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Lease Commitments | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
Lease Commitments | Lease Commitments The Company leases office buildings, vehicles, and other equipment. In addition, PNM leases interests in PVNGS Units 1 and 2 and certain rights-of-way agreements are classified as leases. All of the Company's leases with terms in excess of one year are recorded on the balance sheet by recording a present value lease liability and a corresponding right-of-use asset. Operating lease expense is recognized within operating expenses according to the use of the asset on a straight-line basis. Financing lease costs, which are comprised primarily of fleet and office equipment leases commencing after January 1, 2019, are recognized by amortizing the right-of-use asset on a straight-line basis and by recording interest expense on the lease liability. Financing lease right-of-use assets amortization is reflected in depreciation and amortization and interest on financing lease liabilities is reflected as interest charges on the Company’s Condensed Consolidated Statements of Earnings. See additional discussion of the Company's leasing activities in Note 8 of the Notes to Consolidated Financial Statements in the 2019 Annual Reports on Form 10-K. PVNGS PNM leases interests in Units 1 and 2 of PVNGS. The PVNGS leases were entered into in 1985 and 1986 and initially were scheduled to expire on January 15, 2015 for the four Unit 1 leases and January 15, 2016 for the four Unit 2 leases. Following procedures set forth in the PVNGS leases, PNM notified four of the lessors under the Unit 1 leases and one lessor under the Unit 2 lease that it would elect to renew those leases on the expiration date of the original leases. The four Unit 1 leases now expire on January 15, 2023 and the one Unit 2 lease now expires on January 15, 2024. The annual lease payments during the renewal periods aggregate $16.5 million for PVNGS Unit 1 and $1.6 million for Unit 2. The terms of each of the extended leases do not provide for additional renewal options beyond their currently scheduled expiration dates. PNM has the option to purchase the assets underlying each of the extended leases at their fair market value or to return the lease interests to the lessors on the expiration dates. Under the terms of the extended leases, PNM had until January 15, 2020 for the Unit 1 leases and has until January 15, 2021 for the Unit 2 lease to provide notices to the lessors of PNM’s intent to exercise the purchase options or to return the leased assets to the lessors. On January 3, 2020, PNM filed notice with the NMPRC of 60-day waivers of the deadline to provide notice to purchase or return the assets underlying the PVNGS Unit 1 leases. On March 3, 2020, and April 10, 2020, PNM filed additional notices of waivers of the deadlines. The deadline for PNM to provide irrevocable notice of its intent to purchase or return the assets underlying the PVNGS Unit 1 lease interests is now June 15, 2020. The waivers did not impact the PVNGS Unit 1 leases’ current January 15, 2023 expiration dates. PNM’s elections are independent for each lease and are irrevocable. In the proceeding addressing PNM’s 2017 IRP, PNM agreed to promptly notify the NMPRC of a decision to extend the Unit 1 or 2 leases, or to exercise its option to purchase the leased assets at fair market value upon the expiration of leases. See Note 12. If PNM elects to exercise its purchase option under any of the leases, the leases provide an appraisal process to determine fair market value. If PNM elects to return the assets underlying the extended leases, PNM will retain certain obligations related to PVNGS, including costs to decommission the facility. PNM is depreciating its capital improvements related to the extended leases using NMPRC approved rates through the end of the NRC license period for each unit, which expire in June 2045 for Unit 1 and in June 2046 for Unit 2. Any transfer of the assets underlying the leases will be required to comply with NRC licensing requirements. For