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Fair Value of Derivative and Other Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Commodity Derivatives

PNM’s commodity derivative instruments that are recorded at fair value, all of which are accounted for as economic hedges, are presented in the following line items on the Consolidated Balance Sheets: 

	Economic Hedges
	December 31,
	2019				2018
	(In thousands)
Other current assets	$	1,089			$	1,083
Other deferred charges	1,507				2,511
	2,596				3,594
Other current liabilities	(1,089		)		(1,177		)
Other deferred credits	(1,507		)		(2,511		)
	(2,596		)		(3,688		)
Net	$	—			$	(94	)

Summary of the Effect of Mark-to-Market Commodity Derivative Instruments on Earnings

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
	Year Ended December 31,
	2019				2018				2017
	(In thousands)
Electric operating revenues	$	97			$	(50	)		$	5,151
Cost of energy	(97		)		(52		)		(5,386		)
Total gain (loss)	$	—			$	(102	)		$	(235	)

Schedule of Net Buy (Sell) Volume Positions

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

	Economic Hedges
	MMBTU			MWh
December 31, 2019	—			—
December 31, 2018	100,000			—

Schedule of Realized Gain (Loss)

Gross realized losses shown below exclude the (increase)/decrease in realized impairment losses of $3.0 million, $(9.4) million, and $3.3 million for the years ended December 31, 2019, 2018 and 2017.

	Year Ended December 31,
	2019				2018				2017
	(In thousands)
Proceeds from sales	$	494,528			$	984,533			$	637,492
Gross realized gains	$	25,760			$	19,358			$	36,896
Gross realized (losses)	$	(17,453	)		$	(16,624	)		$	(12,993	)

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

		Year ended December 31,
		2019				2018
		(In thousands)
Equity securities:
Net gains from equity securities sold		$	5,698			$	4,864
Net gains (losses) from equity securities still held		18,319				(10,523		)
Total net gains (losses) on equity securities		24,017				(5,659		)
Available-for-sale debt securities:
Net gains (losses) on debt securities		5,572				(11,517		)
Net gains (losses) on investment securities		$	29,589			$	(17,176	)

Investments Classified by Contractual Maturity Date

At December 31, 2019, the available-for-sale debt securities held by PNM, had the following final maturities:

	Fair Value
	(In thousands)
Within 1 year	$	20,148
After 1 year through 5 years	80,052
After 5 years through 10 years	84,603
After 10 years through 15 years	13,090
After 15 years through 20 years	11,950
After 20 years	39,975
	$	249,818

Schedule of Instruments Presented by Level of Hierarchy

Items recorded at fair value by PNM on the 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.

					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)
December 31, 2019
Cash and cash equivalents	$	15,606			$	15,606			$	—			$	—
Equity securities:
Corporate stocks, common	64,527				64,527				—				—
Corporate stocks, preferred	9,033				2,212				6,821				—
Mutual funds and other	49,848				49,786				62				—
Available-for-sale debt securities:
U.S. government	48,439				31,389				17,050				—				$	535
International government	15,292				—				15,292				—				1,193
Municipals	46,642				—				46,642				—				1,768
Corporate and other	139,445				187				139,258				—				10,801
	$	388,832			$	163,707			$	225,125			$	—			$	14,297
Commodity derivative assets	$	2,596			$	—			$	2,596			$	—
Commodity derivative liabilities	(2,596		)		—				(2,596		)		—
Net	$	—			$	—			$	—			$	—

December 31, 2018
Cash and cash equivalents	$	11,472			$	11,472			$	—			$	—
Equity securities:
Corporate stocks, common	32,997				32,997				—				—
Corporate stocks, preferred	7,258				1,654				5,604				—
Mutual funds and other	70,777				70,777				—				—
Available-for-sale debt securities:
U.S. government	29,503				18,662				10,841				—				$	1,098
International government	8,435				—				8,435				—				90
Municipals	53,642				—				53,642				—				489
Corporate and other	114,158				588				111,414				2,156				923
	$	328,242			$	136,150			$	189,936			$	2,156			$	2,600
Commodity derivative assets	$	3,594			$	—			$	3,594			$	—
Commodity derivative liabilities	(3,688		)		—				(3,688		)		—
Net	$	(94	)		$	—			$	(94	)		$	—

Summary of Carrying Amounts and Fair Value of Instruments

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

									GAAP Fair Value Hierarchy
	Carrying Amount				Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
December 31, 2019	(In thousands)
PNMR	$	3,007,717			$	3,142,704			$	—			$	3,142,074			$	—
PNM	$	1,748,020			$	1,795,149			$	—			$	1,795,149			$	—
TNMP	$	670,691			$	753,317			$	—			$	753,317			$	—
December 31, 2018
PNMR	$	2,670,111			$	2,703,810			$	—			$	2,703,810			$	—
PNM	$	1,656,490			$	1,668,736			$	—			$	1,668,736			$	—
TNMP	$	575,398			$	597,236			$	—			$	597,236			$	—

Schedule of Investments Held by the Employee Benefit Plans

The fair values of investments held by the employee benefit plans are as follows:

					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)
December 31, 2019					(In thousands)
PNM Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	445,984			$	152,158			$	293,826			$	—
Uncategorized investments	86,675
Total Master Trust Investments	$	532,659
TNMP Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	49,353			$	17,335			$	32,018			$	—
Uncategorized investments	9,974
Total Master Trust Investments	$	59,327
PNM OPEB Plan
Cash and cash equivalents	$	1,022			$	1,022			$	—			$	—
Equity securities:
Mutual funds	85,727				39,361				46,366				—
	$	86,749			$	40,383			$	46,366			$	—
TNMP OPEB Plan
Cash and cash equivalents	$	275			$	275			$	—			$	—
Equity securities:
Mutual funds	10,635				4,075				6,560				—
	$	10,910			$	4,350			$	6,560			$	—

