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What changed in TXNM ENERGY INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TXNM ENERGY INC's 2023 and 2024 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 2024 report.

+522 added−560 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-29)

Top changes in TXNM ENERGY INC's 2024 10-K

522 paragraphs added · 560 removed · 385 edited across 10 sections

Item 1. Business

Business — how the company describes what it does

68 edited+17 added−45 removed30 unchanged
Biggest changeA - 5 Table of Contents PNM’s capacity in electric generating facilities, which are owned, leased, under PPAs or battery storage agreements, in commercial operation as of December 31, 2023 is: Generation Percent of Capacity Generation Type Name Location (MW) Capacity Solar PNM-owned solar Twenty sites in New Mexico 158 5.7 % Solar NMRD-owned solar Los Lunas, New Mexico 180 6.5 Solar Solar Direct Rio Arriba County, New Mexico 50 1.8 Solar Route 66 Cibola County, New Mexico 50 1.8 Wind New Mexico Wind House, New Mexico 200 7.2 Wind Red Mesa Wind Seboyeta, New Mexico 102 3.7 Wind Casa Mesa Wind House, New Mexico 50 1.8 Wind La Joya Wind I Torrance, New Mexico 166 6.0 Wind La Joya Wind II Torrance, New Mexico 140 5.0 Geothermal Lightning Dock Geothermal Lordsburg, New Mexico 11 0.4 Battery Storage Arroyo McKinley County, New Mexico 150 5.4 Battery Storage Jicarilla Rio Arriba County, New Mexico 20 0.7 Renewable resources 1,277 46.0 Gas Reeves Station Albuquerque, New Mexico 146 5.2 Gas Afton (combined cycle) La Mesa, New Mexico 235 8.5 Gas Lordsburg Lordsburg, New Mexico 85 3.1 Gas Luna (combined cycle) Deming, New Mexico 190 6.8 Gas/Oil Rio Bravo Albuquerque, New Mexico 149 5.4 Gas Valencia Belen, New Mexico 155 5.6 Gas La Luz Belen, New Mexico 41 1.5 Gas-fired resources 1,001 36.1 Nuclear PVNGS Wintersburg, Arizona 298 1 10.7 Coal Four Corners Fruitland, New Mexico 200 7.2 2,776 100.0 % 1 In January 2024, leased capacity of 10 MW in PVNGS Unit 2 expired and the rights to the capacity were acquired by SRP from the lessors.
Biggest changePNM 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.
OPERATIONS AND REGULATION Regulated Operations Electric power demand is generally seasonal. Power consumption in both New Mexico and Texas 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 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.
Management regularly reports to the Compensation Committee of the Board on human capital management topics, including corporate culture, diversity and inclusion, employee development and compensation and benefits. The Compensation 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, 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.
Some participants in the joint projects are investor-owned entities, while others are privately, municipally, or co-operatively owned. Furthermore, participants in SJGS had varying percentage interest in different generating units within the project and have different percentage interest with respect to plant decommissioning and coal mine reclamation obligations.
Some participants in the joint projects are investor-owned entities, while others are privately, municipally, tribally, or co-operatively owned. Furthermore, participants in SJGS had varying percentage interest in different generating units within the project and have different percentage interest with respect to plant decommissioning and coal mine reclamation obligations.
These 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, including the potential exit from Four Corners • 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 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 or geopolitical activity • 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 battery storage agreements related to replacement resources for facilities retired or for which the leases terminated), and supply chain or other outside support services that may be disrupted • The potential unavailability of cash from PNMR’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, 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 A - 11 Table of Contents • 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 For information about the risks associated with the use of derivative financial instruments see Part II, Item 7A.
These 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.
The SEC filings of PNMR, PNM, and TNMP, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are accessible free of charge on the PNMR website as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
The SEC filings of TXNM, PNM, and TNMP, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are accessible free of charge on the TXNM website as soon as reasonably practicable after they are filed with, or furnished to, the SEC.
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 1,026 miles of electric transmission lines that interconnect with other utilities in Texas.
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.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS Statements made in this filing that relate to future events or PNMR’s, PNM’s, or TNMP’s expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS Statements made in this filing that relate to future events or TXNM’s, PNM’s, or TNMP’s expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995.
PNMR’s, PNM’s, and TNMP’s business, financial condition, cash flows, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements.
TXNM’s, PNM’s, and TNMP’s business, financial condition, cash flows, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements.
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 A - 9 Table of Contents • 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 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.
PNM owns 3,428 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 3,444 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.
Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. PNMR, PNM, and TNMP assume no obligation to update this information.
Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. TXNM, PNM, and TNMP assume no obligation to update this information.
Reports filed with the SEC are available on its website, www.sec.gov . These reports are also available in print upon request from PNMR free of charge.
Reports filed with the SEC are available on its website, www.sec.gov . These reports are also available in print upon request from TXNM free of charge.
As of December 31, 2023, PNM had 333 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, 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.
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. Service to retail electric customers is subject to the jurisdiction of the NMPRC.
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.
The Albuquerque, Rio Rancho, and Santa Fe metropolitan areas accounted for 41.6%, 7.4% and 5.9% of PNM’s 2023 revenues and 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, 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.
Certain of PNM’s natural gas plants 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. Substantially all of PNM’s natural gas costs are recovered through the FPPAC.
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.
As of December 31, 2023, TNMP had 207 employees represented by IBEW Local 66 covered by a collective bargaining agreement that is in effect through August 31, 2027.
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.
A - 3 Table of Contents FERC Regulated Wholesale Transmission Rates charged to wholesale electric transmission customers, other than customers on the Western Spirit Line described below, are based on a formula rate mechanism pursuant to which rates for wholesale transmission service are calculated annually in accordance with an approved formula.
FERC Regulated Wholesale Transmission 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.
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 2023 12.8 % $ 4.19 32.3 % $ 0.73 49.9 % $ 3.42 2022 36.7 2.97 35.4 0.73 23.9 7.61 In 2023 and 2022, 5.0% and 4.1% 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 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.
Also available on the Company’s website at https://www.pnmresources.com/esg-commitment/governance.aspx and in print upon request from any shareholder are PNMR’s: • Corporate Governance Principles • Code of Ethics ( Do the Right Thing – Principles of Business Conduct; Supplier Code of Conduct ) • Charters of the Audit and Ethics Committee, Nominating and Governance Committee, Compensation and Human Resources Committee, and Finance Committee • Restated Articles of Incorporation and Bylaws The Company will post amendments to or waivers from its code of ethics (to the extent applicable to the Company’s executive officers and directors) on its website.
Also available on the Company’s website at https://www.txnmenergy.com/sustainability/governance/governance-documents and in print upon request from any shareholder are TXNM’s: • Corporate Governance Principles • Code of Ethics ( Do the Right Thing – Principles of Business Conduct; Supplier Code of Conduct ) • Charters of the Audit and Ethics Committee, Nominating and Governance Committee, Compensation and Human Capital Committee, and Finance Committee • Restated Articles of Incorporation and Bylaws The Company will post amendments to or waivers from its code of ethics (to the extent applicable to the Company’s executive officers and directors) on its website.
TNMP serves a market of small to medium sized communities, most of which have populations of less than 50,000. TNMP is the exclusive provider of transmission and distribution services in most areas it serves. TNMP’s service territory consists of three non-contiguous areas.
Therefore, TNMP is not subject to traditional rate regulation by FERC. TNMP serves a market of small to medium sized communities, most of which have populations of less than 50,000. TNMP is the exclusive provider of transmission and distribution services in most areas it serves. TNMP’s service territory consists of three non-contiguous areas.
Our 1,635 employees include 33% represented by a bargaining unit, 28% women, 55% minorities, 15% identified as disabled, and 9% veterans. Our diversity goal at the Company is for our workforce to mirror the communities we serve.
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.
Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR, PNM, and TNMP caution readers not to place undue reliance on these statements.
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.
PNM’s proposal to modernize its electricity grid through infrastructure and technology improvements increases the efficiency, reliability, resilience, and security of PNM’s electric system. PNM’s application seeks approval of grid modernization investments of approximately $344 million for the first six years of a broader 11-year strategy. See Note 17.
PNM’s plan to modernize its electricity grid through infrastructure and technology improvements increases the efficiency, reliability, resilience, and security of PNM’s electric system. PNM’s grid modernization investments include approximately $344 million for the first six years of a broader 11-year strategy.
It is unclear how these factors will enter into discussions and negotiations concerning the status of the joint projects as the expiration of basic operational agreements approaches. PNM can provide no assurance that its participation in the joint projects will continue in the manner that currently exists. TNMP TNMP provides only transmission and distribution services and does not sell power.
It is unclear how these factors will enter into discussions and negotiations concerning the status of the joint projects as the expiration of basic operational agreements approaches. PNM can provide no assurance that its participation in the joint projects will continue in the manner that currently exists.
The largest retail electric customer served by PNM accounted for 3.6% of its retail electric revenues for the year ended December 31, 2023 and 2022. Other services provided by PNM include wholesale transmission services to third parties.
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 PUCT approved interim adjustments to TNMP’s transmission rates of $14.2 million in March 2022, $5.3 million in September 2022, $19.4 million in May 2023, and $4.2 million in September 2023. On January 25, 2024, TNMP filed an application to further update its transmission rates, which would increase revenues by $13.1 million annually. The application is pending before the PUCT.
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.
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.
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.
PNMR Services Company provides corporate services through shared services agreements to PNMR and all of PNMR’s business units, including PNM and TNMP. These services are charged and billed at cost on a monthly basis to the business units. The activities of PNMR Development and NMRD are also included in Corporate and Other.
PNMR Services Company provides corporate services through shared services agreements to TXNM and all of TXNM’s business units, including PNM and TNMP. These services are charged and billed at cost on a monthly basis to the business units.
PNM enters into battery storage agreements and purchases renewable power under long-term PPAs, all currently having expiration dates beginning in January 2035 and extending through May 2047.
PNM stores energy under ESAs and purchases renewable power under long-term PPAs, all currently having expiration dates beginning in January 2035 and extending through May 2047.
TNMP’s transmission and distribution activities are solely within ERCOT, which is the independent system operator responsible for maintaining reliable operations for the bulk electric power supply system in most of Texas. Therefore, TNMP is not subject to traditional rate regulation by FERC.
TNMP is subject to traditional cost-of-service regulation with respect to rates and service under the jurisdiction of the PUCT and certain municipalities. TNMP’s transmission and distribution activities are solely within ERCOT, which is the independent system operator responsible for maintaining reliable operations for the bulk electric power supply system in most of Texas.
For its volumetric load consumers billed on KWh usage, TNMP was flat in its weather normalized retail KWh sales in 2023 and experienced an increase of 2.4% in 2022. For its weather normalized demand-based load, excluding retail transmission consumers, TNMP experienced an increase of 14.1% in 2023 and an increase of 17.3% in 2022.
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.
If adjusted for these approved plans, the table above would reflect the percentage of generation capacity from fossil-fueled resources of 27.0%, from nuclear resources of 6.5%, and from renewable resources of 66.5%.
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%.
See Note 17. The NMPRC has also approved riders designed to allow PNM to bill and collect substantially all fuel and purchased power costs, costs of approved energy efficiency initiatives, and costs associated with enhancing transportation electrification in New Mexico.
PNM has a NMPRC-approved rate rider to collect costs for renewable energy procurements that are not otherwise being collected in rates. The NMPRC has also approved riders designed to allow PNM to bill and collect substantially all fuel and purchased power costs, costs of approved energy efficiency initiatives, and costs associated with enhancing transportation electrification in New Mexico.
The system peak demands for retail customers are as follows: System Peak Demands 2023 2022 2021 (Megawatts) Summer 2,162 2,139 1,968 Winter 1,545 1,526 1,518 A - 2 Table of Contents PNM holds long-term, non-exclusive franchise agreements for its electric retail operations, with varying expiration dates.
