PNM turns profitable

-A A +A
By Harold Morgan

Utilities have their moments.
The Socorro Electric Co-op is working through several years of disputes and lawsuits that aren’t quite up to the low comedy standards of city officials in Santa Teresa and Columbus.
I remember former PNM Resources Chairman Jeff Sterba doing his best Al Gore imitation at annual meetings a few years ago. Sterba’s passion for the absolute inevitability of ugly results from global warming was something to behold. Compact fluorescent light bulbs became an annual meeting souvenir.
PNM has a half million customers, most of them in the north central urban area from Belen to Santa Fe, plus communities in the southwest, Ruidoso and Alamogordo, and Clayton, a little northeast pinprick. Xcel Energy has the southeast, El Paso Electric the Mesilla Valley and rural cooperatives the rest, with publicly-owned utilities in Farmington and Los Alamos.
The full disclosure is that I own 150 PNMR shares, accumulated over ten years of small purchases. Recently I bought ten shares of Xcel under a similar program.
PNM has a couple of moments going these days of a rapid transformation of energy everything.
To start, PNM Resources, the holding company for two utilities, PNM and Texas New Mexico Power, is profitable again. The company made $176 million in 2011 after losing $45 million in 2010. The profit has much to do with Pat Vincent-Collawn, Sterba’s successor, dumping Sterba’s expansions into money-losing businesses in Texas. Vincent-Collawn is chairman (as of January 1), president and chief executive officer. She’s the boss.
The expansions and the recession cut PNM’s share price from $21.45 at the end of 2007 to $10.08 a year later. The dividend, the money returned to 12,067 shareholders (as of February 2012) for the privilege of using shareholder’s money, went from 92 cents per share per year in 2007 to 60.5 cents and held at 50 cents. In May the dividend becomes 58 cents.
About half those shareholders are located in New Mexico; the dividend recycles locally.
PNM Resources’ annual report, filed with the SEC in February, says, “PNMR is now fully repositioned as a holding company of regulated electric utilities… earning authorized returns on its regulated businesses.”
Delivering electricity, being profitable and paying dividends are PNM’s job. But that’s not good enough for the left.
In February five organizations, including the Sierra Club and the New Energy Economy, issued a report, “Perspective on PNM.” In standard demagoguery, their “analysis” started with 2008, the year PNM’s results tanked.
That PNM has improved from the low base of 2008 is bad, the Perspective says. Also bad is a PNM rate increase “several months” after the national recession began in 2008. Ignored is the fact that we all thought the New Mexico economy was fine in 2008.
Remember that utilities, being monopolies, are regulated. In PNM’s case the regulation comes through the Public Regulation Commission, another outfit with a low comedy history. It takes a couple of years of analysis and hearings to hustle more money from the PRC. The recession and rate increase linkage is coincidence.
New Energy Economy leads an effort to force PNM to meet federal Environmental Protection Agency requirements by spending a gazillion dollars on new equipment to cut visibility-reducing emissions from PNM’s San Juan Generation Station. PNM says fine but argues that the job can be done for a tenth the cost of the EPA approach.
Gov. Susana Martinez and the Environment Department are in the battle.
A modest but significant PNM moment is the decision to vacate its flashy Alvarado Square headquarters in downtown Albuquerque that is equipped with a large non-working solar system.
Being a regulated utility isn’t flashy, but it is a challenge. Sadly, dealing with demagoguery is part of the challenge,
Harold Morgan
New Mexico Progress