example, the NRC could limit the transfer of ownership should PNM decide to return the assets underlying all or a portion of its current leased interests in PVNGS. In the event PNM decides to return these interests to the lessors, and a qualified buyer cannot be identified, PNM may be required to retain all of a portion of its existing leased capacity in PVNGS or be exposed to other claims for damages by the lessors. Whether PNM retains or returns the assets underlying the extended leases, PNM will seek to recover its undepreciated investments, and any amounts paid to purchase the assets, as well as any other obligations related to PVNGS from NM retail customers. PNM is exposed to loss under the PVNGS lease arrangements upon the occurrence of certain events that PNM does not consider reasonably likely to occur. Under certain circumstances (for example, the NRC issuing specified violation orders with respect to PVNGS or the occurrence of specified nuclear events), PNM would be required to make specified payments to the lessors, and take title to the leased interests. If such an event had occurred as of March 31, 2020, amounts due to the lessors under the circumstances described above would be up to $154.5 million, payable on July 15, 2020 in addition to the scheduled lease payments due on that date. Land Easements and Rights-of-Ways Many of PNM’s electric transmission and distribution facilities are located on lands that require the grant of rights-of-way from governmental entities, Native American tribes, or private parties. PNM has completed several renewals of rights-of-way, the largest of which is a renewal with the Navajo Nation. PNM is obligated to pay the Navajo Nation annual payments of $6.0 million, subject to adjustment each year based on the Consumer Price Index, through 2029. PNM’s April 2020 payment for the amount due under the Navajo Nation right-of-way lease was $7.1 million, which included amounts due under the Consumer Price Index adjustment. Changes in the Consumer Price Index subsequent to January 1, 2019 are considered variable lease payments. PNM has other prepaid rights-of-way agreements that are not accounted for as leases or recognized as a component of plant in service. PNM reflects the unamortized balance of these prepayments in other deferred charges on the Condensed Consolidated Balance Sheets and recognizes amortization expense associated with these agreements in the Condensed Consolidated Statement of Earnings over their term. As of March 31, 2020 and December 31, 2019, the unamortized balance of these rights-of-ways was $59.5 million and $60.2 million. During the three months ended March 31, 2020 and 2019, PNM recognized amortization expense associated with these agreements of $0.9 million and $0.9 million. Fleet Vehicles and Equipment Fleet vehicle and equipment leases commencing on or after January 1, 2019 are classified as financing leases. Fleet vehicle and equipment leases existing as of December 31, 2018 are classified as operating leases. The Company’s fleet vehicle and equipment lease agreements include non-lease components for insignificant administrative and other costs that are billed over the life of the agreement. At March 31, 2020, residual value guarantees on fleet vehicle and equipment leases are $0.7 million, $1.3 million, and $2.0 million for PNM, TNMP, and PNMR. Information related to the Company’s operating leases recorded on the Condensed Consolidated Balance Sheets is presented below:
| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating leases: |  |  |  |  |  |  |  |  |  |  |
Operating lease assets, net of amortization | $ | 114,829 |  |  | $ | 9,271 |  |  | $ | 124,717 |  |  | $ | 120,585 |  |  | $ | 9,954 |  |  | $ | 131,212 |
Current portion of operating lease liabilities | 26,727 |  |  | 2,624 |  |  | 29,693 |  |  | 25,927 |  |  | 2,753 |  |  | 29,068 |
Long-term portion of operating lease liabilities | 88,686 |  |  | 6,459 |  |  | 95,573 |  |  | 97,992 |  |  | 7,039 |  |  | 105,512 |
