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Fair Value of Derivative and Other Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value of Derivative and Other Financial Instruments [Abstract]

Summary of Derivatives

PNM’s 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, 2018				December 31, 2017
	(In thousands)
Current assets	$	1,094			$	1,088
Deferred charges	3,014				3,556
	4,108				4,644
Current liabilities	(1,416		)		(1,182		)
Long-term liabilities	(3,014		)		(3,556		)
	(4,430		)		(4,738		)
Net	$	(322	)		$	(94	)

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,
	2018				2017				2018				2017
	(In thousands)
Electric operating revenues	$	8			$	4,592			$	(2	)		$	7,933
Cost of energy	(8		)		(5,286		)		4				(5,276		)
Total gain	$	—			$	(694	)		$	2			$	2,657

Schedule of Net Buy (Sell) Volume Positions

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

		Economic Hedges
		MMBTU			MWh
June 30, 2018		330,000			(51,200	)
December 31, 2017		100,000			—

Schedule of Gross Realized Gains and Losses

Gains and losses recognized on the Condensed Consolidated Statements of Earnings related to investment securities in the NDT and reclamation trusts are presented in the following table.

		Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
		(In thousands)
Equity securities:
Net gains from equity securities sold		$	2,502			$	5,330
Net gains (losses) from equity securities still held		(443		)		(307		)
Total net gains on equity securities		2,059				5,023
Available-for-sale debt securities:
Net gains (losses) on debt securities		(3,729		)		(6,405		)
Net gains (losses) on investment securities		$	(1,670	)		$	(1,382	)

The proceeds and gross realized gains and losses on the disposition of securities held in the NDT and coal mine reclamation trusts 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 $(2.6) million and $(3.8) million for the three and six months ended June 30, 2018 and $(0.1) million and $1.0 million for the three and six months ended June 30, 2017.

	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2018				2017				2018				2017
	(In thousands)
Proceeds from sales	$	167,359			$	91,657			$	794,088			$	358,045
Gross realized gains	$	7,549			$	7,971			$	13,570			$	16,617
Gross realized (losses)	$	(6,192	)		$	(2,236	)		$	(10,869	)		$	(5,321	)

Investments Classified by Contractual Maturity Date

At June 30, 2018, the available-for-sale debt securities held by PNM, had the following final maturities:

	Fair Value
	(In thousands)
Within 1 year	$	8,883
After 1 year through 5 years	61,875
After 5 years through 10 years	67,445
After 10 years through 15 years	10,102
After 15 years through 20 years	9,574
After 20 years	43,241
	$	201,120

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 along with gross unrealized gains on investments in available-for-sale securities. Under ASU 2016-01, PNM does not classify its investments in equity instruments as available-for-sale securities beginning January 1, 2018.

					GAAP Fair Value Hierarchy
	Total				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Unrealized Gains
	(In thousands)
June 30, 2018
Cash and cash equivalents	$	7,850			$	7,850			$	—			$	—
Equity securities:
Corporate stocks, common	35,363				35,363				—				—
Corporate stocks, preferred	6,338				849				5,489				—
Mutual funds and other	72,434				72,434				—				—
Available-for-sale debt securities:
U.S. Government	29,621				22,178				7,443				—				$	249
International Government	8,757				—				8,757				—				4
Municipals	43,493				—				43,493				—				157
Corporate and other	119,249				—				116,258				2,991				565
	$	323,105			$	138,674			$	181,440			$	2,991			$	975
Commodity derivative assets	$	4,108			$	—			$	4,108			$	—
Commodity derivative liabilities	(4,430		)		—				(4,430		)		—
Net	$	(322	)		$	—			$	(322	)		$	—
December 31, 2017
Available-for-sale securities
Cash and cash equivalents	$	52,636			$	52,636			$	—			$	—
Equity securities:
Domestic value	40,032				40,032				—				—				$	4,011
Domestic growth	35,456				35,456				—				—				3,995
International and other	45,867				42,332				3,535				—				6,810
Fixed income securities:
U.S. Government	34,317				33,645				672				—				273
Municipals	48,076				—				48,076				—				1,225
Corporate and other	67,140				—				67,140				—				1,714
	$	323,524			$	204,101			$	119,423			$	—			$	18,028
Commodity derivative assets	$	4,644			$	—			$	4,644			$	—
Commodity derivative liabilities	(4,738		)		—				(4,738		)		—
Net	$	(94	)		$	—			$	(94	)		$	—

Summary of Level 3 Measurements

A reconciliation of the changes in Level 3 fair value measurements is as follows:

	Corporate Debt
	(In thousands)
Balance at December 31, 2017	$	—
Actual return on assets sold during the period	(4		)
Actual return on assets still held at period end	(5		)
Purchases	4,011
Sales	(1,011		)
Balance at June 30, 2018	$	2,991

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, 2018	(In thousands)
PNMR
Long-term debt	$	2,594,042			$	2,643,276			$	—			$	2,643,276			$	—
Other investments	$	373			$	373			$	373			$	—			$	—
PNM
Long-term debt	$	1,655,760			$	1,679,090			$	—			$	1,679,090			$	—
Other investments	$	153			$	153			$	153			$	—			$	—
TNMP
Long-term debt	$	540,327			$	566,327			$	—			$	566,327			$	—
Other investments	$	220			$	220			$	220			$	—			$	—
December 31, 2017
PNMR
Long-term debt	$	2,437,645			$	2,554,836			$	—			$	2,554,836			$	—
Westmoreland Loan	$	56,640			$	66,588			$	—			$	—			$	66,588
Other investments	$	503			$	503			$	503			$	—			$	—
PNM
Long-term debt	$	1,657,910			$	1,727,135			$	—			$	1,727,135			$	—
Other investments	$	283			$	283			$	283			$	—			$	—
TNMP
Long-term debt	$	480,620			$	527,563			$	—			$	527,563			$	—
Other investments	$	220			$	220			$	220			$	—			$	—

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