PNM’s Credit Outlook Moved to Negative by Standard and Poor’s

ALBUQUERQUE, N.M.) – Standard and Poor’s (S&P) today moved the PNM Resources (NYSE: PNM) family of companies, which includes Public Service Co. of New Mexico (PNM), to Negative Outlook following the recent New Mexico Public Regulation Commission order in PNM’s rate case, moving the companies in the direction of a credit rating downgrade.

S&P’s report discusses the challenging regulatory environment in New Mexico, including the financial impact of PNM’s recent regulatory order. In addition, S&P has concerns about the treatment of Four Corners Power Plant throughout the regulatory proceeding. The report says PNM’s continued investments in this plant results in “potential regulatory headwinds for the company.”

“Credit ratings have a direct impact on PNM and our customers’ bills,” said Chuck Eldred, executive vice president and CFO of PNM Resources. “PNM is currently at an investment grade credit rating. However, this change in outlook could have a long-term impact on our financial health, cost-effective funding of capital investments and our ability to support programs for new customers.”

Company ratings and outlooks are the equivalent of scores that are used by banks to determine an individuals’ credit worthiness and the interest rate individuals pay to borrow money. Electric companies such as PNM borrow significant amounts of money to pay for the equipment to generate electricity and the poles and wires to deliver it to customers. While customers repay these amounts over time through their bills, the interest rate associated with these investments impacts the total amount: the lower the company’s credit rating, the higher the cost to customers.

Background:
PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2016 consolidated operating revenues of $1.4 billion. Through its regulated utilities, PNM and TNMP, PNM Resources has approximately 2,791 megawatts of generation capacity and provides electricity to more than 767,000 homes and businesses in New Mexico and Texas.