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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Schedule of Components of Income Tax Expense (Benefit) | TNMP’s income taxes consist of the following components:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Current federal income tax | $ | 9,445 |  |  | $ | 1,603 |  |  | $ | 35 |
Current state income tax | 1,729 |  |  | 1,639 |  |  | 1,939 |
Deferred federal income tax | 12,690 |  |  | 20,904 |  |  | 20,577 |
Deferred state income tax | (28 | ) |  | (21 | ) |  | (28 | )
Total income taxes | $ | 23,836 |  |  | $ | 24,125 |  |  | $ | 22,523 |
PNMR’s income taxes consist of the following components:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Current federal income tax | $ | — |  |  | $ | — |  |  | $ | (2,015 | )
Current state income tax | (527 | ) |  | (1,376 | ) |  | (728 | )
Deferred federal income tax | 60,892 |  |  | 5,488 |  |  | 59,814 |
Deferred state income tax | 3,886 |  |  | 12,305 |  |  | 14,831 |
Amortization of accumulated investment tax credits | (973 | ) |  | (1,342 | ) |  | (2,164 | )
Total income taxes | $ | 63,278 |  |  | $ | 15,075 |  |  | $ | 69,738 |
PNM’s income taxes (benefit) consist of the following components:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Current federal income tax | $ | (10,290 | ) |  | $ | (7,934 | ) |  | $ | (2,175 | )
Current state income tax | (1,907 | ) |  | (1,988 | ) |  | (979 | )
Deferred federal income tax | 49,123 |  |  | (6,827 | ) |  | 45,890 |
Deferred state income tax | 4,969 |  |  | 5,333 |  |  | 12,061 |
Amortization of accumulated investment tax credits | (973 | ) |  | (1,342 | ) |  | (2,164 | )
Total income taxes (benefit) | $ | 40,922 |  |  | $ | (12,758 | ) |  | $ | 52,633 |
Schedule of Effective Income Tax Rate Reconciliation | PNMR’s provision for income taxes differed from the federal income tax computed at the statutory rate for each of the years shown. The differences are attributable to the following factors:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Federal income tax at statutory rates | $ | 68,311 |  |  | $ | 16,154 |  |  | $ | 70,226 |
Amortization of accumulated investment tax credits | (973 | ) |  | (1,342 | ) |  | (2,164 | )
Flow-through of depreciation items | 1,227 |  |  | 1,485 |  |  | 1,344 |
Earnings attributable to non-controlling interest in Valencia | (5,082 | ) |  | (5,218 | ) |  | (4,945 | )
State income tax, net of federal benefit | 4,537 |  |  | (1,781 | ) |  | 5,723 |
Impairment of state net operating loss carryforwards | (311 | ) |  | 5,278 |  |  | 3,129 |
Impairment of state production tax credits | — |  |  | 3,092 |  |  | 894 |
Allowance for equity funds used during construction | (1,732 | ) |  | (3,650 | ) |  | (1,947 | )
Reversal of deferred items related to BART at SJGS | — |  |  | 1,826 |  |  | — |
Impairment of charitable contribution carryforward | — |  |  | 2,042 |  |  | — |
Regulatory recovery of prior year impairment of state net operating loss carryforward, net of amortization | (1,877 | ) |  | — |  |  | — |
Other | (822 | ) |  | (2,811 | ) |  | (2,522 | )
Total income taxes | $ | 63,278 |  |  | $ | 15,075 |  |  | $ | 69,738 |
Effective tax rate | 32.42 | % |  | 32.66 | % |  | 34.76 | %
The differences are attributable to the following factors:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Federal income tax (benefit) at statutory rates | $ | 46,501 |  |  | $ | (4,579 | ) |  | $ | 53,930 |
Amortization of accumulated investment tax credits | (973 | ) |  | (1,342 | ) |  | (2,164 | )
Flow-through of depreciation items | 1,185 |  |  | 1,465 |  |  | 1,325 |
