.5% for industrial customers $ 20.9 Weather – Hotter weather in the third quarter of 2023 partially offset by milder weather in the remaining quarters of 2024 (6.7) Leap Year - Increase in revenue due to additional day in 2024 1.9 Transmission – Decrease in revenues primarily due to lower market prices and lower volumes in 2024, partially offset by the FERC Order 864 settlement in 2023 and EPE refund in 2024 (13.3) Rate relief – Increase in revenue approved in 2024 Rate Change 15.0 Capacity arrangements – Energy storage agreements starting in the third quarter of 2023, partially offset by purchase agreements in 2023 and sales agreements in 2024 (6.5) Rate Credits – SJGS abandonment settlement agreement in 2023 128.7 2024 Rate Change – PVNGS Unit 1 Leased Interest regulatory liability in 2023 38.4 Rate riders and other – Includes renewable energy, FPPAC, energy efficiency, energy transition charge, and transportation electrification riders which are partially offset in operating expenses, depreciation and amortization, other income (deductions) and interest charges 25.5 Net Change $ 203.9 The following tables summarize the primary drivers for operating expenses, depreciation and amortization, other income (deductions), interest charges, and income taxes: Year Ended December 31, 2024 Change Operating expenses: (In millions) Higher costs for the remaining interests in PVNGS, partially offset by lower plant maintenance and administrative costs at gas fired plants, Four Corners, and the disposition of the PVNGS Unit 2 Leased Interests $ 2.0 Higher regulatory disallowances in 2023, primarily resulting from the 2024 Rate Change (70.7) Unrecoverable portion of San Juan & Four Corners Coal Mine reclamation remeasurements related to the capped surface mine liability in 2024 9.0 Higher allocated depreciation and amortization expense from Corporate and Other 8.3 Higher employee related expenses partially offset by lower outside services and vegetation management expenses 2.1 Higher capitalization of administrative and general expenses due to higher construction expenditures (2.2) Higher insurance premiums primarily related to wildfire risk 3.8 Higher costs associated with rate riders included in Utility margin 7.3 Other 1.3 Net Change $ (39.1) A - 39 Table of Contents Year Ended December 31, 2024 Change Depreciation and amortization: (In millions) Increased utility plant in service $ 15.7 Amortization of regulatory assets approved in the 2024 Rate Change 10.4 Increase in depreciation approved in 2024 Rate Change 13.4 Amortization related to ETBC I Securitized Costs, offset in utility margin 4.1 Other 0.6 Net Change $ 44.2 Other income (deductions): Increased performance on investment securities in the NDT and coal mine reclamation trusts $ 7.8 Lower interest income and higher trust expenses related to investment securities in the NDT, coal mine reclamation and SJGS decommissioning trusts (4.2) Higher equity AFUDC 3.2 Interest related to the NTEC agreement 4.4 Lower non-service post-retirement benefit costs 4.9 Higher interest income primarily related to transmission projects 1.6 Higher charitable contributions in 2023 2.0 Other 0.4 Net Change $ 20.1 Interest charges: Lower interest on term loans $ 3.6 Higher interest related to remarketed PCRBs in June 2024 (2.1) Higher interest related to remarketed PCRBs in June 2023 (1.5) Issuance of SUNs in April 2023 (3.7) Higher interest on transmission interconnection and security deposit arrangements (1.6) Interest related to ETBC I Securitized Bonds, offset in utility margin (17.6) Higher debt AFUDC 3.3 Other 0.2 Net Change $ (19.4) Income (taxes): Higher segment earnings before income taxes $ (51.3) Higher amortization of federal excess deferred income taxes 6.5 Other (1.2) Net Change $ (46.0) A - 40 Table of Contents Corporate and Other The table below summarizes the operating results for Corporate and Other: Year Ended December 31, Change 2024 2023 2024/2023 (In millions) Total revenues $ — $ — $ — Cost of energy — — — Utility margin — — — Operating expenses (27.8) (26.9) (0.9) Depreciation and amortization 37.2 28.7 8.5 Operating income (loss) (9.4) (1.9) (7.5) Other income (deductions) (15.4) (0.2) (15.2) Interest charges (63.1) (57.6) (5.5) Segment earnings (loss) before income taxes (87.9) (59.7) (28.2) Income (taxes) benefits 34.8 16.9 17.9 Segment earnings (loss) $ (53.1) $ (42.8) $ (10.3) Corporate and Other operating expenses shown above are net of amounts allocated to PNM and TNMP under shared services agreements.
Biggest changeA - 38 Table of Contents Operating results – 2025 compared to 2024 The following table summarizes the significant changes to gross margin: Year Ended December 31, 2025 Change Gross margin: (In millions) Utility margin (see below) $ (9.1) Depreciation and amortization (see below) (22.4) Higher plant maintenance costs at Four Corners and gas fired plants, partially offset by lower costs at PVNGS (4.2) Higher employee related, outside services and vegetation management expenses, excluding administrative costs (3.7) Other 1.3 Net Change $ (38.1) The following table summarizes the significant changes to utility margin: Year Ended December 31, 2025 Change Utility margin: (In millions) Retail customer usage/load – Weather normalized retail KWh sales increased 0.1% for residential customers, 1.0% for commercial customers, and 14.3% for industrial customers $ 8.0 Weather – Milder weather in 2025 (14.0) Leap Year - Decrease in revenue due to additional day in 2024 (1.9) Transmission – Increase in revenues due to higher formula rates partially offset by lower market prices and volumes and an EPE refund in 2024 1.4 Rate relief – Increase in revenue approved in 2025 Rate Change 27.7 Capacity arrangements – Additional energy storage agreements starting in the fourth quarter of 2024 and sales agreements in 2024, partially offset with sales agreement in 2025 (41.4) Rate riders and other – Includes renewable energy, FPPAC, energy efficiency, energy transition charge, and transportation electrification riders which are partially offset in operating expenses, depreciation and amortization, other income (deductions), and interest charges 11.1 Net Change $ (9.1) A - 39 Table of Contents The following tables summarize the primary drivers for operating expenses, depreciation and amortization, other income (deductions), interest charges, and income taxes: Year Ended December 31, 2025 Change Operating expenses: (In millions) Higher costs at Four Corners and gas fired plants $ 8.5 Higher property taxes associated with increased utility plant in service 5.8 Unrecoverable portion of San Juan Coal Mine reclamation remeasurement related to the capped surface mine liability (Note 16) (10.4) Unrecoverable portion of Four Corners Coal Mine reclamation remeasurement related to the capped surface mine liability (Note 16) 0.7 Higher allocated depreciation and amortization expense from Corporate and Other 1.8 Higher employee related, outside services, and vegetation management expenses 3.2 Higher capitalization of administrative and general expenses due to higher construction expenditures (3.5) Higher allocated charitable contributions from Corporate and Other related to the 2025 Rate Request 1.5 Higher insurance premiums primarily related to wildfire risk 5.6 Higher costs associated with rate riders included in utility margin 5.1 Other (0.4) Net Change $ 17.9 Depreciation and amortization: Increased utility plant in service $ 20.0 Amortization related to ETBC I Securitized Costs, offset in utility margin 2.4 Net Change $ 22.4 Other income (deductions): Increased performance on investment securities in the NDT and coal mine reclamation trusts $ 7.9 Lower interest income and higher trust expenses related to investment securities in the NDT and coal mine reclamation trust (2.5) Lower equity AFUDC (3.3) Pension settlement charge (Note 11) (58.8) Higher non-service post-retirement benefit costs (3.1) Interest related to the 2024 NTEC agreement (Note 16) (4.3) Other 0.6 Net Change $ (63.5) Interest charges: Higher interest on term loans $ (11.9) Higher interest related to remarketed PCRBs in June 2024 (1.6) Higher interest on revolving short-term borrowings (2.3) Interest on SUNs (14.5) Lower interest on transmission interconnection and security deposit arrangements 5.0 Higher debt AFUDC 1.1 Other 0.7 Net Change $ (23.5) A - 40 Table of Contents Year Ended December 31, 2025 Change Income (taxes): (In millions) Lower segment earnings before income taxes $ 35.1 Higher amortization of federal excess deferred income taxes 2.2 Impacts of lower equity AFUDC (0.8) Lower tax credits (2.4) Other (0.5) Net Change $ 33.6 Corporate and Other The table below summarizes the operating results for Corporate and Other: Year Ended December 31, Change 2025 2024 2025/2024 (In millions) Total revenues $ — $ — $ — Cost of energy — — — Utility margin — — — Operating expenses (17.4) (27.8) 10.4 Depreciation and amortization 37.5 37.2 0.3 Operating income (loss) (20.1) (9.4) (10.7) Other income (deductions) (2.2) (15.4) 13.2 Interest charges (55.1) (63.1) 8.0 Segment earnings (loss) before income taxes (77.5) (87.9) 10.4 Income (taxes) benefits 17.5 34.8 (17.3) Segment earnings (loss) $ (60.0) $ (53.1) $ (6.9) Corporate and Other operating expenses shown above are net of amounts allocated to PNM and TNMP under shared services agreements.
