PNM Resources Inc. (2.6%) (NYSE:PNM) (PNM – $33.72 – NYSE) is a public utility holding company headquartered in Albuquerque, New Mexico. Regulated electric utility subsidiaries include Public Service Company of New Mexico (PSNM) and Texas-New Mexico Power Company (TNMP). PNM expects rate base growth of 5%-7% per annum at both PSNM and TNMP. PNM’s 2016-2019 capital plan totals $1.7 billion, including $547 million in 2016, $425 million in 2017, $398 million in 2018 (excludes $165 million for PV 3) and $352 million in 2019. In late 2015, PNM received final approval of its major environmental plan and ownership changes for the San Juan coal units. Additionally, PSNM refiled an important New Mexico rate case on August 27, 2015. It requested a $123.5 million annual revenue increase, based on a 10.5% allowed ROE using a rate base of $2.5 billion, for the test year October 2015-September 2016. PSNM expects a NMPRC rate order in the third quarter of 2016. In December 2015, the NMPRC agreed to clarify future test year standards begin 13 months after a rate case is filed. We expect BART and other investment to be recognized in the 2018 future test year rate order. We expect the use of a forward-looking test year to provide PSNM greater opportunity to earn its allowed ROE. Assuming fair regulatory treatment, PNM targets 7%-9% annual earnings growth, which includes 2016 earnings guidance of $1.55-$1.76 per share, and 2017 earnings power of $1.94-$2.01 per share.
From Mario Gabelli (Trades, Portfolio)'s Gabelli Utilities Fund first quarter 2016 commentary.
