PNM Resources, Inc. (Holding Co.)

Good day and welcome to the PNM Resources first quarter 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Lisa Goodman, Director of Investor Relations. Please go ahead.

Thank you, Vaishnavi, and thank you everyone for joining us this morning for the PNM Resources First Quarter 2022 Earnings Call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com. Joining me today are PNM Resources Chairman, President, and CEO, Pat Vincent-Colon, and Don Terry, our Senior Vice President and Chief Financial Officer. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates, and the PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM resources results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as reports on Form 8-K filed with the SEC.

With that, I will turn the call over to Pat. Thank you, Lisa. Good morning, everyone. Before we get started, I would like everyone to join me in congratulating the newly promoted Lisa Goodman, our new Executive Director of Investor Relations and Shareholder Services. Congratulations, Lisa. It's a surprise to her, too. So thank you all for joining us today on National Superhero Day. We've all heard the phrase that not all heroes wear capes, and around here that holds true for everyone in our offices and in the field who are holding strong to our values and doing the right thing for our customers and communities. Our successes are the result of each team member contributing to our strategy and goals. And I thank the team here at PNM Resources for making this a reality. On a lighter note, it is also National Great Poetry Reading Day. So I have taken a stab at writing a haiku to summarize today's call. So here we go. Numbers looking good. Steadfast in exiting coal. Merger continues. Okay, so it is definitely not great poetry, and it's certainly not what Japan's haiku master poets had in mind, so I will promise you stick with my day job. I'm going to start on slide four with our financial results and company updates. Ongoing earnings increased during the first quarter compared to last year, coming in at 50 cents. We are affirming our guidance for both 2022 and 2023 as we continue focusing on executing our business plans and delivering results. Don will cover the financials in more detail. Before I move into our regulatory updates at PNM and TNMP, let me quickly touch on our proposed merger. Earlier this month, we filed our brief-in-chief with the New Mexico Supreme Court that makes our arguments on the items previously laid out in the Statement of Issues. We also requested the court hear oral arguments. The next step will be for the New Mexico Public Regulation Commission to file their answer brief. Our final response brief will then be due in the first week of July, which will complete the briefing schedule. As a reminder, there is no statutory timeframe, and we continue to expect a 12- to 18-month process from our initial filing in January. So now, moving on to our regulatory updates. At TNMP, we received approval for our first 2022 semi-annual transmission cost of service filing at the end of March, reflecting a $14.2 million annual increase. TNMP also made its annual filing for recovery of distribution investments in early April, and we expect to implement new rates associated with this filing in September. While these filings may seem fairly routine, our teams have consistently done a thorough job in making these filings to support the needed investments on our system, and we look forward to working with staff and other interveners for a successful outcome. At PNM, yesterday the New Mexico Commission issued an order in our decoupling docket originally filed back in 2020. Parties to the docket disagreed on the changes made by the legislature in 2019 that we believe were intended to allow for a full revenue decoupling and we asked the Commission to provide their interpretation through a petition for a declaratory order. Despite opinions expressed by the Commission's General Counsel, the Commission issued an order specifying that decoupling only applies to changes in customer usage tied to a utility's approved energy efficiency plans. We will be reviewing the order to evaluate our options, which do include an appeal to the New Mexico Supreme Court. And we are not backing down on our early exit of the Four Corners Power Plant and securitization of the undepreciated investments. Similar to the merger appeal, we have filed an appeal with the Supreme Court and filed our brief in March. The Commission will file an answer brief by May 12, and then we will have a response brief in early June. We have also requested oral arguments in this case, and as a reminder, there is no statutory clock for this appeal. Turning to slide five, remember that the Four Corners appeal is part of our strategy to exit coal as we fully eliminate carbon emissions from our generation portfolio. This is a tremendous shift for a utility of our size that relied on coal for over half of our energy needs just five years ago. And this transition is about more than just environmental benefits. It is also designed to reduce costs to customers and to support the communities impacted by the exit from coal. This was the intent of New Mexico's landmark legislation, the Energy Transition Act, that takes a comprehensive approach on moving the state forward into the clean energy future. As an owner and the operator of the San Juan coal plant, we recognize the significance of closing down such a major economic contributor for northwest New Mexico and the surrounding area. We began talking about the closure of the plant back in 2017 and working with stakeholders in the region to provide increased support for economic development opportunities, people and the community at large ahead of the plant shutdown. Our own teams, their families and heritage are part of this transition and we did not take any decisions lightly. We took steps to get funds to impacted workers early. PNM provides for the severances and assistance for any of our own workers, but securitization includes severance and job training funding for the coal mine workers. We knew they would be the first to feel the impacts. We had planned to pre-fund amounts in 2021, but this was held up by the appeal of our securitization approval. Once the Supreme Court upheld our approval in January of this year, we were able to move forward with getting these funds where they were intended even earlier than the Energy Transition Act had contemplated. We have the same considerations for the Four Corners Power Plant, which is located in this same region. We own a much smaller share of the plant and are not the ultimate decision maker on when the plant shuts down. Our filing included securitization of unappreciated investments as both a means to further reduce customer costs as we exit coal and also to support this community with economic development funds that can be put to use years before the plant shuts down. It doesn't mean that our states or anyone's energy transition comes without challenges. The constitutionality of the Energy Transition Act, particularly the portion governing recovery of unappreciated investment, was challenged first at the onset of the new law and then again through the appeal of securitization approval for San Juan. The New Mexico Supreme Court upheld the Energy Transition Act both times. The law is being challenged again with the Commission's denial of our application to exit and securitize Four Corners under the Energy Transition Act, as we have detailed in our arguments on our appeal. Supply chain disruptions are also challenging the transition, with delays in bringing the solar and storage PPAs online that would replace San Juan. We filed with the Commission to extend one of the San Juan units for three months to provide sufficient reserve margin throughout our summer peak, and they responded that this planned extension did not require approval. The transition to lower cost resources will reduce costs for customers, This reduction will help to offset the bill impact from the recovery of new investments made since 2018 when our last rate review was completed. We had planned to file our next rate review in 2020, but delayed the recovery on our growing rate base, recognizing the impact a rate increase would have on our customers during the midst of a global pandemic. We made the same decision to defer recovery as the pandemic continued in 2021. Then, as part of our negotiations with parties in our merger filing, we agreed to further delay the filing until after December 1, 2022, again for the benefit of customers. We are now targeting the end of 2022 for a filing based on 2024 costs, reflecting the changes at San Juan. The Commission has taken up a motion to look at separating the San Juan cost reductions from other rate updates, essentially asking us to continue delaying any new recovery while carving out the offsetting San Juan reduction. We do not think the law, nor the facts and circumstances, support the action requested by this motion. Our plans to exit coal are right for our customers, our communities, our environment, and our shareholders. These plans are also consistent with the goal of our ESG strategy. Before I hand things over to Don, I want to touch on one recent ESG highlight. You can see on slide six, we worked over the past several months to develop a new PNM Pueblo Scholarship Endowment Fund, continuing our support for tribal communities and also our focus on education. Our hope is for this investment to provide opportunities to create economies that are aligned with Pueblo cultural values and traditions, leading to meaningful economic development in Pueblo communities. We want to see these communities thrive in ways that ensure the Pueblo way of life remains sustainable for generations to come. I am proud of our partnership with the All-Pueblo Council of Governors and the American Indian Graduate Center to bring this collaborative vision to reality and look forward to the first scholarships being awarded this year. With that, I will turn it over to Don to walk through the financials.