EEI Financial Conference November 2019 Contact Information and Safe - - PowerPoint PPT Presentation

EEI Financial Conference

November 2019

Contact Information and Safe Harbor Statement

2 Investor Relations Contact Information Lisa Goodman Director, Investor Relations and Shareholder Services U.S. 1-505-241-2160 Lisa.Goodman@pnmresources.com Safe Harbor Statement

Statements made in this presentation for PNM Resources, Inc. (“PNMR”), Public Service Company of New Mexico (“PNM”), or Texas-New Mexico Power Company (“TNMP”) (collectively, the “Company”) that relate to future events or expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act

• f 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. PNMR,

PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR, PNM, and TNMP caution readers not to place undue reliance

• n these statements. PNMR's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by

many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company’s Form 10-K and 10-Q filings with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

Non-GAAP Financial Measures

For an explanation of the non-GAAP financial measures that appear on certain slides in this presentation (ongoing earnings,

• ngoing earnings per diluted share and ongoing earnings guidance measures), as well as a reconciliation to GAAP measures,

please refer to the Company’s website as follows: http://www.pnmresources.com/investors/results.cfm.

Company Overview

PNM Resources Overview

4

Generation Resources and Service Territories PNM Resources is a regulated electric utility holding company focused on providing environmentally responsible, affordable and reliable electricity to customers and above industry average earnings and dividend growth to shareholders

NYSE Ticker: PNM Market Cap: $4B

• Energy holding company
• Based in Albuquerque, New Mexico
• Located in New Mexico
• 530,977 customers
• 15,158 miles transmission and

distribution lines

• 2,701 MW generation capacity
• Located in Texas
• 255,879 end-users
• 9,408 miles transmission and

distribution lines

PNM Resources Strategic Direction and Financial Goals

5

• Plans to be coal-free by 2031
• Goal to be emissions-free by 2040
• Retire and replace coal-fired generation with

cleaner energy portfolio

• Invest to maintain system reliability

Transform to Cleaner Energy Portfolio

• Provide reliable, affordable energy while enhancing

customer experience

• Integrate technologies and customer insights to new

products and services

• Enhance grid to facilitate evolving customer needs

Meet Customer Expectations

• Deliver earnings and dividend growth at or above

industry-average

• Earn allowed returns
• Maintain investment grade credit ratings

Provide Earnings and Dividend Growth

$255 $275 $306 $322 $345

$245 $337 $270 $342 $348 $125 $176 $173 $182 $202 $128 $99 $94 $82 $77 $68

$60 $53

$109 $268 $48 $177 $72

$37 $27 $22 $27 $21 $21 $25

2019 2020 2021 2022 2023

(in millions)

TNMP PNM T&D PV Lease Purchases/Other Replacement Power PNM Existing Generation PNM Renewable Additions PNM Transmission Expansion SJGS Replacement Power 50% NMRD Renewable Additions Business Technology Services/General Services Depreciation

$641 $771 $991 $818 $694

$3.9B investment plan results in 9.6% rate base growth $317M increase in TNMP investments

6

2019 – 2023 Investment Plan

(1) Depreciation does not include amounts associated with NMRD (2) Western Spirit acquisition of $285M reflects assumed purchase price of $360M, net of $75M customer funding (3) For Palo Verde leases that expire in 2023, capex assumes either the purchase of the leases or replacement of the power through new resources (1) (2)

Targeted 2018-2023 Rate Base CAGR (2018 base): Total 9.6% / PNM 6.6% / TNMP 17.3%

(3)

2019 - 2023 Potential Earnings Power

7

This table is not intended to represent a forward-looking projection of 2020 - 2023 earnings guidance. Refer to Slide 31 for additional details and disclosures.