As discussed above, the Company classifies its fleet vehicle and equipment leases and its office equipment leases commencing on or after January 1, 2019 as financing leases. Information related to the Company’s financing leases recorded on the Condensed Consolidated Balance Sheets is presented below:
| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Financing leases: |  |  |  |  |  |  |  |  |  |  |
Non-utility property | $ | 6,320 |  |  | $ | 7,712 |  |  | $ | 14,299 |  |  | $ | 4,857 |  |  | $ | 4,910 |  |  | $ | 10,028 |
Accumulated depreciation | (729) |  |  | (756) |  |  | (1,527) |  |  | (482) |  |  | (466) |  |  | (973) |
Non-utility property, net | 5,591 |  |  | 6,956 |  |  | 12,772 |  |  | 4,375 |  |  | 4,444 |  |  | 9,055 |
Other current liabilities | 975 |  |  | 1,255 |  |  | 2,298 |  |  | 722 |  |  | 850 |  |  | 1,637 |
Other deferred credits | 4,316 |  |  | 5,706 |  |  | 10,182 |  |  | 3,333 |  |  | 3,597 |  |  | 7,102 |
Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities as of March 31, 2020 is presented below:
| PNM |  | TNMP |  | PNMR Consolidated
Weighted average remaining lease term (years): |  |  |  |  |
Operating leases | 6.55 |  | 3.98 |  | 6.35
Financing leases | 5.53 |  | 5.68 |  | 5.57
Weighted average discount rate: |  |  |  |  |
Operating leases | 3.92 | % |  | 3.97 | % |  | 3.92 | %
Financing leases | 3.57 | % |  | 3.52 | % |  | 3.52 | %
Information for the components of lease expense is as follows:
| Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  |  |  |  |  |
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating lease cost: | $ | 6,893 |  |  | $ | 774 |  |  | $ | 7,735 |  |  |  |  |  |  |
Less: amounts capitalized | (291) |  |  | (634) |  |  | (925) |  |  |  |  |  |  |
Total operating lease expense | 6,602 |  |  | 140 |  |  | 6,810 |  |  |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets | 247 |  |  | 289 |  |  | 553 |  |  |  |  |  |  |
Interest on lease liabilities | 45 |  |  | 56 |  |  | 103 |  |  |  |  |  |  |
Less: amounts capitalized | (175) |  |  | (283) |  |  | (458) |  |  |  |  |  |  |
Total financing lease expense | 117 |  |  | 62 |  |  | 198 |  |  |  |  |  |  |
Variable lease expense | 32 |  |  | — |  |  | 32 |  |  |  |  |  |  |
Short-term lease expense | 85 |  |  | 1 |  |  | 86 |  |  |  |  |  |  |
Total lease expense for the period | $ | 6,836 |  |  | $ | 203 |  |  | $ | 7,126 |  |  |  |  |  |  |
| Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  |  |  |  |  |
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating lease cost: | $ | 7,583 |  |  | $ | 898 |  |  |  | $ | 8,620 |  |  |  |  |  |  |
Less: amounts capitalized | (352) |  |  | (657) |  |  |  | (1,009) |  |  |  |  |  |  |
Total operating lease expense | 7,231 |  |  | 241 |  |  |  | 7,611 |  |  |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets | 104 |  |  | 98 |  |  |  | 203 |  |  |  |  |  |  |
Interest on lease liabilities | 16 |  |  | 17 |  |  |  | 32 |  |  |  |  |  |  |
Less: amounts capitalized | (38) |  |  | (40) |  |  |  | (78) |  |  |  |  |  |  |
Total financing lease expense | 82 |  |  | 75 |  |  |  | 157 |  |  |  |  |  |  |
Variable lease expense | — |  |  | — |  |  |  | — |  |  |  |  |  |  |
Short-term lease expense | 74 |  |  | 3 |  |  |  | 94 |  |  |  |  |  |  |
Total lease expense for the period | $ | 7,387 |  |  | $ | 319 |  |  |  | $ | 7,862 |  |  |  |  |  |  |
Supplemental cash flow information related to the Company’s leases is as follows:
| Three Months Ended March 31, |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
| 2020 |  |  |  |  |  | 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 9,351 |  |  | $ | 166 |  |  | $ | 9,658 |  |  | $ | 9,452 |  |  |  | $ | 284 |  |  |  | $ | 9,891 |
Operating cash flows from financing leases | 16 |  |  | 9 |  |  | 27 |  |  | 16 |  |  |  | 17 |  |  |  | 32 |
Finance cash flows from financing leases | 80 |  |  | 51 |  |  | 147 |  |  | 25 |  |  |  | 33 |  |  |  | 58 |
Non-cash information related to right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |  |  |  |
Operating leases | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 143,816 |  |  |  | $ | 12,942 |  |  |  | $ | 157,440 |
Financing leases | 1,463 |  |  | 2,802 |  |  | 4,272 |  |  | 1,635 |  |  |  | 1,268 |  |  |  | 2,904 |
