Segment Information

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

The following segment presentation is based on the methodology that management uses for making operating decisions and assessing performance of its various business activities. A reconciliation of the segment presentation to the GAAP financial statements is provided.

PNM

PNM includes the retail electric utility operations of PNM that are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico. PNM also provides generation service to firm-requirements wholesale customers and sells electricity into the wholesale market, as well as providing transmission services to third parties. The sale of electricity into the wholesale market includes the optimization of PNM’s jurisdictional capacity, as well as the capacity from PVNGS Unit 3, which currently is not included in retail rates (Note 11). FERC has jurisdiction over wholesale power and transmission rates.

TNMP

TNMP is an electric utility providing regulated transmission and distribution services in Texas under the TECA. TNMP’s operations are subject to traditional rate regulation by the PUCT.

Corporate and Other

The Corporate and Other segment includes PNMR holding company activities, primarily related to corporate level debt and investments, as well as PNMR Services Company. The activities of PNMR Development and NM Capital are also included in Corporate and Other.

The following tables present summarized financial information for PNMR by segment. PNM and TNMP each operate in only one segment. Therefore, tabular segment information is not presented for PNM and TNMP.

PNMR SEGMENT INFORMATION

	PNM			TNMP			Corporate and Other			Consolidated
	(In thousands)
Three Months Ended September 30, 2016
Electric operating revenues	$	311,276		$	89,098		$	—		$	400,374
Cost of energy	88,565			20,201			—			108,766
Utility margin	222,711			68,897			—			291,608
Other operating expenses	109,342			24,184			(3,006		)	130,520
Depreciation and amortization	33,312			16,354			3,351			53,017
Operating income (loss)	80,057			28,359			(345		)	108,071
Interest income	1,509			—			3,095			4,604
Other income (deductions)	4,980			855			(184		)	5,651
Interest charges	(22,213		)	(7,308		)	(2,946		)	(32,467		)
Segment earnings (loss) before income taxes	64,333			21,906			(380		)	85,859
Income taxes (benefit)	19,343			8,053			(93		)	27,303
Segment earnings (loss)	44,990			13,853			(287		)	58,556
Valencia non-controlling interest	(4,006		)	—			—			(4,006		)
Subsidiary preferred stock dividends	(132		)	—			—			(132		)
Segment earnings (loss) attributable to PNMR	$	40,852		$	13,853		$	(287	)	$	54,418
Nine Months Ended September 30, 2016
Electric operating revenues	$	780,228		$	246,498		$	—		$	1,026,726
Cost of energy	222,376			60,122			—			282,498
Utility margin	557,852			186,376			—			744,228
Other operating expenses	314,961			70,328			(9,261		)	376,028
Depreciation and amortization	97,778			45,760			10,263			153,801
Operating income (loss)	145,113			70,288			(1,002		)	214,399
Interest income	8,549			—			9,871			18,420
Other income (deductions)	17,305			2,139			(1,517		)	17,927
Interest charges	(66,494		)	(22,150		)	(8,535		)	(97,179		)
Segment earnings (loss) before income taxes	104,473			50,277			(1,183		)	153,567
Income taxes (benefit)	32,131			18,460			(497		)	50,094
Segment earnings (loss)	72,342			31,817			(686		)	103,473
Valencia non-controlling interest	(11,037		)	—			—			(11,037		)
Subsidiary preferred stock dividends	(396		)	—			—			(396		)
Segment earnings (loss) attributable to PNMR	$	60,909		$	31,817		$	(686	)	$	92,040
At September 30, 2016:
Total Assets	$	4,799,012		$	1,366,840		$	237,818		$	6,403,670
Goodwill	$	51,632		$	226,665		$	—		$	278,297

	PNM			TNMP			Corporate and Other			Consolidated
	(In thousands)
Three Months Ended September 30, 2015
Electric operating revenues	$	333,437		$	83,996		$	—		$	417,433
Cost of energy	105,708			18,547			—			124,255
Utility margin	227,729			65,449			—			293,178
Other operating expenses	104,977			22,766			(3,573		)	124,170
Depreciation and amortization	29,042			15,016			3,445			47,503
Operating income	93,710			27,667			128			121,505
Interest income	1,152			—			(1		)	1,151
Other income (deductions)	5,289			672			(482		)	5,479
Interest charges	(19,837		)	(6,855		)	(836		)	(27,528		)
Segment earnings (loss) before income taxes	80,314			21,484			(1,191		)	100,607
Income taxes (benefit)	27,258			7,795			699			35,752
Segment earnings (loss)	53,056			13,689			(1,890		)	64,855
Valencia non-controlling interest	(3,678		)	—			—			(3,678		)
Subsidiary preferred stock dividends	(132		)	—			—			(132		)
Segment earnings (loss) attributable to PNMR	$	49,246		$	13,689		$	(1,890	)	$	61,045
Nine Months Ended September 30, 2015
Electric operating revenues	$	870,826		$	232,361		$	—		$	1,103,187
Cost of energy	299,302			54,637			—			353,939
Utility margin	571,524			177,724			—			749,248
Other operating expenses	312,534			65,332			(11,118		)	366,748
Depreciation and amortization	86,446			42,065			10,502			139,013
Operating income	172,544			70,327			616			243,487
Interest income	4,869			—			(27		)	4,842
Other income (deductions)	18,547			2,757			(2,935		)	18,369
Interest charges	(59,477		)	(20,636		)	(6,601		)	(86,714		)
Segment earnings (loss) before income taxes	136,483			52,448			(8,947		)	179,984
Income taxes (benefit)	44,560			19,200			(2,139		)	61,621
Segment earnings (loss)	91,923			33,248			(6,808		)	118,363
Valencia non-controlling interest	(10,909		)	—			—			(10,909		)
Subsidiary preferred stock dividends	(396		)	—			—			(396		)
Segment earnings (loss) attributable to PNMR	$	80,618		$	33,248		$	(6,808	)	$	107,058
At September 30, 2015:
Total Assets	$	4,615,442		$	1,282,766		$	114,374		$	6,012,582
Goodwill	$	51,632		$	226,665		$	—		$	278,297

At December 31, 2015, the Company adopted ASU 2015-03 – Interest – Imputation of Interest (Subtopic 835-30) and ASU 2015-17, Income Taxes (Topic 740) - Balance Sheet Classification of Deferred Taxes, which require that debt issuance costs be reflected as a direct reduction of the related debt liability, except for arrangements such as the Company’s revolving credit facilities, and eliminated the requirement to classify deferred tax assets and liabilities as non-current or current. The Company applied the updates retrospectively to make all periods comparable. As a result, amounts previously reported as total assets at September 30, 2015 above have been reduced to reflect the reclassifications aggregating $40.3 million for PNMR, $22.1 million for PNM, and $10.4 million for TNMP.