PNM transmission rate settlement approved by FERC, CEO says

PNM Resources’ (NYSE:PNM) utility Public Service Company of New Mexico (PNM) is benefitting from a transmission rate settlement approved by FERC March 17, with the result being transmission rates that will be updated annually, Pat Vincent-Collawn, chairman, president and CEO of PNM Resources, said April 29.

PNM made its compliance filing at FERC after the order was issued, with the rates taking effect April 1, Vincent-Collawn said during PNM Resources’ 1Q16 earnings call.

The transmission rate settlement was filed with FERC in March 2015. The settlement establishes a base return on equity of 10%, with formula-based rates that are calculated annually, Vincent-Collawn said.

PNM Resources on April 26 filed an application with the New Mexico Public Regulation Commission (PRC) for a certificate of public convenience and necessity for a new 80-MW natural gas-fired unit at its San Juan power plant, Vincent-Collawn noted. The unit is estimated to cost $87m, and the company hopes to have it in service by June 2018, she said.

A decision from the PRC is sought by Dec. 1, according to the 1Q16 earnings presentation.

The PRC on April 29 is concluding hearings on PNM’s general rate case to recover costs from investments made in New Mexico, Vincent-Collawn said. The rate case was filed in August 2015, and a decision is expected in July, with new rates likely taking effect Aug. 1, noted Chuck Eldred, executive vice president and CFO of PNM Resources.

PNM Resources reported net earnings of a $1.1m loss in 1Q16 using generally accepted accounting principles (GAAP), compared with a loss of $3.3m in 1Q15. The parent company, which owns PNM and related utility Texas-New Mexico Power said the improvement from 1Q15 stemmed from reduced interest expense related to the repayment of long-term debt in May 2015 and interest earned on a loan provided to Westmoreland Coal Company to finance its purchase of the San Juan Coal Company.