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 remaining interests in Luna are owned equally by Tucson and Samchully Power & Utilities 1, LLC. PNM is also entitled to the entire output of Valencia under a PPA. Reeves, Lordsburg, Rio Bravo, La Luz, and Valencia are used primarily for peaking power and transmission support.
PNM is also entitled to the entire output of Valencia under a PPA. Reeves, Lordsburg, Rio Bravo, La Luz, and Valencia are used primarily for peaking power and transmission support. As discussed in Note 10, Valencia is a variable interest entity and is consolidated by PNM.
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 PNM Resources depends on over 1,600 dedicated employees to deliver outstanding customer service and transform into an emissions-free generation future.
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.
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.
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.
A - 8 Table of Contents Coal Substantially all of PNM’s coal costs are passed on to PNM’s customers under the FPPAC. Four Corners obtains its coal requirements from a mine near the plant. The coal supply arrangement for Four Corners runs through July 6, 2031 and provides for pricing adjustments over its term based on economic indices.
Coal Four Corners obtains its coal requirements from a mine near the plant. The coal supply arrangement for Four Corners runs through July 6, 2031 and provides for pricing adjustments over its term based on economic indices. See Note 16 for additional information about PNM’s coal supply arrangements.
PNM has contracted for firm gas transmission capacity to minimize the potential for disruptions due to extreme weather events.
The supply of natural gas can be subject to disruptions due to extreme weather events and/or pipeline or facility outages. PNM has contracted for firm gas transmission capacity to minimize the potential for disruptions due to extreme weather events.
In addition, PNM has filed an application with the NMPRC seeking approval of resources to be available for the 2026 summer peak, which are necessary for PNM to safely and reliably meet its projected system load.
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.
Four Corners Units 4 and 5 are 13% owned by PNM. These units are jointly owned with APS, SRP, Tucson, and NTEC, and are operated by APS. PNM had no ownership interest in Four Corners Units 1, 2, or 3, which were shut down by APS in 2013.
These units are jointly owned with APS, SRP, Tucson, and NTEC, and are operated by APS. PNM had no ownership interest in Four Corners Units 1, 2, or 3, which were shut down by APS in 2013. The Four Corners plant site is located on land within the Navajo Nation and is subject to an easement from the federal government.
A - 10 Table of Contents Employees The following table sets forth the number of employees of PNMR, PNM, and TNMP as of December 31, 2023: PNMR PNM TNMP Corporate (1) 435 — — PNM 810 810 — TNMP 390 — 390 Total 1,635 810 390 (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, 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.
The NMPRC has approved plans for PNM to procure energy and RECs from additional renewable resources to serve retail customers and a data center located in PNM’s service territory, including the portfolio to replace SJGS and the PVNGS Leased Interest Abandonment Application.
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.
PNM began participating in the EIM in 2021 which has generated cost savings that are passed through to customers in PNM’s FPPAC. PNM also engages in activities to optimize its existing jurisdictional assets and long-term power agreements through spot market, hour-ahead, day-ahead, week-ahead, and other sales of excess generation not required to fulfill retail load and contractual commitments.
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.
This information highlights plans for PNM to have an emissions-free generating portfolio by 2040. The contents of these websites are not a part of this Form 10-K.
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.
Under the approved settlement stipulation TNMP was granted authority to update depreciation rates and refund the regulatory liability related to federal tax reform to customers. 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.
Regulatory Activities The rates TNMP charges customers are subject to traditional rate regulation by the PUCT. 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.
See Note 16 for additional information about PNM’s coal supply arrangements. 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.
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.
Governance The Board agrees that human capital management is an important component of PNM Resources’ continued growth and success, and is essential for its ability to attract, retain and develop talented and skilled employees.
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.
Certain items, including changes to return on equity and depreciation rates, require a separate filing to be made with FERC before being included in the formula rate. The Energy Transition Act (“ETA”) The ETA became effective in 2019. As discussed below, the ETA amends the REA and requires utilities operating in New Mexico to provide 100% zero-carbon energy by 2045.
Certain items, including changes to return on equity and depreciation rates, require a separate filing to be made with FERC before being included in the formula rate. Renewable Energy The REA was enacted to encourage the development of renewable energy in New Mexico.
There has been a significant increase in interconnection requests and cryptocurrency mining applications on the TNMP system, which has necessitated new transmission stations, upgrades at existing stations, and transmission line capacity upgrades.
There has been a significant increase in interconnection requests and data center applications on the TNMP system, which has necessitated new transmission stations, upgrades at existing stations, and transmission line capacity upgrades. TNMP provides transmission and distribution services at regulated rates to various REPs that, in turn, provide retail electric service to consumers within TNMP’s service area.
As discussed in Note 10, Valencia is a variable interest entity and is consolidated by PNM. Nuclear Plant PNM is participating in the three units of PVNGS with APS (the operating agent), SRP, EPE, SCE, SCPPA, and the Department of Water and Power of the City of Los Angeles.
Nuclear Plant PNM is participating in the three units of PVNGS with APS (the operating agent), SRP, EPE, SCE, SCPPA, and the Department of Water and Power of the City of Los Angeles. PNM has ownership interests of 2.3% in Unit 1, 9.4% in Unit 2, and 10.2% in Unit 3. See Note 16 for information on other PVNGS matters.
As a result, the quarterly operating results of PNMR and its operating subsidiaries vary throughout the year. In addition, unusually mild or extreme weather patterns may cause the overall operating results of the Company to fluctuate. PNM Operational Information PNM is an electric utility that provides electric generation, transmission, and distribution service to its rate-regulated customers.
As a result, the quarterly operating results of TXNM and its operating subsidiaries vary throughout the year. In addition, unusually mild or extreme weather patterns may cause the overall operating results of the Company to fluctuate. See Notes 16 and 17 for additional information on rate cases and other regulatory matters.
ITEM 1. BUSINESS THE COMPANY Overview PNMR is an investor-owned holding company with two regulated utilities serving approximately 824,000 residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. PNMR’s electric utilities are PNM and TNMP. PNMR strives to create a clean and bright energy future for customers, communities, and shareholders.
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.
A reference to a “Note” refers to the accompanying Notes to Consolidated Financial Statements. Financial information relating to amounts of revenue, net earnings, and total assets of reportable segments is contained in MD&A and Note 2.
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.
A - 1 Table of Contents WEBSITES The PNMR website is an important source of Company information. New or updated information for public access is routinely posted. PNMR 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.
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.
As of December 31, 2023, 116 active REPs receive transmission and distribution services from TNMP. In 2023, the three largest REPs accounted for 25%, 19%, and 11% of TNMP’s operating revenues. No other consumer accounted for more than 10% of revenues. TNMP holds long-term, non-exclusive franchise agreements for its electric transmission and distribution services.
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.
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. The PVNGS participants have contracted for 100% of PVNGS’s requirements for uranium concentrates through 2026 and an average of 60% through 2028.
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.
For discussion purposes, this report uses the term “Company” when discussing matters of common applicability to PNMR, PNM, and TNMP. Discussions regarding only PNMR, PNM, or TNMP are so indicated. A reference to “MD&A” in this report refers to Part II, Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations.
A reference to “MD&A” in this report refers to Part II, Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations. A reference to a “Note” refers to the accompanying Notes to Consolidated Financial Statements.
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. See Notes 16 and 17 for additional information on rate cases and other regulatory matters.
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.
A - 6 Table of Contents These resources and their currently expected operation dates are as follows: Generation Expected Capacity Type Resource For Operation (MW) NMPRC Approved Solar Retirement of SJGS 2024 550 Battery Storage Retirement of SJGS 2024 100 Solar PVNGS Leased Interest Abandonment 2024 300 Battery Storage PVNGS Leased Interest Abandonment 2024 300 Solar Meta Data Center 2024/2025 330 Battery Storage Meta Data Center 2024/2025 100 Owned Battery Storage Battery Storage 2024 12 1,692 NMPRC Approval Pending Solar 2026 Resource Application 2026 100 Battery Storage 2026 Resource Application 2026 250 Owned Battery Storage 2026 Resource Application 2026 60 410 Fossil‑Fueled Plants SJGS was a four-unit coal-fired plant operated by PNM, the last of which (Unit 4) was retired in September 2022.
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.
A - 7 Table of Contents Purchased Power A summary of purchased power, excluding Valencia, is as follows: Year Ended December 31, 2023 2022 Purchased under long-term PPAs MWh 3,047,505 3,179,472 Cost per MWh $ 28.94 $ 37.45 Other purchased power Total MWh 4,639,342 5,645,918 Cost per MWh $ 80.97 $ 67.15 Plant Operating Statistics Equivalent availability of PNM’s major base-load generating stations was: Plant Operator 2023 2022 Four Corners APS 61.2% 83.2% PVNGS APS 91.4 90.7 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 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.
The PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs. Corporate and Other The Corporate and Other segment includes PNMR holding company activities, primarily related to corporate level debt and the activities of PNMR Services Company.
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.
Participants will not receive information unless requested and can unsubscribe at any time. Our corporate websites are: • PNMR: www.pnmresources.com • PNM: www.pnm.com • TNMP: www.tnmp.com PNMR’s corporate website includes a dedicated section providing key environmental and other sustainability information related to PNM’s and TNMP’s operations and other information that collectively demonstrates the Company’s commitment to ESG principles.
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.
PNM files required renewable energy plans with the NMPRC annually and makes procurements consistent with the plans approved by the NMPRC. See Note 17. TNMP Operational Information TNMP is a regulated utility operating and incorporated in the State of Texas. TNMP’s predecessor was organized in 1925.
TNMP Operational Information TNMP is a regulated utility operating and incorporated in the State of Texas. TNMP’s predecessor was organized in 1925. TNMP provides transmission and distribution services in Texas under the provisions of TECA and the Texas Public Utility Regulatory Act.
Culture Our diverse and 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.
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.
Additional needed supplies are covered through existing inventories or spot market transactions. For conversion services, 100% are contracted through 2026 and an average of 80% through 2028. Additional needed conversion services are covered through existing inventories or spot market transactions. For enrichment services, 80% is contracted through 2026. For fuel assembly fabrication 100% is contracted through 2027.
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.
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PNMR’s strategy and decision-making are focused on safely providing reliable, affordable, and environmentally responsible power built on a foundation of Environmental, Social and Governance (ESG) principles.
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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.
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PNMR is focused on achieving three key financial objectives: • Earning authorized returns on regulated businesses • Delivering at or above industry-average earnings and dividend growth • Maintaining investment grade credit ratings In conjunction with these objectives, PNM and TNMP are dedicated to: • Maintaining strong employee safety, plant performance, and system reliability • Delivering a superior customer experience • Demonstrating environmental stewardship in business operations, including transitioning to an emissions-free generating portfolio by 2040 • Supporting the communities in their service territories PNMR’s success in accomplishing its financial objectives is highly dependent on two key factors: fair and timely regulatory treatment for its utilities and the utilities’ strong operating performance.
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Vision, Values and Business Objectives TXNM’s vision is to create a clean and bright energy future while fulfilling its purpose to work together with customers and communities to meet their energy needs. TXNM’s core values of Safety, Caring and Integrity are the foundation for the Company’s business objectives focused on safety excellence and customer satisfaction, including reliability.
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The Company has multiple strategies in place to achieve favorable regulatory treatment, all of which have as their foundation a focus on the basics: safety, operational excellence, and customer satisfaction, while engaging stakeholders to build productive relationships. The Company believes that maintaining strong and modern electric infrastructure is critical to ensuring reliability and supporting economic growth.
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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 The Company believes that maintaining strong and modern electric infrastructure is critical to ensuring reliability and supporting economic growth.
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Additional information about rate filings is provided in Operations and Regulation below and in Note 17. PNMR’s common stock trades on the New York Stock Exchange under the symbol PNM. PNMR was incorporated in the State of New Mexico in 2000.
