Equity Method Investment

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

In September 2017, PNMR Development and AEP OnSite Partners created NMRD to pursue the acquisition, development, and ownership of renewable energy generation projects, primarily in the state of New Mexico. PNMR Development and AEP OnSite Partners each have a 50% ownership interest in NMRD. In December 2017, PNMR Development made a contribution to NMRD of its interest in three 10 MW solar facilities it was constructing and assigned its interests in several agreements related to those facilities to NMRD. The facilities had a book value of $24.8 million, which approximated fair value at that time. AEP OnSite Partners made a cash contribution to NMRD equal to 50% of the value of the 30 MW solar capacity, amounting to $12.4 million, which cash was then distributed from NMRD to PNMR Development. During 2020, 2019, and 2018 PNMR Development and AEP OnSite Partners each made cash contributions of $23.3 million, $38.3 million, and $9.0 million to NMRD for its construction activities. At December 31, 2020, NMRD’s renewable energy capacity in operation is 135.1 MW, which includes 130 MW of solar-PV facilities to supply energy to the Facebook data center located within PNM’s service territory, 1.9 MW to supply energy to Columbus Electric Cooperative located in southwest New Mexico, 2.0 MW to supply energy to the Central New Mexico Electric Cooperative, and 1.2 MW of solar-PV facilities to supply energy to the City of Rio Rancho, New Mexico. PNMR accounts for its investment in NMRD using the equity method of accounting because PNMR’s ownership interest results in significant influence, but not control, over NMRD and its operations. PNMR records as income its percentage share of earnings or loss of NMRD and carries its investment at cost, adjusted for its share of undistributed earnings or losses.

PNMR presents its share of net earnings from NMRD in other income on the Consolidated Statements of Earnings. Summarized financial information for NMRD is as follows:



	December 31,
	2020		2019		2018
	(In thousands)
Operating revenues	$	10,366	$	3,662	$	3,147
Operating expenses	7,476		2,971		2,136
Net earnings	$	2,890	$	691	$	1,011


	Financial Position
	December 31,
	2020		2019
	(In thousands)
Current assets	$	8,046	$	7,187
Net property, plant, and equipment	172,585		132,772
Non-current assets	1,900		—
Total assets	182,531		139,959
Current liabilities	841		9,640
Non-current liabilities	$	380	$	—
Owners’ equity	$	181,310	$	130,319