Copyright © 2023 Albuquerque Journal
Public Service Company of New Mexico’s net earnings plummeted 34% in 2022, thanks largely to crashing stock markets that took a sharp bite out of utility investments, the company reported Friday morning.
PNM’s net income fell by $53 million – from $156 million in 2021 to $103 million last year – reflecting nearly a $64 million loss on investment securities.
Higher earnings from local electric sales, and from other energy companies transmitting power over PNM lines, did help buffer last year’s investment losses, offsetting the total drop in net income.
But the financial beating on investments – combined with rising interest rates on company debt – dragged overall earnings by PNM’s parent firm, PNM Resources, down by 13%, from $196 million in 2021 to $170 million last year.
That loss could have been significantly higher, save for particularly strong performance by PNM Resources’ other utility subsidiary, Texas New Mexico Power. TNMP reported a 44% jump in earnings last year – from $64 million in 2021 to $92 million – thanks mostly to spectacular growth in customer energy demand in its markets.
TNMP’s “volumetric load,” or residential and commercial demand, grew by 2.4% overall in 2022. But large-scale industrial consumption, known as “demand-based load,” leapt by 17.3%, reflecting robust economic activity in West Texas, particularly among the growing crypto-currency mining industry and databases there, said PNM President and Chief Operating Officer Don Tarry.
“At TNMP, load growth in 2022 exceeded expectations for both volumetric and demand-based load, plus the added growth from crypto mining customers entering the market,” Tarry told investors in an earnings conference call. “These customers are mostly in our West Texas service territory, providing some economic diversity to the region.”
Intense heat is also markedly driving up demand among residential and commercial customers in both New Mexico and Texas during hot summer months. In New Mexico, that’s contributing to additional investments in PNM’s grid, where the utility hit a new system peak last summer for the first time since 2013, Tarry said.
More generally, PNM’s grid is undergoing immense transformation as the company continues to transition from fossil-fuel generation to renewable resources, including solar, wind and back-up battery storage systems. In that regard, PNM Resources Chairman and CEO Pat Vincent-Collawn said closure of the coal-fired San Juan Generating Station near Farmington last September marked the company’s “top environmental achievement” in 2022.
“More than half of our resource portfolio is now carbon-free, with additional renewable and storage resources slated for 2023,” Vincent-Collawn told investors.
Supply-chain issues delayed construction last year on solar and battery systems targeted to replace San Juan. But PNM expects 350 megawatts of new solar, backed by large battery storage systems, to come online this year.
That would convert PNM’s grid to 51% renewables by year-end – six years sooner than mandated by the state’s Energy Transition Act.
Meanwhile, some big PNM cases are coming up at the state Public Regulation Commission. That includes public hearings in June on the utility’s first rate case in six years, plus hearings in March on a comprehensive “grid modernization” plan to upgrade the transmission and distribution system to help PNM integrate more renewable technology on its system and improve grid reliability and resiliency.
Also, PNM’s proposed merger with Connecticut-based energy giant Avangrid could come up again at the commission. The PRC rejected the merger in December 2021, and PNM and Avangrid appealed to the state Supreme Court.
But in January, a new, three-member commission appointed by the governor replaced the previous five-member elected commission, and the current commissioners have since discussed the merger in three closed-door “executive sessions.”
That’s generated wide speculation that the newly-constituted PRC could support a request for the court to remand the case back to the commission for a fresh look.
“Over the last month, we have been pleased to see the commission post notice of three closed sessions with the case on the agenda,” Vincent-Collawn told investors.
Still, there’s been no commission announcements yet.
“We need to wait and see what the commission has done in those sessions, if anything,” Vincent-Collawn said. “…We assume they will report on it in an open meeting sometime, but there’s no timeline for them to do that.”