ALBUQUERQUE – TNMP, the Texas-based subsidiary of TXNM Energy, Inc. (NYSE: TXNM), has secured approval from the Public Utility Commission of Texas for increases in transmission and distribution costs. This decision allows the utility to recover additional investment costs through customer rates.
The Public Utility Commission of Texas sanctioned a $3.9 million annual increase in wholesale transmission rates for TNMP on September 20, 2024. This adjustment corresponds to the recovery of $20.6 million in additional transmission rate base, with the new rates taking effect immediately upon approval.
Following closely, on October 3, 2024, the commission approved a $7.7 million annual increase in TNMP's distribution rates. This change will enable the recovery of $43.7 million in additional distribution rate base, with the new rates anticipated to be effective in about 45 days from the approval date.
TXNM Energy, the parent company of TNMP and headquartered in Albuquerque, New Mexico, provides energy to over 800,000 residential and commercial customers in Texas and New Mexico. The approval of these rate adjustments is a significant step for TNMP in recouping investments made in their service infrastructure.
The rate adjustments stem from the company's recent applications for a Transmission Cost of Service (TCOS) filing and to amend its Distribution Cost Recovery Factor (DCRF). These filings are publicly accessible for review on the TXNM Energy website.
The information in this article is based on a press release statement from TXNM Energy, Inc. The company's forward-looking statements regarding future events, such as financial estimates and business strategies, are subject to various risk factors and uncertainties that could cause actual results to differ from projections. TXNM Energy has stated it does not intend to update this forward-looking information except as required by law.
InvestingPro Insights
While TXNM Energy's subsidiary TNMP has secured approval for rate increases, it's important to consider the broader financial context of the parent company, PNM Resources (NYSE: PNM). According to InvestingPro data, PNM's market capitalization stands at $6.85 million, reflecting its current market valuation.
InvestingPro Tips highlight some concerning aspects of PNM's financial health. The company is reportedly "quickly burning through cash" and "operates with a significant debt burden." These factors could potentially impact the company's ability to fully capitalize on the approved rate increases for its Texas subsidiary.
Moreover, PNM's stock performance has been challenging. InvestingPro data shows a 20% decline in the 3-month price total return and a more substantial 73.33% drop in the 1-year price total return. This downward trend aligns with the InvestingPro Tip indicating that the "stock has taken a big hit over the last six months."
The approved rate increases for TNMP come at a crucial time, as PNM's financials show some strain. The company's gross profit margin for the last twelve months as of Q4 2024 stands at -53.94%, supporting another InvestingPro Tip that PNM "suffers from weak gross profit margins."
It's worth noting that InvestingPro offers 11 additional tips for PNM, providing a more comprehensive analysis for investors interested in delving deeper into the company's financial situation and market position.
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