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Additional information about rate filings is provided in Operations and Regulation below and in Note 17. Other Information These filings for TXNM, PNM, and TNMP include disclosures for each entity. For discussion purposes, this report uses the term “Company” when discussing matters of common applicability to TXNM, PNM, and TNMP. Discussions regarding only TXNM, PNM, or TNMP are so indicated.
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On August 25, 2023, PNM formed PNM Energy Transition Bond Company I, LLC (“ETBC I”), a wholly-owned special purpose subsidiary for the limited purpose of purchasing, owning, and administering energy transition property, issuing Securitized Bonds, and performing related activities. Other Information These filings for PNMR, PNM, and TNMP include disclosures for each entity.
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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.
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Merger On October 20, 2020, PNMR, Avangrid and Merger Sub entered into the Merger Agreement pursuant to which Merger Sub would have merged with and into PNMR, with PNMR surviving the Merger as a wholly-owned subsidiary of Avangrid.
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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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFinancial Risks PNMR may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if its subsidiaries are unable to pay dividends or distributions to PNMR. PNMR is a holding company and has no operations of its own.
Biggest changeSuch additional costs may have the effect of delaying or preventing a takeover of TXNM that would otherwise be beneficial to investors. TXNM may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if its subsidiaries are unable to pay dividends or distributions to TXNM.
The material provisions that may have such an effect include: • Authorization for the Board to issue PNMR’s preferred stock in series and to fix rights and preferences of the series (including, among other things, voting rights and preferences with respect to dividends and other matters) • Advance notice procedures with respect to any proposal other than those adopted or recommended by the Board • Provisions specifying that only a majority of the Board, the chairman of the Board, the chief executive officer, or holders of at least one-tenth of all of PNMR’s shares entitled to vote may call a special meeting of shareholders Under the New Mexico Public Utility Act, NMPRC approval is required for certain transactions that may result in PNMR’s change in control or exercise of control, including ownership of 10% or more of PNMR’s voting stock.
The material provisions that may have such an effect include: • Authorization for the Board to issue TXNM’s preferred stock in series and to fix rights and preferences of the series (including, among other things, voting rights and preferences with respect to dividends and other matters) • Advance notice procedures with respect to any proposal other than those adopted or recommended by the Board • Provisions specifying that only a majority of the Board, the chairman of the Board, the chief executive officer, or holders of at least one-tenth of all of TXNM’s shares entitled to vote may call a special meeting of shareholders Under the New Mexico Public Utility Act, NMPRC approval is required for certain transactions that may result in TXNM’s change in control or exercise of control, including ownership of 10% or more of TXNM’s voting stock.
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; 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; 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.
However, there is no assurance that the continued effects of these market conditions will not adversely impact our business, results of operations, financial condition, cash flows, ability to access the capital markets, and the trading value of the Company’s common stock and debt securities.
There is no assurance that the continued effects of these market conditions will not adversely impact our business, results of operations, financial condition, cash flows, ability to access the capital markets, and the trading value of the Company’s common stock and debt securities.
These factors could negatively impact results of operations and cash flows. The impact of wildfires could negatively affect PNM’s and TNMP’s results of operations. PNM and TNMP have large networks of electric transmission and distribution facilities. Weather conditions including severe drought, high winds, and the natural desert vegetation in the U.S.
These factors could negatively impact results of operations and cash flows. The impact of wildfires could negatively affect PNM’s and TNMP’s results of operations. PNM and TNMP have large networks of electric transmission and distribution facilities. Weather conditions including severe drought, high winds, and the natural vegetation in the U.S.
Compliance with federal, state, tribal, and local environmental laws and regulations, including those addressing climate change, air quality, CCRs, discharges of wastewater originating from fly ash and bottom ash handling facilities, cooling water, ESG matters, GHG emissions, and other matters, may result in increased capital, operating, and other costs, particularly with regard to enforcement efforts focused on power plant emission control obligations.
Compliance with federal, state, tribal, and local environmental laws and regulations, including those addressing climate change, air quality, CCRs, discharges of wastewater originating from fly ash and bottom ash handling facilities, cooling water, sustainability, GHG emissions, and other matters, may result in increased capital, operating, and other costs, particularly with regard to enforcement efforts focused on power plant emission control obligations.
However, if the PVNGS units are decommissioned before their planned date or the coal mine serving Four Corners is shut down sooner than expected, these funds may prove to be insufficient. The financial performance of PNMR, PNM, and TNMP may be adversely affected if power plants, other generation resources, and transmission and distribution systems do not operate reliably and efficiently.
However, if the PVNGS units are decommissioned before their planned date or the coal mine serving Four Corners is shut down sooner than expected, these funds may prove to be insufficient. The financial performance of TXNM, PNM, and TNMP may be adversely affected if power plants, other generation resources, and transmission and distribution systems do not operate reliably and efficiently.
The NMPRC has placed certain restrictions on the ability of PNM to pay dividends to PNMR, including that PNM cannot pay dividends that cause its debt rating to fall below investment grade. The NMPRC has also restricted PNM from paying dividends in any year, as determined on a rolling four-quarter basis, in excess of net earnings without prior NMPRC approval.
The NMPRC has placed certain restrictions on the ability of PNM to pay dividends to TXNM, including that PNM cannot pay dividends that cause its debt rating to fall below investment grade. The NMPRC has also restricted PNM from paying dividends in any year, as determined on a rolling four-quarter basis, in excess of net earnings without prior NMPRC approval.
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 PNMR, 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 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.
Supply chain issues, high inflation, actions by the Federal Reserve to address inflationary concerns and other market conditions, geopolitical activity and the resulting impact on business and economic conditions could negatively affect the Company’s business, results of operations, financial condition, cash flows, and the trading value of PNMR’s common stock and the Company’s debt securities.
Supply chain issues, high inflation, actions by the Federal Reserve to address inflationary concerns and other market conditions, geopolitical activity and the resulting impact on business and economic conditions could negatively affect the Company’s business, results of operations, financial condition, cash flows, and the trading value of TXNM’s common stock and the Company’s debt securities.
Economic conditions also impact the supply and/or cost of commodities and materials needed to construct or acquire utility assets or make necessary repairs. The operating results of PNMR and its operating subsidiaries are seasonal and are affected by weather conditions. Electric generation, transmission, and distribution are generally seasonal businesses that vary with the demand for power.
Economic conditions also impact the supply and/or cost of commodities and materials needed to construct or acquire utility assets or make necessary repairs. The operating results of TXNM and its operating subsidiaries are seasonal and are affected by weather conditions. Electric generation, transmission, and distribution are generally seasonal businesses that vary with the demand for power.
With power consumption typically peaking during the hot summer months, revenues traditionally peak during that period. As a result, quarterly operating results of PNMR and its operating subsidiaries vary throughout the year. In addition, PNMR and its operating subsidiaries have historically had lower revenues resulting in lower earnings when weather conditions are milder.
With power consumption typically peaking during the hot summer months, revenues traditionally peak during that period. As a result, quarterly operating results of TXNM and its operating subsidiaries vary throughout the year. In addition, TXNM and its operating subsidiaries have historically had lower revenues resulting in lower earnings when weather conditions are milder.
The costs incurred to investigate and remediate a physical or cybersecurity attack could be significant. A significant physical or cybersecurity attack on the Company’s critical infrastructure could have an adverse impact on the operations, reputation and financial condition of PNMR, PNM, and TNMP. There are inherent risks in the ownership and operation of nuclear facilities.
The costs incurred to investigate and remediate a physical or cybersecurity attack could be significant. A significant physical or cybersecurity attack on the Company’s critical infrastructure could have an adverse impact on the operations, reputation and financial condition of TXNM, PNM, and TNMP. There are inherent risks in the ownership and operation of nuclear facilities.
Changes in tax laws may negatively impact PNMR’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.
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.
PNMR, PNM, and TNMP are subject to complex government regulation unrelated to the environment, which may have a negative impact on their businesses, financial position and results of operations. To operate their businesses, PNMR, PNM, and TNMP are required to have numerous permits and approvals from a variety of regulatory agencies.
TXNM, PNM, and TNMP are subject to complex government regulation unrelated to the environment, which may have a negative impact on their businesses, financial position and results of operations. To operate their businesses, TXNM, PNM, and TNMP are required to have numerous permits and approvals from a variety of regulatory agencies.
PNMR and its subsidiaries are unable to predict the impact on their business and operating results from future actions of any agency regulating the Company. Changes in existing regulations or the adoption of new ones could result in additional expenses and/or changes in business operations.
TXNM and its subsidiaries are unable to predict the impact on their business and operating results from future actions of any agency regulating the Company. Changes in existing regulations or the adoption of new ones could result in additional expenses and/or changes in business operations.
ITEM 1A. RISK FACTORS The business and financial results of PNMR, PNM, and TNMP are subject to a number of risks and uncertainties, many of which are beyond their control, including those set forth below and in MD&A, Note 16, and Note 17.
ITEM 1A. RISK FACTORS The business and financial results of TXNM, PNM, and TNMP are subject to a number of risks and uncertainties, many of which are beyond their control, including those set forth below and in MD&A, Note 16, and Note 17.
At peak times, power demand could exceed PNM’s forecasted available generation capacity, particularly if PNM’s power plants are not performing as anticipated and additional resources are not approved, or are not available, as PNM transitions its system to carbon emission-free generation and battery storage.
At peak times, power demand could exceed PNM’s forecasted available generation capacity, particularly if PNM’s power plants are not performing as anticipated and additional resources are not approved, or are not available, as PNM transitions its system to carbon emission-free generation and energy storage.
PNMR, PNM, and TNMP cannot be sure that any of their current credit ratings will remain in effect for any given period of time or that a rating will not be put under review for a downgrade, lowered, or withdrawn entirely by a rating agency.
TXNM, PNM, and TNMP cannot be sure that any of their current credit ratings will remain in effect for any given period of time or that a rating will not be put under review for a downgrade, lowered, or withdrawn entirely by a rating agency.
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 PNMR’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. 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.
Without timely cost recovery, including recovery of undepreciated investments and the opportunity to earn a fair return on capital investments, PNMR’s liquidity and results of operations could be negatively impacted. Further, PNM and TNMP are in a period of significant capital expenditures.
Without timely cost recovery, including recovery of undepreciated investments and the opportunity to earn a fair return on capital investments, TXNM’s liquidity and results of operations could be negatively impacted. Further, PNM and TNMP are in a period of significant capital expenditures.
Costs of decommissioning, remediation, and restoration of nuclear and fossil-fueled power plants, as well as reclamation of related coal mines, could exceed the estimates of PNMR and PNM as well as the amounts PNM recovers from its ratepayers, which could negatively impact results of operations and liquidity.
Costs of decommissioning, remediation, and restoration of nuclear and fossil-fueled power plants, as well as reclamation of related coal mines, could exceed the estimates of TXNM and PNM as well as the amounts PNM recovers from its ratepayers, which could negatively impact results of operations and liquidity.
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 10.7% of PNM’s total generating capacity as of December 31, 2023.
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.
PUCT approval is required for changes to the ownership of TNMP or its parent and certain other transactions relating to TNMP. Certain acquisitions of PNMR’s outstanding voting securities also require FERC approval. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
PUCT approval is required for changes to the ownership of TNMP or its parent and certain other transactions relating to TNMP. Certain acquisitions of TXNM’s outstanding voting securities also require FERC approval. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
PNMR 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 $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.
Increased costs resulting from penalties, a heightened level of scrutiny, and/or implementation of plans to achieve compliance with NRC requirements could adversely affect the financial condition, results of operations, and cash flows of PNMR and PNM.
Increased costs resulting from penalties, a heightened level of scrutiny, and/or implementation of plans to achieve compliance with NRC requirements could adversely affect the financial condition, results of operations, and cash flows of TXNM and PNM.
