ML17297A649
| ML17297A649 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 08/05/1981 |
| From: | Van Brunt E ARIZONA PUBLIC SERVICE CO. (FORMERLY ARIZONA NUCLEAR |
| To: | Office of Nuclear Reactor Regulation |
| Shared Package | |
| ML17297A650 | List: |
| References | |
| ANPP-18567, NUDOCS 8108110400 | |
| Download: ML17297A649 (44) | |
Text
REGULAT INFORMATION DISTRIBUTION SYSTEM (RIDS)
ACCESSION NBR:8108110400. DOC ~ DATE:: 81/08/05 NOT IZED NO E.,'
Unit ii Arizona Publi FACILCSTN 50 528 Palo Ver de Nuclear Stationi STN 50 529 Palo Verde Nuclear Station~ Unit 2i Ar)zona Public 0 9=
STN 50-530 Palo Ve'rde Nuclear Station~ Unit 3i Arizona Publi 05000530 AUTH~,NAME AUTHOR AFF IL'I ATION VAN BRUNTiK~,E, Arizona, Public Service Co ~
REC IP ~ IVAMKl RECIP IENT AFF ILLATION Of f ice. of Nuc 1 ear Reactor Regul ati one Directors'UBJECT:
Forwards Annual Financial Repts" for 1980 for AZ Public" Svc Co,Southern CA. Edison CoiE1 Paso Electric CoiPublic SVc Co of NM 8 Salt River ProJect.
DISTRIBUTION CODE(! M004S COPIES RECEiIVED: L~TR ENCL" SIZE'i: l%'P) ~ .
TITLEi; Annual Financial Reports NOTES!Standardized Plant F 1 cy'.C Grimes 05000528 Standardized Plant F 1 cy:C Grimes 05000529 Standardized Plant F 1 cy.'C Grimes 05090530'ECIPIKNT COPIES RECIPIENT COPIES ID CODE/NAME> LTTR ENCL ID CODE/NAME LTTR ENCL ACTION: LI C BR 03 BC 1 0 lIC BR 03 LA 05 1 10 KERRIGANi J ~ 1 0 INTERNAL: NRC'DR 02". 1 1 01 STATE PROGRAM 1 1 EXTERNAL~: lPDR 03~ 1- 1 NTIS
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mme ~$ ~mmes P. O. 8OX mnzmna eomrwx~r 2I666 'HOENIX'RIZONA 85036 August 5, 1981 ANPP-18567 - JMA/NEM Director of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission l<ashington, D.C. 20555 AUG 10 1981~
Ihs, vaIar av~voas 17, Re: Palo Verde Nuclear Generating Station COhVAISS IOII
- (PVNGS) Units 1, 2,.and 3
'ocket Nos. STN-50-528/529/530
Dear Sir:
Pursuant to 10 CFR Part 50.71(b), Arizona Public Ser'vice Company (APS) submits herewith two (2) copies of the 1980 financial statements for each of the Participants who jointly own the Palo Verde Nuclear Generating Station.
Very truly ours, E. E. Van Brunt, Jr.
APS Vice President, Nuclear Projects ANPP Project Director EEVBJr/NEM/av Attachments cc: J. Kerrigan P. Hourihan A. C. Gehr 8108110400 810805 PDR ADOCK 05000528 I PDR
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D Public Service Company of New Mexico 1980 Annual Report
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PNM STATEMENT OF PRINCIPLE Public Service Company of New Our Employees Providing open communications Mexico believes that each suc- An objective opportunity to progress order to achieve a high level of t cessive generation's quality of and grow through productive and derstanding and acceptance of o life willbe progressively more meaningful participation; and purpose and endeavors; dependent upon the availability Our Future Generations Sharing our tcchnical and admin and reliability of electric and A legacy of adequate electric and istrative skills with all levels of water service. water service provided through free government to assist in assuring Consistent with this belief, we enterprise with environmental and best decisions arc made; and recognize our obligations to: economic compatibility. Promoting, supporting and parti Our Customers To meet these obligations, we affirm pating in wortlavhile communit An adequate and reliable source of a policy of: activities and devclopmcnt.
clcctric and water service at the Operating our Company in a respon-lowest reasonable cost; sible manner which reflect the Our Shareholders highest corporate integrity; J.D. Geist, President A reasonable return on, with opti-mum security of, their investment; The annual meeting of stockholders is scheduled to bc held April 28, 1981. A proxy form and notice of the annual meeting will be mailed to all stockholders on March 16, 1981.