Earnings Growth Target 5-6%; reflects updated investment plan

• Additional earnings potential at TNMP strengthens target
• Equity financing plans continue to reflect modeling assumptions that will be optimized

(1) Assumes mid-year implementation (2) Optimization of timing/size not definitive, total equity need of $590M focused on forward block sale and/or mandatory convertibles Note: 2018-2023 CAGR measured from 2018 Ongoing EPS of $2.00

Allowed Return / Equity Ratio

2019 Ongoing Earnings Guidance Midpoint 2020 Earnings Potential 2021 Earnings Potential 2022 Earnings Potential 2023 Earnings Potential

Avg Rate Base Return EPS Avg Rate Base EPS

Avg Rate Base EPS Avg Rate Base EPS Avg Rate Base EPS PNM Retail

9.575% / 50% $2.4 B 8.9% $1.37 $2.4 B $1.44 $2.5 B $1.52 $2.4 B $1.48 $2.4 B $1.48

San Juan Replacement(1)

9.575% / 50% $150 M $0.09 $280 M $0.17

PNM Renewables

9.575% / 50% $115 M 9.575% $0.07 $150 M $0.09 $145 M $0.09 $140 M $0.08 $130 M $0.07

PNM FERC

10% / ~50% $275 M 6.9% $0.12 $330 M $0.15-$0.20 $530 M $0.26-$0.30 $740 M $0.37-$0.42 $780 M $0.39-$0.44

Items not in Rates

$0.04 ($0.04)-($0.02) ($0.03)-($0.01) ($0.03)-($0.01) ($0.03)-($0.01)

Total PNM

$2.7 B $1.60 $2.9 B $1.64-$1.71 $3.2 B $1.84-$1.90 $3.5 B $1.99-$2.06 $3.6 B $2.08-$2.15

TNMP

9.65% / 45% $1.1 B 9.65% $0.67 $1.3 B $0.73 $1.5 B $0.84 $1.6 B $0.89 $1.9 B $1.02

Corporate/Other

($0.19) ($0.21)-($0.19) ($0.21)-($0.19) ($0.19) - ($0.17) ($0.23)-($0.21)

Equity Financing Plans(2)

($0.01)-$0.00 ($0.10)-($0.09) ($0.20) - ($0.19) ($0.24)-($0.23) Total PNM Resources $3.8 B $2.08 $4.2 B $2.15 - $2.25 $4.7 B $2.37 - $2.46 $5.1 B $2.49 - $2.59 $5.6 B $2.63 - $2.73

Earnings Growth

8 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 $1.49 $1.64 $1.65 $1.94 $2.00 $2.08 $2.20 $2.42 $2.54 5-6% Target: $2.55-$2.68 Actual Ongoing EPS Midpoint Guidance / Earnings Potential $2.68

2018 – 2023: Targeting 5 - 6% Ongoing EPS CAGR

• 2014 - 2018: Achieved 7.6% Ongoing EPS CAGR
• 2014 - 2023: Reflects 6-7% Ongoing EPS CAGR

$0.74 Dec ‘13 $0.80 Dec ‘14 $0.88 Dec’ 15 $0.97 Dec ‘16 $1.06 Dec ‘17 $1.16 Dec ‘18 $1.22- $1.23 $1.28- $1.30 $1.34- $1.38 $1.41- $1.46 8% 10% 10% 9% 9%

55-56% payout 53-54% payout 53-54% payout 53-55% payout

Dividend Growth

9

Indicative annual dividend rate

• Expect dividend growth at or above industry average (~5%) in the future

while targeting the middle of a 50% - 60% payout ratio range

• Next dividend review in December 2019

Consistent Delivery of Dividend Growth At or Above Industry Average

Expect future dividend growth to mirror earnings growth (approximately 5-6%)

Payout based upon midpoint earnings potential

Liquidity and Debt Maturity Outlook

10

• Completed:
• Extended $700M revolving credit facilities through 2023
• Refinanced $172 million of 9.5% TNMP First Mortgage Bonds
• Equity issuances of up to $590 million through forward block

and/or mandatory convertibles are projected to fund 2020 - 2023 expenditures

• New debt issuances projected at utilities through 2023 of

~$800 million and $361 million securitization bonds

Maintain appropriate credit metrics Remain a solid investment grade rated company Target regulatory capital structures at PNM and TNMP

Moody’s Rating/Outlook S&P Rating/Outlook PNM Resources Baa3(1) / Stable BBB+(1) / Negative PNM Baa2(2) / Stable BBB+(2) / Negative TNMP A1(3) / Stable A(3) / Negative PNM Resources FFO-to-Debt is maintained well within Moody’s Baa investment grade target range of 13% to 22%

