PNM Resources Inc. executives on Aug. 2 outlined the company's capital plan from 2019 to 2023 to reflect investments to replace capacity at the San Juan coal-fired facility, the two remaining units of which are slated for retirement in 2022.
Over the period, PNM's capital plan totals $3.6 billion, representing rate base compound annual growth at 9.3%.
The company plans to invest $298 million for its recommended power replacement scenario, which includes building a gas plant in San Juan County for approximately $190 million, installing a 40-MW battery storage project for about $50 million and installing an additional 30 MW for about $37 million. The remaining $20 million will be allocated for transmission investments.
All resources will be owned by PNM. The preferred scenario, subject to the approval of the state Public Regulation Commission, also calls for 350 MW in solar power purchase agreements with third-party owners, along with 60 MW of storage.
In 2023, PNM's capital plan includes approximately $128 million of expenses related to the remaining leases at the Palo Verde nuclear generating station.
"As these leases expire, we'll need to either purchase the leases to secure the capacity long term or we'll need to consider the replacement capacity. This will be evaluated in the 2020 RFP process that started in July," PNM CFO Charles Eldred said during the company's earnings conference call.
The company also plans to undertake an at-the-market equity issuance of up to $150 million, comprising $50 million in 2020 and $100 million in 2021, as well as $300 million in mandatory convertibles starting mid-2021
Aside from equity financing plans, PNM also filed an application to securitize $360.1 million of eligible energy transition costs related to the proposed abandonment of the company's investment in San Juan.
Proceeds from the securitization will be used to pay off interim financing for the replacement power.
For the second quarter of 2019, PNM reported ongoing net earnings of $29.3 million, or 37 cents per share, in the second quarter of 2019, down from $42.3 million, or 53 cents per share, a year ago. The results were significantly impacted by the July weather during the period, which PNM said was the mildest in 20 years.
The company reaffirmed its revised 2019 consolidated ongoing EPS guidance range of $2.05 to $2.11.
Source: PNM Resources Inc. Aug. 2 investor presentation