Regulatory Risks The profitability of PNMR’s utilities depends on being able to recover their costs through regulated rates and earn a fair return on invested capital, including investments in its generating plants.
Regulatory Risks The profitability of TXNM’s utilities depends on being able to recover their costs through regulated rates and earn a fair return on invested capital, including investments in its generating plants.
The Company is unable to estimate these costs due to the many uncertainties associated with, among other things, the nature and extent of future regulations and changes in existing regulations, including the changes in regulatory policy under the Biden Administration.
The Company is unable to estimate these costs due to the many uncertainties associated with, among other things, the nature and extent of future regulations and changes in existing regulations, including the changes in regulatory policy under the Trump Administration.
Economic activity in the service territories of PNMR subsidiaries is a key factor in their performance. Decreased economic activity can lead to declines in energy consumption, which could adversely affect future revenues, earnings, and growth.
Economic activity in the service territories of TXNM subsidiaries is a key factor in their performance. Decreased economic activity can lead to declines in energy consumption, which could adversely affect future revenues, earnings, and growth.
The NMPRC has established a cap on the amount of costs for the final reclamation of the surface coal mines that may be recovered from customers. PNM records estimated liabilities for its share of the legal obligations for decommissioning and reclamation. These estimates include many A - 15 Table of Contents assumptions about future events and are inherently imprecise.
The NMPRC has established a cap on the amount of costs for the final reclamation of the surface coal mines that may be recovered from customers. PNM records estimated liabilities for its share of the legal obligations for decommissioning and reclamation. These estimates include many assumptions about future events and are inherently imprecise.
A breach of the Company’s information systems could also lead to the loss and destruction of confidential and proprietary data, personally identifiable information, trade secrets, intellectual property and supplier data, and could disrupt A - 16 Table of Contents business operations which could harm the Company’s reputation and financial results, as well as potential increased regulatory oversight, litigation, fines, and other remedial action.
A breach of the Company’s information systems could also lead to the loss and destruction of confidential and proprietary data, personally identifiable information, trade secrets, intellectual property and supplier data, and could disrupt business operations which could harm the Company’s reputation and financial results, as well as potential increased regulatory oversight, litigation, fines, and other remedial action.
Prior to providing funds to PNMR, PNM and TNMP have financial and regulatory obligations that must be satisfied, including among others, debt service and, in the case of PNM, preferred stock dividends.
Prior to providing funds to TXNM, PNM and TNMP have financial and regulatory obligations that must be satisfied, including among others, debt service and, in the case of PNM, preferred stock dividends.
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.
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.
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.
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.
The Company’s financial performance depends on the successful operation of PNM’s generation assets, as well as the transmission and distribution systems of PNM and TNMP. PNM’s retirement of SJGS and the potential retirement of Four Corners will increase PNM’s dependency on other generation resources, including renewable resources, gas-fired facilities, and PVNGS, and will reduce PNM’s flexibility in managing those resources.
The Company’s financial performance depends on the successful operation of PNM’s generation assets, as well as the transmission and distribution systems of PNM and TNMP. PNM’s retirement of SJGS will increase PNM’s dependency on other generation resources, including renewable resources, gas-fired facilities, and PVNGS, and will reduce PNM’s flexibility in managing those resources.
PNM is responsible for all decommissioning obligations related to its entire interest in PVNGS, including portions under lease both during and after termination of the leases.
PNM is responsible for all decommissioning obligations related to its entire interest in PVNGS, including portions both during and after termination of the leases.
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.
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.
PNMR, PNM, and TNMP are subject to information security breaches and risks of unauthorized access to their information and operational technology systems as well as physical threats to assets.
TXNM, PNM, and TNMP are subject to information security breaches and risks of unauthorized access to their information and operational technology systems as well as physical threats to assets.
In addition, PNMR and its operating subsidiaries may underestimate the costs of environmental compliance, liabilities, and litigation due to the uncertainty inherent in these matters.
In addition, TXNM and its operating subsidiaries may underestimate the costs of environmental compliance, liabilities, and litigation due to the uncertainty inherent in these matters.
The Company faces the risk of physical and cybersecurity attacks, both threatened and actual, against generation facilities, transmission and distribution infrastructure, information technology systems, and network infrastructure, which could negatively impact the ability of the Company to generate, transport, and deliver power, or otherwise operate facilities in the most efficient manner or at all.
The Company faces the risk of physical and cybersecurity attacks, both threatened and actual, against generation facilities, transmission and distribution infrastructure, information technology systems, and network infrastructure, which could negatively impact the ability of the Company to generate, transmit, and distribute power, or otherwise operate facilities in the most efficient manner or at all.
See Note 16 and the Climate Change Issues subsection of the Other Issues Facing the Company section of MD&A. The utility industry is facing increasing stakeholder scrutiny related to ESG matters. Recently, PNMR has seen a rise in certain stakeholders, such as investors, customers, employees, and lenders, placing increasing importance on the impact and social cost associated with climate change.
See Note 16 and the Climate Change Issues subsection of the Other Issues Facing the Company section of MD&A. The utility industry is facing increasing stakeholder scrutiny related to sustainability. Recently, TXNM has seen a rise in certain stakeholders, such as investors, customers, employees, and lenders, placing increasing importance on the impact and social cost associated with climate change.
A - 18 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.
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.
PNM is permitted to pay dividends to PNMR from prior equity contributions made by PNMR. Additionally, PNMR’s financing agreements generally include a covenant to maintain a debt-to-capitalization ratio that does not exceed 70%, and PNM and TNMP’s financing arrangements generally include a covenant to maintain debt-to-capitalization ratios that do not exceed 65%.
PNM is permitted to pay dividends to TXNM from prior equity contributions made by TXNM. Additionally, TXNM’s financing agreements generally include a covenant to maintain a debt-to-capitalization ratio that does not exceed 70%, and PNM and TNMP’s financing arrangements generally include a covenant to maintain debt-to-capitalization ratios that do not exceed 65%.
Governance Risks Provisions of PNMR’s organizational documents, as well as several other statutory and regulatory factors, will limit another party’s ability to acquire PNMR and could deprive PNMR’s shareholders of the opportunity to receive a takeover premium for shares of PNMR’s common stock.
Governance Risks Provisions of TXNM’s organizational documents, as well as several other statutory and regulatory factors, will limit another party’s ability to acquire TXNM and could deprive TXNM’s shareholders of the opportunity to receive a takeover premium for shares of TXNM’s common stock.
PNMR’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 PNMR’s common stock or delaying or preventing a change in control of PNMR.
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.
Failure to comply with any applicable rules, regulations or decisions may lead to customer refunds, fines, penalties, and other payments, which could materially and adversely affect the results of operations and financial condition of PNMR and its subsidiaries. A - 14 Table of Contents Operational Risks Customer electricity usage could be reduced by increases in prices charged and other factors.
Failure to comply with any applicable rules, regulations or decisions may lead to customer refunds, fines, penalties, and other payments, which could materially and adversely affect the results of operations and financial condition of TXNM and its subsidiaries. Operational Risks Customer electricity usage could be reduced by increases in prices charged and other factors.
A - 13 Table of Contents CCRs from the operation of SJGS were used in the reclamation of a surface coal mine. These CCRs consist of fly ash, bottom ash, and gypsum.
CCRs from the operation of SJGS were used in the reclamation of a surface coal mine. These CCRs consist of fly ash, bottom ash, and gypsum.
PNMR 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 PNMR.
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.
Federal GHG reduction measures setting emission guidelines remain in a state of uncertainty. Therefore, PNMR is dealing with an uncertain regulatory and policy environment and increased scrutiny and changing stakeholder expectations with respect to environmental and climate change programs, judicial decisions, and international accords.
Federal GHG reduction measures setting standards and emission guidelines, and climate-related disclosure rules remain in a state of uncertainty. Therefore, TXNM is dealing with an uncertain regulatory and policy environment and increased scrutiny and changing stakeholder expectations with respect to environmental and climate change programs, judicial decisions, and international accords.
PNM currently depends on fossil-fueled generation for 43.3% of its electricity. As discussed under Climate Change Issues, this type of generation could be subject to 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.
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.
PNM has interests in a nuclear power plant, two coal-fired power plants, and several natural gas-fired power plants and is obligated to pay its share of the costs to decommission these facilities. PNM is also obligated to pay for its share of the costs of reclamation of the mines that supply coal to the coal-fired power plants.
PNM has interests in a nuclear power plant, a coal-fired power plant, and several natural gas-fired power plants and is obligated to pay its share of the costs to decommission these facilities. PNM is also obligated to pay for its share of the costs of reclamation of the mine that supplies coal to the coal-fired power plant.
Difficulties in obtaining permits and rights-of-way could negatively impact PNM’s results of operations. PNM’s ability to execute planned operational activities and projects may be inhibited by difficulties in obtaining permits and rights-of-way and other delays. Many of PNM’s transmission and distribution lines cross federal, state, and tribal lands.
PNM’s ability to execute planned operational activities and projects may be inhibited by difficulties in obtaining permits and rights-of-way and other delays. Many of PNM’s transmission and distribution lines cross federal, state, and tribal lands.
Disruption in the credit and capital markets may impact the Company’s strategy and ability to raise capital. PNMR 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 - 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.
Further, the ability of PNMR to declare dividends depends upon the extent to which cash flows will support dividends, the Company’s financial circumstances and performance, economic conditions in the U.S. and in the Company’s service areas, A - 19 Table of Contents future growth plans and the related capital requirements, and other business considerations.
Further, the ability of TXNM to declare dividends depends upon the extent to which cash flows will support dividends, the Company’s financial circumstances and performance, economic conditions in the U.S. and in the Company’s service areas, future growth plans and the related capital requirements, and other business considerations.
If PNMR or its operating subsidiaries are not able to access capital at competitive rates, or at all, PNMR’s ability to finance capital requirements and implement its strategy will be limited.
If TXNM or its operating subsidiaries are not able to access capital at competitive rates, or at all, TXNM’s ability to finance capital requirements and implement its strategy will be limited.
As discussed in MD&A - Liquidity and Capital Resources, all of PNMR, PNM, and TNMP debt ratings are investments grade. Downgrades or changing requirements could result in increased borrowing costs due to higher interest rates on current borrowings or future financings, a smaller potential pool of investors, and decreased funding sources.
As discussed in MD&A - Liquidity and Capital Resources, all of TXNM, PNM, and TNMP’s senior debt ratings are investment grade. Downgrades or changing requirements could result in increased borrowing costs due to higher interest rates on current borrowings or future financings, a smaller potential pool of investors, and decreased funding sources.
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.
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.
PNM maintains trust funds designed to provide adequate financial resources for decommissioning PVNGS and SJGS, and for reclamation of the coal mine that served SJGS and continue to serve Four Corners at the end of their expected lives.
PNM maintains trust funds designed to provide adequate financial resources for decommissioning PVNGS and SJGS, and for reclamation of the coal mine that served SJGS and continues to serve Four Corners at the end of its expected life.
PNMR’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 ESG matters and reducing GHG, which may impose significant compliance costs and may significantly limit or affect their operations and financial results.
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.
If that occurs, PNM may see opposition to recovery of these additional costs and could experience a lag between when costs are incurred and when regulators permit recovery in customers’ rates. These situations could have negative impacts on results of operations and cash flows.
If that occurs, PNM may see opposition to recovery of these additional costs and could experience a lag between when costs are incurred and when regulators permit recovery in customers’ rates. These situations could have negative impacts on results of operations and cash flows. Difficulties in obtaining permits and rights-of-way could negatively impact PNM’s results of operations.
The Company’s financial position, results of operations, and cash flows could be negatively impacted if the current mine operator were to default on its obligations to reclaim the San Juan mine and PNMR is required to perform under the letter of credit support agreement.