Excluded from the operating and financing cash paid for leases above are $0.3 million and $0.2 million at PNM, $0.6 million and $0.3 million at TNMP, and $0.9 million and $0.5 million at PNMR. These capitalized costs are reflected as investing activities on the Company’s Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019. Future expected lease payments are shown below:
| As of March 31, 2020 |  |  |  |  |  |  |  |  |  |
| PNM |  |  |  | TNMP |  |  |  | PNMR Consolidated |  |
| Financing |  | Operating |  | Financing |  | Operating |  | Financing |  | Operating
| (In thousands) |  |  |  |  |  |  |  |  |  |
Remainder of 2020 | $ | 861 |  |  | $ | 17,386 |  |  | $ | 1,111 |  |  | $ | 2,279 |  |  | $ | 2,027 |  |  | $ | 20,076 |
2021 | 1,117 |  |  | 26,576 |  |  | 1,441 |  |  | 2,448 |  |  | 2,631 |  |  | 29,316 |
2022 | 1,082 |  |  | 26,266 |  |  | 1,396 |  |  | 1,996 |  |  | 2,551 |  |  | 28,473 |
2023 | 1,038 |  |  | 17,735 |  |  | 1,269 |  |  | 1,508 |  |  | 2,345 |  |  | 19,423 |
2024 | 712 |  |  | 7,908 |  |  | 1,074 |  |  | 877 |  |  | 1,786 |  |  | 8,833 |
Later years | 1,008 |  |  | 34,466 |  |  | 1,367 |  |  | 765 |  |  | 2,375 |  |  | 35,488 |
Total minimum lease payments | 5,818 |  |  | 130,337 |  |  | 7,658 |  |  | 9,873 |  |  | 13,715 |  |  | 141,609 |
Less: Imputed interest | 527 |  |  | 14,924 |  |  | 697 |  |  | 790 |  |  | 1,235 |  |  | 16,343 |
Lease liabilities as of March 31, 2020 | $ | 5,291 |  |  | $ | 115,413 |  |  | $ | 6,961 |  |  | $ | 9,083 |  |  | $ | 12,480 |  |  | $ | 125,266 |
The above tables include $9.9 million, $15.1 million, and $25.0 million for PNM, TNMP, and PNMR at March 31, 2020 for expected future payments on fleet vehicle and equipment leases that could be avoided if the leased assets were returned and the lessor is able to recover estimated market value for the equipment from third parties. The Company’s contractual commitments for leases that have not yet commenced are insignificant.
Lease Commitments | Lease Commitments The Company leases office buildings, vehicles, and other equipment. In addition, PNM leases interests in PVNGS Units 1 and 2 and certain rights-of-way agreements are classified as leases. All of the Company's leases with terms in excess of one year are recorded on the balance sheet by recording a present value lease liability and a corresponding right-of-use asset. Operating lease expense is recognized within operating expenses according to the use of the asset on a straight-line basis. Financing lease costs, which are comprised primarily of fleet and office equipment leases commencing after January 1, 2019, are recognized by amortizing the right-of-use asset on a straight-line basis and by recording interest expense on the lease liability. Financing lease right-of-use assets amortization is reflected in depreciation and amortization and interest on financing lease liabilities is reflected as interest charges on the Company’s Condensed Consolidated Statements of Earnings. See additional discussion of the Company's leasing activities in Note 8 of the Notes to Consolidated Financial Statements in the 2019 Annual Reports on Form 10-K. PVNGS PNM leases interests in Units 1 and 2 of PVNGS. The PVNGS leases were entered into in 1985 and 1986 and initially were scheduled to expire on January 15, 2015 for the four Unit 1 leases and January 15, 2016 for the four Unit 2 leases. Following procedures set forth in the PVNGS leases, PNM notified four of the lessors under the Unit 1 leases and one lessor under the Unit 2 lease that it would elect to renew those leases on the expiration date of the original leases. The four Unit 1 leases now expire on January 15, 2023 and the one Unit 2 lease now expires on January 15, 2024. The annual lease payments during the renewal periods aggregate $16.5 million for PVNGS Unit 1 and $1.6 million for Unit 2. The terms of each of the extended leases do not provide for additional renewal options beyond their currently scheduled expiration dates. PNM has the option to purchase the assets underlying each of the extended leases