For further information and details pertaining to the information pro-vided in this rcport, contact D.E.
Peckham, Secretary, Public Service Company of New Mexico, Alvarado Square, Albuquerque, New Mexico 87158.
Thc Common Stock of this Company is traded on thc Ncw York Stock Ex-cliange under thc symbol PNM.
This Annual Report and the financial statements contained herein are sub-mitted for the general inforntation of the stockholders of the Company and arc not intcndcd for use in con-nection with any sale or purchase of, or any offer or solicitation of offers to buy or sell, any securities of thc Company.
ANCIALHIGHLIGHTS 1980 1979 % Chan e rating revenues $ 280,516,000 244,370,000 14.8 rating expenses $ 208,718,000 184,554,000 13.1 rating income $ 71,798,000 59,816,000 20.0 earnings $ 71,436,000 54,803,000 30.4 earnings applicable to common stock $ 53,602,000 42,607,000 25.8 rn on average common equity 14 9% 13.6% 9.6 rage number of common shares outstanding 15)933,000 14,363,000 10.9 earnings per common sharc $ 3.36 2.97 13.1 idends aid er common share $ 2.04 1.88 8.5 struction expenditures $ 283,864,000 $ 323,361,000 (12.2) ss investment in utilit ro ert $ 1 477 744 000 $ 1 197 514 000 23.4 wat t-hour sales 5,402,098,000 4,960,451,000 8.9 ber of electric customers served at year cnd 213,000 206,000 3.4 a e kWhr usa e cr residential customer: 5 782 5 929 2.5 ber of employees 2,598 2,311 12.4 ber of common stockholders 34 436 31 160 10.5 BLE OF CONTENTS ident's Let ter enues and Expenses 0 Earnings struction Program and nancing Requirements 4 and Regulation 4 tric Operations 5 er Operations 5 idiaries 5 nce 6
'sion Operations 8 er Operations 10 inistration 11
.idiary Operations 14 ctors and Officers 16 parative Operating atls ties 17 cted Financial Data 18 ncial Statements 22 lcmentary Information Changing Prices 34 rterly Results Operations 36 k/Dividend Data 36 em Map Inside Ba ck Cover
PRESIDENT'S LETTER Change. It has challenged man- shorter time periods; financial in-kind's imagination for thousands of struments gain or lose viability years. But today change is no longer quickly, demanding constant in-a philosopher's puzzle, it is an essen- dcpth research; public opinion ebbs tial fact of business life. What makes and flows around us; and those cltange of such concern today is that business practices that worked so so many events arc crowded into well in the past somehow no longer ever smaller bits of time, making seem adequate. It is as though busi-prediction and planning both ex- ness is on a moving platform shoot-traordinarily difficult as well as ing at moving targets.
more important. These kaleidoscopic changes in This compression forces business thc corporate environment force us to organize itself in a way tltat allows to reconsider how to pursue our it to respond quickly to its environ- businesses. If we suspend for a mo-ment and bc ready to innovate as ment the moral tone some associate circumstances dictate. Economic with thc concept of reindustrializa-conditions are in a state of flux, ex- tion, we scc an extraordinary oppor-pectations of customers and tunity in history to rcindustrialize employees are clnnging, technology as our predecessors in business did and information systems are con- more than a century ago. We must stantly evolving. Clearly, for business move in many new directions rapid-managers in the 1980s, our task will ly and decisively, seeking new be to manage cltangc or even to be opportunities for success.