As the Company moves forward with its mission to achieve 100% carbon-free generation by 2040, it expects that more significant water savings will be gained. Shutting down SJGS in 2022 and Four Corners in 2031 will allow the Company to reach our goals for reduced freshwater use at 80% by 2035 and 90% by 2040 from 2005 levels.
As the Company moves forward with its mission to achieve carbon-free generation, it expects that more significant water savings will be gained. Shutting down SJGS in 2022 and Four Corners in 2031 will allow the Company to reach our goals for reduced freshwater use at 80% by 2035 and 90% by 2040 from 2005 levels.
To reach these objectives, the Company is committed to: • Preparing our workforce with the knowledge and skills to thrive in a customer-focused world • Purposefully delivering an intentional customer experience that exceeds our evolving customer and stakeholder expectations • Enabling an environmentally sustainable future and deploying technologically advanced solutions that empower and benefit customers • Demonstrating the relationship between customer excellence and our dedicated focus on financial strength Meeting the business objectives above will drive key financial results: • Earning authorized returns on regulated businesses • Delivering at or above industry-average long-term earnings growth, with a dividend payout ratio between 50 and 60 percent of earnings • Maintaining investment grade credit ratings Business Focus To achieve its business objectives, focus is directed in key areas: Safe, Reliable and Affordable Power; Utility Plant Investments; Superior Customer Experience; Environmentally Responsible Power; and Stakeholder and Community Engagement.
To reach these objectives, the Company is committed to: • Preparing our workforce with the knowledge and skills to thrive in a customer-focused world • Purposefully delivering an intentional customer experience that exceeds our evolving customer and stakeholder expectations • Enabling an environmentally sustainable future and deploying technologically advanced solutions that empower and benefit customers • Demonstrating the relationship between customer excellence and our dedicated focus on financial strength Meeting the business objectives above will drive key financial results: • Earning authorized returns on regulated businesses • Delivering at or above industry-average long-term earnings growth, with a dividend payout ratio between 50 and 60 percent of earnings • Maintaining investment grade credit ratings Business Focus To achieve the Company’s business objectives, focus is directed in key areas: Safe, Reliable and Affordable Power; Utility Plant Investments; Superior Customer Experience; Environmentally Responsible Power; and Stakeholder and Community Engagement.
The Company has not experienced, nor does it expect significant negative impacts to customer usage at PNM and TNMP resulting from these economic impacts. However, if current economic conditions worsen, the Company may be required to implement additional measures such as reducing or delaying operating and maintenance expenses and planned capital expenditures.
The Company has not experienced, nor does it expect to experience significant negative impacts to customer usage at PNM and TNMP resulting from these economic impacts. However, if current economic conditions worsen, the Company may be required to implement additional measures such as reducing or delaying operating and maintenance expenses and planned capital expenditures.
(2) Demand-based load includes consumers billed on a monthly KW peak and retail transmission customers that are primarily billed under rate riders. (3) TNMP provides transmission and distribution services to REPs that provide electric service to customers in TNMP’s service territories. The number of consumers above represents the customers of these REPs.
(2) Demand-based load includes consumers billed on a monthly KW peak and also includes retail transmission customers that are primarily billed under rate riders. (3) TNMP provides transmission and distribution services to REPs that provide electric service to customers in TNMP’s service territories. The number of consumers above represents the customers of these REPs.
PNM has invested in paid summer college engineering internship programs for American Indian students available in the greater Albuquerque area, established the PNM Pueblo Education Scholarship and Endowment to invest in higher education for Native American Indian students, and supported the development of an entrepreneur complex located in Albuquerque and operated by the Indian Pueblo Cultural Center.
PNM has invested in paid summer college engineering internship programs for American Indian students in the greater Albuquerque area, established the PNM Pueblo Education Scholarship and Endowment to invest in higher education for Native American Indian students, and supported the development of an entrepreneur complex located in Albuquerque and operated by the Indian Pueblo Cultural Center.
In September 2024, TNMP sent employees to assist in restoring power to those communities impacted by Hurricane Helene and in January 2025 TNMP was announced as an Edison Electric Institute (“EEI”), an association representing all US investor-owned electric companies, Emergency Response Award recipient.
In September 2024, TNMP sent employees to assist in restoring power to those communities impacted by Hurricane Helene and in January 2025 TNMP was announced as an Emergency Response Award recipient by the Edison Electric Institute (“EEI”), an association representing all US investor-owned electric companies.
In 2023, EPA published in the Federal Register proposed regulatory actions under CAA sections 111(b) and (d) to replace the Clean Power Plan and the ACE Rule and finalized the rules on May 9, 2024.
In 2024, EPA published in the Federal Register proposed regulatory actions under CAA sections 111(b) and (d) to replace the Clean Power Plan and the ACE Rule and finalized the rules on May 9, 2024.
Board oversight includes understanding the various challenges and opportunities presented by these risks, including the financial consequences that might result from enacted and potential federal and/or state regulation of GHG; plans to mitigate these risks; and the impacts these risks may have on the Company’s strategy. In addition, the Board approves certain procurements of grid modernization technologies and replacement resources.
Board oversight includes understanding the various challenges and opportunities presented by these risks, including the financial consequences that might result from enacted and potential federal and/or state regulation of GHG; plans to mitigate these risks; and the impact these risks may have on the Company’s strategy. In addition, the Board approves certain procurements of grid modernization technologies and replacement resources.
A 10% increase in the estimates of future decommissioning costs at current price levels would have increased the ARO liability by $15.0 million at December 31, 2024. PNM recognizes an expense and a corresponding liability for ultimate decommissioning of PVNGS. See Note 17 for information concerning NMPRC’s order to address the recovery of decommissioning costs in a future proceeding.
