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Lease Commitments | 12 Months Ended
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Dec. 31, 2023
Leases [Abstract] |
Lease Commitments | Lease Commitments The Company enters into various lease agreements to meet its business needs and to satisfy the needs of its customers. The Company accounts for contracts that convey the use and control of identified assets for a period of time as leases. The Company classifies leases as operating or financing by evaluating the terms of the lease agreement. Agreements under which the Company is likely to utilize substantially all of the economic value or life of the asset or that the Company is likely to own at the end of the lease term, either through purchase or transfer of ownership, are classified as financing leases. Leases not meeting these criteria are accounted for as operating leases. Agreements under which the Company is a lessor are insignificant. PNMR, PNM, and TNMP determine present value for their leases using their incremental borrowing rates at the commencement date of the lease or, when readily available, the rate implicit in the agreement. The Company leases office buildings, vehicles, battery storage facilities, and other equipment. In addition, PNM had lease interests in PVNGS and certain rights-of-way agreements that were or are classified as leases. All of the Company’s leases with terms in excess of one year are recorded on the Consolidated Balance Sheets 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 Consolidated Statements of Earnings. PVNGS In 1985 and 1986, PNM entered into leases for its interest in PVNGS Unit 1 and 2. The leases initially were scheduled to expire in January 2015 for four Unit 1 leases and January 2016 for 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 expired in January 2023 and the one Unit 2 lease expired in January 2024. The annual lease payments during the renewal periods aggregated $0.8 million on the PVNGS Unit 2 lease that terminated in January 2024. PNM will cease depreciation and as authorized by the NMPRC create a regulatory asset for the associated remaining undepreciated investments. On April 5, 2021, PNM and SRP entered into an Asset Purchase and Sale Agreement, pursuant to which PNM agreed to sell to SRP certain PNM-owned assets and nuclear fuel necessary to the ongoing operation and maintenance of leased capacity in PVNGS Unit 1 and Unit 2. In January 2023, the Unit 1 leases expired, and PNM closed on the associated sale to SRP, receiving payments of $33.7 million, of which $28.4 million was recorded as a reduction to Net utility plant on the Condensed Consolidated Balance Sheets and is presented as cash flows from investing activities on the Condensed Consolidated Statement of Cash Flows. In addition, $5.3 million was recorded as a reduction to materials, supplies, and fuel stock on the Condensed Consolidated Balance Sheets and is presented as cash flows from operating activities on the Condensed Consolidated Statement of Cash Flows. In January 2024, the Unit 2 leases expired, and PNM closed on the associated sale to SRP, receiving payments of $3.5 million, of which $3.0 million was related to net utility plant and $0.5 million was related to materials and supplies. See Notes 16 and 17 for information on other PVNGS matters including NMPRC authorization to create regulatory assets for the associated remaining undepreciated investments and the PVNGS Leased Interest Abandonment Application. 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 2023 payment for the amount due under the Navajo Nation right-of-way lease was $8.3 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 Consolidated Balance Sheets and recognizes amortization expense associated with these agreements in the Consolidated Statement of Earnings over their term. As of December 31, 2023 and 2022, the unamortized balance of these rights-of-ways was $56.2 million and $54.6 million. During the years ended December 31, 2023, 2022, and 2021, PNM recognized amortization expense associated with these agreements of $3.5 million, $3.8 million, and $3.7 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 December 31, 2023, residual value guarantees on fleet vehicle and equipment leases are $0.8 million, $1.0 million, and $1.8 million for PNM, TNMP, and PNMR Consolidated. Battery Storage Agreements The Company has entered into various battery storage agreements and, in the third quarter of 2023, two battery storage facilities with an aggregate capacity of 170 MW began commercial operation. The agreements are for 20-year terms and have fixed payments over the life of the agreements. The Company has accounted for the agreements as operating leases and initially recorded lease liabilities with corresponding right-of-use assets of $138.0 million. In addition, the Company has elected to separate lease components from non-lease components for battery storage agreements and accordingly, does not include non-lease components in the measurement of the lease liability or right-of-use asset. The non-lease components, currently not included in the measurement of the lease liability or the corresponding right-of-use asset, comprise of 25.5% of the value of the agreements. Information related to the Company’s operating leases recorded on the Consolidated Balance Sheets is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating leases: |  |  |  |  |  |  |  |  |  |  |
Operating lease assets, net of amortization | $ | 180,370 |  |  | $ | 1,814 |  |  | $ | 182,201 |  |  | $ | 52,556 |  |  | $ | 3,426 |  |  | $ | 55,982 |
Current portion of operating lease liabilities | 11,371 |  |  | 895 |  |  | 12,267 |  |  | 17,239 |  |  | 1,543 |  |  | 18,781 |
Long-term portion of operating lease liabilities | 166,191 |  |  | 809 |  |  | 167,000 |  |  | 39,633 |  |  | 1,703 |  |  | 41,336 |
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 Consolidated Balance Sheets is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Financing leases: |  |  |  |  |  |  |  |  |  |  |
Non-utility property | $ | 25,425 |  |  | $ | 24,487 |  |  | $ | 49,981 |  |  | $ | 19,324 |  |  | $ | 20,084 |  |  | $ | 39,738 |
Accumulated depreciation | (11,984) |  |  | (11,869) |  |  | (23,905) |  |  | (7,726) |  |  | (8,202) |  |  | (16,189) |
Non-utility property, net | $ | 13,441 |  |  | $ | 12,618 |  |  | $ | 26,076 |  |  | $ | 11,598 |  |  | $ | 11,882 |  |  | $ | 23,549 |
Other current liabilities | $ | 4,146 |  |  | $ | 4,616 |  |  | $ | 8,776 |  |  | $ | 3,441 |  |  | $ | 3,867 |  |  | $ | 7,363 |
Other deferred credits | 9,300 |  |  | 8,023 |  |  | 17,326 |  |  | 8,079 |  |  | 8,028 |  |  | 16,123 |
Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
Weighted average remaining lease term (years): |  |  |  |  |  |  |  |  |  |  |
Operating leases | 16.79 |  | 1.65 |  | 16.65 |  | 6.74 |  | 2.16 |  | 6.48
Financing leases | 3.81 |  | 3.08 |  | 3.45 |  | 3.99 |  | 3.39 |  | 3.68
Weighted average discount rate: |  |  |  |  |  |  |  |  |  |  |
Operating leases | 5.61 | % |  | 4.16 | % |  | 5.60 | % |  | 4.01 | % |  | 3.94 | % |  | 4.00 | %
Financing leases | 4.54 |  |  | 4.63 |  |  | 4.58 |  |  | 3.36 |  |  | 3.53 |  |  | 3.44 |
Information for the components of lease expense is as follows:
| Year Ended December 31, 2023
| PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating lease cost: |  |  |  |  |
Battery storage leases | $ | 4,351 |  |  | $ | — |  |  | $ | 4,351 |
Other operating leases | 11,127 |  |  | 1,479 |  |  | 12,606 |
Amounts capitalized | (374) |  |  | (1,298) |  |  | (1,672) |
Total operating lease expense | 15,104 |  |  | 181 |  |  | 15,285 |
Financing lease cost: |  |  |  |  |
Amortization of right-of-use assets | 4,566 |  |  | 4,634 |  |  | 9,253 |
Interest on lease liabilities | 562 |  |  | 497 |  |  | 1,060 |
Amounts capitalized | (3,190) |  |  | (4,250) |  |  | (7,440) |
Total financing lease expense | 1,938 |  |  | 881 |  |  | 2,873 |
Variable lease expense | 1,342 |  |  | — |  |  | 1,342 |
Short-term lease expense | 675 |  |  | 29 |  |  | 782 |
Total lease expense for the period | $ | 19,059 |  |  | $ | 1,091 |  |  | $ | 20,282 |
| Year Ended December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating lease cost | $ | 26,764 |  |  | $ | 2,020 |  |  | $ | 28,835 |