The Company’s financial position, results of operations, and cash flows could be negatively impacted if the current mine operator were to default on its obligations to reclaim the San Juan mine and TXNM is required to perform under the letter of credit support agreement. TXNM and its subsidiaries’ substantial indebtedness could adversely affect its financial condition.
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 2024-2028 to be $6.1 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 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 2024-2028 to be $6.1 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.
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 battery storage facilities. PNM is obligated to supply power to retail customers.
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.
The pension plans’ targeted asset allocation is 50% liability matching fixed and 50% return generating income, which includes alternative income. The Company uses a strategy, known as Liability Driven Investing, which seeks to select investments that match the liabilities of the pension plans.
The PNM and TNMP Pension Plans have targeted asset allocations of 50% and 70% liability matching fixed and 50% and 30% return generating income, which includes alternative income. The Company uses a strategy, known as Liability Driven Investing, which seeks to select investments that match the liabilities of the pension plans.
If the NMPRC does not authorize appropriate recovery of any of the costs discussed above, including undepreciated generating resources at the A - 12 Table of Contents time those resources are removed from service and fails to authorize recovery of the costs of obtaining power to replace those resources, PNM’s financial position, results of operations, and cash flows could be negatively impacted.
If the regulators do not authorize appropriate recovery of any of the costs discussed above, including undepreciated generating resources at the time those resources are removed from service and fails to authorize recovery of the costs of obtaining power to replace those resources, PNM and TNMP’s financial position, results of operations, and cash flows could be negatively impacted.
PNMR’s ability to meet its financial obligations and to pay dividends on its common stock primarily depends on the net earnings and cash flows of PNM and TNMP and their capacity to pay upstream dividends or distributions.
TXNM is a holding company and has no operations of its own. TXNM’s ability to meet its financial obligations and to pay dividends on its common stock primarily depends on the net earnings and cash flows of PNM and TNMP and their capacity to pay upstream dividends or distributions.
Further, the Company’s use of technologies manufactured by third parties may be subject to espionage activities, and cyber-attack of the third party resulting in losses outside of the control of the Company.
Further, the Company’s use of technologies manufactured by third parties, including applications with GenAI capabilities, may be subject to espionage activities, and cyber-attack of the third party resulting in the loss of confidentiality, privacy, integrity of data, and other losses outside of the control of the Company.
Southwest region and Texas could contribute to wildfires in or near PNM’s and TNMP’s service territories. PNM and TNMP take proactive steps to mitigate wildfire risk. However, wildfire risk is always present and PNM and TNMP could be held liable for damages incurred as a result of wildfires caused, or allegedly caused, by their transmission and distribution systems.
However, wildfire risk is always present and PNM and TNMP could be held liable for damages incurred as a result of wildfires caused, or allegedly caused, by their transmission and distribution systems.
These factors include changing customer behaviors, including increased emphasis on energy efficiency measures and utilization of alternative sources of power, rate design that is not driven by economics, which could influence customer behavior, unfavorable economic conditions, reduced new sources of demand, and unpredictable weather patterns.
At the same time costs are increasing, there are factors placing downward pressure on the demand for power, thereby reducing customer usage. These factors include changing customer behaviors, increased emphasis on energy efficiency measures, utilization of alternative sources of power, rate design that is not driven by economics, unfavorable economic conditions, reduced new sources of demand, and unpredictable weather patterns.
Under the Biden Administration, EPA and other federal agencies have sought to expand climate change regulations and work to aggressively reduce GHG emissions. 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.
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.
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.
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.
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.
Failure to comply with applicable environmental laws and regulations also could result in civil liability arising out of government enforcement actions or private claims.
The NDT investment portfolio maintains a target of 80% fixed income and 20% equity securities. The current asset allocation exposes the NDT investment portfolio to market and macroeconomic factors.
In 2024, the Corporate Investment Committee approved a revised target for the NDT investment portfolio of 30% fixed income, 45% equity securities, and 25% alternative investments. The Company is in process of implementing the revised strategy. The current asset allocation exposes the NDT investment portfolio to market and macroeconomic factors.
In addition, wildfires could cause damage to PNM’s and TNMP’s assets that could result in loss of service to customers or make it difficult to supply power in sufficient quantities to meet customer needs. These events could have negative impacts on the Company’s financial position, results of operations, and cash flows.
In addition, wildfires could cause damage to PNM’s and TNMP’s assets that could result in loss of service to customers or make it difficult to supply power in sufficient quantities to meet customer needs. Wildfire avoidance measures, such as intentional power interruptions, also may lead to customer claims for lost service, business interruption, and other injuries.
This adverse outcome in the 2024 Rate Change could negatively impact PNM’s financial position, results of operation, and cash flows. See Note 17.
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.
Removed
At the same time costs are increasing, there are factors placing downward pressure on the demand for power, thereby reducing customer usage.
Added
Under the Biden Administration, EPA and other federal agencies have sought to expand climate change regulations and work to aggressively reduce GHG emissions.
Removed
In December 2022, PNM filed the 2024 Rate Change that included investments in transmission and distribution infrastructure for the six years between 2019 through 2024 as primary drivers of PNM’s identified revenue deficiency and a request for an ROE of 10.25%. The revenue deficiency is largely offset by cost reductions resulting from PNM’s transition to lower-cost, clean generation resources.
Added
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.

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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 Information Systems Security Professional, Certified Information Systems Auditor and Certified Information Security Manager. In addition, the CIO has a M.S. in Information Systems.
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.
These efforts include a wide range of activities, A - 21 Table of Contents 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.
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.
As of December 31, 2023, 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, 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.
The Cybersecurity Program utilizes a risk-based approach and includes written cybersecurity and information technology policies and procedures, including a cybersecurity incident response plan. The Company’s Cybersecurity Program is led by its Vice President and Chief Information Officer (“CIO”), who oversees the management and development of all business technology and security for the Company and its subsidiaries.
The Cybersecurity Program utilizes a risk-based approach and includes written cybersecurity and information technology policies and procedures, including a cybersecurity incident response plan. The Company’s Cybersecurity Program is led by its Vice President and Chief Information Officer (“CIO”), who oversees the management and development of all business technology and cyber and physical security for the Company and its subsidiaries.
Risks from cybersecurity threats The information set forth under Item 1A, “Risk Factors” — “ PNMR, PNM, and TNMP are subject to information security breaches and risks of unauthorized access to their information and operational technology systems as well as physical threats to assets. ” on page A-16 of this Annual Report on Form 10-K is hereby incorporated by reference.
Risks from cybersecurity threats The information set forth under Item 1A, “Risk Factors” — “ TXNM, PNM, and TNMP are subject to information security breaches and risks of unauthorized access to their information and operational technology systems as well as physical threats to assets. ” on page A-14 of this Annual Report on Form 10-K is hereby incorporated by reference.
The CIO is also responsible for federal reliability standards compliance, critical infrastructure protection and the supply chain function.
The CIO is also responsible for federal reliability standards compliance, critical infrastructure protection and crisis management resilience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePNM owns and leases communication, office and other equipment, office space, A - 22 Table of Contents vehicles, 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.
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.
ITEM 2. PROPERTIES PNMR The significant properties owned by PNMR include those owned by PNM and TNMP and are disclosed below. PNM See Sources of Power in Part I, Item 1 Business above for information on PNM’s owned and leased capacity in electric generating stations.
ITEM 2. PROPERTIES TXNM The significant properties owned by TXNM include those owned by PNM and TNMP and are disclosed below. PNM See Sources of Power in Part I, Item 1 Business above for information on PNM’s owned and leased capacity in electric generating stations.
TNMP also owns and leases vehicles, service facilities, and office locations throughout its service territory. As of December 31, 2023, TNMP owned 1,026 miles of overhead electric transmission lines, 7,328 miles of overhead distribution lines, 1,516 miles of underground distribution lines, and 128 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, 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.
As of December 31, 2023, PNM owned, or jointly owned, 3,428 miles of electric transmission lines, 5,768 miles of distribution overhead lines, 6,098 miles of underground distribution lines (excluding street lighting), and 251 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, 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNote 16 • Cooling Water Intake Structures • Santa Fe Generating Station Note 17 • PNM – 2020 Decoupling • PNM – Integrated Resource Plan • PNM – Grid Modernization Application • PNM – Community Solar Act • TNMP – Transmission Cost of Service Rates • TNMP – Periodic Distribution Rate Adjustment
Biggest changeNote 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
ITEM 3. LEGAL PROCEEDINGS See Note 16 and Note 17 for information related to the following matters for PNMR, PNM, and TNMP, incorporated in this item by reference.
ITEM 3. LEGAL PROCEEDINGS See Note 16 and Note 17 for information related to the following matters for TXNM, PNM, and TNMP, incorporated in this item by reference.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeEden 57 Senior Vice President, Chief Financial Officer and Treasurer May 2022 Vice President and Treasurer February 2021 P. V. Apodaca 72 Senior Vice President, General Counsel, and Secretary January 2010 A - 23 Table of Contents PART II
Biggest changeIverson 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
Collawn 65 Chairman and Chief Executive Officer May 2022 Chairman, President, and Chief Executive Officer January 2012 J. D. Tarry 53 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 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.
ITEM 4. MINE SAFETY DISCLOSURES Not Applicable. SUPPLEMENTAL ITEM – INFORMATION ABOUT EXECUTIVE OFFICERS OF PNM RESOURCES, INC. All officers are elected annually by the Board of PNMR. Executive officers, their ages as of February 16, 2024 and offices held with PNMR 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 14, 2025 and offices held for the past five years are as follows: Name Age Office Initial Effective Date P. K.
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Eden 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere have been no issuer purchases of equity securities. All of PNM’s and TNMP’s common stock is owned by PNMR and is not listed for trading on any stock exchange. 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.
Biggest changeOn 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.
PNMR 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 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.
ITEM 5. MARKET FOR PNMR’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES PNMR’s common stock is traded on the New York Stock Exchange under the symbol “PNM”. Dividends on PNMR’s common stock are declared by its Board.
ITEM 5. MARKET FOR TXNM’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES TXNM’s common stock is traded on the New York Stock Exchange under the symbol “TXNM”. Dividends on TXNM’s common stock are declared by its Board.
The Board declared dividends on common stock considered to be for the second quarter of $0.3675 per share in August 2023 and $0.3475 per share in August 2022. The Board declared dividends on common stock considered to be for the third quarter of $0.3675 per share in September 2023 and $0.3475 per share in September 2022.
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.
In December 2022, the Board increased the quarterly dividend from $0.3475 to $0.3675 per share. In December 2023, the Board increased the quarterly dividend from $0.3675 to $0.3875 per share.
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.
Quarterly cash dividends were paid on PNM’s outstanding cumulative preferred stock at the stated rates during 2023 and 2022. PNMR and TNMP do not have any preferred stock outstanding. Sales of Unregistered Securities None. ITEM 6. [RESERVED]
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.
PNMR 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 February 16, 2024, there were 6,941 holders of record of PNMR’s common stock. All of the outstanding common stock of PNM and TNMP is held by PNMR.
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.
See Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Preferred Stock As of December 31, 2023, PNM has 115,293 shares of cumulative preferred stock outstanding. PNM is not aware of any active trading market for its cumulative preferred stock.
