XML 40 R25.htm IDEA: XBRL DOCUMENT v3.22.2.2
Electric Operating Revenues
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Electric Operating Revenues Electric Operating Revenues
PNMR is an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are PNM and TNMP. Additional information concerning electric operating revenue is contained in Note 4 of the Notes to Consolidated Financial Statements in the 2021 Annual Reports on Form 10-K.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consists primarily of trade receivables from customers. In the normal course of business, credit is extended to customers on a short-term basis. The Company estimates the allowance for credit losses on trade receivables based on historical experience and estimated default rates. Accounts receivable balances are reviewed monthly, adjustments to the allowance for credit losses are made as necessary and amounts that are deemed uncollectible are written off.

PNM updated its allowance for accounts receivable balances and recorded incremental reductions to credit losses of $(0.8) million and $(2.4) million in the three and nine months ended September 30, 2022 and increases of $0.5 million and $2.9 million in the three and nine months ended September 30, 2021. The NMPRC issued an order authorizing all public utilities to create a regulatory asset to defer incremental costs related to COVID-19, including increases in uncollectible accounts. See discussion regarding regulatory treatment in Note 12.

In addition to the allowance for credit losses on trade receivables, the Company has evaluated other receivables for potential credit related losses. These balances include potential exposures for other non-retail utility services. In the three and nine months ended September 30, 2022, there were no estimated credit losses related to these transactions. In the three and nine months ended September 30, 2021, PNM recorded $0.8 million in estimated credit losses related to these transactions.

In February 2021, Texas experienced a severe winter storm delivering the coldest temperatures in 100 years for many parts of the state. As a result, the ERCOT market was not able to deliver sufficient generation load to the grid resulting in significant, statewide outages as ERCOT directed transmission operators to curtail thousands of firm load megawatts. TNMP complied with ERCOT directives to curtail delivery of electricity in its service territory and did not experience significant outages on its system outside of the ERCOT directed curtailments. During the weather event, generators experienced an extreme spike in market driven fuel prices and in turn charged REPs excessive market driven power prices which eventually get passed to end users on their electricity bill. Given the uncertainty of the collectability of end users' bills by REPs, ERCOT also increased the collateral required by REPs in order to do business within ERCOT's Balancing Authority. TNMP deferred bad
debt expense (credit losses) from defaulting REPs to a regulatory asset which totaled $0.8 million at both September 30, 2022 and December 31, 2021 and will seek recovery in a general rate case.

Disaggregation of Revenues

A disaggregation of revenues from contracts with customers by the type of customer is presented in the table below.
PNMTNMPPNMR Consolidated
Three Months Ended September 30, 2022(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential$150,682 $60,878 $211,560 
Commercial136,314 41,705 178,019 
Industrial25,609 9,450 35,059 
Public authority6,893 1,720 8,613 
Economy energy service11,784 — 11,784 
Transmission44,513 28,881 73,394 
Miscellaneous12,576 961 13,537 
Total revenues from contracts with customers
388,371 143,595 531,966 
Alternative revenue programs(599)(11,044)(11,643)
Other electric operating revenues (1)
209,565 — 209,565 
Total Electric Operating Revenues
$597,337 $132,551 $729,888 
Nine Months Ended September 30, 2022
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential$368,159 $146,367 $514,526 
Commercial325,492 111,365 436,857 
Industrial68,351 27,388 95,739 
Public authority16,063 4,806 20,869 
Economy energy service31,726 — 31,726 
Transmission114,699 83,731 198,430 
Miscellaneous19,745 2,887 22,632 
Total revenues from contracts with customers
944,235 376,544 1,320,779 
Alternative revenue programs1,039 (15,608)(14,569)
Other electric operating revenues (1)
367,526 — 367,526 
Total Electric Operating Revenues
$1,312,800 $360,936 $1,673,736 
(1) Increase in 2022 is primarily the result of participation in the EIM beginning in April 2021.
PNMTNMPPNMR Consolidated
Three Months Ended September 30, 2021(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential$155,035 $51,839 $206,874 
Commercial137,071 34,434 171,505 
Industrial24,856 7,282 32,138 
Public authority7,388 1,614 9,002 
Economy energy service7,389 — 7,389 
Transmission26,459 24,075 50,534 
Miscellaneous3,503 936 4,439 
Total revenues from contracts with customers
361,701 120,180 481,881 
Alternative revenue programs(8,331)(1,152)(9,483)
Other electric operating revenues82,153 — 82,153 
Total Electric Operating Revenues
$435,523 $119,028 $554,551 
Nine Months Ended September 30, 2021
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential$377,794 $121,600 $499,394 
Commercial327,090 93,332 420,422 
Industrial66,593 21,621 88,214 
Public authority17,312 4,561 21,873 
Economy energy service24,722 — 24,722 
Transmission60,919 68,849 129,768 
Miscellaneous10,129 2,837 12,966 
Total revenues from contracts with customers
884,559 312,800 1,197,359 
Alternative revenue programs(5,469)2,313 (3,156)
Other electric operating revenues151,595 — 151,595 
Total Electric Operating Revenues
$1,030,685 $315,113 $1,345,798 

Contract Balances

Performance obligations related to contracts with customers are typically satisfied when the energy is delivered and the customer or end-user utilizes the energy. Accounts receivable from customers represent amounts billed, including amounts under ARPs. For PNM, accounts receivable reflected on the Condensed Consolidated Balance Sheets, net of allowance for credit losses, includes $115.6 million at September 30, 2022 and $86.8 million at December 31, 2021 resulting from contracts with customers. All of TNMP’s accounts receivable results from contracts with customers.

Contract assets are an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance). Upon the completion of the Western Spirit Line, PNM entered into a TSA with Pattern Wind under an incremental tariff rate approved by FERC. The terms of the agreement provide for a financing component that benefits the customer. As such, the revenue that PNM recognizes will be in excess of the consideration received at the beginning of the service term resulting in a contract asset. The balance of the contract asset is $9.1 million at September 30, 2022 and $0.6 million at December 31, 2021. This contract asset is presented in Other deferred charges on the Condensed Consolidated Balance Sheet.
Contract liabilities arise when consideration is received in advance from a customer before satisfying the performance obligations. Therefore, revenue is deferred and not recognized until the obligation is satisfied. Under its OATT, PNM accepts upfront consideration for capacity reservations requested by transmission customers, which requires PNM to defer the customer’s transmission capacity rights for a specific period of time. PNM recognizes the revenue of these capacity reservations over the period it defers the customer's capacity rights. Other utilities pay PNM and TNMP in advance for the joint-use of their utility poles. These revenues are recognized over the period of time specified in the joint-use contract, typically for one calendar year. Deferred revenues on these arrangements are recorded as contract liabilities. PNMR's, PNM's, and TNMP's contract liabilities and related revenues are not material for any of the periods presented. The Company has no other arrangements with remaining performance obligations to which a portion of the transaction price would be required to be allocated.