(1) Issuer rating (2) Senior unsecured rating (3) Senior secured rating

$350 $306 $57 $1,003

$35

$658

$140

$300 2020 2021 2022 2023 and Beyond

Long-term Debt Maturities

(in millions)

PNM TNMP Corporate

Generation Portfolio Transformation

New Mexico Energy Policy

12

Nuclear 30%

Senate Bill 489 (Energy Transition Act): passed in 2019 legislative session and signed by New Mexico Governor Lujan Grisham; effective June 14, 2019

• Renewable Portfolio Standards and Carbon-Free Goal
• Current: 20% renewables by 2020
• Proposed:
• 40% renewables by 2025
• 50% renewables by 2030
• 80% renewables by 2040
• 100% carbon-free by 2045
• Securitization measure for abandonment of coal-fired generating facilities

reduces customer bills

• Economic development funds provide needed financial assistance to

workers and the communities impacted by retirement of coal-fired generating facilities

50% Renewables

80% Renewables

40% Renewables

100% Carbon-Free 2045 2040

2030 2025

Exit from Coal Generation, Emission Reductions

13

• The shutdown of Units 2 and 3 at PNM San Juan Generating Station in December 2017

reduced CO₂ emissions at this plant by 54% below 2005 levels

• The 2017 Integrated Resource Plan called for a complete exit from coal generation by the

end of 2031

• New Mexico’s Energy Transaction Act, effective June 14, 2019, calls for 100% carbon-free

energy by 2045

• PNM has stated a goal to be 100% emissions-free by 2040

983 762 200 2005 2018 2023 2031

Reduction of MW Coal Capacity

22% reduction 80% reduction 100% coal free

Read more in our Climate Change Report at http://www.pnmresources.com/about-us/sustainability-portal.aspx

San Juan Abandonment, Securitization and Replacement Power

14

Abandonment

• Requests

abandonment of San Juan coal plant after participation agreement and coal supply contracts end June 30, 2022

Securitization

• $283M undepreciated

investment in San Juan, proceeds available to fund replacement power

• $29M decommissioning

and reclamation costs

• $20M job training and

severance costs

• $20M economic

development funds

• $9M financing costs

Total $361M securitization

Replacement Power

• Recommended

scenario balances environment, cost and reliability

• 350MW solar drives

62% reduction in carbon emissions

• 130MW battery

storage capacity responsibly integrates new technology

• 280MW natural gas

peaking plants ensure reliability during energy transition, provides San Juan property tax base Total $298M investment

Timing

• Filed July 1, 2019
• NMPRC decision on abandonment and

securitization expected by April 2020; decision on replacement power expected by October 2020

Energy Transition Act Applicability - Intervenor Positions

15

Intervenor(s) Briefs Abandonment/ Securitization (19-00018-UT) Replacement Power (19-00195-UT) Comments

Board of County Commissioners for the County of San Juan and the City of Farmington

 

Contingent upon provision of funds to the San Juan community Central Consolidated School District

 

Contingent upon provision of funds to the San Juan community Citizens for Fair Rates and the Environment

 

Commission should disregard provisions that conflict with the New Mexico Constitution Coalition for Clean Affordable Energy

 

IBEW/IUOE

 

Interwest Energy Alliance

 

New Energy Economy

X X

Cannot apply; ETA is unconstitutional NMPRC Staff

X X

Cannot be applied to pending case San Juan Legislative Delegation

 

Contingent upon provision of funds to the San Juan community Sierra Club

 

Southwest Generation Operating Company



No position on ETA applicability to abandonment/securitization Western Resource Advocates

 

Parties that did not file a brief on ETA applicability: ABCWUA, Attorney General, Bernalillo County, City of Albuquerque, County of Los Alamos, Diné Citizens Against Ruining Our Environment, Greg Sonnenfeld, M-S-R Public Power Agency, Navajo Power, NM AREA, Prosperity Works, REIA, San Juan Citizen Alliance, and Westmoreland Coal, Inc.

