Dive Brief:
- Supply chain constraints impacting industrial customers have slowed demand growth projections this year for Public Service Co. of New Mexico, known as PNM, officials said Friday during the earnings call of parent company PNM Resources. The utility now expects 2022 retail load growth to come in somewhere between 0.5% and 1.5%, about half the pace of previous estimates.
- Conversely, PNM Resourcesâ other utility subsidiary, Texas-New Mexico Power, has seen load growth beat expectations âacross the board,â said officials, in part due to a double-digit expansion of crypto mining loads. Volumetric growth has been 2.8% year-to-date, and the utility increased load growth expectations for the year to a range of 2% to 3%.
- PNM Resources is also in a holding pattern with regard to its proposed merger with Connecticut-based Avangrid. New Mexico regulators denied the deal in 2021Â over a variety of concerns but the utility has appealed to the stateâs Supreme Court. âAs Tom Petty so beautifully sang, the waiting is truly the hardest part,â PNMÂ Resources Chairman and CEO Patricia Vincent-Collawn told reporters and analysts.
Dive Insight:
PNM Resources on Friday raised its 2022 earnings guidance to a range of $2.63 to $2.68/share, âbased on the continued strength at the utilities [and] offset by higher interest rates,â Vincent-Collawn said.Â
In the utility companyâs second-quarter earnings presentation, it had estimated ongoing 2022 earnings of $2.50 to $2.60/share. The utility said it anticipates load growth to accelerate next year and is planning a $344 million grid modernization investment in its PNM territory.
The New Mexico Public Regulation Commission is slated to begin hearings on the grid modernization proposal in March, PNMÂ Resources President and Chief Operating Officer Don Tarry said. The utility requested approval by July, with plans to implement a rate rider beginning in September âafter summer rates and customer bills are lower,â he said.
Company officials also noted the third quarter took PNM a step forward on plans to be emissions-free by 2040, with the retirement of its last unit at the coal-fired San Juan Generating Station.
âThis significantly reduces the amount of coal in PNM's generation, to less than 10%, and brings our portfolio to 55% carbon-free,â said Vincent-Collawn.
Officials also discussed load growth outlooks for PNMâs utilities.
For PNM, âthe primary driver of growth in our original guidance was from our industrial customers,â Tarry said. âDelays related to customer supply chain issues and other pressures have moved this timing out till next year. ... Looking ahead to 2023, our expectation is for industrial customers to move through their delays and get back to the original forecast of 2% to 3%.â
Residential and commercial load in the PNM territory has also âdone better than expectations for the year,â Tarry noted. Because industrial customers pay the lowest electricity rates, the slower growth âdoes not have significant impacts on our EPS,â he said.
Load growth at Texas-New Mexico Power, on the other hand, âhas exceeded expectations across the board,â Tarry said. âUsage from crypto mining customers has pushed growth up to double-digit levels. Without crypto mining usage, demand-based load has grown consistent with our expectations for the year of 2.5% to 3.5%.â
As for the Avangrid merger, officials say they are now waiting on the New Mexico Supreme Court.
Avangrid and PNM Resources appealed the PRCâs denial in January and the courtâs briefing schedule concluded in August. âNo response has been provided on the companies' request for oral argument,â the company said in a statement. âThere is no statutory deadline for the Court to respond to the request for oral argument nor to act on the appeal.â
New Mexico regulators denied the $8 billion deal on warnings of reliability risks, the potential for higher prices and slower development of renewable resources.