at their fair market value or to return the lease interests to the lessors on the expiration dates. Under the terms of the extended leases, PNM had until January 15, 2020 for the Unit 1 leases and has until January 15, 2021 for the Unit 2 lease to provide notices to the lessors of PNM’s intent to exercise the purchase options or to return the leased assets to the lessors. On January 3, 2020, PNM filed notice with the NMPRC of 60-day waivers of the deadline to provide notice to purchase or return the assets underlying the PVNGS Unit 1 leases. On March 3, 2020, and April 10, 2020, PNM filed additional notices of waivers of the deadlines. The deadline for PNM to provide irrevocable notice of its intent to purchase or return the assets underlying the PVNGS Unit 1 lease interests is now June 15, 2020. The waivers did not impact the PVNGS Unit 1 leases’ current January 15, 2023 expiration dates. PNM’s elections are independent for each lease and are irrevocable. In the proceeding addressing PNM’s 2017 IRP, PNM agreed to promptly notify the NMPRC of a decision to extend the Unit 1 or 2 leases, or to exercise its option to purchase the leased assets at fair market value upon the expiration of leases. See Note 12. If PNM elects to exercise its purchase option under any of the leases, the leases provide an appraisal process to determine fair market value. If PNM elects to return the assets underlying the extended leases, PNM will retain certain obligations related to PVNGS, including costs to decommission the facility. PNM is depreciating its capital improvements related to the extended leases using NMPRC approved rates through the end of the NRC license period for each unit, which expire in June 2045 for Unit 1 and in June 2046 for Unit 2. Any transfer of the assets underlying the leases will be required to comply with NRC licensing requirements. For example, the NRC could limit the transfer of ownership should PNM decide to return the assets underlying all or a portion of its current leased interests in PVNGS. In the event PNM decides to return these interests to the lessors, and a qualified buyer cannot be identified, PNM may be required to retain all of a portion of its existing leased capacity in PVNGS or be exposed to other claims for damages by the lessors. Whether PNM retains or returns the assets underlying the extended leases, PNM will seek to recover its undepreciated investments, and any amounts paid to purchase the assets, as well as any other obligations related to PVNGS from NM retail customers. PNM is exposed to loss under the PVNGS lease arrangements upon the occurrence of certain events that PNM does not consider reasonably likely to occur. Under certain circumstances (for example, the NRC issuing specified violation orders with respect to PVNGS or the occurrence of specified nuclear events), PNM would be required to make specified payments to the lessors, and take title to the leased interests. If such an event had occurred as of March 31, 2020, amounts due to the lessors under the circumstances described above would be up to $154.5 million, payable on July 15, 2020 in addition to the scheduled lease payments due on that date. Land Easements and Rights-of-Ways Many of PNM’s electric transmission and distribution facilities are located on lands that require the grant of rights-of-way from governmental entities, Native American tribes, or private parties. PNM has completed several renewals of rights-of-way, the largest of which is a renewal with the Navajo Nation. PNM is obligated to pay the Navajo Nation annual payments of $6.0 million, subject to adjustment each year based on the Consumer Price Index, through 2029. PNM’s April 2020 payment for the amount due under the Navajo Nation right-of-way lease was $7.1 million, which included amounts due under the Consumer Price Index adjustment. Changes in the Consumer Price Index subsequent to January 1, 2019 are considered variable lease payments. PNM has other prepaid rights-of-way agreements that are not accounted for as leases or recognized as a component of plant in service. PNM reflects the