Earnings attributable to non-controlling interest in Valencia | (5,082 | ) |  | (5,218 | ) |  | (4,945 | )
State income tax, net of federal benefit | 3,921 |  |  | (2,162 | ) |  | 5,522 |
Impairment of state net operating loss carryforwards | (213 | ) |  | 3,619 |  |  | 2,145 |
Allowance for equity funds used during construction | (1,457 | ) |  | (3,650 | ) |  | (1,947 | )
Reversal of deferred items related to BART at SJGS | — |  |  | 1,826 |  |  | — |
Reversal of deferred income taxes accrued at prior tax rates | (301 | ) |  | (737 | ) |  | (737 | )
Regulatory recovery of prior year impairment of state net operating loss carryforward, net of amortization | (1,877 | ) |  | — |  |  | — |
Other | (782 | ) |  | (1,980 | ) |  | (496 | )
Total income taxes (benefit) | $ | 40,922 |  |  | $ | (12,758 | ) |  | $ | 52,633 |
Effective tax rate | 30.80 | % |  | 97.52 | % |  | 34.16 | %
The differences are attributable to the following factors:
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Federal income tax at statutory rates | $ | 22,928 |  |  | $ | 23,131 |  |  | $ | 21,115 |
State income tax, net of federal benefit | 1,132 |  |  | 1,065 |  |  | 1,257 |
Other | (224 | ) |  | (71 | ) |  | 151 |
Total income taxes | $ | 23,836 |  |  | $ | 24,125 |  |  | $ | 22,523 |
Effective tax rate | 36.39 | % |  | 36.50 | % |  | 37.33 | %
Components of Deferred Tax Assets and Liabilities | The components of PNM’s net accumulated deferred income tax liability were:
| December 31,
| 2016 |  | 2015
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss | $ | 117,922 |  |  | $ | 116,693 |
Regulatory liabilities related to income taxes | 60,940 |  |  | 75,889 |
Federal tax credit carryforwards | 59,156 |  |  | 57,928 |
Shutdown of SJGS Units 2 and 3 | 53,434 |  |  | 53,823 |
Other | 41,700 |  |  | 41,210 |
Total deferred tax assets | 333,152 |  |  | 345,543 |
Deferred tax liabilities: |  |  |
Depreciation and plant related | (891,578 | ) |  | (828,926 | )
Investment tax credit | (56,017 | ) |  | (56,589 | )
Regulatory assets related to income taxes | (56,577 | ) |  | (61,018 | )
Pension | (50,134 | ) |  | (58,070 | )
Other | (27,512 | ) |  | (37,324 | )
Total deferred tax liabilities | (1,081,818 | ) |  | (1,041,927 | )
Net accumulated deferred income tax liabilities | $ | (748,666 | ) |  | $ | (696,384 | )
The components of PNMR’s net accumulated deferred income tax liability were:
| December 31,
| 2016 |  | 2015
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss | $ | 160,901 |  |  | $ | 161,691 |
Regulatory liabilities related to income taxes | 64,657 |  |  | 80,031 |
Federal tax credit carryforwards | 78,675 |  |  | 77,417 |
Shutdown of SJGS Units 2 and 3 | 53,434 |  |  | 53,823 |
Other | 75,805 |  |  | 70,749 |
Total deferred tax assets | 433,472 |  |  | 443,711 |
Deferred tax liabilities: |  |  |
Depreciation and plant related | (1,102,458 | ) |  | (1,027,047 | )
Investment tax credit | (56,017 | ) |  | (56,589 | )
Regulatory assets related to income taxes | (66,378 | ) |  | (71,054 | )
CTC | (12,715 | ) |  | (16,151 | )
Pension | (57,287 | ) |  | (65,226 | )
Other | (79,267 | ) |  | (85,037 | )
Total deferred tax liabilities | (1,374,122 | ) |  | (1,321,104 | )
Net accumulated deferred income tax liabilities | $ | (940,650 | ) |  | $ | (877,393 | )
The components of TNMP’s net accumulated deferred income tax liability at December 31, were:
| December 31,
| 2016 |  | 2015
| (In thousands)
Deferred tax assets: |  |  |
Regulatory liabilities related to income taxes | $ | 3,718 |  |  | $ | 4,141 |