PNM Owned Resources Third Party Resources __________________ Total 350 MW ________________ Total 410 MW

Recommended Replacement Power Scenario Details

16

• Competitive RFP processes resulted in a cost-effective mix of resources owned by PNM

and third-party providers

• To manage the risks of integrating new battery storage technology, total storage capacity

does not exceed 5% of peak load and the capacity at each location is limited to 40 MW 280 MW Gas Peaking Units at San Juan $191M investment in-service June 2022 40 MW Storage $50M investment in-service June 2022 30 MW Storage $37M investment in-service June 2022 300 MW Solar PPA + 40 MW Storage ESA $20M transmission investment begins June 2022 50 MW Solar PPA + 20 MW Storage ESA begins Jan 2022

Note: All potential replacement power scenarios incorporated 140 MW wind energy PPA included in June 3, 2019 RPS Filing

Integration of Renewable Generation

17

2018 2020 2025 2035

137 333 721 1,137 356 521 681 956

Growing Solar and Wind Capacity

Based on Recommended San Juan Replacement Scenario (MW)

Solar Wind

Integration of renewable generation requires T&D investment and addition of supporting backup capacity

493 854 1,402 1,955

Note: Resources above and beyond the resources purchased to support the Facebook data center in New Mexico

Transmission and Renewable Expansion in New Mexico

18

Source: American Wind Energy Association, Oct. 2019

New Mexico ranks:

New Mexico added wind capacity at a higher growth rate than any other state in 2017 and currently has projects under construction or in advanced development that will more than double current installed capacity

• 1,953 MW installed capacity
• 1,227 MW under construction
• 1,328 MW in advanced

development

Wind Solar

Source: NREL

New Mexico has abundant solar and wind resources Third-party development increases demand for transmission capacity

Source: WINDExchange.energy.gov, Q3 2019

in US wind capacity potential in US concentrating solar power technical potential

Source: NREL, July 2012

PNM

PNM Load and Economic Conditions

20

Regulated Retail Energy Sales and Customers Economic indicators continue to be positive Weather and Load improved Q3 EPS by $0.05

• 14% increase in cooling degree days
• Industrial, Residential growth partially offset by

Commercial energy efficiency impacts

PNM

Q3 2019 vs. Q3 2018 YTD 2019 vs. YTD 2018 2019E Total PNM Retail Load(1) 0.3% 0.0% 0.0% – 1.0% PNM Avg. Customers 0.7% 0.8% 0.8% – 1.0%

(1) Weather normalized, excludes Economy customers

20-yr Avg 20-yr Avg 20-yr Avg 20-yr Avg 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 Q1 Heating Degree-Days Q2 Cooling Degree-Days Q3 Cooling Degree-Days Q4 Heating Degree-Days

Weather Volatility

NMPRC Commissioners and Districts

21

District Name Term Ends Party

District 1 Cynthia Hall 2020(1) Democrat District 2 Jefferson Byrd 2022(1) Republican District 3 Valerie Espinoza, Vice-Chairman 2020 Democrat District 4 Theresa Becenti-Aguilar, Chairman 2022(1) Democrat District 5 Stephen Fischmann 2022(1) Democrat

NMPRC Districts and PNM Service Areas

(1) Eligible for re-election to a second four-year term

2019 Legislative Update – Appointed vs Elected:

• A Senate Joint Resolution was passed in the New Mexico legislature to

include a state constitutional amendment on the ballot in the next general election (2020) to move to a 3-member, appointed Commission

• If the amendment is passed by a simple majority:
• The legislature defines the nominating committee and the

requirements for Commissioners

• The terms for Commissioners elected in Districts 1 and 3 in 2020 will

be for a two-year term ending in 2022; the terms for Commissioners in Districts 2, 4 and 5 already expire in 2022

• Three appointed Commissioners would begin terms January 1, 2023

PNM Regulatory Agenda

22

Filing Action Timing Docket No.

PNM:

Western Spirit Transmission Line NMPRC approved acquisition on October 2, 2019; FERC approved acquisition on August 8, 2019 and incremental rate effective July 9, 2019 Acquisition planned for mid-2021 19-00129-UT ER19-1824-000 EC19-90-000 Consolidated Application for San Juan (Abandonment, Securitization and Replacement) PNM filed July 1, 2019; NMPRC bifurcated application on July 10, 2019 NMPRC decision on abandonment/ securitization expected by April 2020, decision on replacement power expected by October 2020 19-00018-UT 19-00195-UT Appeal of 2015 General Rate Case to New Mexico Supreme Court New Mexico Supreme Court issued opinion May 16, 2019 affirming NMPRC decision but denying the disallowance of future Palo Verde decommissioning costs; full order was remanded back to the NMPRC No statutory timeline; oral arguments

