Public Service Company of New Mexico PFD 4.58%

What they do

PNM is a vertically integrated electric utility in New Mexico with distribution, transmission and generation assets. It is a wholly-owned subsidiary of TXNM Energy, Inc., which also owns Texas New Mexico Power (TNMP), an electric transmission and distribution utility in Texas. PNM sponsors PNM Energy Transition Bond Company I, LLC (ETBC I), which issued $343.2 million of senior secured energy transition bonds in November 2023, repaid through non-bypassable Energy Transition Charges collected from PNM customers.

Revenue drivers

• PNM electric utility — Vertically integrated New Mexico electric utility earning revenue through retail and wholesale electric sales under NMPRC-regulated rates, fuel and purchased power recovery, and riders such as the Energy Transition Charge. In Q2 2026 PNM contributed $0.41 GAAP diluted EPS and $0.30 ongoing diluted EPS.
• Non-bypassable Energy Transition Charges — Rate rider established to collect non-bypassable customer charges for repayment of the $343.2 million ETBC I Securitized Bonds issued November 15, 2023 in two Series A tranches.
• Resource portfolio investments — Capital investments in generation, storage and grid modernization, including the NMPRC-approved Grid Modernization Plan of approximately $344 million over the first six years of an 11-year strategy, recovered through regulated rates.

Recent performance

TXNM Energy reported Q2 2026 GAAP net earnings attributable to TXNM Energy of $71.3 million, or $0.64 per diluted share, versus $21.6 million or $0.22 per diluted share in Q2 2025. Ongoing net earnings were $64.1 million ($0.58 per diluted share) in Q2 2026 versus $24.5 million ($0.25) a year earlier. The PNM segment posted $0.41 GAAP and $0.30 ongoing diluted EPS in Q2 2026, compared with $0.25 GAAP and $0.12 ongoing in Q2 2025. Management cited rate relief from the approved 2025 Rate Request, higher retail load and higher transmission revenue as contributors. Year-to-date 2026 GAAP diluted EPS was $0.67 on $75.0 million of GAAP net earnings.

Strategy

PNM filed its 2029-2032 Resource Portfolio Application with the NMPRC on May 29, 2026, seeking approval of 800 MW of wind PPAs, 240 MW of solar PPAs, 610 MW of battery storage agreements, a 40 MW expansion of PNM-owned natural gas generation, and abandonment and exit of its Four Corners Power Plant interest in 2031. The application also requests an accounting order for future economic development resources and gives notice that PNM intends to extend Reeves Generating Station operations through 2044. The portfolio is aimed at projected resource shortfalls beginning in 2029 driven by load growth and the Four Corners exit. At the parent level, TXNM Energy is pursuing its acquisition by Blackstone Infrastructure affiliates and has extended the termination date to May 31, 2027.

Risks

• Parent acquisition closing uncertainty — The Blackstone Infrastructure acquisition of TXNM Energy still requires NMPRC and Nuclear Regulatory Commission approvals, with closing now expected in the first half of 2027 after the termination date was extended to May 31, 2027.
• Resource adequacy and Four Corners exit — PNM projects resource shortfalls beginning in 2029 driven by load growth and the planned 2031 exit from Four Corners, requiring NMPRC approval of new wind, solar, storage and gas resources.
• Regulatory rate case outcomes — PNM's earnings depend on NMPRC approvals such as the 2025 Rate Request and the pending 2029-2032 Resource Portfolio Application; unfavorable decisions could delay recovery of invested capital.
• Securitization bond payment reliance — ETBC I's $343.2 million Series A bonds are serviced by non-bypassable Energy Transition Charges collected from PNM customers, exposing bondholders to customer collection and regulatory continuity risk.

Outlook

Management does not plan to issue earnings guidance during the pendency of the proposed Blackstone Infrastructure transaction. TXNM Energy anticipates closing the acquisition in the first half of 2027, subject to NMPRC and remaining federal approvals. PNM continues to pursue NMPRC approval of its 2029-2032 Resource Portfolio Application to address projected shortfalls beginning in 2029. Interim TNMP rates related back to May 22, 2026, with final approved rates effective September 13, 2026.