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Fair Value of Derivative and Other Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value of Derivative and Other Financial Instruments [Abstract]

commodity derivative instruments that are recorded at fair value, all of which are accounted for as economic hedges, are summarized as follows:



	Economic Hedges
	June 30, 2017			December 31, 2016
	(In thousands)
Current assets	$	3,847		$	5,224
Deferred charges	4,106			—
	7,953			5,224
Current liabilities	(1,990		)	(2,339		)
Long-term liabilities	(4,106		)	—
	(6,096		)	(2,339		)
Net	$	1,857		$	2,885

Effect of Mark-to-Market on Earnings, Excluding Tax Effects

The following table presents the effect of mark-to-market commodity derivative instruments on PNM’s earnings, excluding income tax effects. Commodity derivatives had no impact on OCI for the periods presented.



	Economic Hedges
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(In thousands)
Electric operating revenues	$	4,592		$	(4,123	)	$	7,933		$	(1,439	)
Cost of energy	(5,286		)	(967		)	(5,276		)	(1,112		)
Total gain (loss)	$	(694	)	$	(5,090	)	$	2,657		$	(2,551	)

Schedule of Net Buy (Sell) Volume Positions

The table below presents PNM’s net buy (sell) volume positions:



	Economic Hedges
	MMBTU	MWh

June 30, 2017	177,500	(1,383,295	)
December 31, 2016	254,100	(2,471,600	)

Schedule of Fair Value and Gross Unrealized Gains in Available-for-sale Securities

The fair value and gross unrealized gains of investments in available-for-sale securities are presented in the following table.



	June 30, 2017				December 31, 2016
	Unrealized Gains		Fair Value		Unrealized Gains		Fair Value
			(In thousands)
Cash and cash equivalents	$	—	$	10,318	$	—	$	23,683
Equity securities:
Domestic value	4,640		69,106		1,135		34,796
Domestic growth	4,542		68,147		3,032		47,595
International and other	3,396		38,620		2,029		27,481
Fixed income securities:
U.S. Government	371		29,411		115		40,962
Municipals	949		37,137		585		43,789
Corporate and other	1,423		42,287		553		54,671
	$	15,321	$	295,026	$	7,449	$	272,977

Schedule of Gross Realized Gains and Losses

The proceeds and gross realized gains and losses on the disposition of available-for-sale securities are shown in the following table. Realized gains and losses are determined by specific identification of costs of securities sold. Gross realized losses shown below exclude the (increase)/decrease in realized impairment losses of $(0.1) million and $1.0 million for the three and six months ended June 30, 2017 and $(0.7) million and $0.9 million for the three and six months ended June 30, 2016.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(In thousands)
Proceeds from sales	$	91,657		$	69,115		$	358,045		$	194,014
Gross realized gains	$	7,971		$	9,531		$	16,617		$	20,247
Gross realized (losses)	$	(2,236	)	$	(4,233	)	$	(5,321	)	$	(10,349	)

Investments Classified by Contractual Maturity Date

At June 30, 2017, the available-for-sale and held-to-maturity debt securities had the following final maturities:



	Fair Value
	Available-for-Sale		Held-to-Maturity
	PNMR and PNM		PNMR
	(In thousands)
Within 1 year	$	4,426	$	—
After 1 year through 5 years	22,201		86,070
After 5 years through 10 years	27,997		—
After 10 years through 15 years	4,324		—
After 15 years through 20 years	10,623		—
After 20 years	39,264		—
	$	108,835	$	86,070

Schedule of Investments

Items recorded at fair value by PNM on the Condensed Consolidated Balance Sheets are presented below by level of the fair value hierarchy. There were no Level 3 fair value measurements at June 30, 2017 and December 31, 2016 for items recorded at fair value.



				GAAP Fair Value Hierarchy
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
	(In thousands)
June 30, 2017
Available-for-sale securities
Cash and cash equivalents	$	10,318		$	10,318	$	—
Equity securities:
Domestic value	69,106			69,106		—
Domestic growth	68,147			68,147		—
International and other	38,620			35,366		3,254
Fixed income securities:
U.S. Government	29,411			28,187		1,224
Municipals	37,137			—		37,137
Corporate and other	42,287			—		42,287
	$	295,026		$	211,124	$	83,902

Commodity derivative assets	$	7,953		$	—	$	7,953
Commodity derivative liabilities	(6,096		)	—		(6,096		)
Net	$	1,857		$	—	$	1,857

December 31, 2016
Available-for-sale securities
Cash and cash equivalents	$	23,683		$	23,683	$	—
Equity securities:
Domestic value	34,796			34,796		—
Domestic growth	47,595			47,595		—
International and other	27,481			27,481		—
Fixed income securities:
U.S. Government	40,962			39,723		1,239
Municipals	43,789			—		43,789
Corporate and other	54,671			23,158		31,513
	$	272,977		$	196,436	$	76,541

Commodity derivative assets	$	5,224		$	—	$	5,224
Commodity derivative liabilities	(2,339		)	—		(2,339		)
Net	$	2,885		$	—	$	2,885

Schedule of Carrying Amount and Fair Value of Items Not Recorded at Fair Value

The carrying amounts and fair values of investments in the Westmoreland Loan, other investments, and long-term debt, which are not recorded at fair value on the Condensed Consolidated Balance Sheets are presented below:



					GAAP Fair Value Hierarchy
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2017	(In thousands)
PNMR
Long-term debt	$	2,373,362	$	2,502,268	$	—	$	2,502,268	$	—
Westmoreland Loan	$	75,820	$	86,070	$	—	$	—	$	86,070
Other investments	$	404	$	1,051	$	404	$	—	$	647
PNM
Long-term debt	$	1,631,912	$	1,718,492	$	—	$	1,718,492	$	—
Other investments	$	173	$	173	$	173	$	—	$	—
TNMP
Long-term debt	$	421,024	$	462,016	$	—	$	462,016	$	—
Other investments	$	231	$	231	$	231	$	—	$	—

December 31, 2016
PNMR
Long-term debt	$	2,392,712	$	2,540,693	$	—	$	2,540,693	$	—
Westmoreland Loan	$	95,000	$	100,893	$	—	$	—	$	100,893
Other investments	$	547	$	1,164	$	547	$	—	$	617
PNM
Long-term debt	$	1,631,369	$	1,730,157	$	—	$	1,730,157	$	—
Other investments	$	316	$	316	$	316	$	—	$	—
TNMP
Long-term debt	$	420,875	$	468,329	$	—	$	468,329	$	—
Other investments	$	231	$	231	$	231	$	—	$	—

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details