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Fair Value of Derivative and Other Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

PNM’s commodity derivative instruments that are recorded at fair value, all of which are accounted for as economic hedges and considered Level 2 fair value measurements, are presented in the following line items on the Consolidated Balance Sheets:


	Economic Hedges
	December 31,
	2021		2020
	(In thousands)
Other current assets	$	684	$	1,096
Other deferred charges			455
	684		1,551
Other current liabilities	(2,275)		(1,096)
Other deferred credits			(455)
	(2,275)		(1,551)
Net	$	(1,591)	$	—

Schedule of Realized Gain (Loss)

Gains and losses recognized on the Consolidated Statements of Earnings related to investment securities in the NDT and reclamation trusts are presented in the following table:


	Year ended December 31,
	2021		2020		2019
	(In thousands)
Equity securities:
Net gains from equity securities sold	$	8,738	$	5,861	$	5,698
Net gains (losses) from equity securities still held	(442)		17,707		18,319
Total net gains on equity securities	8,296		23,568		24,017
Available-for-sale debt securities:


Net gains (losses) on debt securities	8,554		(1,969)		5,572
Net gains on investment securities	$	16,850	$	21,599	$	29,589

Gross realized losses shown below exclude the (increase)/decrease in realized impairment losses of $0.7 million, $(3.2) million, and $3.0 million for the years ended December 31, 2021, 2020 and 2019.


	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Proceeds from sales	$	459,867	$	590,998	$	494,528
Gross realized gains	$	39,408	$	35,904	$	25,760
Gross realized (losses)	$	(22,815)	$	(28,817)	$	(17,453)

Investments Classified by Contractual Maturity Date

At December 31, 2021, the available-for-sale debt securities held by PNM, had the following final maturities:


	Fair Value
	(In thousands)
Within 1 year	$	29,680
After 1 year through 5 years	77,278
After 5 years through 10 years	93,302
After 10 years through 15 years	20,893
After 15 years through 20 years	12,933
After 20 years	39,120
	$	273,206

Schedule of Instruments Presented by Level of Hierarchy

Items recorded at fair value by PNM on the Consolidated Balance Sheets are presented below by level of the fair value hierarchy along with gross unrealized gains on investments in available-for-sale securities.


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unrealized Gains
	(In thousands)
December 31, 2021
Cash and cash equivalents	$	7,895	$	7,895	$	—
Equity securities:
Corporate stocks, common	97,626		97,626		—
Corporate stocks, preferred	9,114		3,775		5,339
Mutual funds and other	75,285		75,241		44
Available-for-sale debt securities:
U.S. government	43,128		13,204		29,924		$	214
International government	16,001		—		16,001		1,508
Municipals	47,050		—		47,050		1,807
Corporate and other	167,027		—		167,027		12,212
	$	463,126	$	197,741	$	265,385	$	15,741




December 31, 2020

Cash and cash equivalents	$	6,107	$	6,107	$	—
Equity securities:
Corporate stocks, common	85,271		85,271		—
Corporate stocks, preferred	9,910		3,608		6,302
Mutual funds and other	58,817		58,762		55
Available-for-sale debt securities:
U.S. government	55,839		29,579		26,260		$	950
International government	16,032		—		16,032		2,537
Municipals	50,139		—		50,139		2,779
Corporate and other	158,000		3		157,997		21,121
	$	440,115	$	183,330	$	256,785	$	27,387

Summary of Carrying Amounts and Fair Value of Instruments

The carrying amounts and fair values of long-term debt, all of which are considered Level 2 fair value measurements and are not recorded at fair value on the Consolidated Balance Sheets are presented below:


	Carrying Amount		Fair Value
December 31, 2021	(In thousands)
PNMR	$	3,698,919	$	3,915,010
PNM	$	1,881,110	$	1,975,987
TNMP	$	918,050	$	1,039,023

December 31, 2020
PNMR	$	3,295,150	$	3,571,382
PNM	$	1,696,620	$	1,818,169
TNMP	$	853,673	$	1,006,722

Schedule of Investments Held by the Employee Benefit Plans

The fair values of investments held by the employee benefit plans are as follows:


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
December 31, 2021	(In thousands)
PNM Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	527,873	$	235,605	$	292,268
Uncategorized investments	49,432
Total Master Trust Investments	$	577,305
TNMP Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	58,623	$	21,390	$	37,233
Uncategorized investments	3,962
Total Master Trust Investments	$	62,585
PNM OPEB Plan
Cash and cash equivalents	$	1,578	$	1,578	$	—
Equity securities:
Mutual funds	94,549		58,383		36,166
	$	96,127	$	59,961	$	36,166
TNMP OPEB Plan
Cash and cash equivalents	$	381	$	381	$	—
Equity securities:
Mutual funds	12,249		11,575		674
	$	12,630	$	11,956	$	674


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
December 31, 2020	(In thousands)
PNM Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	498,907	$	241,445	$	257,462
Uncategorized investments	88,984
Total Master Trust Investments	$	587,891

TNMP Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	56,966	$	28,732	$	28,234
Uncategorized investments	9,230
Total Master Trust Investments	$	66,196

PNM OPEB Plan
Cash and cash equivalents	$	1,310	$	1,310	$	—
Equity securities:





Mutual funds	92,400		52,284		40,116
	$	93,710	$	53,594	$	40,116
TNMP OPEB Plan
Cash and cash equivalents	$	18	$	18	$	—
Equity securities:





Mutual funds	12,843		10,806		2,037
	$	12,861	$	10,824	$	2,037

The fair values of investments in the PNMR Master Trust are as follows:


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
December 31, 2021	(In thousands)
PNMR Master Trust
Cash and cash equivalents	$	18,924	$	18,924	$	—
Equity securities:
Corporate stocks, common	92,484		92,484		—
Corporate stocks, preferred	806		—		806
Mutual funds and other	222,106		59,203		162,903
Fixed income securities:
U.S. government	95,429		86,384		9,045
International government	5,977		—		5,977
Municipals	6,143		—		6,143
Corporate and other	144,627		—		144,627
Total investments categorized within fair value hierarchy	586,496		$	256,995	$	329,501
Uncategorized investments:
Private equity funds	10,479
Hedge funds	8,913
Real estate funds	34,002
	$	639,890


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
December 31, 2020	(In thousands)
PNMR Master Trust
Cash and cash equivalents	$	20,812	$	20,812	$	—
Equity securities:
Corporate stocks, common	114,983		114,983		—
Corporate stocks, preferred	1,187		135		1,052
Mutual funds and other	173,931		47,418		126,513
Fixed income securities:
U.S. government	97,460		86,829		10,631
International government	6,202		—		6,202
Municipals	6,277		—		6,277
Corporate and other	135,021		—		135,021
Total investments categorized within fair value hierarchy	555,873		$	270,177	$	285,696
Uncategorized investments:
Private equity funds	12,552
Hedge funds	52,285
Real estate funds	33,377
	$	654,087

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details