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. See Part III, Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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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 - 56 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA B - 1
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

Item 7. Management's Discussion & Analysis

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

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Biggest changeOperating results – 2023 compared to 2022 The following table summarizes the significant changes to gross margin: Year Ended December 31, 2023 Change Gross margin: (In millions) Utility margin (see below) $ (162.5) Depreciation and amortization (see below) 3.2 Lower plant maintenance costs primarily due to the retirement of SJGS, the disposition of the PVNGS Unit 1 Leased Interest, and lower costs at gas fired plants partially offset by higher costs at Four Corners and the remaining interests in PVNGS 57.3 Higher employee related, outside services, and vegetation management expenses, excluding administrative costs (4.6) Other (0.4) Net Change $ (107.0) A - 37 Table of Contents The following table summarizes the significant changes to utility margin: Year Ended December 31, 2023 Change Utility margin: (In millions) Retail customer usage/load – Weather normalized retail KWh sales decreased 1.0% for residential customers and 4.6% for industrial customers, which was partially offset by increased sales to commercial customers of 0.2% $ (0.9) Weather – Primarily due to hotter weather in the third quarter of 2023 8.8 Transmission – Increase in revenues primarily due to higher market prices and higher volumes partially offset by the FERC Order 864 Settlement (Note 17) 4.7 Unregulated margin – Decreases due to the retirement of SJGS Unit 4 in 2022 (10.3) Capacity arrangements – New agreements in 2023, including battery storage (11.8) Rate refunds – SJGS abandonment settlement agreement partially offset by NMPRC ordered rate refunds in 2022 (Note 17) (127.5) 2024 Rate Change – PVNGS Unit 1 Leased Interest regulatory liability (Note 17) (38.4) FERC ordered time-value refunds in 2022 (Note 17) 8.1 Rate riders and other – Includes renewable energy, FPPAC, energy efficiency, energy transition charge, and transportation electrification riders 4.8 Net Change $ (162.5) 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, 2023 Change Operating expenses: (In millions) Lower plant maintenance and administrative costs primarily due to the retirement of SJGS, the disposition of the PVNGS Unit 1 Leased Interest, and lower costs at Four Corners and gas fired plants partially offset by higher costs related to the remaining interests in PVNGS $ (58.5) Higher employee related, outside services, and vegetation management expenses 6.3 Higher regulatory disallowances and restructuring costs, primarily resulting from the 2024 Rate Change (Note 17) 69.9 Other 1.3 Net Change $ 19.0 Depreciation and amortization: Increased utility plant in service $ 6.8 Lower depreciation due to the retirement of SJGS (8.0) Lower depreciation due to the disposition of the PVNGS Unit 1 Leased Interest (3.0) Other 1.0 Net Change $ (3.2) Other income (deductions): Increased performance on investment securities in the NDT and coal mine reclamation trusts $ 97.6 Higher interest income and lower trust expenses related to investment securities in the NDT, coal mine reclamation and SJGS decommissioning trusts 4.8 Other 1.2 Net Change $ 103.6 A - 38 Table of Contents Year Ended December 31, 2023 Change Interest charges: (In millions) Higher interest on term loan $ (7.4) Higher interest on short-term borrowings (8.3) Issuance of SUNs in April 2023 (7.6) Higher interest on transmission interconnections and other customer deposit arrangements (4.3) Interest related to ETBC I issuance of Securitized Bonds in November 2023 (2.5) Higher debt AFUDC 5.8 Other (1.2) Net Change $ (25.5) Income (taxes): Lower segment earnings before income taxes $ 26.3 Higher tax credits in 2023 5.4 Lower amortization of federal excess deferred income taxes (Note 18) (0.2) Impacts of the closure of SJGS in 2022 3.5 Lower uncertain tax positions 1.1 Other (0.1) Net Change $ 36.0 TNMP Non-GAAP Financial Measures TNMP defines utility margin as electric operating revenues less cost of energy, which consists of costs charged by third-party transmission providers.
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.
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 by 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 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.
PNM also recently joined the Electric Power Research Institute (“EPRI”) Climate READi (Resilience and Adaptation) Initiative, a three-year initiative to develop a comprehensive and consistent approach to physical climate risk and facilitate the analysis and application of appropriate climate data among all stakeholders to enhance the planning, design and operation of a resilient power system.
PNM also joined the Electric Power Research Institute (“EPRI”) Climate READi (Resilience and Adaptation) Initiative, a three-year initiative to develop a comprehensive and consistent approach to physical climate risk and facilitate the analysis and application of appropriate climate data among all stakeholders to enhance the planning, design and operation of a resilient power system.
However, before the DC Circuit could issue an opinion regarding either the Carbon Pollution Standards or the Clean Power Plan, President Trump took office and his administration asked the court to hold both cases in abeyance while the rules were re-evaluated, which the court granted.
However, before the DC Circuit could issue an opinion regarding either the Carbon Pollution Standards or the Clean Power Plan, President Trump took office in 2017, and his administration asked the court to hold both cases in abeyance while the rules were re-evaluated, which the court granted.
As a result of the President’s notice to the United Nations, the U.S. officially withdrew from the Paris Agreement on November 4, 2020. On January 20, 2021, President Biden signed an instrument that will allow the United States to rejoin the Paris Agreement on Climate Change.
As a result of the President’s notice to the United Nations, the U.S. officially withdrew from the Paris Agreement on November 4, 2020. On January 20, 2021, President Biden signed an instrument that will allow the U.S. to rejoin the Paris Agreement on Climate Change.
These actions triggered new GHG permitting requirements for stationary sources, including the energy industry, under the Prevention of Significant Deterioration (“PSD”) and Title V programs, although the US Supreme Court held the CAA does not authorize EPA to require a source to obtain a PSD permit solely on the basis of its potential GHG emissions.
These actions triggered new GHG permitting requirements for stationary sources, including the energy industry, under the Prevention of Significant Deterioration (“PSD”) and Title V program, although the US Supreme Court held the CAA does not authorize EPA to require a source to obtain a PSD permit solely on the basis of its potential GHG emissions.
PNMR and its utilities are aware of the important roles they play in enhancing economic vitality in their service territories. Management believes that maintaining strong and modern electric infrastructure is critical to ensuring reliability and supporting economic growth. When contemplating expanding or relocating their operations, businesses consider energy affordability and reliability to be important factors.
TXNM and its utilities are aware of the important roles they play in enhancing economic vitality in their service territories. Management believes that maintaining strong and modern electric infrastructure is critical to ensuring reliability and supporting economic growth. When contemplating expanding or relocating their operations, businesses consider energy affordability and reliability to be important factors.
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, 2023. 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, 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.
PNMR 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 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.
In the unlikely event that the contingent requirements were to be triggered, PNMR, PNM, or TNMP could be required to provide security, immediately pay outstanding obligations, or be prevented from drawing on unused capacity under certain credit agreements. The most significant consequences resulting from these contingent requirements are detailed in the discussion below.
In the unlikely event that the contingent requirements were to be triggered, TXNM, PNM, or TNMP could be required to provide security, immediately pay outstanding obligations, or be prevented from drawing on unused capacity under certain credit agreements. The most significant consequences resulting from these contingent requirements are detailed in the discussion below.
No impairments were indicated in the Company’s annual goodwill testing, which was performed as of April 1, 2023. 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, 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.
The program focused on characterizing and analyzing the relationship of individual electric utility company’s carbon emissions and global temperature goals. Activities include analyzing the scientific understanding of global emissions pathways that are consistent with limiting global warming and providing insight to assist companies in developing approaches to climate scenario planning.
The program focused on characterizing and analyzing the relationship of individual electric utility company’s carbon emissions and global temperature goals. Activities included analyzing the scientific understanding of global emissions pathways that are consistent with limiting global warming and providing insight to assist companies in developing approaches to climate scenario planning.
Decommissioning costs are based on site-specific estimates, which are updated periodically and involve numerous judgments and assumptions, including estimates of future decommissioning costs at current price levels, inflation rates, and discount rates. Changes in these estimates could significantly impact PNMR’s and PNM’s financial position, results of operations, and cash flows.
Decommissioning costs are based on site-specific estimates, which are updated periodically and involve numerous judgments and assumptions, including estimates of future decommissioning costs at current price levels, inflation rates, and discount rates. Changes in these estimates could significantly impact TXNM’s and PNM’s financial position, results of operations, and cash flows.
PNMR recognizes its responsibility to support programs and organizations that enrich the quality of life across its service territories and seeks opportunities to further demonstrate its commitment in these areas as needs arise. In response to community needs, PNMR partners with other corporate funders to support nonprofits and small businesses.
TXNM recognizes its responsibility to support programs and organizations that enrich the quality of life across its service territories and seeks opportunities to further demonstrate its commitment in these areas as needs arise. In response to community needs, TXNM partners with other corporate funders to support nonprofits and small businesses.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations for PNMR is presented on a combined basis, including certain information applicable to PNM and TNMP. This report uses the term “Company” when discussing matters of common applicability to PNMR, PNM, and TNMP.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations for TXNM is presented on a combined basis, including certain information applicable to PNM and TNMP. This report uses the term “Company” when discussing matters of common applicability to TXNM, PNM, and TNMP.
The Company utilizes these credit facilities and cash flows from operations to provide funds for both construction and operational expenditures. PNMR also has intercompany loan agreements with each of its subsidiaries. For additional details regarding the Company’s revolving credit facilities, see Note 7.
The Company utilizes these credit facilities and cash flows from operations to provide funds for both construction and operational expenditures. TXNM also has intercompany loan agreements with each of its subsidiaries. For additional details regarding the Company’s revolving credit facilities, see Note 7.
Each of the Company’s revolving credit facilities and term loans contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the PNMR agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%.
Each of the Company’s revolving credit facilities and term loans contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the TXNM agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%.
The MD&A for PNM and TNMP is presented as permitted by Form 10-K General Instruction I (2) as amended by the FAST Act. For additional information related to the earliest of the two years presented please refer to the Company’s 2022 Annual Report on Form 10-K.
The MD&A for PNM and TNMP is presented as permitted by Form 10-K General Instruction I (2) as amended by the FAST Act. For additional information related to the earliest of the two years presented please refer to the Company’s 2023 Annual Report on Form 10-K.
Scheduled payments on Securitized Bonds Securitized Bonds are subject to fixed, scheduled, principal and interest payment arrangements that are paid semi-annually in accordance with the terms of the agreement and are funded by the energy transition charge billed to customers. See Note 16.
Scheduled payments on ETBC I Securitized Bonds The ETBC I Securitized Bonds are subject to fixed, scheduled, principal and interest payment arrangements that are paid semi-annually in accordance with the terms of the agreement and are funded by the energy transition charge billed to customers. See Note 16.
Based on the analysis performed for the PNM and TNMP reporting units in 2023, 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 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.
Off-Balance Sheet Arrangements PNMR has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Off-Balance Sheet Arrangements TXNM has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
The PNMR Revolving Credit Facility, PNM Revolving Credit Facility, PNM New Mexico Credit Facility, and the TNMP Revolving Credit Facility contain “ratings triggers,” for pricing purposes only. If PNMR, PNM, or TNMP is downgraded or upgraded by the ratings agencies, the result would be an increase or decrease in interest cost.
The TXNM Revolving Credit Facility, PNM Revolving Credit Facility, PNM New Mexico Credit Facility, and the TNMP Revolving Credit Facility contain “ratings triggers,” for pricing purposes only. If TXNM, PNM, or TNMP is downgraded or upgraded by the ratings agencies, the result would be an increase or decrease in interest cost.
See Results of Operations above. Certain changes in assets and liabilities resulting from normal operations, including the effects of the seasonal nature of the Company’s operations, also impact operating cash flows. Cash Flows from Investing Activities The changes in PNMR’s cash flows from investing activities relate primarily to changes in utility plant additions.
See Results of Operations above. Certain changes in assets and liabilities resulting from normal operations, including the effects of the seasonal nature of the Company’s operations, also impact operating cash flows. Cash Flows from Investing Activities The changes in TXNM’s cash flows from investing activities relate primarily to changes in utility plant additions.
A - 35 Table of Contents RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto. Trends and contingencies of a material nature are discussed to the extent known.
A - 33 Table of Contents RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and Notes thereto. Trends and contingencies of a material nature are discussed to the extent known.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in accordance with GAAP requires management to apply accounting policies and to make estimates and judgments that best provide the framework to report the results of operations and financial position for PNMR, PNM, and TNMP.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in accordance with GAAP requires management to apply accounting policies and to make estimates and judgments that best provide the framework to report the results of operations and financial position for TXNM, PNM, and TNMP.
