Segment Information

The following segment presentation is based on the methodology that management uses for making operating decisions and assessing performance of its various business activities. A reconciliation of the segment presentation to the GAAP financial statements is provided.

PNM

PNM includes the retail electric utility operations of PNM that are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico. PNM also includes the generation and sale of electricity into the wholesale market, as well as providing transmission services to third parties. The sale of electricity includes the asset optimization of PNM’s jurisdictional capacity, as well as the capacity excluded from retail rates. FERC has jurisdiction over wholesale power and transmission rates.

TNMP

TNMP is an electric utility providing services in Texas under the TECA. TNMP’s operations are subject to traditional rate regulation by the PUCT. TNMP provides transmission and distribution services at regulated rates to various REPs that, in turn, provide retail electric service to consumers within TNMP’s service area. TNMP also provides transmission services at regulated rates to other utilities that interconnect with TNMP’s facilities

Corporate and Other

The Corporate and Other segment includes PNMR holding company activities, primarily related to corporate level debt and PNMR Services Company. The activities of PNMR Development, NM Capital, and the equity method investment in NMRD are also included in Corporate and Other.

The following tables present summarized financial information for PNMR by segment. PNM and TNMP each operate in only one segment. Therefore, tabular segment information is not presented for PNM and TNMP.

PNMR SEGMENT INFORMATION



	PNM			TNMP			Corporate and Other			Consolidated
	(In thousands)
Three Months Ended March 31, 2018
Electric operating revenues	$	236,232		$	81,646		$	—		$	317,878
Cost of energy	70,802			21,754			—			92,556
Utility margin	165,430			59,892			—			225,322
Other operating expenses	100,511			24,973			(5,016		)	120,468
Depreciation and amortization	36,627			16,387			5,708			58,722
Operating income (loss)	28,292			18,532			(692		)	46,132
Interest income	2,487			—			1,637			4,124
Other income (deductions)	1,217			1,085			79			2,381
Interest charges	(20,830		)	(7,729		)	(4,496		)	(33,055		)
Segment earnings (loss) before income taxes	11,166			11,888			(3,472		)	19,582
Income taxes (benefit)	(348		)	2,475			(1,344		)	783
Segment earnings (loss)	11,514			9,413			(2,128		)	18,799
Valencia non-controlling interest	(3,677		)	—			—			(3,677		)
Subsidiary preferred stock dividends	(132		)	—			—			(132		)
Segment earnings (loss) attributable to PNMR	$	7,705		$	9,413		$	(2,128	)	$	14,990

At March 31, 2018:
Total Assets	$	4,925,741		$	1,526,434		$	224,218		$	6,676,393
Goodwill	$	51,632		$	226,665		$	—		$	278,297



	PNM			TNMP			Corporate and Other			Consolidated
	(In thousands)
Three Months Ended March 31, 2017
Electric operating revenues	$	251,558		$	78,620		$	—		$	330,178
Cost of energy	81,317			21,487			—			102,804
Utility margin	170,241			57,133			—			227,374
Other operating expenses	93,756			23,797			(4,660		)	112,893
Depreciation and amortization	36,016			15,371			4,996			56,383
Operating income (loss)	40,469			17,965			(336		)	58,098
Interest income	2,816			—			2,065			4,881
Other income (deductions)	5,545			732			(335		)	5,942
Interest charges	(21,012		)	(7,404		)	(3,284		)	(31,700		)
Segment earnings (loss) before income taxes	27,818			11,293			(1,890		)	37,221
Income taxes (benefit)	7,708			3,689			(622		)	10,775
Segment earnings (loss)	20,110			7,604			(1,268		)	26,446
Valencia non-controlling interest	(3,452		)	—			—			(3,452		)
Subsidiary preferred stock dividends	(132		)	—			—			(132		)
Segment earnings (loss) attributable to PNMR	$	16,526		$	7,604		$	(1,268	)	$	22,862

At March 31, 2017:
Total Assets	$	4,870,201		$	1,396,055		$	211,423		$	6,477,679
Goodwill	$	51,632		$	226,665		$	—		$	278,297