PNM Resources reported a 32 percent decline in net earnings in 2017, reflecting a $57.5 million write-off in the fourth quarter related to federal tax reform.
The company will gain about $48 million from the lowering of the corporate income tax rate from 35 percent to 21 percent. It will pass those gains onto consumers starting this year as part of Public Service Co. of New Mexico’s latest rate case that concluded in December, allowing PNM to lower its newest rate hike to just 1.4 percent.
But the tax reform also had a negative impact on parent company PNM Resources’ net deferred tax liabilities. That refers to company write-offs of various expenses, such as the decision by state regulators to deny PNM any profit on $148 million in investments it made at the coal-fired Four Corners Power Plant.
PNM Resources and its subsidiaries must report all losses on its books every year. By recording those losses at the new 21 percent tax rate rather than the previous 35 percent, the value of tax deductions on the company’s liabilities declined, leading to the $57.5 million total write-off in the fourth quarter.