unamortized balance of these prepayments in other deferred charges on the Condensed Consolidated Balance Sheets and recognizes amortization expense associated with these agreements in the Condensed Consolidated Statement of Earnings over their term. As of March 31, 2020 and December 31, 2019, the unamortized balance of these rights-of-ways was $59.5 million and $60.2 million. During the three months ended March 31, 2020 and 2019, PNM recognized amortization expense associated with these agreements of $0.9 million and $0.9 million. Fleet Vehicles and Equipment Fleet vehicle and equipment leases commencing on or after January 1, 2019 are classified as financing leases. Fleet vehicle and equipment leases existing as of December 31, 2018 are classified as operating leases. The Company’s fleet vehicle and equipment lease agreements include non-lease components for insignificant administrative and other costs that are billed over the life of the agreement. At March 31, 2020, residual value guarantees on fleet vehicle and equipment leases are $0.7 million, $1.3 million, and $2.0 million for PNM, TNMP, and PNMR. Information related to the Company’s operating leases recorded on the Condensed Consolidated Balance Sheets is presented below:
| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating leases: |  |  |  |  |  |  |  |  |  |  |
Operating lease assets, net of amortization | $ | 114,829 |  |  | $ | 9,271 |  |  | $ | 124,717 |  |  | $ | 120,585 |  |  | $ | 9,954 |  |  | $ | 131,212 |
Current portion of operating lease liabilities | 26,727 |  |  | 2,624 |  |  | 29,693 |  |  | 25,927 |  |  | 2,753 |  |  | 29,068 |
Long-term portion of operating lease liabilities | 88,686 |  |  | 6,459 |  |  | 95,573 |  |  | 97,992 |  |  | 7,039 |  |  | 105,512 |
As discussed above, the Company classifies its fleet vehicle and equipment leases and its office equipment leases commencing on or after January 1, 2019 as financing leases. Information related to the Company’s financing leases recorded on the Condensed Consolidated Balance Sheets is presented below:
| March 31, 2020 |  |  |  |  |  | December 31, 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Financing leases: |  |  |  |  |  |  |  |  |  |  |
Non-utility property | $ | 6,320 |  |  | $ | 7,712 |  |  | $ | 14,299 |  |  | $ | 4,857 |  |  | $ | 4,910 |  |  | $ | 10,028 |
Accumulated depreciation | (729) |  |  | (756) |  |  | (1,527) |  |  | (482) |  |  | (466) |  |  | (973) |
Non-utility property, net | 5,591 |  |  | 6,956 |  |  | 12,772 |  |  | 4,375 |  |  | 4,444 |  |  | 9,055 |
Other current liabilities | 975 |  |  | 1,255 |  |  | 2,298 |  |  | 722 |  |  | 850 |  |  | 1,637 |
Other deferred credits | 4,316 |  |  | 5,706 |  |  | 10,182 |  |  | 3,333 |  |  | 3,597 |  |  | 7,102 |
Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities as of March 31, 2020 is presented below:
| PNM |  | TNMP |  | PNMR Consolidated
Weighted average remaining lease term (years): |  |  |  |  |
Operating leases | 6.55 |  | 3.98 |  | 6.35
Financing leases | 5.53 |  | 5.68 |  | 5.57
Weighted average discount rate: |  |  |  |  |
Operating leases | 3.92 | % |  | 3.97 | % |  | 3.92 | %
Financing leases | 3.57 | % |  | 3.52 | % |  | 3.52 | %
Information for the components of lease expense is as follows:
| Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  |  |  |  |  |
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating lease cost: | $ | 6,893 |  |  | $ | 774 |  |  | $ | 7,735 |  |  |  |  |  |  |
Less: amounts capitalized | (291) |  |  | (634) |  |  | (925) |  |  |  |  |  |  |
Total operating lease expense | 6,602 |  |  | 140 |  |  | 6,810 |  |  |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets | 247 |  |  | 289 |  |  | 553 |  |  |  |  |  |  |
Interest on lease liabilities | 45 |  |  | 56 |  |  | 103 |  |  |  |  |  |  |
Less: amounts capitalized | (175) |  |  | (283) |  |  | (458) |  |  |  |  |  |  |
Total financing lease expense | 117 |  |  | 62 |  |  | 198 |  |  |  |  |  |  |
Variable lease expense | 32 |  |  | — |  |  | 32 |  |  |  |  |  |  |
Short-term lease expense | 85 |  |  | 1 |  |  | 86 |  |  |  |  |  |  |
