Construction Program and Jointly-Owned Electric Generating Plants

PNM is a participant in several jointly-owned power plant projects. The primary operating or participation agreements for the joint projects expire in July 2022 for SJGS, July 2041 for Four Corners, December 2046 for Luna, and November 2047 for PVNGS.

PNM’s expenditures for additions to utility plant were $309.1 million in 2017, including expenditures on jointly-owned projects. TNMP does not participate in the ownership or operation of any generating plants, but incurred expenditures for additions to utility plant of $145.5 million during 2017. On a consolidated basis, PNMR’s expenditures for additions to utility plant were $500.5 million in 2017.

Joint Projects

Under the agreements for the jointly-owned projects, PNM has an undivided interest in each asset and liability of the project and records its pro-rata share of each item in the corresponding asset and liability account on PNM’s Consolidated Balance Sheets. Likewise, PNM records its pro-rata share of each item of operating and maintenance expenses for its jointly-owned plants within the corresponding operating expense account in its Consolidated Statements of Earnings. PNM is responsible for financing its share of the capital and operating costs of the joint projects.

At December 31, 2017, PNM’s interests and investments in jointly-owned generating facilities are:



Station (Fuel Type)	Plant in Service		Accumulated Depreciation⁽¹⁾			Construction Work in Progress			Composite Interest
	(In thousands)
SJGS (Coal) ⁽²⁾	$	920,950	$	(522,750	)	$	8,512		46.30	%
PVNGS (Nuclear) ⁽³⁾	$	918,830	$	(353,054	)	$	35,038		10.20	%
Four Corners Units 4 and 5 (Coal)	$	204,432	$	(100,914	)	$	61,755		13.00	%
Luna (Gas)	$	70,995	$	(27,023	)	$	(13	)	33.33	%


⁽¹⁾	Includes cost of removal.


⁽²⁾	See Note 16 for a discussion of the December 2017 shutdown of SJGS Units 2 and 3 and the restructuring of the ownership of SJGS Unit 4.


⁽³⁾	Includes interest in PVNGS Unit 3, interest in common facilities for all PVNGS units, and owned interests in PVNGS Units 1 and 2, including improvements.

San Juan Generating Station

PNM operates and jointly owns SJGS. Effective January 1, 2018, SJGS Unit 1 is owned 50% by PNM and 50% by Tucson and SJGS Unit 4 is owned 77.297% by PNM, including a 12.8% interest held as merchant plant, 8.475% by Farmington, 7.2% by Los Alamos, and 7.028% by UAMPS. See Note 16 for additional information about SJGS, including the shutdown of SJGS Units 2 and 3 in December 2017 and the restructuring of SJGS ownership.

Palo Verde Nuclear Generating Station

PNM is a participant in the three units of PVNGS, also known as the Arizona Nuclear Power Project, with APS (the operating agent), SRP, EPE, SCE, SCPPA, and The Department of Water and Power of the City of Los Angeles. PNM has a 10.2% undivided interest in PVNGS, with portions of its interests in Units 1 and 2 held under leases. See Note 7 for additional information concerning the PVNGS leases, including PNM’s purchase of the assets underlying certain of the leases at the expiration of the leases on January 15, 2016, and Note 17 for the NMPRC’s treatment of those purchases in the ratemaking process.

Operation of each of the three PVNGS units requires an operating license from the NRC. The NRC issued full power operating licenses for Unit 1 in June 1985, Unit 2 in April 1986, and Unit 3 in November 1987. The full power operating licenses were originally for a period of 40 years and authorize APS, as operating agent for PVNGS, to operate the three PVNGS units. In April 2011, the NRC approved extensions in the operating licenses for the plants for 20 years through June 2045 for Unit 1, April 2046 for Unit 2, and November 2047 for Unit 3. In April 2010, APS entered into a Municipal Effluent Purchase and Sale Agreement that provides effluent water rights necessary for cooling purposes at PVNGS through 2050.

Four Corners Power Plant

PNM is a participant in two units of Four Corners with APS (the operating agent), an affiliate of APS, SRP, and Tucson. PNM has a 13.0% undivided interest in Units 4 and 5 of Four Corners. The Four Corners plant site is leased from the Navajo Nation and is also subject to an easement from the federal government. APS, on behalf of the Four Corners participants, negotiated amendments to an existing facility lease with the Navajo Nation, which extends the Four Corners leasehold interest from 2016 to 2041. See Note 16 for additional information about Four Corners.

Luna Energy Facility

Luna is a combined-cycle power plant near Deming, New Mexico. Luna is owned equally by PNM, Tucson, and Samchully Power & Utilities 1, LLC. The operation and maintenance of the facility has been contracted to North American Energy Services.

Construction Program

The Company anticipates making substantial capital expenditures for the construction and acquisition of utility plant and other property and equipment. An unaudited summary of the budgeted construction expenditures, including expenditures for jointly-owned projects, and nuclear fuel, is as follows:



	2018		2019		2020		2021		2022		Total
					(In millions)
PNM	$	295.0	$	339.0	$	313.4	$	315.8	$	493.7	$	1,756.9
TNMP	185.8		170.5		170.0		170.5		170.1		866.9
Corporate and Other	19.4		17.3		17.0		17.5		17.1		88.3
Total PNMR	$	500.2	$	526.8	$	500.4	$	503.8	$	680.9	$	2,712.1

The construction expenditure estimates are under continuing review and subject to ongoing adjustment, as well as to Board review and approval. The above construction expenditures include $7.9 million for environmental upgrades at Four Corners, $72.8 million for 50 MW of new solar facilities included in PNM’s 2018 renewable energy procurement plan, approximately $170.0 million for an anticipated expansion of PNM’s transmission system, and approximately $100.0 million in 2021 and $300.0 million in 2022 for the costs of replacement resources related to the potential shutdown of SJGS Units 1 and 4 in 2022. See Note 17. Expenditures for the expansion of PNM’s transmission system and SJGS replacement sources are subject to obtaining necessary approvals of the NMPRC. PNM will be required to file CCN applications with the NMPRC to obtain those approvals.