Amounts capitalized | (690) |  |  | (1,728) |  |  | (2,417) |
Total operating lease expense | 26,074 |  |  | 292 |  |  | 26,418 |
Financing lease cost: |  |  |  |  |
Amortization of right-of-use assets | 3,175 |  |  | 3,279 |  |  | 6,529 |
Interest on lease liabilities | 327 |  |  | 330 |  |  | 659 |
Amounts capitalized | (2,264) |  |  | (3,208) |  |  | (5,471) |
Total financing lease expense | 1,238 |  |  | 401 |  |  | 1,717 |
Variable lease expense | 890 |  |  | — |  |  | 890 |
Short-term lease expense (1) | 3,058 |  |  | 5 |  |  | 3,109 |
Total lease expense for the period | $ | 31,260 |  |  | $ | 698 |  |  | $ | 32,134 |
(1) Includes expense of $2.7 million for the twelve months ended December 31, 2022 for rental of temporary cooling towers associated with the SJGS Unit 1 outage. These amounts are partially offset with insurance reimbursements of $2.7 million for the twelve months ended December 31, 2022. Supplemental cash flow information related to the Company’s leases is as follows:
| Year Ended December 31, 2023 |  | Year Ended December 31, 2022
| 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 | $ | 21,575 |  |  | $ | 110 |  |  | $ | 21,685 |  |  | $ | 25,687 |  |  | $ | 246 |  |  | $ | 25,984 |
Operating cash flows from financing leases | 183 |  |  | 73 |  |  | 256 |  |  | 96 |  |  | 43 |  |  | 141 |
Financing cash flows from financing leases | 1,671 |  |  | 802 |  |  | 2,527 |  |  | 1,123 |  |  | 499 |  |  | 1,711 |
Non-cash information related to right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |  |  |  |
Operating leases | $ | 138,204 |  |  | $ | 6 |  |  | $ | 138,210 |  |  | $ | 2,924 |  |  | $ | 179 |  |  | $ | 3,103 |
Financing leases | 6,421 |  |  | 5,407 |  |  | 11,828 |  |  | 4,205 |  |  | 4,061 |  |  | 8,266 |
Capitalized lease costs are reflected as investing activities on the Company’s Consolidated Statements of Cash Flows for the twelve months ended December 31, 2023 and 2022. Future expected lease payments are shown below:
| As of December 31, 2023
| PNM |  | TNMP |  | PNMR Consolidated
|  |  | Operating |  |  |  |  |  |  |  | Operating
| Financing |  | Battery Storage |  | Other |  | Financing |  | Operating |  | Financing |  | Battery Storage |  | Other
| (In thousands)
2024 | $ | 4,649 |  |  | $ | 11,786 |  |  | $ | 8,046 |  |  | $ | 5,083 |  |  | $ | 945 |  |  | $ | 9,746 |  |  | $ | 11,786 |  |  | $ | 8,991 |
2025 | 3,605 |  |  | 11,786 |  |  | 7,087 |  |  | 3,991 |  |  | 770 |  |  | 7,598 |  |  | 11,786 |  |  | 7,857 |
2026 | 3,089 |  |  | 11,786 |  |  | 7,025 |  |  | 2,781 |  |  | 76 |  |  | 5,870 |  |  | 11,786 |  |  | 7,101 |
2027 | 1,859 |  |  | 11,786 |  |  | 7,029 |  |  | 1,381 |  |  | — |  |  | 3,240 |  |  | 11,786 |  |  | 7,029 |
2028 | 889 |  |  | 11,786 |  |  | 7,032 |  |  | 310 |  |  | — |  |  | 1,199 |  |  | 11,786 |  |  | 7,032 |
Later years | 614 |  |  | 172,254 |  |  | 10,587 |  |  | 37 |  |  | — |  |  | 651 |  |  | 172,254 |  |  | 10,587 |
Total minimum lease payments | 14,705 |  |  | 231,184 |  |  | 46,806 |  |  | 13,583 |  |  | 1,791 |  |  | 28,304 |  |  | 231,184 |  |  | 48,597 |
Less: Imputed interest | 1,259 |  |  | 94,563 |  |  | 5,865 |  |  | 944 |  |  | 87 |  |  | 2,202 |  |  | 94,563 |  |  | 5,951 |
Lease liabilities | $ | 13,446 |  |  | $ | 136,621 |  |  | $ | 40,941 |  |  | $ | 12,639 |  |  | $ | 1,704 |  |  | $ | 26,102 |  |  | $ | 136,621 |  |  | $ | 42,646 |
The above table includes $12.6 million, $12.3 million, and $24.9 million for PNM, TNMP, and PNMR at December 31, 2023 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. At December 31, 2023, the Company has various lease arrangements that have been executed but have not yet commenced, which are primarily related to battery storage agreements. The Company currently expects lease commencement dates in 2024, with lease terms expiring in 2044, and will recognize lease assets and liabilities upon lease commencement. The expected total fixed consideration to be paid for these arrangements, which includes non-lease payments, is approximately $961.0 million over the 20-year terms of the agreements.