Of broader significance in administrative law, the Court’s opinion expressly invoked the major question doctrine, which requires rules involving issues of “vast economic or political significance” to be supported by clear statutory authorization.
Of broader significance in administrative law, the Court’s opinion expressly invoked the major questions doctrine, which requires rules involving issues of “vast economic or political significance” to be supported by clear statutory authorization.
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.
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.
In addition, PNM’s Time-of-Day pilot approved in the 2024 Rate Change final order incentivizes customers, through price signals, to use energy during the day when renewable generation is abundant. The Infrastructure Investment and Jobs Act, also commonly known as the Bipartisan Infrastructure Law (“BIL”), was signed into law on November 15, 2021.
In addition, PNM’s Time-of-Day pilot approved in the 2024 Rate Change final order incentivizes customers, through price signals, to use energy during the day when renewable generation is abundant. The Infrastructure Investment and Jobs Act, also commonly known as the Bipartisan Infrastructure Law (“BIL”), was signed into law in 2021.
While the Company has not conducted an independent 2 Degree Scenario analysis, our commitment to becoming 100% A - 53 Table of Contents emissions-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 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.
Segment Information The following discussion is based on the segment methodology that PNMR’s management uses for making operating decisions and assessing performance of its various business activities. See Note 2 for more information on PNMR’s operating segments.
Segment Information The following discussion is based on the segment methodology that TXNM’s management uses for making operating decisions and assessing performance of its various business activities. See Note 2 for more information on TXNM’s operating segments.
Nuclear decommissioning costs are based on estimates of the costs for removing all radioactive and other structures at PVNGS. AROs, including nuclear decommissioning costs, are discussed in Note 15. Nuclear decommissioning costs represent approximately 72% of PNM’s ARO liability.
Nuclear decommissioning costs are based on estimates of the costs for removing all radioactive and other structures at PVNGS. AROs, including nuclear decommissioning costs, are discussed in Note 15. Nuclear decommissioning costs represent approximately 76% of PNM’s ARO liability.
Interest on long-term debt, excluding 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.
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.
The ability of PNMR to pay dividends on its common stock is dependent upon the ability of PNM and TNMP to pay dividends to PNMR. See Note 6 for a discussion of regulatory and contractual restrictions on the payment of dividends by PNM and TNMP.
The ability of TXNM to pay dividends on its common stock is dependent upon the ability of PNM and TNMP to pay dividends to TXNM. See Note 6 for a discussion of regulatory and contractual restrictions on the payment of dividends by PNM and TNMP.
Construction expenditures also include investments proposed in PNM’s Grid Modernization Application. 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 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.
Contingent Provisions of Certain Obligations PNMR, PNM, and TNMP have a number of debt obligations and other contractual commitments that contain contingent provisions. Some of these, if triggered, could affect the liquidity of the Company.
Contingent Provisions of Certain Obligations TXNM, PNM, and TNMP have a number of debt obligations and other contractual commitments that contain contingent provisions. Some of these, if triggered, could affect the liquidity of the Company.
The PNMR facility requires that PNMR is to maintain a debt-to-capitalization ratio of less than or equal to 70%. The debt-to-capitalization ratio requirement remains at less than or equal to 65% for the PNM and TNMP facilities.
The TXNM facility requires that TXNM is to maintain a debt-to-capitalization ratio of less than or equal to 70%. The debt-to-capitalization ratio requirement remains at less than or equal to 65% for the PNM and TNMP facilities.
Thresholds for the number of countries necessary to ratify or accede to the Paris Agreement and total global GHG percentage were achieved on October 5, 2016 and the Paris Agreement entered into force on November 4, 2016. On June 1, 2017, President Trump announced that the U.S. would withdraw from the Paris Agreement.
Thresholds for the number of countries necessary to ratify or accede to the Paris Agreement and total global GHG percentage were achieved on October 5, 2016 and the Paris Agreement entered into force on November 4, 2016. In 2017, President Trump announced that the U.S. would withdraw from the Paris Agreement.
A - 48 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.
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.
PNM has calculated GHG reductions that would result from scenarios that assume PNM’s retirement of its share of the SJGS in 2022 and exiting Four Corners by 2031 and PNM has set a goal to have a 100% emissions-free generating portfolio by 2040.
PNM has calculated GHG reductions that would result from scenarios that capture PNM’s retirement of its share of the SJGS in 2022 and assume exiting Four Corners in 2031 and PNM has set a goal to have a 100% carbon-free generating portfolio by 2040.
In cases where there is no clear statement of authority, courts need not defer to the A - 51 Table of Contents agency’s statutory interpretation on “major questions.” The decision sets legal precedent for future rulemakings by EPA and other federal regulatory agencies whereby the agency’s authority may be limited based upon similar reasoning.
In cases where there is no clear statement of authority, courts need not defer to the agency’s statutory interpretation on “major questions.” The decision sets legal precedent for future rulemakings by EPA and other federal regulatory agencies whereby the agency’s authority may be limited based upon similar reasoning.
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, 2023 and February 16, 2024, 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, 2024 and February 14, 2025, the Company was in compliance with its debt covenants.
TNMP’s high-performance homes residential new construction energy efficiency program has earned the Energy Star Partner of the Year award for 7 years, including 5 years receiving the Sustained Excellence Award, recognizing long-term commitment to fighting climate change and protecting public health through energy efficiency.
TNMP’s high-performance homes residential new construction energy efficiency program has earned the Energy Star Partner of the Year award for 8 years, including 6 years receiving the Sustained Excellence Award, recognizing long-term commitment to fighting climate change and protecting public health through energy efficiency.
A - 50 Table of Contents Other Climate Change Risks PNM’s generating stations are located in the arid southwest. Access to water for cooling for some of these facilities is critical to continued operations. Forecasts for the impacts of climate change on water supply in the southwest range from reduced precipitation to changes in the timing of precipitation.
Other Climate Change Risks PNM’s generating stations are located in the arid southwest. Access to water for cooling for some of these facilities is critical to continued operations. Forecasts for the impacts of climate change on water supply in the southwest range from reduced precipitation to changes in the timing of precipitation.
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 2024-2028 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 2025-2029 period.
PNM will continue to monitor the United States’ participation in the Paris Agreement and other parties’ involvement in these types of international accords, but the potential impact that such accords may have on the Company cannot be determined at this time.
PNM will continue to monitor the United States’ move to withdraw from the Paris Agreement and other parties’ involvement in these types of international accords, but the potential impact that such accords may have on the Company cannot be determined at this time.
PNM’s capital initiatives for investments in transmission and distribution infrastructure to deliver clean energy, enhance customer satisfaction, and increase grid resilience. Construction expenditures also include investments proposed in PNM’s Grid Modernization Application.
PNM’s capital initiatives include investments in transmission and distribution infrastructure to deliver clean energy, enhance customer satisfaction, and increase grid resilience. Construction expenditures also include investments proposed in PNM’s Grid Modernization Application and TNMP’s SRP.
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 2023, 20 of the Company’s 21 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 2024, 21 of the Company’s 22 facilities met or exceeded the solid waste diversion goal of a 65% diversion rate.
These estimates are subject to change due to underlying variables, including changes in PNM’s generation portfolio, supplier’s ability to meet contractual in-service dates and complex relationships between several factors. See additional discussion of these resources in Notes 16 and 17. PNM also has a customer distributed solar generation program that represented 281.6 MW at December 31, 2023.
These estimates are subject to change due to underlying variables, including changes in PNM’s generation portfolio, supplier’s ability to meet contractual in-service dates and complex relationships between several factors. See additional discussion of these resources in Notes 16 and 17. PNM also has a customer distributed solar generation program that represented 308.5 MW at December 31, 2024.
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 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, owned by the 19 pueblo nations of New Mexico.
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.
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.
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.
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 2024 – 2028 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 2025 – 2029 period. This could include new debt and/or equity issuances.
PNM also leverages social media in communications with customers on various topics such as education, outage alerts, safety, customer service, and PNM’s community partnerships in philanthropic projects. As discussed above, PNMR’s corporate website includes a dedicated section providing additional information regarding the Company’s commitment to ESG principles and other sustainability efforts.
PNM also leverages social media in communications with customers on various topics such as education, outage alerts, safety, customer service, and PNM’s community partnerships in philanthropic projects. As discussed above, TXNM’s corporate website includes a dedicated section providing additional information regarding the Company’s commitment to sustainability.
PNMR projects that its consolidated capital requirements, consisting of construction expenditures and dividends, will total $6.8 billion for 2024-2028. These construction expenditures include TNMP’s investments to support continued high growth in system demand across TNMP’s service territories and growing encouragement for infrastructure investments from the Texas legislature to support grid reliability and resilience.
TXNM projects that its consolidated capital requirements, consisting of construction expenditures and dividends, will total $8.6 billion for 2025 - 2029. These construction expenditures include TNMP’s investments to support continued high growth in system demand across TNMP’s service territories and growing encouragement for infrastructure investments from the Texas legislature to support grid reliability and resilience.
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.
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.
PNM’s environmental focus is in three key areas: • Developing strategies to provide reliable and affordable power while transitioning to a 100% emissions-free generating portfolio by 2040 • Preparing PNM’s system to meet New Mexico’s increasing renewable energy requirements as cost-effectively as possible • Increasing energy efficiency participation PNMR’s corporate website (www.pnmresources.com) includes a dedicated section providing key environmental and other sustainability information related to PNM’s and TNMP’s operations and other information that collectively demonstrates the Company’s commitment to ESG principles.
PNM’s environmental focus is in three key areas: • Developing strategies to provide reliable and affordable power while transitioning to a 100% carbon-free generating portfolio by 2040 • Preparing PNM’s system to meet New Mexico’s increasing renewable energy requirements as cost-effectively as possible • Increasing energy efficiency participation TXNM’s corporate website (www.txnmenergy.com) includes a dedicated section providing key environmental and other information related to PNM’s and TNMP’s operations, including information that collectively demonstrates the Company’s commitment to sustainability.
The instrument was deposited with the United Nations on January 21, 2021, and the United States officially became a party to the Agreement on February 19, 2021.
The instrument was deposited with the United Nations on January 21, 2021, and the U.S. officially became a party to the Agreement on February 19, 2021.
PNMR 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. A - 28 Table of Contents PNMR targets a dividend payout ratio in the 50% to 60% range of its ongoing earnings.
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. TXNM targets a dividend payout ratio in the 50% to 60% range of its ongoing earnings.
Electric Vehicles PNMR is building upon its ESG goal of 100% emissions-free generation by 2040 with plans for additional emissions reductions through the electrification of its vehicle fleet. Growing the number of electric vehicles within the Company’s fleet will benefit the environment and lower fuel costs furthering the commitment to ESG principles.
Electric Vehicles TXNM is building upon its goal of 100% carbon-free generation by 2040 with plans for additional emissions reductions through the electrification of its vehicle fleet. Growing the number of electric vehicles within the Company’s fleet will benefit the environment and lower fuel costs furthering the commitment to sustainability.
PNM shutdown SJGS Units 2 and 3 as part of its strategy to address the regional haze requirements of the CAA.
PNM shut down SJGS Units 2 and 3 as part of its strategy to address the regional haze requirements of the CAA.
The ETA provides for a transition from fossil-fueled generating resources to renewable and other carbon-free resources by allowing utilities to issue Securitized Bonds, or “energy transition bonds,” related to the retirement of certain coal-fired generating facilities to qualified investors. See additional discussion of the ETA in Note 16 and the issuance of Securitized Bonds in Note 7.
The ETA provides for a transition from fossil-fueled generating resources to renewable and other carbon-free resources by allowing utilities to issue Securitized Bonds related to the retirement of certain coal-fired generating facilities to qualified investors. See additional discussion of the ETA in Notes 16 and 17 and the issuance of the ETBC I Securitized Bonds in Note 7.
