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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit)

PNMR’s income taxes (benefits) consist of the following components:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Current federal income tax			$	—					$	—					$	—
Current state income tax (benefit)			(2,841)						1,597						1,835
Deferred federal income tax (benefit)			(11,503)						18,413						20,679
Deferred state income tax (benefit)			(825)						7,302						11,315
Amortization of accumulated investment tax credits			(1,181)						(1,182)						(1,247)
Total income taxes (benefits)			$	(16,350)					$	26,130					$	32,582

PNM’s income taxes (benefits) consist of the following components:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Current federal income tax (benefit)			$	9,518					$	(13,533)					$	—
Current state income tax (benefit)			(4,304)						3,244						(128)
Deferred federal income tax (benefit)			(22,951)						25,298						18,774
Deferred state income tax			1,150						4,361						8,583
Amortization of accumulated investment tax credits			(171)						(172)						(237)
Total income taxes (benefits)			$	(16,758)					$	19,198					$	26,992

TNMP’s income taxes consist of the following components:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Current federal income tax			$	11,354					$	17,055					$	5,770
Current state income tax			3,055						2,662						2,395
Deferred federal income tax (benefit)			2,917						(4,527)						(224)
Deferred state income tax (benefit)			(29)						(29)						(29)
Total income taxes			$	17,297					$	15,161					$	7,912

Schedule of Effective Income Tax Rate Reconciliation

PNMR’s provision for income taxes (benefits) differed from the federal income tax computed at the statutory rate for each of the years shown. The differences are attributable to the following factors:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Federal income tax at statutory rates			$	19,011					$	44,375					$	51,330
Amortization of accumulated investment tax credits			(1,181)						(1,182)						(1,247)
Amortization of excess deferred income tax			(22,859)						(23,599)						(24,484)
Flow-through of depreciation items			1,281						2,795						798
(Earnings) attributable to non-controlling interest in Valencia			(3,892)						(3,176)						(3,253)
State income tax (benefit), net of federal (benefit)			(2,239)						6,826						9,660
Allowance for equity funds used during construction			(3,145)						(2,898)						(2,776)
Allocation of tax (benefit) related to stock compensation awards			(261)						91						(788)
Non-deductible compensation			1,659						1,125						899
Non-deductible merger related costs			(1,959)						74						848
R&D credit			(2,050)						(1,320)						(1,530)
Other			(715)						3,019						3,125
Total income taxes (benefits)			$	(16,350)					$	26,130					$	32,582

Effective tax rate 18.06  % 12.37  % 13.33  %

The differences are attributable to the following factors:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Federal income tax at statutory rates			$	7,972					$	29,026					$	41,696
Amortization of accumulated investment tax credits			(171)						(172)						(237)
Amortization of excess deferred income tax			(14,252)						(14,421)						(15,158)
Flow-through of depreciation items			1,114						2,641						689
(Earnings) attributable to non-controlling interest in Valencia			(3,892)						(3,176)						(3,253)
State income tax (benefit), net of federal (benefit)			(2,216)						5,694						7,609
Allowance for equity funds used during construction			(2,065)						(1,958)						(2,080)
Allocation of tax (benefit) related to stock compensation awards			(185)						65						(563)
Non-deductible compensation			1,015						701						547
Non-deductible merger costs			(33)						10						22
R&D credit			(2,000)						(1,300)						(1,500)
Other			(2,045)						2,088						(780)
Total income taxes (benefits)			$	(16,758)					$	19,198					$	26,992

Effective tax rate (44.15) % 13.89  % 13.59  %

The differences are attributable to the following factors:

			Year Ended December 31,
			2023						2022						2021
			(In thousands)
Federal income tax at statutory rates			$	23,569					$	22,560					$	15,076
Amortization of excess deferred income tax			(8,607)						(9,177)						(9,326)
State income tax, net of federal (benefit)			2,414						2,103						1,763
Allocation of tax (benefit) related to stock compensation awards			(77)						26						(224)
Non-deductible compensation			642						422						351
Transaction costs			3						1						(4)
Other			(647)						(774)						276
Total income taxes			$	17,297					$	15,161					$	7,912

Effective tax rate 15.41  % 14.11  % 11.02  %

Components of Deferred Tax Assets and Liabilities

The components of PNMR’s net accumulated deferred income tax liability were:

			December 31,
			2023						2022
			(In thousands)
Deferred tax assets:
Net operating loss			$	16,833					$	85,382
Regulatory liabilities related to income taxes			90,461						98,371
Federal tax credit carryforwards			124,510						122,557
Regulatory disallowances			42,330						28,037
Regulatory liability SJGS retirement credits			28,797						—
Other			35,492						33,849
Total deferred tax assets			338,423						368,196
Deferred tax liabilities:
Depreciation and plant related			(738,078)						(801,022)
Investment tax credit			(95,046)						(96,227)
Regulatory assets related to income taxes			(80,643)						(77,013)
Pension			(41,141)						(40,651)
Regulatory asset for shutdown of SJGS Units 2 and 3			(22,454)						(24,048)
Regulatory asset SJGS energy transition property			(86,521)						(69,828)
Regulatory asset PVNGS investment			(20,503)						—
PVNGS trusts			(41,767)						(26,084)
Other			(57,550)						(56,154)
Total deferred tax liabilities			(1,183,703)						(1,191,027)
Net accumulated deferred income tax liabilities			$	(845,280)					$	(822,831)

The components of PNM’s net accumulated deferred income tax liability were:

			December 31,
			2023						2022
			(In thousands)
Deferred tax assets:
Net operating loss			$	—					$	54,681
Regulatory liabilities related to income taxes			71,546						76,744
Federal tax credit carryforwards			80,586						84,902
Regulatory disallowance			42,330						28,037
Regulatory liability SJGS retirement credits			28,797						—
Other			35,993						33,079
Total deferred tax assets			259,252						277,443
Deferred tax liabilities:
Depreciation and plant related			(545,815)						(620,814)
Investment tax credit			(73,844)						(74,015)
Regulatory assets related to income taxes			(71,742)						(67,912)
Pension			(36,483)						(36,048)
Regulatory asset for shutdown of SJGS Units 2 and 3			(22,454)						(24,048)
Regulatory asset SJGS energy transition property			(86,521)						(69,828)
Regulatory asset PVNGS investment			(20,503)						—
PVNGS Trusts			(41,767)						(26,084)
Other			(44,160)						(40,734)
Total deferred tax liabilities			(943,289)						(959,483)
Net accumulated deferred income tax liabilities			$	(684,037)					$	(682,040)

The components of TNMP’s net accumulated deferred income tax liability were:

			December 31,
			2023						2022
			(In thousands)
Deferred tax assets:
Regulatory liabilities related to income taxes			$	18,915					$	21,627
Other			5,534						5,353
Total deferred tax assets			24,449						26,980
Deferred tax liabilities:
Depreciation and plant related			(179,483)						(166,230)
Regulatory assets related to income taxes			(8,901)						(9,213)
Loss on reacquired debt			(5,254)						(5,527)
Pension			(4,659)						(4,603)
AMS			(2,613)						(3,989)
Other			(2,287)						(2,055)
Total deferred tax liabilities			(203,197)						(191,617)
Net accumulated deferred income tax liabilities			$	(178,748)					$	(164,637)

Reconciliation of Accumulated Deferred Income Tax Liability to Deferred Income Tax Benefit

The following table reconciles the change in PNMR’s net accumulated deferred income tax liability to the deferred income tax (benefit) included in the Consolidated Statement of Earnings:

			Year Ended
			December 31, 2023
			(In thousands)
Net change in deferred income tax liability per above table			$	22,449
Change in tax effects of income tax related regulatory assets and liabilities			(11,791)
Amortization of excess deferred income tax			(22,859)
Tax effect of mark-to-market adjustments			474
Tax effect of excess pension liability			(1,566)
Adjustment for uncertain income tax positions			(17)
Reclassification of unrecognized tax benefits			17
Other			(216)
Deferred income tax (benefit)			$	(13,509)

The following table reconciles the change in PNM’s net accumulated deferred income tax liability to the deferred income tax (benefit) included in the Consolidated Statement of Earnings:

			Year Ended
			December 31, 2023
			(In thousands)
Net change in deferred income tax liability per above table			$	1,997
Change in tax effects of income tax related regulatory assets and liabilities			(9,391)
Amortization of excess deferred income tax			(14,252)
Tax effect of mark-to-market adjustments			(1,099)
Tax effect of excess pension liability			(1,566)
Adjustment for uncertain income tax positions			(55)
Reclassification of unrecognized tax benefits			2,394
Deferred income tax (benefit)			$	(21,972)

The following table reconciles the change in TNMP’s net accumulated deferred income tax liability to the deferred income tax included in the Consolidated Statement of Earnings:

			Year Ended
			December 31, 2023
			(In thousands)
Net change in deferred income tax liability per above table			$	14,111
Change in tax effects of income tax related regulatory assets and liabilities			(2,400)
Amortization of excess deferred income tax			(8,607)
Other			(216)
Deferred income tax			$	2,888

Reconciliation of Unrecognized Tax Benefits (Expenses)

A reconciliation of unrecognized tax benefits is as follows:

			PNMR						PNM						TNMP
			(In thousands)
Balance at December 31, 2020			$	13,152					$	10,230					$	119
Additions based on tax positions related to 2021			305						295						11
Additions for tax positions of prior years			257						246						11
Balance at December 31, 2021			13,714						10,771						141
Additions based on tax positions related to 2022			1,444						1,437						7
Additions (reductions) for tax positions of prior years			(4)						(7)						3
Balance at December 31, 2022			15,154						12,201						151
Additions (reductions) based on tax positions related to 2023			(277)						(294)						17
Additions for tax positions of prior years			259						239						20
Balance at December 31, 2023			$	15,136					$	12,146					$	188

Tax Carryforward, Impairments, net of Federal Tax Benefit

Impairments of tax attributes after reflecting the expiration of carryforwards under applicable tax laws, net of federal tax benefit, for 2021 through 2023 are as follows:

			PNMR						PNM						TNMP
			(In thousands)
December 31, 2023:
Federal tax credit carryforwards			$	839					$	(427)					$	—
Compensation expense			$	387					$	246					$	140
December 31, 2022:
Federal tax credit carryforwards			$	187					$	427					$	—
Compensation expense			$	199					$	140					$	59
December 31, 2021:
Federal tax credit carryforwards			$	1,029					$	—					$	—
Compensation expense			$	119					$	84					$	35

Summary of Tax Credit Carryforwards

The reserve balances, after reflecting expiration of carryforwards under applicable tax laws, at December 31, 2023 and 2022 are as follows:

			PNMR						PNM						TNMP
			(In thousands)
December 31, 2023:
Federal tax credit carryforwards			$	2,055					$	—					$	—
Compensation expense			$	1,112					$	729					$	381
December 31, 2022:
Federal tax credit carryforwards			$	1,216					$	427					$	—
Compensation expense			$	725					$	483					$	241

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