Lease Commitments | Lease Commitments The Company enters into various lease agreements to meet its business needs and to satisfy the needs of its customers. The Company accounts for contracts that convey the use and control of identified assets for a period of time as leases. The Company classifies leases as operating or financing by evaluating the terms of the lease agreement. Agreements under which the Company is likely to utilize substantially all of the economic value or life of the asset or that the Company is likely to own at the end of the lease term, either through purchase or transfer of ownership, are classified as financing leases. Leases not meeting these criteria are accounted for as operating leases. Agreements under which the Company is a lessor are insignificant. PNMR, PNM, and TNMP determine present value for their leases using their incremental borrowing rates at the commencement date of the lease or, when readily available, the rate implicit in the agreement. The Company leases office buildings, vehicles, battery storage facilities, and other equipment. In addition, PNM had lease interests in PVNGS and certain rights-of-way agreements that were or are classified as leases. All of the Company’s leases with terms in excess of one year are recorded on the Consolidated Balance Sheets 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 Consolidated Statements of Earnings. PVNGS In 1985 and 1986, PNM entered into leases for its interest in PVNGS Unit 1 and 2. The leases initially were scheduled to expire in January 2015 for four Unit 1 leases and January 2016 for 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 expired in January 2023 and the one Unit 2 lease expired in January 2024. The annual lease payments during the renewal periods aggregated $0.8 million on the PVNGS Unit 2 lease that terminated in January 2024. PNM will cease depreciation and as authorized by the NMPRC create a regulatory asset for the associated remaining undepreciated investments. On April 5, 2021, PNM and SRP entered into an Asset Purchase and Sale Agreement, pursuant to which PNM agreed to sell to SRP certain PNM-owned assets and nuclear fuel necessary to the ongoing operation and maintenance of leased capacity in PVNGS Unit 1 and Unit 2. In January 2023, the Unit 1 leases expired, and PNM closed on the associated sale to SRP, receiving payments of $33.7 million, of which $28.4 million was recorded as a reduction to Net utility plant on the Condensed Consolidated Balance Sheets and is presented as cash flows from investing activities on the Condensed Consolidated Statement of Cash Flows. In addition, $5.3 million was recorded as a reduction to materials, supplies, and fuel stock on the Condensed Consolidated Balance Sheets and is presented as cash flows from operating activities on the Condensed Consolidated Statement of Cash Flows. In January 2024, the Unit 2 leases expired, and PNM closed on the associated sale to SRP, receiving payments of $3.5 million, of which $3.0 million was related to net utility plant and $0.5 million was related to materials and supplies. See Notes 16 and 17 for information on other PVNGS matters including NMPRC authorization to create regulatory assets for the associated remaining undepreciated investments and the PVNGS Leased Interest Abandonment Application. 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 2023 payment for the amount due under the Navajo Nation right-of-way lease was $8.3 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 Consolidated Balance Sheets and recognizes amortization expense associated with these agreements in the Consolidated Statement of Earnings over their term. As of December 31, 2023 and 2022, the unamortized balance of these rights-of-ways was $56.2 million and $54.6 million. During the years ended December 31, 2023, 2022, and 2021, PNM recognized amortization expense associated with these agreements of $3.5 million, $3.8 million, and $3.7 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 December 31, 2023, residual value guarantees on fleet vehicle and equipment leases are $0.8 million, $1.0 million, and $1.8 million