These grants help nonprofits innovate or sustain programs to grow and develop their mission, develop and implement environmental programs, and provide educational opportunities. The PNM Resources Foundation continued to expand its matching and volunteer grant programs and the annual amount of matching donations available to each of its employees was increased.
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.
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 a decrease of $0.8 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 $2.0 million in costs related to the Merger that were not allocated to PNM or TNMP.
As discussed in Note 7, in November 2022, PNMR entered into a distribution agreement, pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $200.0 million of its common stock, no par value, through sales agents under the PNMR 2022 ATM Program.
As discussed in Note 7, in 2024, TXNM entered into a distribution agreement, pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $300.0 million of its common stock, no par value, through sales agents under the TXNM 2024 ATM Program.
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 2023, the Company utilized a qualitative analysis for both the PNM and TNMP reporting units.
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.
The PUCT has developed, and continues to develop, rules associated with the new legislation. TNMP will submit filings for investments and recovery in accordance with these new rules in addition to the existing rate recovery mechanisms. PNM has also experienced growing demand, including a new system peak recorded in 2023.
TNMP will submit filings for investments and recovery in accordance with these new rules in addition to the existing rate recovery mechanisms. PNM has also experienced growing demand, including a new system peak recorded in 2023.
Throughout the year, employees volunteer their time generously through independent volunteer activities and board participation. Employees strengthen community resilience by giving at least 9,000 volunteer hours each year to support the health, safety, and well-being of diverse communities.
Throughout the year, employees volunteer their time generously through independent volunteer activities and board participation. Employees strengthen community resilience by giving more than 6,000 volunteer hours each year to support the health, safety, and well-being of diverse communities.
A 10% increase in the estimates of future reclamation costs at current price levels would have increased the mine reclamation liability by $14.5 million at December 31, 2023. 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 $16.8 million at December 31, 2024. PNM considers the contemporaneous reclamation costs part of the cost of its delivered coal costs.
The Board approved the following increases in the indicated annual common stock dividend: Approval Date Percent Increase February 2022 6.1 % December 2022 5.8 December 2023 5.4 Maintaining Investment Grade Credit Ratings The Company is committed to maintaining investment grade credit ratings in order to reduce the cost of debt financing and to help ensure access to credit markets, when required.
The Board approved the following increases in the indicated annual common stock dividend: Approval Date Percent Increase December 2023 5.4 % December 2024 5.2 Maintaining Investment Grade Credit Ratings The Company is committed to maintaining investment grade issuer credit ratings in order to reduce the cost of debt financing and to help ensure access to credit markets, when required.
PNM’s proposal to modernize its electricity grid through infrastructure and technology improvements also increases the efficiency, reliability, resilience, and security of PNM’s electric system. PNM’s application seeks approval of grid modernization investments of approximately $344 million for the first six years of a broader 11-year strategy.
PNM’s plan to modernize its electricity grid through infrastructure and technology improvements also increases the efficiency, reliability, resilience, and security of PNM’s electric system. The approved plan includes grid modernization investments of approximately $344 million for the first six years of a broader 11-year strategy.
PNMR did not initially receive any proceeds upon the execution of these agreements and, except in certain specified circumstances, had the option to elect physical, cash, or net share settlement of the forward sale agreements on or before a date that is 12 months from the agreement effective dates.
TXNM did not receive any proceeds upon the execution of this agreement and, except in certain specified circumstances, has the option to elect physical, cash, or net share settlement of the forward sale agreement on or before a date that is 12 months from the agreement effective dates.
PNM also continues to partner with the Navajo Nation in the Light up Navajo project, piloted in 2019 and modeled as a mutual aid project with over 25 utilities nationwide participating to connect Navajo homes without electricity to the power grid.
PNM continues to partner with the Navajo Nation in the Light up Navajo project, piloted in 2019 and modeled as a mutual aid project to connect Navajo homes without electricity to the power grid.
INDC of 50% to 52% carbon emissions reduction by 2030 and the Biden Administration’s goal of net-zero carbon emissions economy-wide by 2050. On April 1, 2020, the NMPRC approved PNM’s application to retire its share of SJGS in 2022. PNM filed for abandonment of Four Corners on January 8, 2021. See Note 17.
INDC of 50% to 52% carbon emissions reduction by 2030 and the Biden Administration’s goal of net-zero carbon emissions economy-wide by 2050. On April 1, 2020, the NMPRC approved PNM’s application to retire its share of SJGS in 2022. See Note 17.
Over 25% of the program budget is dedicated to low- and moderate-income customers to plan for an equitable transition to an electrified transportation sector. In 2021, PNM joined 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. 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.
A - 49 Table of Contents Greenhouse Gas Emissions Exposures In 2022, GHG emissions associated with PNM’s interests in its fossil-fueled generating plants included approximately 4.8 million metric tons of CO 2 , which comprises the vast majority of PNM’s GHG emissions.
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.
After considering the effects of these financings and the Company’s short-term liquidity position as of February 16, 2024, the Company has consolidated maturities of long-term and short-term debt aggregating $658.0 million in the period from January 1, 2024 through February 28, 2025.
After considering the effects of these financings and the Company’s short-term liquidity position as of February 14, 2025, the Company has consolidated maturities of long-term and short-term debt aggregating $1.1 billion in the period from January 1, 2025 through February 28, 2026.
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.
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’s load management and annual energy efficiency programs also help lower peak demand requirements. In 2023, TNMP’s incremental energy saved as a result of new participation in TNMP’s energy efficiency programs is estimated to be approximately 17 GWh. This is equivalent to the annual consumption of approximately 2,297 homes in TNMP’s service territory.
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.
A - 55 Table of Contents Pension and Other Postretirement Benefits The Company maintains qualified defined benefit pension plans, postretirement benefit plans providing medical and dental benefits, and executive retirement programs.
Pension and Other Postretirement Benefits The Company maintains qualified defined benefit pension plans, postretirement benefit plans providing medical and dental benefits, and executive retirement programs.
This act represents a “once-in-a-generation” investment designed to modernize and upgrade America’s infrastructure. The BIL includes historic investments to upgrade the transmission and distribution systems to improve reliability and resilience, and to facilitate the deployment of more affordable and cleaner energy across the country.
This act represents a “once-in-a-generation” investment designed to modernize and upgrade America’s infrastructure. The BIL includes historic investments to upgrade the transmission and distribution systems to improve reliability and resilience, and to facilitate the deployment of more affordable and cleaner energy across the country. In October 2024, PNM was selected for two grants from the DOE.
MD&A FOR PNM RESULTS OF OPERATIONS PNM operates in only one reportable segment, as presented above in Results of Operations for PNMR. MD&A FOR TNMP RESULTS OF OPERATIONS TNMP operates in only one reportable segment, as presented above in Results of Operations for PNMR.
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.

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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 16, 2024, 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: PNMR Revolving Credit Facility 6.92 % $ 126,200 $ 300,000 PNM Revolving Credit Facility 6.67 121,300 400,000 PNM New Mexico Credit Facility 6.69 30,000 40,000 TNMP Revolving Credit Facility 6.30 100,000 100,000 $ 377,500 $ 840,000 Long-term Debt: PNMR 2021 Delayed-Draw Term Loan 6.38 % $ 500,000 PNMR 2023 Term Loan 6.78 500,000 $ 1,000,000 The investments held by PNM in trusts for decommissioning, reclamation, pension benefits, and other post-employment benefits had an estimated fair value of $925.5 million at December 31, 2023, of which 39.4% were fixed-rate debt securities that subject PNM to risk of loss of fair value with increases in market interest rates.
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.
The Company periodically makes plans to reduce its variable interest rate exposures through various instruments including fixed rate debt and equity hedging arrangements like those executed by PNMR 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 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.
PNM is 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 these market fluctuations by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options, and swaps.
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, 2023. 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, 2024. These equity securities expose PNM and TNMP to losses in fair value should the market values of the underlying securities decline.
During the years ended December 31, 2023 and 2022, 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, 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.
If interest rates were to increase by 50 basis points from their levels at December 31, 2023, the decrease in the fair value of the fixed-rate securities would be 1.5%, or $5.5 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 5.1%, or $1.1 million.
All of the fair values as of December 31, 2023 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 2024.
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.
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.
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 RMC’s responsibilities include: • Establishing policies regarding risk exposure levels and activities in each of the business segments • Approving the types of derivatives entered into for hedging • Reviewing and approving hedging risk activities • Establishing policies regarding counterparty exposure and limits • Authorizing and delegating transaction limits • Reviewing and approving controls and procedures for derivative activities • Reviewing and approving models and assumptions used to calculate mark-to-market and market risk exposure • Proposing risk limits to the Board’s Finance Committee for its approval • Reporting to the Board’s Audit and Finance Committees on these activities A - 56 Table of Contents To the extent an open position exists, fluctuating commodity prices, interest rates, equity prices, and economic conditions can impact financial results and financial position, either favorably or unfavorably.
The RMC’s responsibilities include: • Establishing policies regarding risk tolerance levels and activities in each of the business segments • Approving new types of derivatives entered into for marketing and hedging • Reviewing and approving hedging risk activities • Establishing policies regarding counterparty credit exposure and limits • Authorizing and delegating transaction limits • Reviewing and approving controls and procedures for derivative activities • Reviewing and approving models and assumptions used to calculate mark-to-market and market risk exposure • Proposing risk limits to the Board’s Finance Committee for its approval • Reporting to the Board’s Audit and Finance Committees on these activities To the extent an open position exists, fluctuating commodity prices, interest rates, equity prices, and economic conditions can impact financial results and financial position, either favorably or unfavorably.
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 $6.5 million for PNM and $0.5 million for TNMP. A - 58 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 $8.2 million for PNM and $0.5 million for TNMP. A - 57 Table of Contents
Net credit risk for the Company’s largest counterparty as of December 31, 2023 was $1.7 million. Other investments have no significant counterparty credit risk. Interest Rate Risk The majority of the 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, 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.
The securities held by TNMP in trusts for pension and other post-employment benefits had an estimated fair value of $49.5 million at December 31, 2023, of which 45.8% 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 $45.7 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.
During the years ended December 31, 2023 and 2022, the effects of mark-to-market commodity derivative instruments had no impact to PNM’s net earnings and $10.2 million of fair value gains and $7.8 million of fair value losses have been recorded as a regulatory asset.
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.
PNM and TNMP earnings are exposed to adverse changes in market interest rates when long- A - 57 Table of Contents term debt must be refinanced, repriced or redeemed. PNMR’s debt and 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 continue to 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, 2023, PNMR held $0.2 million 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, 2024, TXNM held zero of cash collateral to offset its credit exposure.
If interest rates were to increase by 50 basis points from their levels at December 31, 2023, the decrease in the fair value of the fixed-rate securities would be 5.2%, or $1.2 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.
Alternatives Investment Risk As of December 31, 2023, PNM and TNMP had 7.1% 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, 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.
Schedule of Credit Risk Exposure December 31, 2023 Rating (1) Credit Risk Exposure (2) Number of Counter-parties >10% Net Exposure of Counter-parties >10% (Dollars in thousands) External ratings: Investment grade $ 3,486 2 $ 2,902 Non-investment grade — — — Split ratings — — — Internal ratings: Investment grade 197 — — Non-investment grade — — — Total $ 3,683 $ 2,902 (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, 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.
Variable interest rates under the PNMR, PNM and TNMP revolving credit facilities are based on SOFR.
Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities and term loans are based on SOFR.
Equity securities comprised 39.2% and 40.8% of the securities held by the various PNM and TNMP trusts as of December 31, 2023. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $36.3 million for PNM and $2.0 million for TNMP.
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.

Other TXNM 10-K year-over-year comparisons