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Lease Commitments (Tables)

9 Months Ended

Sep. 30, 2021

Information related to the Company’s operating leases recorded on the Condensed Consolidated Balance Sheets is presented below:


	September 30, 2021						December 31, 2020
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Operating leases:
Operating lease assets, net of amortization	$	79,808	$	5,778	$	85,956	$	97,461	$	7,206	$	105,133
Current portion of operating lease liabilities	26,166		1,988		28,230		25,130		2,193		27,460
Long-term portion of operating lease liabilities	51,233		3,579		55,106		75,941		4,779		81,065

Information related to the Company’s financing leases recorded on the Condensed Consolidated Balance Sheets is presented below:


	September 30, 2021						December 31, 2020
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Financing leases:
Non-utility property	$	14,276	$	15,722	$	30,328	$	11,453	$	13,299	$	25,055
Accumulated depreciation	(3,838)		(4,185)		(8,185)		(2,044)		(2,241)		(4,383)
Non-utility property, net	10,438		11,537		22,143		9,409		11,058		20,672

Other current liabilities	2,620		2,897		5,602		1,993		2,397		4,470
Other deferred credits	7,639		8,649		16,373		7,176		8,669		15,972

Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities as of September 30, 2021 is presented below:



	PNM		TNMP		PNMR Consolidated
Weighted average remaining lease term (years):
Operating leases	5.83		3.08		5.65
Financing leases	4.31		4.35		4.32

Weighted average discount rate:
Operating leases	3.99	%	3.97	%	3.98	%
Financing leases	2.62	%	2.72	%	2.67	%

Lease, Cost

Information for the components of lease expense is as follows:


	Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Operating lease cost:	$	6,569	$	594	$	7,192	$	20,020	$	1,880	$	22,006
Amounts capitalized	(199)		(517)		(716)		(645)		(1,618)		(2,264)
Total operating lease expense	6,370		77		6,476		19,375		262		19,742
Financing lease cost:
Amortization of right-of-use assets	657		693		1,372		1,793		1,944		3,802
Interest on lease liabilities	66		78		145		193		230		426
Amounts capitalized	(452)		(709)		(1,161)		(1,235)		(1,967)		(3,202)
Total financing lease expense	271		62		356		751		207		1,026

Variable lease expense	106		—		106		274		—		274
Short-term lease expense (1)	1,572		2		1,578		1,821		6		1,857
Total lease expense for the period	$	8,319	$	141	$	8,516	$	22,221	$	475	$	22,899

(1) Includes expense of $1.4 million for the three and nine months ended September 30, 2021 for rental of temporary cooling towers associated with the SJGS Unit 1 outage. These amounts are partially offset with insurance reimbursements of $0.9 million for the three and nine months ended September 30, 2021. For additional information on the SJGS Unit 1 outage see Note 12.


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Operating lease cost:	$	6,798	$	685	$	7,545	$	20,538	$	2,205	$	22,938
Amounts capitalized	(248)		(577)		(825)		(786)		(1,812)		(2,599)
Total operating lease expense	6,550		108		6,720		19,752		393		20,339
Financing lease cost:
Amortization of right-of-use assets	435		439		893		1,022		1,110		2,187
Interest on lease liabilities	58		74		134		156		198		358
Amounts capitalized	(281)		(452)		(733)		(682)		(1,105)		(1,787)
Total financing lease expense	212		61		294		496		203		758

Variable lease expense	63		—		63		158		—		158
Short-term lease expense	16		4		22		176		5		183
Total lease expense for the period	$	6,841	$	173	$	7,099	$	20,582	$	601	$	21,438

Schedule of Leases, Supplemental Cash Flows

Supplemental cash flow information related to the Company’s leases is as follows:


	Nine Months Ended						Nine Months Ended
	September 30, 2021						September 30, 2020
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25,511	$	262	$	25,897	$	25,804	$	483	$	26,708
Operating cash flows from financing leases	65		24		92		58		32		94
Finance cash flows from financing leases	621		234		920		378		215		646

Non-cash information related to right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	—	$	317	$	317	$	—	$	—	$	—
Financing leases	2,898		2,642		5,567		5,635		6,309		11,985

Lessee, Operating Lease, Liability, Maturity

Future expected lease payments are shown below:


	As of September 30, 2021
	PNM				TNMP				PNMR Consolidated
	Financing		Operating		Financing		Operating		Financing		Operating
	(In thousands)
Remainder of 2021	$	709	$	334	$	800	$	538	$	1,532	$	935
2022	2,767		26,266		3,125		1,990		5,980		28,467
2023	2,649		17,735		2,906		1,750		5,607		19,665
2024	1,972		7,908		2,438		877		4,421		8,833
2025	1,164		6,946		1,545		702		2,710		7,685
Later years	1,335		27,520		1,417		76		2,752		27,816
Total minimum lease payments	10,596		86,709		12,231		5,933		23,002		93,401
Less: Imputed interest	337		9,310		685		366		1,027		10,065
Lease liabilities as of September 30, 2021	$	10,259	$	77,399	$	11,546	$	5,567	$	21,975	$	83,336

Finance Lease, Liability, Maturity

Future expected lease payments are shown below:


	As of September 30, 2021
	PNM				TNMP				PNMR Consolidated
	Financing		Operating		Financing		Operating		Financing		Operating
	(In thousands)
Remainder of 2021	$	709	$	334	$	800	$	538	$	1,532	$	935
2022	2,767		26,266		3,125		1,990		5,980		28,467
2023	2,649		17,735		2,906		1,750		5,607		19,665
2024	1,972		7,908		2,438		877		4,421		8,833
2025	1,164		6,946		1,545		702		2,710		7,685
Later years	1,335		27,520		1,417		76		2,752		27,816
Total minimum lease payments	10,596		86,709		12,231		5,933		23,002		93,401
Less: Imputed interest	337		9,310		685		366		1,027		10,065
Lease liabilities as of September 30, 2021	$	10,259	$	77,399	$	11,546	$	5,567	$	21,975	$	83,336