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Lease Commitments (Tables)

9 Months Ended

Sep. 30, 2022

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


	September 30, 2022						December 31, 2021
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Operating leases:
Operating lease assets, net of amortization	$	58,670	$	3,769	$	62,440	$	73,903	$	5,264	$	79,511
Current portion of operating lease liabilities	16,902		1,631		18,534		25,278		1,882		27,218
Long-term portion of operating lease liabilities	39,754		1,947		41,701		52,552		3,155		55,993

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


	September 30, 2022						December 31, 2021
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Financing leases:
Non-utility property	$	18,151	$	18,372	$	36,853	$	15,171	$	16,181	$	31,695
Accumulated depreciation	(6,843)		(7,256)		(14,340)		(4,550)		(4,923)		(9,660)
Non-utility property, net	11,308		11,116		22,513		10,621		11,258		22,035

Other current liabilities	$	3,248	$	3,508	$	6,827	$	2,731	$	2,994	$	5,813
Other deferred credits	7,962		7,620		15,602		7,732		8,273		16,075

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, 2022 is presented below:



	PNM		TNMP		PNMR Consolidated
Weighted average remaining lease term (years):
Operating leases	6.98		2.35		6.69
Financing leases	4.01		3.48		3.74

Weighted average discount rate:
Operating leases	4.01	%	4.00	%	4.01	%
Financing leases	3.07	%	3.09	%	3.08	%

Lease, Cost

Information for the components of lease expense is as follows:


	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
	PNM		TNMP		PNMR Consolidated		PNM		TNMP		PNMR Consolidated
	(In thousands)
Operating lease cost:	$	6,736	$	466	$	7,205	$	20,085	$	1,489	$	21,623
Amounts capitalized	(166)		(410)		(577)		(524)		(1,336)		(1,860)
Total operating lease expense	6,570		56		6,628		19,561		153		19,763
Financing lease cost:
Amortization of right-of-use assets	792		779		1,585		2,293		2,334		4,680
Interest on lease liabilities	84		85		170		231		238		471
Amounts capitalized	(588)		(829)		(1,417)		(1,648)		(2,309)		(3,957)
Total financing lease expense	288		35		338		876		263		1,194

Variable lease expense	262		—		262		629		—		629
Short-term lease expense (1)	568		1		567		2,837		4		2,884
Total lease expense for the period	$	7,688	$	92	$	7,795	$	23,903	$	420	$	24,470

(1) Includes expense of $0.4 million and $2.7 million for the three and nine months ended September 30, 2022 for rental of temporary cooling towers associated with the SJGS Unit 1 outage. These amounts are offset with insurance reimbursements of $0.4 million and $2.7 million for the three and nine months ended September 30, 2022. For additional information on the SJGS Unit 1 outage see Note 12.


	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	1,572		2		1,578		1,821		6		1,857
Total lease expense for the period	$	8,319	$	141	$	8,516	$	22,221	$	475	$	22,899

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, 2022						September 30, 2021
	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	$	25,503	$	118	$	25,670	$	25,511	$	262	$	25,897
Operating cash flows from financing leases	67		32		101		65		24		92
Finance cash flows from financing leases	810		371		1,249		621		234		920

Non-cash information related to right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	2,924	$	—	$	2,924	$	—	$	317	$	317
Financing leases	3,032		2,349		5,381		2,898		2,642		5,567

Lessee, Operating Lease, Liability, Maturity

Future expected lease payments are shown below:


	As of September 30, 2022
	PNM				TNMP				PNMR Consolidated
	Financing		Operating		Financing		Operating		Financing		Operating
	(In thousands)
Remainder of 2022	$	898	$	10,234	$	976	$	455	$	1,896	$	10,725
2023	3,497		8,779		3,698		1,546		7,251		10,465
2024	2,777		7,217		3,125		943		5,916		8,171
2025	1,940		7,076		2,192		770		4,134		7,847
2026	1,513		7,014		1,113		76		2,626		7,090
Later years	1,324		24,384		632		—		1,956		24,384
Total minimum lease payments	11,949		64,704		11,736		3,790		23,779		68,682
Less: Imputed interest	739		8,048		608		212		1,350		8,447
Lease liabilities as of September 30, 2022	$	11,210	$	56,656	$	11,128	$	3,578	$	22,429	$	60,235

Finance Lease, Liability, Maturity

Future expected lease payments are shown below:


	As of September 30, 2022
	PNM				TNMP				PNMR Consolidated
	Financing		Operating		Financing		Operating		Financing		Operating
	(In thousands)
Remainder of 2022	$	898	$	10,234	$	976	$	455	$	1,896	$	10,725
2023	3,497		8,779		3,698		1,546		7,251		10,465
2024	2,777		7,217		3,125		943		5,916		8,171
2025	1,940		7,076		2,192		770		4,134		7,847
2026	1,513		7,014		1,113		76		2,626		7,090
Later years	1,324		24,384		632		—		1,956		24,384
Total minimum lease payments	11,949		64,704		11,736		3,790		23,779		68,682
Less: Imputed interest	739		8,048		608		212		1,350		8,447
Lease liabilities as of September 30, 2022	$	11,210	$	56,656	$	11,128	$	3,578	$	22,429	$	60,235