Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2019

The operations of PNM and TNMP are regulated by the NMPRC, PUCT, and FERC and the provisions of GAAP for rate-regulated enterprises are applied to its regulated operations. Regulatory assets represent probable future recovery of previously incurred costs that will be collected from customers through the ratemaking process. Regulatory liabilities represent probable future reductions in revenues associated with amounts that are to be credited to customers through the ratemaking process. Regulatory assets and liabilities reflected in the Consolidated Balance Sheets are presented below.



	PNM						TNMP
	December 31,						December 31,
	2019			2018			2019			2018
Assets:	(In thousands)
Current:
FPPAC	$	7,373		$	4,104		$	—		$	—
Energy efficiency costs	—			430			—			—
	7,373			4,534			—			—
Non-Current:
CTC, including carrying charges	—			—			7,412			17,744
Coal mine reclamation costs⁽³⁾	13,995			19,915			—			—
Deferred income taxes	66,296			63,369			8,997			9,309
Loss on reacquired debt	19,426			21,085			30,212			31,510
Pension and OPEB⁽¹⁾	214,771			227,400			27,947			26,972
Shutdown of SJGS Units 2 and 3	113,508			119,785			—			—
Hurricane recovery costs⁽²⁾	—			—			1,041			1,551
AMS surcharge	—			—			25,015			31,435
AMS retirement and other costs	—			—			15,542			16,489
Renewable energy costs	643			—			—			—
Other	6,828			9,349			5,297			3,017
	435,467			460,903			121,463			138,027
Total regulatory assets	$	442,840		$	465,437		$	121,463		$	138,027

Liabilities:
Current:
Renewable energy rider	$	—		$	(4,475	)	$	—		$	—
Other	(371		)	(1,500		)	(134		)	(3,471		)
	(371		)	(5,975		)	(134		)	(3,471		)
Non-Current:
Cost of removal	(271,025		)	(263,597		)	(46,091		)	(29,637		)
Deferred income taxes	(374,122		)	(407,978		)	(131,871		)	(143,745		)
PVNGS ARO	(11,341		)	(18,397		)	—			—
Renewable energy tax benefits	(19,069		)	(20,226		)	—			—
Accelerated depreciation SNCRs	(7,758		)	(3,690		)	—			—
Pension and OPEB	—			—			(4,775		)	(3,940		)
Other	(83		)	(83		)	(108		)	(136		)
	(683,398		)	(713,971		)	(182,845		)	(177,458		)
Total regulatory liabilities	$	(683,769	)	$	(719,946	)	$	(182,979	)	$	(180,929	)

⁽¹⁾Includes $0.7 million for certain PNM pension costs as described in Note 11

⁽²⁾Amount shown is net of amounts owed under the PUCT’s January 25, 2018 order as described in Note 17

⁽³⁾Includes $9.4 million in coal mine reclamation costs related to PNM’s planned retirement of SJGS in 2022 as described in Note 16

The Company’s regulatory assets and regulatory liabilities are reflected in rates charged to customers or have been addressed in a regulatory proceeding. The Company does not receive or pay a rate of return on the following regulatory assets and regulatory liabilities (and their remaining amortization periods): coal mine reclamation costs (through 2020); deferred income taxes (over the remaining life of the taxable item, up to the remaining life of utility plant); pension and OPEB costs (through 2033); and PVNGS ARO (to be determined in a future regulatory proceeding).

The Company is permitted, under rate regulation, to accrue and record a regulatory liability for the estimated cost of removal and salvage associated with certain of its assets through depreciation expense. Under GAAP, actuarial losses and prior service costs for pension plans are required to be recorded in AOCI; however, to the extent authorized for recovery through the regulatory process these amounts are recorded as regulatory assets or liabilities. Based on prior regulatory approvals, the amortization of these amounts will be included in the Company’s rates.

Based on a current evaluation of the various factors and conditions that are expected to impact future cost recovery, the Company believes that future recovery of its regulatory assets is probable.