A 10% increase in the estimates of future decommissioning costs at current price levels would have increased the ARO liability by $15.0 million at December 31, 2025. PNM recognizes an expense and a corresponding liability for ultimate decommissioning of PVNGS. See Note 17 for information concerning NMPRC’s order to address the recovery of decommissioning costs in a future proceeding.
TXNM also collaborates on community projects, low-income customer assistance programs, and employee volunteerism. PNM stands out as one of the few investor-owned utilities dedicated to operating a tribal relations office, which is focused on serving and collaborating with 18 of the 23 sovereign nations in New Mexico and the Southwest.
TXNM also collaborates on community projects, low-income customer assistance programs, and employee volunteerism. PNM stands out as one of the few investor-owned utilities operating a tribal relations office, which is focused on serving and collaborating with 18 of the 23 sovereign nations in New Mexico and the Southwest.
While the Company has not conducted an independent 2 Degree Scenario analysis, our commitment to becoming 100% carbon-free by 2040 produces a carbon emissions reduction pathway that tracks within the ranges of climate scenario pathways that are consistent with limiting the global warming average to less than 2 degrees Celsius.
While the Company has not conducted an independent 2 Degree Scenario analysis, our commitment to becoming 100% carbon-free produces a carbon emissions reduction pathway that tracks within the ranges of climate scenario pathways that are consistent with limiting the global warming average to less than 2 degrees Celsius.
TXNM measures reliability and benchmark performance of PNM and TNMP against other utilities using industry-standard metrics, including System Average Interruption Duration Index (“SAIDI”) and System Average Interruption Frequency Index (“SAIFI”). PNM’s and TNMP’s investment plans include projects designed to support reliability and reduce the amount of time customers are without power.
TXNM measure’s reliability and benchmark performance of PNM and TNMP against other utilities using industry-standard metrics, including System Average Interruption Duration Index (“SAIDI”) and System Average Interruption Frequency Index (“SAIFI”). PNM’s and TNMP’s investment plans include projects designed to support reliability and reduce the amount of time customers are without power.
The Company continually evaluates the probability that regulatory assets and liabilities will impact future rates and makes various assumptions in those analyses. The expectations of future rate impacts are generally based on orders issued by regulatory commissions or historical experience, as well as discussions with applicable regulatory authorities.
The Company continually evaluates the probability that regulatory assets and liabilities will impact future rates and make various assumptions in those analyses. The expectations of future rate impacts are generally based on orders issued by regulatory commissions or historical experience, as well as discussions with applicable regulatory authorities.
No impairments were indicated in the Company’s annual goodwill testing, which was performed as of April 1, 2024. Since the annual evaluation, there have been no indications that the fair values of the reporting units with recorded goodwill have decreased below the carrying values. The annual testing was based on certain critical estimates and assumptions.
No impairments were indicated in the Company’s annual goodwill testing, which was performed as of April 1, 2025. Since the annual evaluation, there have been no indications that the fair values of the reporting units with recorded goodwill have decreased below the carrying values. The annual testing was based on certain critical estimates and assumptions.
On June 6, 2024, TNMP filed its WMP with the PUCT in response to recent wildfire events impacting the electric utility industry and the customers it serves. TNMP’s WMP establishes a wildfire risk awareness and mitigation strategy that becomes part of a fire safe culture across the Company.
In June 2024, TNMP filed its WMP with the PUCT in response to recent wildfire events impacting the electric utility industry and the customers it serves. TNMP’s WMP establishes a wildfire risk awareness and mitigation strategy that becomes part of a fire safe culture across the Company.
The PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs. TNMP also has approximately 277,000 advanced meters across its service territory, the costs of which are being recovered through base rates.
The PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs. TNMP also has approximately 282,000 advanced meters across its service territory, the costs of which are being recovered through base rates.
With reliability being the primary role of a transmission and distribution service provider in Texas’ deregulated market, TNMP continues to focus on keeping end-users updated about interruptions and to encourage consumer preparation when severe weather is forecasted.
With reliability being the primary role of a transmission and distribution service provider in Texas’ deregulated market, TNMP continues to focus on keeping end-users updated about interruptions and encouraging consumer preparation when severe weather is forecasted.
Continued growth in PNM’s fleet of solar and wind energy sources, energy efficiency programs, and innovative uses of air-cooling technology have contributed to this reduction. Water usage has continued to decline as PNM has substituted less fresh-water-intensive generation resources to replace SJGS.
Continued growth in PNM’s solar and wind energy resources, energy efficiency programs, and innovative uses of air-cooling technology have contributed to this reduction. Water usage has continued to decline as PNM has substituted less fresh-water-intensive generation resources to replace SJGS.
The Board is also informed of the Company’s practices and procedures to assess the impacts of operations on the environment. The Board considers issues associated with climate change, the Company’s GHG exposures, and the financial consequences that might result from enacted and potential federal and/or state regulation of GHG.
The Board is also informed of the Company’s practices and procedures to assess the impact of operations on the environment. The Board considers issues associated with climate change, the Company’s GHG exposures, and the financial consequences that might result from enacted and potential federal and/or state regulation of GHG.
Based on the analysis performed for the PNM and TNMP reporting units in 2024, the Company concluded that there were no changes that were reasonably likely to cause the fair value of the reporting units to be less than their carrying value and determined that there was no impairment of goodwill.
Based on the analysis performed for the PNM and TNMP reporting units in 2025, the Company concluded that there were no changes that were reasonably likely to cause the fair value of the reporting units to be less than their carrying value and determined that there was no impairment of goodwill.
These grants help nonprofits innovate or sustain programs to grow and develop their mission, develop and implement environmental programs, and provide educational opportunities. The Foundation continues to expand its matching and volunteer grant programs and the annual amount of matching donations available to each of its employees.
These grants help nonprofits innovate or sustain programs to grow and develop their missions, develop and implement environmental programs, and provide educational opportunities. The Foundation continues to expand its matching and volunteer grant programs and the annual amount of matching donations available to each of its employees.
Liquidity TXNM’s liquidity arrangements include the $300.0 million TXNM Revolving Credit Facility, the $400.0 million PNM Revolving Credit Facility, and the $200.0 million TNMP Revolving Credit Facility.
Liquidity TXNM’s liquidity arrangements include the $300.0 million TXNM Revolving Credit Facility, the $400.0 million PNM Revolving Credit Facility, and the $300.0 million TNMP Revolving Credit Facility.
The NMPRC requires that New Mexico utilities factor a standardized cost of carbon emissions into their IRPs using prices ranging between $8 and $40 per metric ton of CO 2 emitted and escalating these costs by 2.5% per year. Under the NMPRC order, each utility must analyze these standardized prices as projected operating costs.
The NMPRC requires that New Mexico utilities factor a standardized cost of carbon emissions into their IRPs using prices ranging A - 52 Table of Contents between $8 and $40 per metric ton of CO 2 emitted and escalating these costs by 2.5% per year. Under the NMPRC order, each utility must analyze these standardized prices as projected operating costs.
Although the Company believes all relevant factors were considered in A - 53 Table of Contents the qualitative impairment analysis to reach the conclusion that goodwill is not impaired, significant changes in any one of the assumptions could produce a significantly different result potentially leading to the recording of an impairment that could have significant impacts on the results of operations and financial position of the Company.
Although the Company believes all relevant factors were considered in the qualitative impairment analysis to reach the conclusion that goodwill is not impaired, significant changes in any one of the assumptions could produce a significantly different result potentially leading to the recording of an impairment that could have significant impacts on the results of operations and financial position of the Company.
