Regulatory Assets and Liabilities

12 Months Ended

Dec. 31, 2020

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,
	2020		2019		2020		2019
Assets:	(In thousands)
Current:
FPPAC	$	—	$	7,373	$	—	$	—

Energy efficiency costs	—		—		202		—

	—		7,373		202		—
Non-Current:
CTC, including carrying charges	—		—		324		7,412
Coal mine reclamation costs(3)	9,980		13,995		—		—
Deferred income taxes	65,564		66,296		9,817		8,997
Loss on reacquired debt	19,748		19,426		28,914		30,212
Pension and OPEB(1)	190,147		214,771		22,863		27,947

Shutdown of SJGS Units 2 and 3	107,231		113,508		—		—
Hurricane recovery costs(2)	—		—		480		1,041
AMS surcharge	—		—		18,761		25,015
AMS retirement and other costs	—		—		13,915		15,542
Renewable energy costs	—		643		—		—
Deferred cost under the ETA	42,703		—		—		—
Deferred COVID-19 costs	8,761		—		676		—
SJGS replacement resources	8,282		—		—		—
Other	5,537		6,828		4,087		5,297
	457,953		435,467		99,837		121,463
Total regulatory assets	$	457,953	$	442,840	$	100,039	$	121,463


	PNM				TNMP
	December 31,				December 31,
	2020		2019		2020		2019
Liabilities:
Current:
FPPAC	$	(2,274)	$	—	$	—	$	—
Renewable energy rider	(2,044)		—		—		—

Other	(1,101)		(371)		(2,052)		(134)
	(5,419)		(371)		(2,052)		(134)
Non-Current:
Cost of removal	(284,695)		(271,025)		(59,613)		(46,091)
Deferred income taxes	(343,844)		(374,122)		(119,695)		(131,871)
PVNGS ARO	(5,394)		(11,341)		—		—
Renewable energy tax benefits	(17,912)		(19,069)		—		—


Accelerated depreciation SNCRs(4)	(12,045)		(7,758)		—		—
Pension and OPEB	—		—		(5,535)		(4,775)
COVID-19 cost savings	(900)		—		—		—
Other	(83)		(83)		(512)		(108)
	(664,873)		(683,398)		(185,355)		(182,845)
Total regulatory liabilities	$	(670,292)	$	(683,769)	$	(187,407)	$	(182,979)

(1) Includes $1.6 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 $9.3 million in coal mine reclamation costs related to PNM’s planned retirement of SJGS in 2022 and recoverable under the ETA as described in Note 16

(4) Amounts to be refunded under the ETA

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); PVNGS ARO (to be determined in a future regulatory proceeding); costs recoverable under the ETA (over the securitization period); deferred COVID-19 costs (to be determined in a future regulatory proceeding); and SJGS replacement resources (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. 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.