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PNM to take $33M impairment related to coal-fired generation retirement plans


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PNM to take $33M impairment related to coal-fired generation retirement plans

PNM Resources Inc. expects to record a pre-tax impairment of approximately $33 million as of Dec. 31, 2018, associated with plans to retire its utility subsidiary Public Service Co. of New Mexico's share of the San Juan coal plant.

The New Mexico Public Regulation Commission in December approved the utility's integrated resources plan, which includes plans to stop using coal-fired power resources by 2031.

The impairment reflects $11 million of undepreciated investments in its 65-MW merchant stake of the facility, as of Dec. 31, 2018, and about $22 million of forecasted undepreciated investment in its 132-MW jurisdictional interest as of June 30, 2022, according to a Jan. 2 federal filing.

The company also anticipates an estimated $40 million increase in its liability for mine reclamation, resulting in a pretax loss of about $30 million for the surface mine that serves the plant which cannot be recovered from customers.

PNM plans to file for formal abandonment with New Mexico regulators in mid-2019 seeking permission to retire the coal-fired facility in 2022, and to seek recovery of its entire remaining undepreciated investments and other costs necessary to retire the facility. If approved, PNM's 200-MW stake in the Four Corners coal project will be the only coal-fired facility left in the company's portfolio.

PNM said the charges will not materially affect its liquidity, cash flows or compliance with financial covenants.