Management has published, with Board oversight, a Climate Change Report available at https://www.txnmenergy.com/sustainability/environment/climate_change_report that details the Company’s efforts to transition to a carbon-free generating portfolio by 2040.
Management has published, with Board oversight, a Climate Change Report available at https://www.txnmenergy.com/sustainability/environment/climate_change_report that details the Company’s efforts to transition to a carbon-free generating portfolio.
These engagements have helped PNM to build and improve customer relationships and have provided PNM with valuable customer insights to gauge customer interest levels towards programs and services to be highly customer centric. Additionally, PNM continues to focus its efforts to enhance the customer experience through customer service improvements, including enhanced digital payment options, strategic customer outreach, and improved communications.
These engagements have helped PNM to build and improve customer relationships and have provided PNM with valuable customer insights to gauge customer interest levels towards programs and services to be highly customer centric. Additionally, PNM continues to focus its efforts on enhancing the customer experience through customer service improvements, including enhanced digital payment options, strategic customer outreach, and improved communications.
Impairment testing may be performed based on either a qualitative analysis or quantitative analysis. Note 19 contains information on the impairment testing performed by the Company on goodwill. For 2024, the Company utilized a quantitative analysis for the PNM reporting unit and a qualitative analysis for the TNMP reporting unit.
Impairment testing may be performed based on either a qualitative analysis or quantitative analysis. Note 19 contains information on the impairment testing performed by the Company on goodwill. For 2025, the Company utilized a quantitative analysis for the PNM reporting unit and a qualitative analysis for the TNMP reporting unit.
Numerous parties sought review by the US Supreme Court, and on June 30, 2022, the Court held that the “generation shifting” approach in the Clean Power Plan exceeded the powers granted to EPA by Congress, though the Court did not address the related issue of whether Section 111 of the CAA only authorizes EPA to require measures that can be implemented entirely within the fence line at an individual source.
Numerous parties sought review by the US Supreme Court, and on June 30, 2022, the Court held that the “generation shifting” approach in the Clean Power Plan exceeded the powers granted to EPA by Congress, though the Court did not address A - 51 Table of Contents the related issue of whether Section 111 of the CAA only authorizes EPA to require measures that can be implemented entirely within the fence line at an individual source.
A - 25 Table of Contents Safe, Reliable, and Affordable Power Safety is the first priority of our business and a core value of the Company. TXNM utilizes a Safety Management System to provide clear direction, objectives and targets for managing safety performance and minimizing risks and empowers employees to “Be the Reason Everyone Goes Home Safe”.
Safe, Reliable, and Affordable Power Safety is the first priority of our business and a core value of the Company. TXNM utilizes a Safety Management System to provide clear direction, objectives and targets for managing safety performance and minimizing risks and empowers employees to “Be the Reason Everyone Goes Home Safe”.
A - 29 Table of Contents The Company utilizes a number of communications channels and strategic content to serve and engage its many stakeholders. PNM’s website provides the details of major regulatory filings, including general rate requests, as well as the background on PNM’s efforts to maintain reliability, keep prices affordable, and protect the environment.
The Company utilizes a number of communications channels and strategic content to serve and engage its many stakeholders. PNM’s website provides the details of major regulatory filings, including general rate requests, as well as the background on PNM’s efforts to maintain reliability, keep prices affordable, and protect the environment.
The regulatory framework in Texas strongly encourages investments into the grid by providing timely recovery through rate mechanisms outside of general rate cases. The PUCT has approved mechanisms that allow TNMP to recover capital invested in transmission and distribution projects without having to file a general rate case.
Beyond legislative actions, the regulatory framework in Texas strongly encourages investments into the grid by providing timely recovery through rate mechanisms outside of general rate cases. The PUCT has approved mechanisms that allow TNMP to recover capital invested in transmission and distribution projects without having to file a general rate case.
The net periodic benefit cost or income and the calculation of the projected benefit obligations are recognized in the Company’s financial statements and depend on expected investment performance, the level of contributions made to the plans, and employee demographics. These calculations require the use of a number of actuarial assumptions and estimates.
The net periodic benefit cost or income and the calculation of the projected benefit obligations are recognized in the Company’s financial statements and depend on expected investment performance, the A - 55 Table of Contents level of contributions made to the plans, and employee demographics. These calculations require the use of a number of actuarial assumptions and estimates.
The order also disbands the Interagency Working Group on the Social Cost of Greenhouse Gases (“IWG”), eliminates the “social cost of carbon” from consideration in any Federal permitting or regulatory decision, and expressly directs EPA to submit joint recommendations on the legality and continuing applicability of the 2009 endangerment finding for greenhouse gases that currently provides the legal basis for EPA to regulate greenhouse gases under the Clean Air Act.
The order also disbands the Interagency Working Group on the Social Cost of Greenhouse Gases (“IWG”), eliminates the “social cost of carbon” from consideration in any Federal permitting or regulatory decision, and expressly directs EPA to submit joint recommendations on the legality and continuing applicability of the 2009 endangerment finding for greenhouse gases that currently provides the legal basis for EPA to regulate greenhouse gases under the CAA.
The NMPRC approved collection of PNM’s regulatory asset to recover the initial capital investments and implementation and ongoing costs necessary to participate in the EIM in the 2024 Rate Change final order. PNM passes the cost savings through to customers under PNM’s FPPAC.
The NMPRC approved collection of PNM’s regulatory asset to recover the initial capital investments and implementation and ongoing costs necessary to participate in the EIM in the 2024 Rate Change final order. PNM passes the cost savings achieved by participating in the EIM through to customers under PNM’s FPPAC.
The Company currently believes that its internal cash generation, existing credit arrangements, and access to public and private capital markets will provide sufficient resources to meet the Company’s capital requirements for at least the next twelve months. As of December 31, 2024 and February 14, 2025, the Company was in compliance with its debt covenants.
The Company currently believes that its internal cash generation, existing credit arrangements, and access to public and private capital markets will provide sufficient resources to meet the Company’s capital requirements for at least the next twelve months. As of December 31, 2025 and February 13, 2026, the Company was in compliance with its debt covenants.
More than 25% of the program budget is dedicated to low- and moderate-income customers to plan for an equitable transition to an electrified transportation sector. A - 28 Table of Contents PNM participates in the National Electric Highway Coalition, which plans to build fast-charging ports along major U.S. travel corridors.
More than 25% of the program budget is dedicated to low- and moderate-income customers to plan for an equitable transition to an electrified transportation sector. PNM participates in the National Electric Highway Coalition, which plans to build fast-charging ports along major U.S. travel corridors.
Utility Plant Investments During the 2023 and 2024 periods, PNM and TNMP together invested $2.3 billion in utility plant, including transmission and distribution systems, substations, power plants, and nuclear fuel. Investment plans emphasize new investments in transmission and distribution infrastructure to support growing demand with grid reliability and resilience and to deliver clean energy.
Utility Plant Investments During the 2024 and 2025 periods, PNM and TNMP together invested $2.4 billion in utility plants, including transmission and distribution systems, substations, power plants, and nuclear fuel. Investment plans emphasize new investments in transmission and distribution infrastructure to support growing demand with grid reliability and resilience and to deliver clean energy.
OTHER ISSUES FACING THE COMPANY Climate Change Issues Background For the past several years, management has identified multiple risks and opportunities related to climate change, including the impacts of severe weather events, potential environmental regulation, technological innovation, and availability of fuel and water for operations, as among the most significant risks facing the Company.