• n remand held July 17, 2019

15-00261-UT S-1-SC-36115 Solar Direct Program PNM filed May 31, 2019 for approval of voluntary renewable program expected to begin March 31, 2021 NMPRC decision expected in Q1 2020 19-00158-UT 2020 Renewable Plan PNM filed June 3, 2019; hearings held October 24-25, 2019 NMPRC decision expected in Q1 2020 19-00159-UT

$68.59 $76.12 $106.17 $115.42 $137.51

$50 $100 $150

City of Seattle - (WA) Public Service Co of Colorado (CO) El Paso Electric Co (NM) El Paso Electric Co (TX) PacifiCorp (UT) Public Service Co of NM (NM) Montana-Dakota Utilities Co (MT) PacifiCorp (WY) City of Colorado Springs - (CO) NorthWestern Energy LLC - (MT) Avista Corp (ID) Avista Corp (WA) PacifiCorp (ID) Idaho Power Co (ID) Southern California Edison Co (CA) Sacramento Municipal Util Dist (CA) City of Tacoma - (WA) San Diego Gas & Electric Co (CA) Southwestern Public Service Co (NM) Montana-Dakota Utilities Co (WY) Tucson Electric Power Co (AZ) Portland General Electric Co (OR) PacifiCorp (OR) Regional Average Bill Black Hills Power, Inc. d/b/a (WY) PacifiCorp (WA) Pacific Gas & Electric Co. (CA) Nevada Power Co (NV) PacifiCorp (CA) US Average Bill City of San Antonio - (TX) Southwestern Electric Power Co (TX) Modesto Irrigation District (CA) Entergy Texas Inc. (TX) Salt River Project (AZ) Imperial Irrigation District (CA) LADWP (CA) Arizona Public Service Co (AZ)

Comparison of Average Residential Bills(1)

Western Region Average Bills by Utility

PNM Bills Remain Below National and Regional Averages

23

(1)Based on U.S. Energy Information Administration's Residential Rate increases through June 2019

• Current US Avg
• Current Regional Avg
• PNM 2019

Customer bill impacts of increased investments are mitigated by:

‘

• Return of federal tax

savings to customers

• Load growth reduces

per-customer cost of new investments

• Energy Imbalance

Market and renewable investments result in lower costs for fuel

TNMP

TNMP Load and Economic Conditions

25

Regulated Retail Energy Sales and Customers

• Texas is the largest energy-producing state and the

largest energy-consuming state in the nation(1)

• ERCOT summer peak demand projected to grow by

~20% over next 10 years(2), extensive regional studies call for increased transmission infrastructure to support reliability and growth, particularly in West Texas TNMP Demand

(1) Source: Energy Information Administration (EIA) (2) Source: ERCOT 2019-2028 forecast

TNMP Investment Plan by Region

West Texas ~44% North/Central TX ~31% Gulf Coast ~25%

• TNMP Service Area

(1) Changes in load do not have a significant impacts on quarterly EPS; however, demand-based load growth is an indicator of increased infrastructure needs (2) Commercial and Industrial per-kw monthly peak billings; excludes retail Transmission customers

TNMP

Q3 2019 vs. Q3 2018 YTD 2019 vs. YTD 2018 2019E Demand-Based Load(2) 5.4% 4.3% 4.0% – 5.0% TNMP Avg. End Users 1.4% 1.5% 1.5% – 2.0%

Texas growth continues to lead nation Weather and Load improved Q3 EPS by $0.02

• 10% increase in cooling degree days
• Strong demand-based load growth(1)

PUCT Commissioners and TNMP Regulatory Agenda

26

Commissioners are appointed by the Governor of Texas and confirmed by the Senate.

Name Term Began Term Ends Party

DeAnn Walker (Chair)

• Sept. 2017
• Aug. 2021

Republican Arthur D’Andrea

• Nov. 2017
• Aug. 2023

Republican Shelly Botkin June 2018

• Sept. 2019

Republican

PUCT Commissioners

Filing Action Timing Docket No.