for PNM, TNMP, and PNMR Consolidated. Battery Storage Agreements The Company has entered into various battery storage agreements and, in the third quarter of 2023, two battery storage facilities with an aggregate capacity of 170 MW began commercial operation. The agreements are for 20-year terms and have fixed payments over the life of the agreements. The Company has accounted for the agreements as operating leases and initially recorded lease liabilities with corresponding right-of-use assets of $138.0 million. In addition, the Company has elected to separate lease components from non-lease components for battery storage agreements and accordingly, does not include non-lease components in the measurement of the lease liability or right-of-use asset. The non-lease components, currently not included in the measurement of the lease liability or the corresponding right-of-use asset, comprise of 25.5% of the value of the agreements. Information related to the Company’s operating leases recorded on the Consolidated Balance Sheets is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating leases: |  |  |  |  |  |  |  |  |  |  |
Operating lease assets, net of amortization | $ | 180,370 |  |  | $ | 1,814 |  |  | $ | 182,201 |  |  | $ | 52,556 |  |  | $ | 3,426 |  |  | $ | 55,982 |
Current portion of operating lease liabilities | 11,371 |  |  | 895 |  |  | 12,267 |  |  | 17,239 |  |  | 1,543 |  |  | 18,781 |
Long-term portion of operating lease liabilities | 166,191 |  |  | 809 |  |  | 167,000 |  |  | 39,633 |  |  | 1,703 |  |  | 41,336 |
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 Consolidated Balance Sheets is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Financing leases: |  |  |  |  |  |  |  |  |  |  |
Non-utility property | $ | 25,425 |  |  | $ | 24,487 |  |  | $ | 49,981 |  |  | $ | 19,324 |  |  | $ | 20,084 |  |  | $ | 39,738 |
Accumulated depreciation | (11,984) |  |  | (11,869) |  |  | (23,905) |  |  | (7,726) |  |  | (8,202) |  |  | (16,189) |
Non-utility property, net | $ | 13,441 |  |  | $ | 12,618 |  |  | $ | 26,076 |  |  | $ | 11,598 |  |  | $ | 11,882 |  |  | $ | 23,549 |
Other current liabilities | $ | 4,146 |  |  | $ | 4,616 |  |  | $ | 8,776 |  |  | $ | 3,441 |  |  | $ | 3,867 |  |  | $ | 7,363 |
Other deferred credits | 9,300 |  |  | 8,023 |  |  | 17,326 |  |  | 8,079 |  |  | 8,028 |  |  | 16,123 |
Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities is presented below:
| December 31, 2023 |  | December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated |  | PNM |  | TNMP |  | PNMR Consolidated
Weighted average remaining lease term (years): |  |  |  |  |  |  |  |  |  |  |
Operating leases | 16.79 |  | 1.65 |  | 16.65 |  | 6.74 |  | 2.16 |  | 6.48
Financing leases | 3.81 |  | 3.08 |  | 3.45 |  | 3.99 |  | 3.39 |  | 3.68
Weighted average discount rate: |  |  |  |  |  |  |  |  |  |  |
Operating leases | 5.61 | % |  | 4.16 | % |  | 5.60 | % |  | 4.01 | % |  | 3.94 | % |  | 4.00 | %
Financing leases | 4.54 |  |  | 4.63 |  |  | 4.58 |  |  | 3.36 |  |  | 3.53 |  |  | 3.44 |
Information for the components of lease expense is as follows:
| Year Ended December 31, 2023
| PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating lease cost: |  |  |  |  |
Battery storage leases | $ | 4,351 |  |  | $ | — |  |  | $ | 4,351 |
Other operating leases | 11,127 |  |  | 1,479 |  |  | 12,606 |
Amounts capitalized | (374) |  |  | (1,298) |  |  | (1,672) |
Total operating lease expense | 15,104 |  |  | 181 |  |  | 15,285 |
Financing lease cost: |  |  |  |  |
Amortization of right-of-use assets | 4,566 |  |  | 4,634 |  |  | 9,253 |
Interest on lease liabilities | 562 |  |  | 497 |  |  | 1,060 |
Amounts capitalized | (3,190) |  |  | (4,250) |  |  | (7,440) |
Total financing lease expense | 1,938 |  |  | 881 |  |  | 2,873 |
Variable lease expense | 1,342 |  |  | — |  |  | 1,342 |
Short-term lease expense | 675 |  |  | 29 |  |  | 782 |
Total lease expense for the period | $ | 19,059 |  |  | $ | 1,091 |  |  | $ | 20,282 |
| Year Ended December 31, 2022
| PNM |  | TNMP |  | PNMR Consolidated
| (In thousands)
Operating lease cost | $ | 26,764 |  |  | $ | 2,020 |  |  | $ | 28,835 |