Total lease expense for the period | $ | 6,836 |  |  | $ | 203 |  |  | $ | 7,126 |  |  |  |  |  |  |
| Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  |  |  |  |  |
| (In thousands) |  |  |  |  |  |  |  |  |  |
Operating lease cost: | $ | 7,583 |  |  | $ | 898 |  |  |  | $ | 8,620 |  |  |  |  |  |  |
Less: amounts capitalized | (352) |  |  | (657) |  |  |  | (1,009) |  |  |  |  |  |  |
Total operating lease expense | 7,231 |  |  | 241 |  |  |  | 7,611 |  |  |  |  |  |  |
Financing lease cost: |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets | 104 |  |  | 98 |  |  |  | 203 |  |  |  |  |  |  |
Interest on lease liabilities | 16 |  |  | 17 |  |  |  | 32 |  |  |  |  |  |  |
Less: amounts capitalized | (38) |  |  | (40) |  |  |  | (78) |  |  |  |  |  |  |
Total financing lease expense | 82 |  |  | 75 |  |  |  | 157 |  |  |  |  |  |  |
Variable lease expense | — |  |  | — |  |  |  | — |  |  |  |  |  |  |
Short-term lease expense | 74 |  |  | 3 |  |  |  | 94 |  |  |  |  |  |  |
Total lease expense for the period | $ | 7,387 |  |  | $ | 319 |  |  |  | $ | 7,862 |  |  |  |  |  |  |
Supplemental cash flow information related to the Company’s leases is as follows:
| Three Months Ended March 31, |  |  |  |  |  | Three Months Ended March 31, |  |  |  |
| 2020 |  |  |  |  |  | 2019 |  |  |  |
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands) |  |  |  |  |  |  |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases | $ | 9,351 |  |  | $ | 166 |  |  | $ | 9,658 |  |  | $ | 9,452 |  |  |  | $ | 284 |  |  |  | $ | 9,891 |
Operating cash flows from financing leases | 16 |  |  | 9 |  |  | 27 |  |  | 16 |  |  |  | 17 |  |  |  | 32 |
Finance cash flows from financing leases | 80 |  |  | 51 |  |  | 147 |  |  | 25 |  |  |  | 33 |  |  |  | 58 |
Non-cash information related to right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |  |  |  |
Operating leases | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 143,816 |  |  |  | $ | 12,942 |  |  |  | $ | 157,440 |
Financing leases | 1,463 |  |  | 2,802 |  |  | 4,272 |  |  | 1,635 |  |  |  | 1,268 |  |  |  | 2,904 |
Excluded from the operating and financing cash paid for leases above are $0.3 million and $0.2 million at PNM, $0.6 million and $0.3 million at TNMP, and $0.9 million and $0.5 million at PNMR. These capitalized costs are reflected as investing activities on the Company’s Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019. Future expected lease payments are shown below:
| As of March 31, 2020 |  |  |  |  |  |  |  |  |  |
| PNM |  |  |  | TNMP |  |  |  | PNMR Consolidated |  |
| Financing |  | Operating |  | Financing |  | Operating |  | Financing |  | Operating
| (In thousands) |  |  |  |  |  |  |  |  |  |
Remainder of 2020 | $ | 861 |  |  | $ | 17,386 |  |  | $ | 1,111 |  |  | $ | 2,279 |  |  | $ | 2,027 |  |  | $ | 20,076 |
2021 | 1,117 |  |  | 26,576 |  |  | 1,441 |  |  | 2,448 |  |  | 2,631 |  |  | 29,316 |
2022 | 1,082 |  |  | 26,266 |  |  | 1,396 |  |  | 1,996 |  |  | 2,551 |  |  | 28,473 |
2023 | 1,038 |  |  | 17,735 |  |  | 1,269 |  |  | 1,508 |  |  | 2,345 |  |  | 19,423 |
2024 | 712 |  |  | 7,908 |  |  | 1,074 |  |  | 877 |  |  | 1,786 |  |  | 8,833 |
Later years | 1,008 |  |  | 34,466 |  |  | 1,367 |  |  | 765 |  |  | 2,375 |  |  | 35,488 |
Total minimum lease payments | 5,818 |  |  | 130,337 |  |  | 7,658 |  |  | 9,873 |  |  | 13,715 |  |  | 141,609 |
Less: Imputed interest | 527 |  |  | 14,924 |  |  | 697 |  |  | 790 |  |  | 1,235 |  |  | 16,343 |
Lease liabilities as of March 31, 2020 | $ | 5,291 |  |  | $ | 115,413 |  |  | $ | 6,961 |  |  | $ | 9,083 |  |  | $ | 12,480 |  |  | $ | 125,266 |
The above tables include $9.9 million, $15.1 million, and $25.0 million for PNM, TNMP, and PNMR at March 31, 2020 for expected future payments on fleet vehicle and equipment leases that could be avoided if the leased assets were returned and the lessor is able to recover estimated market value for the equipment from third parties. The Company’s contractual commitments for leases that have not yet commenced are insignificant.

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