A - 49 Table of Contents OTHER ISSUES FACING THE COMPANY Climate Change Issues Background For the past several years, management has identified multiple risks and opportunities related to climate change, including the impacts of severe weather events, potential environmental regulation, technological innovation, and availability of fuel and water for operations, as among the most significant risks facing the Company.
In the final rules, EPA determined that the standards for existing coal- or gas-fired steam generating units must be based on the use of either Carbon Capture Storage (“CCS”) (long-term), natural gas co-firing A - 50 Table of Contents (medium-term), or exempt from the rule via early retirement.
In the final rules, EPA determined that the standards for existing coal- or gas-fired steam generating units must be based on the use of either Carbon Capture Storage (“CCS”) (long-term), natural gas co-firing (medium-term), or exempt from the rule via early retirement.
The ETA, among other things, requires that investor-owned utilities obtain specified percentages of their energy from renewable and carbon-free resources. The ETA requires utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045.
The ETA, among other things, requires that investor-owned utilities obtain specified percentages of their energy from renewable and carbon-free resources. The passage of the ETA amended the REA to require utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045.
In addition, as an investor-owned utility operating in the state of New Mexico, PNM is required to comply with the ETA, which requires utilities’ generating portfolio be 100% carbon-free by 2045. The requirements of the ETA and the Company’s goal compare favorably to the U.S.
In A - 53 Table of Contents addition, as an investor-owned utility operating in the state of New Mexico, PNM is required to comply with the ETA, which requires utilities’ generating portfolio be 100% carbon-free by 2045. The requirements of the ETA and the Company’s goal compare favorably to the U.S.
In addition to internal cash generation, the Company anticipates that it will be necessary to obtain additional long-term financing in the form of debt refinancing, new debt issuances, and/or new equity in order to fund its capital requirements during the 2025-2029 period.
In addition to internal cash generation, the Company anticipates that it will be necessary to obtain additional long-term financing in the form of debt refinancing, new debt issuances, and/or new equity in order to fund its capital requirements during the 2026-2030 period.
See the subheading Capital Requirements included in the full discussion of Liquidity and Capital Resources below for additional discussion of the Company’s projected capital requirements. Superior Customer Experience The Company strives to deliver a superior customer experience.
A - 27 Table of Contents See the subheading Capital Requirements included in the full discussion of Liquidity and Capital Resources below for additional discussion of the Company’s projected capital requirements. Superior Customer Experience The Company strives to deliver a superior customer experience.
The amounts allocated include certain expenses shown as depreciation and amortization and other income (deductions) in the table above. The change in operating expenses includes an increase of $2.0 million in costs related to the Merger that were not allocated to PNM or TNMP.
The amounts allocated include certain expenses shown as depreciation and amortization and other income (deductions) in the table above. The change in operating expenses includes an increase of $15.4 million in costs related to the Merger that were not allocated to PNM or TNMP.
In addition to the above areas of focus, the Company is working to reduce the amount of solid waste going to landfills through increased recycling and reduction of waste. In 2024, 21 of the Company’s 22 facilities met or exceeded the solid waste diversion goal of a 65% diversion rate.
In addition to the above areas of focus, the Company is working to reduce the amount of solid waste going to landfills through increased recycling and reduction of waste. In 2025, 18 of the Company’s 22 facilities met or exceeded the solid waste diversion goal of a 65% diversion rate.
Based on its current evaluation, the Company believes that future recovery of its regulatory assets is probable. Impairments Tangible long-lived assets are evaluated for impairment when events and circumstances indicate that the assets might be impaired.
Based on its current evaluation, the Company believes that future recovery of its regulatory assets is probable. A - 54 Table of Contents Impairments Tangible long-lived assets are evaluated for impairment when events and circumstances indicate that the assets might be impaired.
The Company anticipates that it will be necessary to obtain additional long-term financing to fund its capital requirements and to balance its capital structure during the 2025 – 2029 period. This could include new debt and/or equity issuances.
The Company anticipates that it will be necessary to obtain additional long-term financing to fund its capital requirements and to balance its capital structure during the 2026 – 2030 period. This could include new debt and/or equity issuances.
A - 48 Table of Contents Greenhouse Gas Emissions Exposures In 2024, GHG emissions associated with PNM’s interests in its fossil-fueled generating plants included approximately 1.5 million metric tons of CO 2 , which comprises the vast majority of PNM’s GHG emissions.
Greenhouse Gas Emissions Exposures In 2024, GHG emissions associated with PNM’s interests in its fossil-fueled generating plants included approximately 1.5 million metric tons of CO 2 , which comprises the vast majority of PNM’s GHG emissions.
PNM has implemented efforts to increase participation in low-income energy efficiency programs, providing additional aid through the PNM Good Neighbor Fund, partnering with state agencies to make it easier to access funding, improving access to clean energy through expanded outreach and communication, and the implementation of low-income transportation electrification programs.
PNM has also implemented efforts to increase participation in low-income energy efficiency programs, including providing additional aid through the PNM Good Neighbor Fund, partnering with state agencies to make it easier to access funding, improving access to clean energy through expanded outreach and communication, and implementing low-income transportation electrification programs.
Interest on long-term debt, excluding ETBC I Securitized Bonds Interest accrues on long-term debt agreements, at fixed rates, with the passage of time, and is typically paid semi-annually in accordance with the terms of the debt agreement.
A - 46 Table of Contents Interest on long-term debt, excluding ETBC I Securitized Bonds Interest accrues on long-term debt agreements, at fixed rates, with the passage of time, and is typically paid semi-annually in accordance with the terms of the debt agreement.
In addition to PNM’s owned and third-party contracted solar facilities, PNM also has a customer distributed solar generation program that represented 308.5 MW at December 31, 2024. The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory.
In addition to PNM’s owned and third-party contracted solar facilities, PNM also has a customer distributed solar generation program that represented 334.1 MW at December 31, 2025. The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory.
The standards for new combustion turbines must be based on CCS (base load), efficient simple cycle design (intermediate load), or lower-emitting fuels (low load). Over a dozen states, several industry groups, and some power companies and labor unions have filed challenges to the rule at the DC Circuit.
The standards for new combustion turbines must be based on CCS (base load), efficient simple cycle design (intermediate load), or lower-emitting fuels (low load). Over a dozen states, several industry groups, and some power companies and labor unions have filed challenges to the rule at the DC Circuit. The DC Circuit heard oral arguments on December 6, 2024.
The ETA also allows for the recovery of undepreciated investments and decommissioning costs related to qualifying EGUs that the NMPRC has required be removed from retail jurisdictional rates, provided replacement resources to be included in retail rates have lower or zero-carbon emissions.
Those amendments also allow for the recovery of undepreciated investments and decommissioning costs related to qualifying EGUs that the NMPRC has required be removed from retail jurisdictional rates, provided replacement resources to be included in retail rates have lower or zero-carbon emissions.
As of December 31, 2024, approximately 28% of PNM’s generating capacity, including resources owned, leased, under PPAs or ESAs, all of which is located within the U.S., consisted of coal or gas-fired generation that produces GHG emissions. As PNM shifts its generation to cleaner energy resources, the Company’s output of GHG emissions continues to decrease.
As of December 31, 2025, approximately 25% of PNM’s generating capacity, including resources owned, leased, and under PPAs, all of which is located within the U.S., consisted of coal or gas-fired generation that produces GHG emissions. As PNM shifts its generation to cleaner energy resources, the Company’s output of GHG emissions continues to decrease.