					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)
December 31, 2018	(In thousands)
PNM Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	412,790			$	139,673			$	272,829			$	288
Uncategorized investments	76,874
Total Master Trust Investments	$	489,664
TNMP Pension Plan
Participation in PNMR Master Trust Investments:
Investments categorized within fair value hierarchy	$	45,283			$	15,149			$	30,101			$	33
Uncategorized investments	9,378
Total Master Trust Investments	$	54,661
PNM OPEB Plan
Cash and cash equivalents	$	190			$	190			$	—			$	—
Equity securities:
Mutual funds	69,513				32,325				37,188				—
	$	69,703			$	32,515			$	37,188			$	—
TNMP OPEB Plan
Cash and cash equivalents	$	66			$	66			$	—			$	—
Equity securities:
Mutual funds	8,725				3,723				5,002				—
	$	8,791			$	3,789			$	5,002			$	—

The fair values of investments in the PNMR Master Trust are as follows:

					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)
December 31, 2019	(In thousands)
PNMR Master Trust
Cash and cash equivalents	$	19,982			$	19,982			$	—			$	—
Equity securities:
Corporate stocks, common	68,497				68,497				—				—
Corporate stocks, preferred	825				—				825				—
Mutual funds and other	172,326				—				172,326				—
Fixed income securities:
U.S. government	90,970				81,014				9,956				—
International government	5,411				—				5,411				—
Municipals	6,980				—				6,980				—
Corporate and other	130,346				—				130,346				—
Total investments categorized within fair value hierarchy	495,337				$	169,493			$	325,844			$	—
Uncategorized investments:
Private equity funds	15,827
Hedge funds	47,618
Real estate funds	33,204
	$	591,986
December 31, 2018
PNMR Master Trust
Cash and cash equivalents	$	20,120			$	20,120			$	—			$	—
Equity securities:
Corporate stocks, common	54,270				54,270				—				—
Corporate stocks, preferred	874				—				874				—
Mutual funds and other	143,517				—				143,517				—
Fixed income securities:
U.S. government	84,459				80,482				3,977				—
International government	5,721				—				5,721				—
Municipals	9,558				—				9,558				—
Corporate and other	139,554				(50		)		139,283				321
Total investments categorized within fair value hierarchy	458,073				$	154,822			$	302,930			$	321
Uncategorized investments:
Private equity funds	18,021
Hedge funds	45,589
Real estate funds	22,642
	$	544,325

Summary of Level 3 Measurements

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

	Fixed Income - Corporate
PNMR Master Trust	PNM Pension				TNMP Pension				Total Master Trust
	(In thousands)
Balance at December 31, 2017	$	191			$	21			$	212
Actual return on assets sold during the period	(7		)		(1		)		(8		)
Actual return on assets still held at period end	(1		)		—				(1		)
Purchases	192				23				215
Sales	(87		)		(10		)		(97		)
Balance at December 31, 2018	288				33				321
Actual return on assets sold during the period	(48		)		(5		)		(53		)
Actual return on assets still held at period end	—				—				—
Purchases	133				15				148
Sales	(373		)		(43		)		(416		)
Balance at December 31, 2019	$	—			$	—			$	—

The following table presents information about the PBO, fair value of plan assets, and funded status of the plans:

	PNM								TNMP
	Year Ended December 31,								Year Ended December 31,
	2019				2018				2019				2018
	(In thousands)
PBO at beginning of year	$	564,258			$	623,983			$	60,587			$	68,423
Service cost	—				—				—				—
Interest cost	25,175				24,270				2,686				2,625
Actuarial (gain) loss	61,151				(41,025		)		7,889				(5,216		)
Benefits paid	(44,839		)		(42,970		)		(5,588		)		(5,245		)
PBO at end of year	605,745				564,258				65,574				60,587
Fair value of plan assets at beginning of year	489,978				562,016				55,074				63,499
Actual return on plan assets	86,328				(29,068		)		9,881				(3,180		)
Employer contributions	—				—				—				—
Benefits paid	(44,839		)		(42,970		)		(5,588		)		(5,245		)
Fair value of plan assets at end of year	531,467				489,978				59,367				55,074
Funded status – asset (liability) for pension benefits	$	(74,278	)		$	(74,280	)		$	(6,207	)		$	(5,513	)

The following table presents information about the APBO, the fair value of plan assets, and the funded status of the plans:

	PNM								TNMP
	Year Ended December 31,								Year Ended December 31,
	2019				2018				2019				2018
	(In thousands)
APBO at beginning of year	$	75,305			$	89,897			$	10,064			$	12,279
Service cost	53				83				50				134
Interest cost	3,316				3,439				451				477
Participant contributions	2,131				2,390				316				174
Actuarial (gain) loss	2,587				(12,206		)		1,004				(2,213		)
Benefits paid	(8,271		)		(8,298		)		(650		)		(787		)
APBO at end of year	75,121				75,305				11,235				10,064
Fair value of plan assets at beginning of year	69,703				80,356				8,744				10,002
Actual return on plan assets	19,257				(7,669		)		2,434				(988		)
Employer contributions	3,580				2,924				—				343
Participant contributions	2,131				2,390				316				174
Benefits paid	(8,271		)		(8,298		)		(650		)		(787		)
Fair value of plan assets at end of year	86,400				69,703				10,844				8,744
Funded status – asset (liability)	$	11,279			$	(5,602	)		$	(391	)		$	(1,320	)

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-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=118939692&loc=d3e27357-111563

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