General Rate Review Settlement approved December 2, 2018 Rates implemented January 2019 48401 TCOS Filing Filed January 25, 2019 Rates implemented March 2019 49143 TCOS Filing Filed July 23, 2019 Rates implemented September 2019 49785

TNMP Regulatory Agenda

TNMP General Rate Review Settlement

27

Key Components of Approved Settlement Annual revenue increase $10.0M ROE (prior authorized 10.125%) 9.65% Capital structure (prior authorized 45% equity) 45% Equity Cost of debt 6.4% Increase to rate base $73M Return of excess deferred federal income taxes $11.0M

• Settlement approved December 20, 2018
• Rates implemented January 2019

TNMP Rates Comparable in Texas

28

$- $10 $20 $30 $40 $50 $60 Oncor Centerpoint TNMP AEP North AEP Central Residential Total Wires Charge for 1,000 kWh

Current rate filing pending Current rate filing pending Current rate filing pending Current rate filing pending

Source: TDU tariffs for retail delivery service effective September 1, 2019 and PUCT Filings Interchange.

1Rates effective January 2019

New Rates1

Rates expected to be comparable to other IOUs after pending rate filings

Appendix

2019 Consolidated Ongoing Earnings Guidance

30

$2.05 Consolidated EPS $2.11

PNM $1.59 – $1.62 TNMP $0.66 – $0.68 Corp/Other ($0.20) – ($0.19)

2019 Earnings Guidance

2019 - 2023 Potential Earnings Power

31

(1) Average rate base has been reduced by approximately $130M to represent ($0.05) of Earnings Potential for the lost equity return on Four Corners investment determined in the 2018 general

rate review. 2022 and 2023 rate base also reflects the removal of $283M undepreciated SJGS investment upon its retirement in mid-2022 to be recovered through securitization.

(2) Replacement Power includes $298M investment implemented mid-2022; $278M of generation investment and $20M of transmission investment. (3) PNM Renewables reflect assets collected through the Renewable Rate Rider. (4) PNM FERC in 2021-2023 reflects a return of 8%-9% to account for Western Spirit investment recovered through incremental rates. (5) Consists primarily of decommissioning/reclamation trust income (net of fees/taxes), AFUDC, certain incentive compensation, and the 65MW ownership of San Juan Unit 4 (prior to retirement). (6) TNMP earnings include additional recovery for Energy Efficiency, along with items excluded from rates (primarily AFUDC) and interest savings from the refinancing of existing debt. (7) Corporate/Other includes the earnings impacts associated with short and intermediate term bank debt and the 50% equity interest in NMRD. (8) Equity Financing Plans to fund capital growth reflect financing alternatives, including ATM Program or block sale of up to $290M (dilution impacts

assume $50M issued in 2020, $90M to $140M in 2021, $50M in 2022 and $50M in 2023), and $300M mandatory convertibles beginning mid-2021. This table is not intended to represent a forward-looking projection of 2020 - 2023 earnings guidance.

Allowed Return / Equity Ratio

2019 Ongoing Earnings Guidance Midpoint 2020 Earnings Potential 2021 Earnings Potential 2022 Earnings Potential 2023 Earnings Potential

Avg Rate Base Return EPS Avg Rate Base EPS

Avg Rate Base EPS Avg Rate Base EPS Avg Rate Base EPS PNM Retail(1)

9.575% / 50% $2.4 B 8.9% $1.37 $2.4 B $1.44 $2.5 B $1.52 $2.4 B $1.48 $2.4 B $1.48

San Juan Replacement(2)

9.575% / 50% $150 M $0.09 $280 M $0.17

PNM Renewables(3)

9.575% / 50% $115 M 9.575% $0.07 $150 M $0.09 $145 M $0.09 $140 M $0.08 $130 M $0.07

PNM FERC(4)

10% / ~50% $275 M 6.9% $0.12 $330 M $0.15-$0.20 $530 M $0.26-$0.30 $740 M $0.37-$0.42 $780 M $0.39-$0.44

Items not in Rates(5)

$0.04 ($0.04)-($0.02) ($0.03)-($0.01) ($0.03)-($0.01) ($0.03)-($0.01)

Total PNM

$2.7 B $1.60 $2.9 B $1.64-$1.71 $3.2 B $1.84-$1.90 $3.5 B $1.99-$2.06 $3.6 B $2.08-$2.15

TNMP(6)