A - 51 Table of Contents International Accords The United Nations Framework Convention on Climate Change (“UNFCCC”) is an international environmental treaty that was negotiated at the 1992 United Nations Conference on Environment and Development (informally known as the Earth Summit) and entered into force in March 1994.
International Accords The United Nations Framework Convention on Climate Change (“UNFCCC”) is an international environmental treaty that was negotiated at the 1992 United Nations Conference on Environment and Development (informally known as the Earth Summit) and entered into force in March 1994.
December 31, TXNM 2024 2023 TXNM common equity 33.9 % 34.1 % Preferred stock of subsidiary 0.2 0.2 Long-term debt 1 65.9 65.7 Total capitalization 100.0 % 100.0 % PNM PNM common equity 46.4 % 46.2 % Preferred stock 0.2 0.3 Long-term debt 53.4 53.5 Total capitalization 100.0 % 100.0 % TNMP Common equity 48.3 % 49.5 % Long-term debt 51.7 50.5 Total capitalization 100.0 % 100.0 % 1 TXNM’s long-term debt as of December 31, 2024 includes Convertible Notes (Note 7), which receive 50% equity credit from ratings organizations.
December 31, TXNM 2025 2024 TXNM common equity 38.5 % 33.9 % Preferred stock of subsidiary 0.2 0.2 Long-term debt 1 61.3 65.9 Total capitalization 100.0 % 100.0 % PNM PNM common equity 45.5 % 46.4 % Preferred stock 0.2 0.2 Long-term debt 54.3 53.4 Total capitalization 100.0 % 100.0 % TNMP Common equity 51.0 % 48.3 % Long-term debt 49.0 51.7 Total capitalization 100.0 % 100.0 % 1 TXNM’s long-term debt as of December 31, 2025, includes Convertible Notes (Note 7), which receive 50% equity credit from ratings organizations.
PNM investments are aimed at advancing the infrastructure beyond its original architecture to a more flexible and redundant system accommodating A - 26 Table of Contents growing amounts of intermittent and distributed generation resources and integrating evolving technologies that provide long-term customer value.
Investments at PNM are aimed at supporting economic development and advancing the infrastructure beyond its original architecture to a more flexible and redundant system accommodating growing amounts of intermittent and distributed generation resources and integrating evolving technologies that provide long-term customer value.
A - 54 Table of Contents MD&A FOR PNM RESULTS OF OPERATIONS PNM operates in only one reportable segment, as presented above in Results of Operations for TXNM. MD&A FOR TNMP RESULTS OF OPERATIONS TNMP operates in only one reportable segment, as presented above in Results of Operations for TXNM.
MD&A FOR PNM RESULTS OF OPERATIONS PNM operates in only one reportable segment, as presented above in Results of Operations for TXNM. MD&A FOR TNMP RESULTS OF OPERATIONS TNMP operates in only one reportable segment, as presented above in Results of Operations for TXNM.
The Emergency Response Awards recognize recovery and assistance efforts of electric companies following service disruptions caused by extreme weather or other natural events. In 2024, PNM continues in-person engagements with residential and business customers through customer advisory councils.
The Emergency Response Awards recognize recovery and assistance efforts of electric companies following service disruptions caused by extreme weather or other natural events. In 2025, PNM continued to hold in-person engagements with residential and business customers through customer advisory councils.
A - 47 Table of Contents Capital Structure The capitalization tables below include the current maturities of long-term debt, but do not include short-term debt and do not include operating lease obligations as debt.
Capital Structure The capitalization tables below include the current maturities of long-term debt, but do not include short-term debt and do not include operating lease obligations as debt.
In 2024, incremental energy saved as a result of new participation in PNM’s portfolio of energy efficiency programs is estimated to be 86 GWh. This is equivalent to the annual consumption of approximately 11,891 homes in PNM’s service territory. PNM’s load management and annual energy efficiency programs also help lower peak demand requirements.
In 2025, incremental energy saved as a result of participation in PNM’s portfolio of energy efficiency programs is estimated to be 84 GWh. This is equivalent to the annual consumption of approximately 11,639 homes in PNM’s service territory. PNM’s load management and energy efficiency programs also help lower peak demand requirements.
A 10% increase in the estimates of future reclamation costs at current price levels would have increased the mine reclamation liability by $16.8 million at December 31, 2024. PNM considers the contemporaneous reclamation costs part of the cost of its delivered coal costs.
A 10% increase in the estimates of future reclamation costs at current price levels would have increased the mine reclamation liability by $18.4 million at December 31, 2025. PNM considers the contemporaneous reclamation costs part of the cost of its delivered coal costs.
As part of that plan, PNM will promote energy equity where technology like smart meters and distribution upgrades will be provided to low-income areas first in order to allow customers to gain insights into their energy usage in order to improve affordability and create fairer access to energy.
As part of that plan, PNM will promote energy equity by installing technology like smart meters and making distribution upgrades in low-income areas first in order to allow lower-income customers to gain insights into their energy usage to improve affordability and create fairer access to energy.
Many factors affect the amount of GHG emitted, including total electricity sales, plant performance, economic dispatch, and the availability of renewable resources. For example, wind generation performance from PNM’s largest single renewable energy resource, New Mexico Wind, varies each year as a result of highly seasonal wind patterns and annual wind resource variability.
Many factors affect the amount of GHG emitted, including total electricity sales, plant performance, economic dispatch, and the availability of renewable resources. For example, wind generation performance varies each year as a result of highly seasonal wind patterns and annual wind resource variability.
For information on PNM’s and TNMP’s energy efficiency filing with the NMPRC and PUCT see Note 17. Water Conservation and Solid Waste Reduction PNM continues its efforts to reduce the amount of fresh water used to make electricity (about 45% more efficient than in 2005).
For information on PNM’s and TNMP’s energy efficiency filing with the NMPRC and PUCT see Note 17. Water Conservation and Solid Waste Reduction PNM continues to make progress in its efforts to reduce the amount of fresh water used to make electricity.
Construction expenditures also include investments included in PNM’s Grid Modernization Application and TNMP’s SRP. These investments provide for a more resilient, reliable, efficient, and decarbonized electric system. Not included in the table above are incremental expenditures for new customer growth in New Mexico and Texas, and other transmission and renewable energy expansion in New Mexico.
Construction expenditures also include investments included in PNM’s Grid Modernization Plan and TNMP’s SRP. These investments provide for a more resilient, reliable, efficient, and decarbonized electric system. Construction expenditures included in the table above may change due to incremental expenditures for new customer growth in New Mexico and Texas, and other transmission and renewable energy expansion in New Mexico.
FERC Regulation Rates PNM charges wholesale transmission customers are subject to traditional rate regulation by FERC. Rates charged to wholesale electric transmission customers, other than customers on the Western Spirit Line, are based on a formula rate mechanism pursuant to which rates for wholesale transmission service are calculated annually in accordance with an approved formula.
Rates charged to wholesale electric transmission customers, other than customers on the Western Spirit Line, are based on a formula rate mechanism pursuant to which rates for wholesale transmission service are calculated annually in accordance with an approved formula.
The program is a three-year initiative, through work across three concurrent workstreams, and PNM will benefit from the development of a first-of-its-kind comprehensive framework for managing physical climate risk and investment prioritization that is expected to be published in Spring 2025.
The program is a three-year initiative, through work across three concurrent workstreams, and PNM will benefit from the development of a first-of-its-kind comprehensive framework for managing physical climate risk and investment prioritization that was launched in May 2025.
