Subsequent Events

PNM's 2010 Electric Rate Case is discussed in Note 10. On August 8, 2011, a majority of the commissioners of the NMPRC signed a final order that adopts, approves, and accepts the stipulation in the 2010 Electric Rate Case with certain modifications. The order provides that, for the order to become effective, PNM and the other signers of the stipulation have until August 12, 2011 to formally accept the modifications or to indicate that they either do not oppose or take no position on the modifications. Therefore, no assurance can be given that the NMPRC's order will become effective. If the signers of the stipulation do not accept the modifications, any one of them could ask the NMPRC to rehear and reconsider the order, or specific aspects of it. Other parties could also request rehearing and reconsideration whether or not the modifications are opposed by any of the signers. PNM cannot predict if any party will request rehearing or the outcome of any such request. If the order does not become effective, PNM would proceed with litigation of the original case, which requested a $165.2 million rate increase, before the NMPRC.

The NMPRC's modifications include:


•	A revenue increase for PNM's New Mexico retail customers of $72.1 million that PNM could implement currently, thereby eliminating the phased-in increases contained in the stipulation;


•	Elimination of the rider that would have allowed PNM to increase rates in 2013 by up to $20.0 million based on changes in plant-related rate base between June 30, 2010 and December 31, 2012;


•	A change in rate design for the residential customer class;


•	If approved by the signers, a change in the moratorium on the next general increase in PNM's rates, such that the increase could not become effective before July 1, 2013, rather than January 1, 2014 as specified in the stipulation.

Provisions of the stipulation that the NMPRC did not alter include:


•	Allowing PNM to file for recovery of the costs of renewable energy procurement programs through a rate rider;


•	Allowing PNM to file for recovery of costs to comply with any federal or state environmental law or requirement effective after June 30, 2010;


•	The proposed convergence of rates for PNM North and PNM South;


•	The same FPPAC for PNM North and PNM South customers;


•	The agreement among the signers of the stipulation to seek dismissal of the NMPRC's proceeding concerning PNM's replacement power costs recovered through the FPPAC, which is discussed under Emergency FPPAC in Note 10;


•	PNM's agreement to forego $10.0 million of the under-collected amount in the FPPAC balancing account.

As a result of the above, PNM recorded a pre-tax loss for the $10.0 million of fuel costs discussed above that will not be recovered through the FPPAC. In addition, PNM recorded a pre-tax loss aggregating $7.5 million for costs that will not be recovered in rates approved by the NMPRC order. These costs primarily relate to rate case expenses for the 2010 Electric Rate Case, expenses related to an audit of fuel and purchased power costs, loss on debt re-acquired in previous years, and the 2010 settlement of claims against DOE related to spent nuclear fuel at PVNGS. These amounts were recorded as of June 30, 2011 and are reflected as regulatory disallowances on PNM's Condensed Consolidated Statement of Earnings (Loss).