Related Party Transactions

12 Months Ended

Dec. 31, 2011

PNMR, PNM, and TNMP are considered related parties as defined under GAAP. TNMP provides transmission and distribution services to First Choice. On November 1, 2011, PNMR sold First Choice. TNMP revenues from First Choice through October 31, 2011 are considered related party revenues and included in the table below. PNMR Services Company provides corporate services to PNMR and its subsidiaries in accordance with shared services agreements. These services are billed at cost on a monthly basis to the business units. Optim Energy was a related party prior to September 23, 2011. PNMR Services Company provided corporate services to Optim Energy under a services agreement. There was also a services agreement for Optim Energy to provide services to PNMR.

PNMR files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PNMR and each of its affiliated companies. These agreements provide that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PNMR. If there are net operating losses and/or tax credits, the subsidiary shall receive payment for the tax savings from PNMR to the extent that PNMR is able to utilize those benefits.

See Note 6 for information on intercompany borrowing arrangements. See Note 22 for information concerning Optim Energy. The table below summarizes the nature and amount of related party transactions of PNMR, PNM and TNMP:



	Year Ended December 31,
	2011		2010			2009
			(In thousands)
Electricity, transmission and distribution related services billings:
TNMP to PNMR	$	33,813	$	39,084		$	41,338
Services billings:
PNMR to PNM⁽¹⁾	98,914		93,602			80,141
PNMR to TNMP	29,353		25,455			22,919
PNM to TNMP	550		400			698
TNMP to PNMR	164		319			636
PNMR to Optim Energy	4,083		5,778			6,743
Optim Energy to PNMR	23		173			305
Income tax sharing payments:
PNM to PNMR	—		—			126,527
TNMP to PNMR	—		—			4,322
PNMR to TNMP	—		(13,869		)	—
PNMR to PNM	—		(59,298		)	—
Interest payments:
PNM to PNMR	54		13			8
TNMP to PNMR	40		281			849

⁽¹⁾ Includes billings to PNM Gas of $0.9 million in 2009.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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+ Details