Over the next 20 years, PNM projects energy efficiency and load management programs will provide the equivalent of approximately 12,900 GWh of electricity savings, which will avoid approximately 220,000 tons of CO 2 based upon projected emissions from PNM’s portfolio of resources.
PNM’s cumulative savings from these programs were an estimated 9,005 GWh of electricity through 2025. Over the next 20 years, PNM projects energy efficiency and load management programs will provide the equivalent of approximately 12,900 GWh of electricity savings, which will avoid approximately 220,000 tons of CO 2 based upon projected emissions from PNM’s portfolio of resources.
A - 44 Table of Contents During the year ended December 31, 2024, TXNM met its capital requirements and construction expenditures through cash generated from operations, as well as its liquidity arrangements and the borrowings discussed in Financing Activities above.
During the year ended December 31, 2025, TXNM met its capital requirements and construction expenditures through cash generated from operations, as well as its liquidity arrangements and the borrowings discussed in Financing Activities above.
PNM The Energy Transition Act (“ETA”) The ETA requires utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045.
The New Mexico Energy Transition Act (“ETA”) The passage of the ETA amended the REA to require utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045.
PNM’s utility-owned solar and energy storage capacity, as well as solar, energy storage, wind, and geothermal procurements in service as of December 31, 2024 have a total net generation capacity of 2,779 MW.
PNM’s utility-owned solar and energy storage capacity, as well as solar, energy storage, wind, and geothermal procurements in service as of December 31, 2025, have a total net generation capacity of 3,244 MW.
Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities are based on SOFR. The Company believes the terms and conditions of these facilities are consistent with those of other investment grade revolving credit facilities in the A - 45 Table of Contents utility industry.
Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities, including the PNM New Mexico Credit Facility, are based on SOFR. The Company believes the terms and conditions of these facilities are consistent with those of other investment grade revolving credit facilities in the utility industry.
On February 14, 2025, TNMP entered into an agreement (the “TNMP 2025 Bond Purchase Agreement”) with institutional investors for the sale of $140.0 million aggregate principal amount of its 5.19% TNMP first mortgage bonds (the “TNMP 2025 Bonds”) offered in private placement transactions. TNMP issued all $140.0 million at a 5.19% interest rate, due April 1, 2031.
On February 14, 2025, TNMP entered into the TNMP February 2025 Bond Purchase Agreement with institutional investors for the sale of $140.0 million aggregate principal amount of its 5.19% TNMP February 2025 Bonds offered in private placement transactions. On February 14, 2025, TNMP issued all $140.0 million of the TNMP February 2025 Bonds, due April 1, 2031.
Financing Activities See Note 7 for additional information concerning the Company’s financing activities. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC.
PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC.
Grid Modernization Plan On October 17, 2024, the NMPRC issued a final order approving PNM’s Grid Modernization Plan which will improve customers’ ability to customize their use of energy and ensure that customers, including low-income customers, are a top priority and will benefit from the electricity grid consistent with the Grid Modernization Statute.
Grid Modernization Plan On October 17, 2024, the NMPRC issued a final order approving PNM’s Grid Modernization Plan which will improve customers’ ability to customize their use of energy and benefit from the electricity grid consistent with the Grid Modernization Statute.
The IRP is required to cover a 20-year planning period and contain an action plan covering the first three years of that period. On December 15, 2023, PNM filed its 2023 IRP with a continued focus on a carbon-free energy system by 2040.
The IRP is required to cover a 20-year planning period and contain an action plan covering the first three years of that period. PNM’s accepted 2023 IRP maintains a continued focus on a carbon-free energy system by 2040.
The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory. PNM’s approved resource plans have a generation capacity of 910 MW and are expected to be in service by summer of 2026.
The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory. PNM’s approved resource plans have a generation capacity of 1,453 MW.
The Company currently believes that its capital requirements for at least the next twelve months can be met through internal cash generation, existing, extended, or new credit arrangements, and access to public and private capital markets as discussed above and in Note 7.
There were no borrowings outstanding under the TNMP Revolving Credit Facility at December 31, 2025. The Company currently believes that its capital requirements for at least the next twelve months can be met through internal cash generation, existing, extended, or new credit arrangements, and access to public and private capital markets as discussed above and in Note 7.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt February 14, 2025, variable rate debt balances and weighted average interest rates were as follows: Variable Rate Debt Weighted Average Interest Rate Balance Outstanding Capacity (In thousands) Short-term Debt: TXNM Revolving Credit Facility 5.91 % $ 144,700 $ 300,000 PNM Revolving Credit Facility 5.67 184,300 400,000 PNM New Mexico Credit Facility 5.66 35,000 40,000 TNMP Revolving Credit Facility 5.29 112,200 200,000 $ 476,200 $ 940,000 Long-term Debt: TXNM 2021 Delayed-Draw Term Loan 5.36 % $ 51,000 TXNM 2023 Term Loan 5.76 410,000 PNM 2024 Term Loan 5.31 200,000 PNM 2025 Term Loan 5.30 195,000 $ 856,000 A - 56 Table of Contents The investments held by PNM in trusts for decommissioning, reclamation, pension benefits, and other post-employment benefits had an estimated fair value of $925.3 million at December 31, 2024, of which 18.5% were fixed-rate debt securities that subject PNM to risk of loss of fair value with increases in market interest rates.
Biggest changeAt February 13, 2026, variable rate debt balances and weighted average interest rates were as follows: Variable Rate Debt Weighted Average Interest Rate Balance Outstanding Capacity (In thousands) Short-term Debt: TXNM Revolving Credit Facility 5.16 % $ 56,500 $ 300,000 PNM Revolving Credit Facility 4.91 209,100 400,000 PNM New Mexico Credit Facility 5.02 40,000 40,000 TNMP Revolving Credit Facility 4.54 49,700 300,000 $ 355,300 $ 1,040,000 Long-term Debt: PNM 2025 Term Loan 4.67 195,000 PNM November 2025 Term Loan 4.56 120,000 $ 315,000 The investments held by PNM in trusts for decommissioning, reclamation, pension benefits, and other post-employment benefits had an estimated fair value of $876.9 million at December 31, 2025, of which 16.4% were fixed-rate debt securities that subject PNM to risk of loss of fair value with increases in market interest rates.
PNM may be exposed to changes in the market prices of electricity and natural gas for the positions in its wholesale portfolio not covered by the FPPAC. The Company manages risks associated with these market fluctuations by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options, and swaps.
PNM may be exposed to changes in the market prices of electricity and natural gas for the positions in its wholesale portfolio not covered by the FPPAC. The Company manages risks associated with market fluctuations by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options, and swaps.
PNM and TNMP earnings are exposed to adverse changes in market interest rates when long-term debt must be refinanced, repriced or redeemed. TXNM’s debt and the revolving credit facilities of PNM and TNMP are exposed to interest rate risk to the extent variable interest rates continue to rise.
PNM and TNMP earnings are exposed to adverse changes in market interest rates when long-term debt must be refinanced, repriced or redeemed. TXNM’s debt and the revolving credit facilities of PNM and TNMP are exposed to interest rate risk to the extent variable interest rates rise.
The gross exposure captures the amounts from receivables/payables for realized transactions, delivered and unbilled revenues, and mark-to-market gains/losses. Gross exposures can be offset according to legally enforceable netting arrangements but are not reduced by posted credit collateral. At December 31, 2024, TXNM held zero of cash collateral to offset its credit exposure.