Other | 6,016 |  |  | 6,702 |
Total deferred tax assets | 9,734 |  |  | 10,843 |
Deferred tax liabilities: |  |  |
Depreciation and plant related | (201,017 | ) |  | (189,322 | )
CTC | (12,715 | ) |  | (16,151 | )
Regulatory assets related to income taxes | (9,800 | ) |  | (10,036 | )
Loss on reacquired debt | (11,937 | ) |  | (12,392 | )
Other | (20,050 | ) |  | (15,733 | )
Total deferred tax liabilities | (255,519 | ) |  | (243,634 | )
Net accumulated deferred income tax liabilities | $ | (245,785 | ) |  | $ | (232,791 | )
Reconciliation of Accumulated Deferred Income Tax Liability to Deferred Income Tax Benefit | The following table reconciles the change in PNMR’s net accumulated deferred income tax liability to the deferred income tax benefit included in the Consolidated Statement of Earnings:
| Year Ended
| December 31, 2016
| (In thousands)
Net change in deferred income tax liability per above table | $ | 63,257 |
Change in tax effects of income tax related regulatory assets and liabilities | (10,621 | )
Tax effect of mark-to-market adjustments | 8,379 |
Tax effect of excess pension liability | 5,071 |
Adjustment for uncertain income tax positions | 297 |
Reclassification of unrecognized tax benefits | (297 | )
Regulatory recovery of prior year impairment of state net operating loss carryforward, net of amortization | (1,877 | )
Other | (404 | )
Deferred income taxes | $ | 63,805 |
The following table reconciles the change in PNM’s net accumulated deferred income tax liability to the deferred income tax benefit included in the Consolidated Statement of Earnings:
| Year Ended
| December 31, 2016
| (In thousands)
Net change in deferred income tax liability per above table | $ | 52,282 |
Change in tax effects of income tax related regulatory assets and liabilities | (10,510 | )
Tax effect of mark-to-market adjustments | 8,336 |
Tax effect of excess pension liability | 5,071 |
Adjustment for uncertain income tax positions | 297 |
Reclassification of unrecognized tax benefits | (297 | )
Regulatory recovery of prior year impairment of state net operating loss carryforward, net of amortization | (1,877 | )
Other | (183 | )
Deferred income taxes | $ | 53,119 |
The following table reconciles the change in TNMP’s net accumulated deferred income tax liability to the deferred income tax benefit included in the Consolidated Statement of Earnings:
| Year Ended
| December 31, 2016
| (In thousands)
Net change in deferred income tax liability per above table | $ | 12,994 |
Change in tax effects of income tax related regulatory assets and liabilities | (111 | )
Other | (221 | )
Deferred income taxes | $ | 12,662 |
Reconciliation of Unrecognized Tax Benefits (Expenses) | A reconciliation of unrecognized tax benefits (expenses) is as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
Balance at December 31, 2013 | $ | 19,889 |  |  | $ | 11,073 |  |  | $ | 6,796 |
Additions based on tax positions related to 2014 | 623 |  |  | 623 |  |  | — |
Additions (reductions) for tax positions of prior years | (5,481 | ) |  | 532 |  |  | (6,796 | )
Settlement payments | — |  |  | — |  |  | — |
Balance at December 31, 2014 | 15,031 |  |  | 12,228 |  |  | — |
Additions based on tax positions related to 2015 | 1,214 |  |  | 1,214 |  |  | — |
Additions (reductions) for tax positions of prior years | (9,790 | ) |  | (9,790 | ) |  | — |
Settlement payments | — |  |  | — |  |  | — |
Balance at December 31, 2015 | 6,455 |  |  | 3,652 |  |  | — |
Additions based on tax positions related to 2016 | 242 |  |  | 242 |  |  | — |