9.65% / 45% $1.1 B 9.65% $0.67 $1.3 B $0.73 $1.5 B $0.84 $1.6 B $0.89 $1.9 B $1.02

Corporate/Other(7)

($0.19) ($0.21)-($0.19) ($0.21)-($0.19) ($0.19)-($0.17) ($0.23)-($0.21)

Equity Financing Plans(8)

($0.01)-$0.00 ($0.10)-($0.09) ($0.20)-($0.19) ($0.24)-($0.23)

Total PNM Resources

$3.8 B $2.08 $4.2 B $2.15 - $2.25 $4.7 B $2.37 - $2.46 $5.1 B $2.49 - $2.59 $5.6 B $2.63 - $2.73

Liquidity as of October 25, 2019

32

PNM TNMP PNMR PNM Resources Consolidated PNMR Develop- ment Corporate /Other Financing Capacity(1): (In millions) Revolving credit facilities $440.0 $75.0 $40.0 $300.0 $855.0 As of 10/25/19: Short-term debt and LOC balances $2.5 $15.4 $38.9 $84.1 $140.9 Remaining availability 437.5 59.6 1.1 215.9 714.1 Invested cash 20.5

• 0.9

21.4 Total Available Liquidity $458.0 $59.6 $1.1 $216.8 $735.5

(1) Excludes intercompany debt and term loans

San Juan and Four Corners Generating Stations Ownership and Participants

33 Unit Total MW PNM MW PNM Ownership Other Participants/Ownership 1 340 170 50% Tucson Electric 50% (170 MW) 4 507 392 77.3% City of Farmington 8.5% (43 MW) Los Alamos County 7.2% (36.5 MW) Utah Associated Municipal Power Systems (UAMPS) 7.0% (35.5 MW) Total 847 562 Unit Total MW PNM MW PNM Ownership Other Participants/Ownership 4 770 100 13% Arizona Public Service Company 70% (539 MW) Salt River Project 10% (77 MW) Tucson Electric Power 7% (54 MW) 5 770 100 13% Arizona Public Service Company 70% (539 MW) Salt River Project 10% (77 MW) Tucson Electric Power 7% (54 MW) Total 1,540 200

San Juan Generating Station Four Corners Generating Station

Palo Verde Nuclear Generating Station Ownership and Leases

34

MW Owned vs. Leased Lease Expiration

• Unit 1: January 15, 2015; exercised option to extend leases to 2023
• Unit 2: January 15, 2016; exercised right to purchase 3 leases in 2016 and option to extend one lease to 2024

Yearly Payment Amounts

• Total PV Unit 1 - $16.5M
• Total PV Unit 2 - $1.6M

Unit 1 Owned 2.3% 30 MW Leased 7.9% 104 MW Total 10.2% 134 MW Unit 2 Owned 9.5% 124 MW Leased 0.7% 10 MW Total 10.2% 134 MW Unit 3 Owned 10.2% 134 MW Leased 0% 0 MW Total 10.2% 134 MW

Battery Storage Integration

35

The following slides come to life with Augmented Reality (AR) powered by RealityX2

This new technology runs in your smartphone or tablet and overlays a digital/virtual world on top of your physical reality. Experience AR for yourself by visiting the App store to download and open the RealityX2 app, then pointing your device at the images contained in these slides to learn more about battery storage and plans for the integration of battery storage at PNM.

The Case for Battery Storage

36

• Historically, large fossil fuel

and nuclear plants were constructed to meet a constantly growing energy demand with 24/7 reliability

• Battery storage provides a

solution for an increasing amount of intermittent renewables resources without sacrificing reliability

Utilize the app to visualize how energy flows under the “old” and “new” ways

Battery Technology

37

• Battery storage technology has evolved from lead acid batteries to

lithium ion batteries in a variety of applications, including utility- scale energy storage

• Flow batteries represent the next evolution of battery technology

Utilize the app to see inside each battery and hear about each technology

Utility Integration and PNM Plans

38

• The PNM Prosperity Project was an early pioneer for grid-connected

battery storage

• PNM has proposed plans for future integration of battery storage

through purchase power agreements and utility-owned facilities

Utilize the app to tour the PNM Prosperity Project and hear our plans and considerations for future battery integration