Public Service Co. of New Mexico reported a 53 percent drop in net earnings in first-quarter 2017, reflecting investment costs at its coal plants and the staggered, two-year phase-in of new rates that took effect this year.
PNM reported $7.7 million in net earnings from January-March, down from $16.5 million in first-quarter 2017. Outage costs from installing new pollution controls at the coal-fired Four Corners Power Plant near Farmington, expenses associated with the shut down in December of two of four units at the nearby San Juan Generating Station, plus costs for bringing more electricity from the Palo Verde Nuclear Generating Station in Arizona into New Mexico’s retail rates all impacted utility earnings.
Depreciation and property tax expenses from new capital investments, plus lower decommissioning and reclamation trust gains, also affected earnings.
A new, 1.4 percent rate hike approved by the New Mexico Public Regulation Commission in December wasn’t enough to offset those losses during the quarter, especially since only half the rate increase is being phased in this year, and the rest in 2019.
The drop in PNM earnings cut overall income for the utility’s parent firm, PNM Resources, by 34 percent, from $22.9 million in January-March 2017 to $15 million this year. A decline in corporate income from higher interest rates on debt also contributed.
Still, positive performance by PNM Resources’ other utility, Texas New Mexico Power, did offset some of the parent firm’s losses. TNMP reported $9.4 million in net income, up from $7.6 million in first-quarter 2017.
PNM Resources’ net earnings per share fell from 29 cents to 19 cents. But the company reaffirmed its earnings guidance for 2018 of between $2.04 to $2.16 per share.
PNM Resources Chairman, President and CEO Pat Vincent-Collawn said the company had anticipated the first-quarter results as it phases-in PNM’s new retail rates.
“With the rate settlement behind us, we’re expecting a straight-forward year,” Vincent-Collawn told investors in a conference call Friday morning.
Earnings are “in line” with expectations given the planned changes at PNM’s coal plants and the transition of more Palo Verde power from the wholesale market to New Mexico’s rate base, said Chief Financial Officer Chuck Eldred.