Equity Method Investment

12 Months Ended

Dec. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investment

In September 2017, PNMR Development and AEP OnSite Partners created NMRD to pursue the acquisition, development, and ownership of renewable energy generation projects, primarily in the state of New Mexico. PNMR Development and AEP OnSite Partners each have a 50% ownership interest in NMRD. At December 31, 2023, NMRD’s renewable energy capacity in operation is 185.1 MW, which includes 180 MW of solar-PV facilities to supply energy to the Meta data center located within PNM’s service territory, 1.9 MW to supply energy to Columbus Electric Cooperative located in southwest New Mexico, 2.0 MW to supply energy to the Central New Mexico Electric Cooperative, and 1.2 MW of solar-PV facilities to supply energy to the City of Rio Rancho, New Mexico.

On December 22, 2023, PNMR Development and AEP Onsite reached agreement with Exus New Mexico, LLC, a subsidiary of Exus North America Holdings, LLC, for the sale of NMRD and its subsidiaries for approximately $230 million, subject to adjustment to reflect the actual amounts of certain components of working capital at closing, pursuant to a Membership Interest Purchase Agreement, dated December 22, 2023 (“MIPA”). Closing occurred on February 27, 2024, with PNMR Development receiving $117.0 million upon settlement. PNMR Development does not expect a material impact to Net

Earnings as a result of the transaction. As previously disclosed, PNMR Development expects to use the net proceeds from the sale of NMRD to reduce the future external capital needs at PNMR and support continued investments in regulated rate base at PNMR’s utilities. PNMR Development will provide certain services to NMRD for a transitional period following closing.

PNMR accounted for its investment in NMRD using the equity method of accounting because PNMR’s ownership interest results in significant influence, but not control, over NMRD and its operations.  PNMR recorded as income its percentage share of earnings or loss of NMRD and carried its investment at cost, adjusted for its share of undistributed earnings or losses.

During 2023, 2022, and 2021 PNMR Development and AEP OnSite Partners each made cash contributions of $26.3 million, zero and zero to NMRD. In February 2021, NMRD paid both PNMR Development and AEP OnSite Partners a dividend of $3.0 million. PNMR Development’s cumulative equity in earnings of NMRD as of March 31, 2021 was $2.4 million and is presented as cash flows from operating activities on the Consolidated Statement of Cash Flows for the year ending December 31, 2021. The portion of the dividend in excess of PNMR Development’s cumulative equity earnings of NMRD amounting to $0.6 million is presented as cash flows from investing activities.

PNMR presented its share of net earnings from NMRD in other income on the Consolidated Statements of Earnings. Summarized financial information for NMRD is as follows:

	December 31,
	2023		2022		2021
	(In thousands)
Operating revenues	$	13,629	$	12,505	$	12,738
Operating expenses	8,228		9,591		9,733
Net earnings	$	5,401	$	2,914	$	3,005

	Financial Position
	December 31,
	2023		2022
	(In thousands)
Current assets	$	2,589	$	8,357
Net property, plant, and equipment	235,791		169,440
Non-current assets	1,849		9,631
Total assets	240,229		187,428
Current liabilities	730		5,822
Non-current liabilities	358		366
Owners’ equity	$	239,141	$	181,240