agents of that change. This is precisely what PNM is do-Recently, the business press ltas ing. As we ltave discussed in other been discussing a ncw social con- publications, PNM has shifted from tract, "the reindustrialization of using natural gas as a boiler fuel to America." This concept calls for a coal during the past decade. In 1980, change in direction of thc country' about 84 percent of our generation business in order to rcvitalizc it. was from coal. Such a change is Have wc been going about thc coun- more titan a matter of fuels. It also try's business wrong all these years? demonstrates the strength and flex-Or is this just sloganccring? ibilitof thc open market. We nude I think a more precise statement of this conversion with no mandate affairs would be tltat thc context in or assistance from government. We which wc do business is suffering chose this path because of price and from thc strain of rapid cliange. On supply signals from the market-top of that, business is growing in place. Furthermore, this increased complexity at an almost geometric use of coal was achieved without rate; markets grow, evolving toward abandoning cnvironmcntal concerns.
a climax, then decline in much In fact, wc actually increased our conunitmcnt to environmental protection.
Icrause of this rapid growth, PNM Additionally, our changing busi- But it docs not end there.
become skilled at adapting to ness environment has lcd us to sell Efficiency and productivity are ingc. A case in point is our cur- certain assets of Wcstcrn Coal Co. necessary but not sufficient. Onc t forecast indicating a slower rate to Utah International, Inc. Jointly could, for instance, be very efficient conomic growth in Ncw Mexico owned by PNM and'Ibcson Electric at manufacturing buggywhips. We
- ing thc near term than occurred Power Company, Western Coal Co. luve found tlut creative, innovative hc late 1970s. Uncertainties rc- sold its coal processing cquipmcnt employees who consciously seek ding thc uranium nurket and for 825 million. Wc arc also current- new opportunities for the Company hcr costs of energy along with ly pursuing thc acquisition of New are thc kcy to success in a world ir Company's aggressive load Mexico Electric Service Company characterized by clunge.
nagemcnt program luve lowered which is headquartcred in Ffobbs, As you meet part of PNM's growth projections. But this New Mexico. managcmcnt team later in this ise in the growth rate allows us to Beyond these events, your Com- report, you will read in more detail cuvcr, seeking new business op- pany is managing the changing en- of some of the programs put in place tunitics. Further, we arc now vironment in more far-reaching to enhance your Company's perform-cfining our plans for thc future ways. While tile utility business will ance. For now, it is enough to say erms of energy management and remain our main concern, we are ag- that the cumulative effect of these merely expansion to meet a gressively seeking ncw directions for programs is tlut we are not only ful-ct on the growth curve. PNM. These new business oppor- fillingour mandate for service but Iorc specifically, the purchase of tunities will strengthen PNM's finan- we are also in a strong position to Juan Unit 4 from our partner at cial integrity while at thc same time seize future opportunities that San Juan Plant, Tucson Electric provide areas of growth for our may arise.
vcr Company, will add 236 MW many talented employees.
'NM's 1982 capacity. The Palo A more current goal we Iuve set e Nuclear Generating Station for ourselves is to keep thc growth provide us with 130 MW from of electric rates equal to or below i of its three units in 1983, 1984, the rate of inflation. We recently 1986. These additions have al- filed for ncw revenue requirements J.D. Geist cd us to reschedule our Pumped under the Cost of Service Indexing President
. gc Project from 1985 to format that proposed a rate increase
- 0. Thc result is we will have an tlut was significantly below the rate quate rcscrve margin in gencra- of inflation. This indicates a decline capacity. Thus, we can take in thc real price of electricity. 'I'he antagc of the opportunity and decline is due, in large measure, to kct part of this capacity to West various programs wc luvc in place G.A. Scltreiber st utilitics. These contingency to reduce operating expenses and in- Chairman of the Board cr sales benefit both our ratc- crease productivity.
ers and slurcholders. The credit for these programs hc significance of these power belongs to the employees of PNM.
s goes beyond revenues. In ef- Their enthusiasm, innovation and ag-
, wc arc inventorying gcncrating gressive commitmcnt to increased icity, at today's costs, for future cfficicncy, combined with the leader-when thc cost of adding capacity ship and stability of our directors bc significantly higher. This is and officers, has made thc difference.
gy nunagement.