The gross exposure captures the amounts from receivables/payables for realized transactions, delivered and unbilled revenues, and mark-to-market gains/losses. Gross exposures can be offset according to legally enforceable netting arrangements but are not reduced by posted credit collateral. At December 31, 2025, TXNM held zero of cash collateral to offset its credit exposure.
Equity Market Risk The investments held by PNM in trusts for decommissioning and reclamation and trusts established for PNM’s and TNMP’s pension and post-employment benefits plans include certain equity securities at December 31, 2024. These equity securities expose PNM and TNMP to losses in fair value should the market values of the underlying securities decline.
Equity Market Risk The investments held by PNM in trusts for decommissioning and reclamation and trusts established for PNM’s and TNMP’s pension and post-employment benefits plans include certain equity securities at December 31, 2025. These equity securities expose PNM and TNMP to losses in fair value should the market values of the underlying securities decline.
PNM uses such instruments to hedge its exposure to changes in the market prices of electricity and natural gas. PNM also uses such instruments under an NMPRC approved hedging plan to manage fuel and purchased power costs related to customers covered by its FPPAC.
PNM uses such instruments to hedge its exposure to changes in the market prices of electricity and natural gas. PNM also uses such instruments under an NMPRC approved hedging plan from time-to-time, to manage fuel and purchased power costs related to customers covered by its FPPAC.
During the years ended December 31, 2024 and 2023, the Company had no commodity derivative instruments designated as cash flow hedging instruments. Commodity contracts that meet the definition of a derivative, are recorded at fair value on the Consolidated Balance Sheets.
During the years ended December 31, 2025 and 2024, the Company had no commodity derivative instruments designated as cash flow hedging instruments. Commodity contracts that meet the definition of a derivative, are recorded at fair value on the Consolidated Balance Sheets.
There is risk associated with these funds due to the nature of the strategies and techniques and the use of investments that do not have readily determinable fair values. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $8.2 million for PNM and $0.5 million for TNMP. A - 57 Table of Contents
There is risk associated with these funds due to the nature of the strategies and techniques and the use of investments that do not have readily determinable fair values. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $8.5 million for PNM and $0.7 million for TNMP. A - 58 Table of Contents
A - 55 Table of Contents The following table provides information related to credit exposure by the credit worthiness (credit rating) and concentration of credit risk for wholesale counterparties, all of which will mature in less than two years.
The following table provides information related to credit exposure by the credit worthiness (credit rating) and concentration of credit risk for wholesale counterparties, all of which will mature in less than two years.
Net credit risk for the Company’s largest counterparty as of December 31, 2024 was $3.6 million. Other investments have no significant counterparty credit risk. Interest Rate Risk The majority of PNM’s and TNMP’s long-term debt is fixed-rate debt, which does not expose earnings to adverse changes in market interest rates.
Net credit risk for the Company’s largest counterparty as of December 31, 2025, was $0.4 million. Other investments have no significant counterparty credit risk. Interest Rate Risk The majority of PNM’s and TNMP’s long-term debt is fixed-rate debt, which does not expose earnings to adverse changes in market interest rates.
As a result, the Company cannot predict with certainty the impact that its risk management decisions may have on its businesses, operating results, or financial position.
As a result, the Company cannot A - 56 Table of Contents predict with certainty the impact that its risk management decisions may have on its businesses, operating results, or financial position.
The securities held by TNMP in trusts for pension and other post-employment benefits had an estimated fair value of $45.7 million at December 31, 2024, of which 47.5% were fixed-rate debt securities that subject TNMP to risk of loss of fair value with movements in market interest rates.
The securities held by TNMP in trusts for pension and other post-employment benefits had an estimated fair value of $45.1 million at December 31, 2025, of which 29.0% were fixed-rate debt securities that subject TNMP to risk of loss of fair value with movements in market interest rates.
If interest rates were to increase by 50 basis points from their levels at December 31, 2024, the decrease in the fair value of the fixed-rate securities would be 5.1%, or $1.1 million.
If interest rates were to increase by 50 basis points from their levels at December 31, 2025, the decrease in the fair value of the fixed-rate securities would be 5.7%, or $8.2 million.
If interest rates were to increase by 50 basis points from their levels at December 31, 2024, the decrease in the fair value of the fixed-rate securities would be 5.5%, or $9.4 million.
If interest rates were to increase by 50 basis points from their levels at December 31, 2025, the decrease in the fair value of the fixed-rate securities would be 5.6%, or $0.7 million.
Alternatives Investment Risk As of December 31, 2024, PNM and TNMP had 8.9% and 10.6% of its pension assets invested in the alternative asset class. Alternative investments include investments in hedge funds, real estate funds, and private equity funds.
Alternatives Investment Risk As of December 31, 2025, PNM and TNMP had 9.7% and 15.7% of its pension assets invested in the alternative asset class. Alternative investments include investments in hedge funds, real estate funds, and private equity funds.
Schedule of Credit Risk Exposure December 31, 2024 Rating (1) Credit Risk Exposure (2) Number of Counter-parties >10% Net Exposure of Counter-parties >10% (Dollars in thousands) External ratings: Investment grade $ 3,993 1 $ 3,641 Non-investment grade — — — Split ratings — — — Internal ratings: Investment grade 359 — — Non-investment grade — — — Total $ 4,352 $ 3,641 (1) The rating “Investment Grade” is for counterparties, or a guarantor, with a minimum S&P rating of BBB- or Moody’s rating of Baa3.
Schedule of Credit Risk Exposure December 31, 2025 Rating (1) Credit Risk Exposure (2) Number of Counter-parties >10% Net Exposure of Counter-parties >10% (Dollars in thousands) External ratings: Investment grade $ 1,132 2 $ 650 Non-investment grade — — — Split ratings — — — Internal ratings: Investment grade 596 — — Non-investment grade — — — Total $ 1,728 $ 650 (1) The rating “Investment Grade” is for counterparties, or a guarantor, with a minimum S&P rating of BBB- or Moody’s rating of Baa3.
The Company periodically makes plans to reduce its variable interest rate exposures through various instruments including fixed rate debt and equity and hedging arrangements like those executed by TXNM in 2022 and 2023, and otherwise expects that it will be able to extend or replace variable rate debt under similar terms and conditions prior to their expirations.
The Company periodically makes plans to reduce its A - 57 Table of Contents variable interest rate exposures through various instruments including fixed rate debt and equity and hedging arrangements and otherwise expects that it will be able to extend or replace variable rate debt under similar terms and conditions prior to their expirations.
Equity securities comprised 55.4% and 35.7% of the securities held by the various PNM and TNMP trusts as of December 31, 2024. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $51.2 million for PNM and $1.6 million for TNMP.
Equity securities comprised 69.9% and 55.3% of the securities held by the various PNM and TNMP trusts as of December 31, 2025. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $61.3 million for PNM and $2.5 million for TNMP.
During the years ended December 31, 2024 and 2023, the effects of mark-to-market commodity derivative instruments had no impact to PNM’s net earnings and $6.6 million of fair value losses and $10.2 million of fair value gains have been recorded as a regulatory asset and a regulatory liability.
During the years ended December 31, 2025 and 2024, the effects of mark-to-market commodity derivative instruments had no impact to PNM’s net earnings and zero and $5.7 million of fair value gains have been recorded as a regulatory asset. All of the fair values were determined based on prices provided by external sources other than actively quoted market prices.
Removed
All of the fair values as of December 31, 2024 were determined based on prices provided by external sources other than actively quoted market prices. The net mark-to-market amounts will settle by the end of 2025.

Other TXNM 10-K year-over-year comparisons