Additions (reductions) for tax positions of prior years | 55 |  |  | 55 |  |  | — |
Settlement payments | — |  |  | — |  |  | — |
Balance at December 31, 2016 | $ | 6,752 |  |  | $ | 3,949 |  |  | $ | — |
Interest Income (Expense) Related to Income Taxes | Interest income (expense) related to income taxes is as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
2016 | $ | 4,398 |  |  | $ | 3,625 |  |  | $ | 345 |
2015 | $ | — |  |  | $ | — |  |  | $ | — |
2014 | $ | 146 |  |  | $ | 148 |  |  | $ | (2 | )
Accumulated Accrued Interest Receivable (Payable) Related to Income Taxes | Accumulated accrued interest receivable (payable) related to income taxes is as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
December 31, 2016: |  |  |  |  |
Accumulated accrued interest receivable | $ | — |  |  | $ | — |  |  | $ | — |
Accumulated accrued interest payable | $ | — |  |  | $ | — |  |  | $ | — |
December 31, 2015: |  |  |  |  |
Accumulated accrued interest receivable | $ | 3,236 |  |  | $ | 3,236 |  |  | $ | — |
Accumulated accrued interest payable | $ | (1,120 | ) |  | $ | (24 | ) |  | $ | (120 | )
Deferred Income Taxes, Increase (Decrease) In Regulatory Liability and Income Tax Expense | Adjustments to deferred income taxes recorded as increases (decreases) in the regulatory liability and income tax expense are as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
December 31, 2016: |  |  |  |  |
Regulatory liability | $ | (7,132 | ) |  | $ | (7,132 | ) |  | $ | — |
Income tax expense | $ | 712 |  |  | $ | 804 |  |  | $ | — |
December 31, 2015: |  |  |  |  |
Regulatory liability | $ | (1,903 | ) |  | $ | (1,903 | ) |  | $ | — |
Income tax expense | $ | (674 | ) |  | $ | (470 | ) |  | $ | — |
December 31, 2014: |  |  |  |  |
Regulatory liability | $ | (5,106 | ) |  | $ | (5,106 | ) |  | $ | — |
Income tax expense | $ | (71 | ) |  | $ | (312 | ) |  | $ | — |
Tax Carryforward, Impairments, net of Federal Tax Benefit | The impairments, net of federal tax benefit, for 2014 through 2016 are as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
December 31, 2016: |  |  |  |  |
State tax credit carryforwards | $ | — |  |  | $ | — |  |  | $ | — |
State net operating loss carryforwards | $ | (311 | ) |  | $ | (213 | ) |  | $ | — |
Charitable contribution carryforwards | $ | — |  |  | $ | — |  |  | $ | — |
December 31, 2015: |  |  |  |  |
State tax credit carryforwards | $ | 3,092 |  |  | $ | — |  |  | $ | — |
State net operating loss carryforwards | $ | 5,278 |  |  | $ | 3,619 |  |  | $ | — |
Charitable contribution carryforwards | $ | 2,042 |  |  | $ | — |  |  | $ | — |
December 31, 2014: |  |  |  |  |
State tax credit carryforwards | $ | 894 |  |  | $ | — |  |  | $ | — |
State net operating loss carryforwards | $ | 3,129 |  |  | $ | 2,145 |  |  | $ | — |
Summary of Tax Credit Carryforwards | The reserve balances, after reflecting expiration of carryforwards under applicable tax laws, at December 31, 2016 and 2015 are as follows:
| PNMR |  | PNM |  | TNMP
| (In thousands)
December 31, 2016: |  |  |  |  |
State tax credit carryforwards | $ | 3,986 |  |  | $ | — |  |  | $ | — |
State net operating loss carryforwards | $ | 361 |  |  | $ | 248 |  |  | $ | — |
Charitable contribution carryforwards | $ | 659 |  |  | $ | — |  |  | $ | — |
December 31, 2015: |  |  |  |  |
State tax credit carryforwards | $ | 6,378 |  |  | $ | — |  |  | $ | — |
State net operating loss carryforwards | $ | 361 |  |  | $ | 248 |  |  | $ | — |
Charitable contribution carryforwards | $ | 659 |  |  | $ | — |  |  | $ | — |

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