Amounts capitalized | (690) |  |  | (1,728) |  |  | (2,417) |
Total operating lease expense | 26,074 |  |  | 292 |  |  | 26,418 |
Financing lease cost: |  |  |  |  |
Amortization of right-of-use assets | 3,175 |  |  | 3,279 |  |  | 6,529 |
Interest on lease liabilities | 327 |  |  | 330 |  |  | 659 |
Amounts capitalized | (2,264) |  |  | (3,208) |  |  | (5,471) |
Total financing lease expense | 1,238 |  |  | 401 |  |  | 1,717 |
Variable lease expense | 890 |  |  | — |  |  | 890 |
Short-term lease expense (1) | 3,058 |  |  | 5 |  |  | 3,109 |
Total lease expense for the period | $ | 31,260 |  |  | $ | 698 |  |  | $ | 32,134 |
(1) Includes expense of $2.7 million for the twelve months ended December 31, 2022 for rental of temporary cooling towers associated with the SJGS Unit 1 outage. These amounts are partially offset with insurance reimbursements of $2.7 million for the twelve months ended December 31, 2022. Supplemental cash flow information related to the Company’s leases is as follows:
| Year Ended December 31, 2023 |  | Year Ended December 31, 2022
| 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 | $ | 21,575 |  |  | $ | 110 |  |  | $ | 21,685 |  |  | $ | 25,687 |  |  | $ | 246 |  |  | $ | 25,984 |
Operating cash flows from financing leases | 183 |  |  | 73 |  |  | 256 |  |  | 96 |  |  | 43 |  |  | 141 |
Financing cash flows from financing leases | 1,671 |  |  | 802 |  |  | 2,527 |  |  | 1,123 |  |  | 499 |  |  | 1,711 |
Non-cash information related to right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |  |  |  |
Operating leases | $ | 138,204 |  |  | $ | 6 |  |  | $ | 138,210 |  |  | $ | 2,924 |  |  | $ | 179 |  |  | $ | 3,103 |
Financing leases | 6,421 |  |  | 5,407 |  |  | 11,828 |  |  | 4,205 |  |  | 4,061 |  |  | 8,266 |
Capitalized lease costs are reflected as investing activities on the Company’s Consolidated Statements of Cash Flows for the twelve months ended December 31, 2023 and 2022. Future expected lease payments are shown below:
| As of December 31, 2023
| PNM |  | TNMP |  | PNMR Consolidated
|  |  | Operating |  |  |  |  |  |  |  | Operating
| Financing |  | Battery Storage |  | Other |  | Financing |  | Operating |  | Financing |  | Battery Storage |  | Other
| (In thousands)
2024 | $ | 4,649 |  |  | $ | 11,786 |  |  | $ | 8,046 |  |  | $ | 5,083 |  |  | $ | 945 |  |  | $ | 9,746 |  |  | $ | 11,786 |  |  | $ | 8,991 |
2025 | 3,605 |  |  | 11,786 |  |  | 7,087 |  |  | 3,991 |  |  | 770 |  |  | 7,598 |  |  | 11,786 |  |  | 7,857 |
2026 | 3,089 |  |  | 11,786 |  |  | 7,025 |  |  | 2,781 |  |  | 76 |  |  | 5,870 |  |  | 11,786 |  |  | 7,101 |
2027 | 1,859 |  |  | 11,786 |  |  | 7,029 |  |  | 1,381 |  |  | — |  |  | 3,240 |  |  | 11,786 |  |  | 7,029 |
2028 | 889 |  |  | 11,786 |  |  | 7,032 |  |  | 310 |  |  | — |  |  | 1,199 |  |  | 11,786 |  |  | 7,032 |
Later years | 614 |  |  | 172,254 |  |  | 10,587 |  |  | 37 |  |  | — |  |  | 651 |  |  | 172,254 |  |  | 10,587 |
Total minimum lease payments | 14,705 |  |  | 231,184 |  |  | 46,806 |  |  | 13,583 |  |  | 1,791 |  |  | 28,304 |  |  | 231,184 |  |  | 48,597 |
Less: Imputed interest | 1,259 |  |  | 94,563 |  |  | 5,865 |  |  | 944 |  |  | 87 |  |  | 2,202 |  |  | 94,563 |  |  | 5,951 |
Lease liabilities | $ | 13,446 |  |  | $ | 136,621 |  |  | $ | 40,941 |  |  | $ | 12,639 |  |  | $ | 1,704 |  |  | $ | 26,102 |  |  | $ | 136,621 |  |  | $ | 42,646 |
The above table includes $12.6 million, $12.3 million, and $24.9 million for PNM, TNMP, and PNMR at December 31, 2023 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. At December 31, 2023, the Company has various lease arrangements that have been executed but have not yet commenced, which are primarily related to battery storage agreements. The Company currently expects lease commencement dates in 2024, with lease terms expiring in 2044, and will recognize lease assets and liabilities upon lease commencement. The expected total fixed consideration to be paid for these arrangements, which includes non-lease payments, is approximately $961.0 million over the 20-year terms of the agreements.

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