Asset Retirement Obligations

12 Months Ended

Dec. 31, 2019

Asset Retirement Obligation Disclosure [Abstract]

AROs are recorded based on studies to estimate the amount and timing of future ARO expenditures and reflect underlying assumptions, such as discount rates, estimates of the future costs for decommissioning, and the timing of the removal activities to be performed. Approximately 76% of PNM’s total ARO liabilities are related to nuclear decommissioning of PVNGS. PNM is responsible for all decommissioning obligations related to its entire interest in PVNGS, including portions under lease both during and after termination of the leases. Studies of the decommissioning costs of PVNGS, SJGS, Four Corners, and other facilities are performed periodically and revisions to the ARO liabilities are recorded. Changes in the assumptions underlying the calculations may also require revisions to the estimated AROs when identified.

A reconciliation of the ARO liabilities is as follows:



	PNMR			PNM			TNMP
	(In thousands)
Liability at December 31, 2016	$	127,519		$	126,601		$	754
Liabilities incurred⁽¹⁾	1,854			1,853			—
Liabilities settled	(968		)	(944		)	(24		)
Accretion expense	10,680			10,603			63
Revisions to estimated cash flows	7,594			7,594			—
Liability at December 31, 2017	146,679			145,707			793
Liabilities incurred	—			—			—
Liabilities settled	(192		)	—			—
Accretion expense	11,482			11,402			67
Revisions to estimated cash flows	705			705			—
Liability at December 31, 2018	158,674			157,814			860
Liabilities incurred	—			—			—
Liabilities settled	(987		)	(935		)	(52		)
Accretion expense	12,635			12,562			73
Revisions to estimated cash flows⁽²⁾	11,640			11,640			—
Liability at December 31, 2019	$	181,962		$	181,081		$	881

⁽¹⁾ Represents the obligation related to the additional ownership interest in SJGS Unit 4 that PNM acquired on December 31, 2017 due to the restructuring of the ownership of SJGS.

⁽²⁾Reflects the impacts of an updated SJGS decommissioning study that assumes PNM will retire its share of SJGS in 2022. PNM is seeking recovery of these costs in its SJGS Abandonment Application currently pending before the NMPRC. See Note 17.