The increase largely reflects a 10 percent rate hike for average residential customers that took effect last October, combined with lower plant outage costs during the first quarter and cost savings from company restructuring efforts, said executives from the utility’s parent firm, PNM Resources, in a conference call with investors on Friday.
Prospects seem good for more financial improvement in coming quarters, thanks to advances on a settlement agreement with parties involved in PNM’s new rate case. The utility is seeking Public Regulation Commission approval for another 14 percent rate hike that would be phased in over two years. It’s held ongoing settlement negotiations since March with about a dozen parties in the case.
“We’ve reached an agreement on the parameters of a settlement,” PNM Resources Chairman, President and CEO Pat Vincent-Collawn told investors on Friday. “We’ve asked the PRC for an extension for negotiations until next Friday (May 5) for all the parties involved to get approval from their bases to sign a settlement.”
Other parties also confirm progress, although difficult issues remain in the negotiations, which are confidential.
“We’re not quite there yet, but it’s fair to say we’re close,” said Steve Michel, chief counsel for Western Resource Advocates. “There are still some issues we’re working through. Discussions can be complicated with so many stakeholders with different concerns.”
Given the positive outlook for rate relief, company executives project a significant improvement in PNM Resources’ earnings in the next few years.
“We’re focused on 2019 as the the year that our earnings potential can be realized,” said Chief Financial Officer Chuck Eldred.
The sharp rise in PNM earnings contributed to a marked improvement in the parent firm’s finances in the first quarter. The company reported a 100 percent jump in net earnings, from $10.5 million in the first three months of 2016 to $22.9 million this year. Net earnings per share rose from 13 cents to 29 cents.
The first-quarter boost came entirely from PNM, since net earnings at the company’s other utility, Texas New Mexico Power, remained flat at $7.6 million in the first three months, compared with $7.5 Million in 2016.
Unlike TNMP, however, which reports fairly robust growth in electric demand, PNM continues to face declines in load. Residential demand did climb by 1.6 percent in the first quarter, but commercial sales fell 2.6 percent, and industrial demand dropped by 3.8 percent, Eldred told investors.