REVENUES AND EXPENSES Earnings pcr average common slnre In order to meet 1981 requircmcn for 1980 increased to $ 3.36 versus and reduce short-term debt, the Revenues for 1980 werc S280.5 S2.97 in 1979. Return on average Company proposes to sell approx million, up 14.8 percent over 1979 common equity was 14.9 percent imatcly $ 173 million of common revenues of $ 244.4 million. The in-compared to 13.6 percent in 1979. stock, S60 million of first mortgal crease in revcnucs was due primarily bonds, and $ 25 million of prcfcrr to rate relief secured from the New stock, depending on market cond Mexico Public Service Commission CONSTRUCTION PROGRAM AND FINANCING tions and other factors, and also and the Federal Energy Regulatory REQUIREMENTS utilize S120 million of proceeds fr Commission, power sales to the pollution control financings.
Department of Water and Power Increase in utility plant in 1980 of the City of Los Angeles, and in- totaled approximately $ 280 million, RATES AND REGULATI creased kilowatt-hour sales. Average compared to S317 million in 1979.
residential rates increased 7.25 per- To finance these additions, cxtcr- As an electric and water utility, cent during 1980, demonstrating the nal funding for 1980 included the operating in thc state of Ncw iWe~
beginning of an expected trend in sale of S50 million of prcfcrrcd ico, PNM is subject to the jurisdic which PNM's rates will increase stock, S50 million in privately tion of the New Mexico Public Se slower than the rate of inflation. placed first mortgage bonds, a S28 vice Commission (Commission). i PNM generated revenues of approx- million take-down from the $ 45 Many activities of the Company a imately SIO million from the sale of million privately placed first mort- regulated by the Conimission, in-power not needed by New Mexico gage bonds issued in October 1979, cluding rates, quality of scrvicc, i; customers at this time to the City of $ 58 million in draw-downs from suance of securities, and pcrmittii Los Angeles. Kilowatt-hour sales pollution control trust accounts, and for generation and transmission .
increased 8.9 percent, from S 14 million in common stock raised construction. The Federal Energy',
4,960,451,000 kWhr to through PNM's special stock plans Regulatory Commission (FERC) h:
5,402,098,000 kWhr. including dividend reinvcstmcnt and jurisdiction over rates clnrgcd by~
In 1980, fuel and purchased power the employee stock purclnse plan. PNiVI for electricity sold for resale expenses and other operating and Including an increase in short-term and various accounting and repor maintenance expenses increased by debt of $ 33 million, PNM's external ing procedures.
12.5 percent, compared to a 29.5 financing for 1980 totaled approx- Since mid-1975, rates under tht percent increase in 1979. These imately $ 233 million. jurisdiction of the Commission h:
operating economies were the result Additionally, the City of Farm- been adjusted using Cost of Servi<
of careful management of cxpenscs ington, Ncw Mexico issued, on be- Indexing. This method was applit, while simultaneously maintaining half of the Company, $ 26 million to approximately 75 pcrccnt of, system reliability. Thc Company's principal amount of pollution con- PNM's equity investmcnt in 1980 operating ratio declined from 55.1 trol rcvcnue bonds in June 1980 to Indexing provides for recovery oJ operating costs for gcncrating ant 1
percent in 1979 to 54.0 percent in fund the costs of pollution control 1980. equipmcnt for Units 4 and 5 at the distributing electricity based on tl, As a result of the necessary flinanc- Four Corners Generating Station. most recent calendar year. As ing for the Company's construction Thc Company's five-year construc- originally designed, rates under program, increased borrowing costs tion budget for thc period 1981 to jurisdiction of thc Commission w and higher levels of short-term bor- 1985 provides for thc expenditure adjusted quarterly when return oi rowing, the interest on short-term of approximately S1,077 million, avcragc common equity fell below'r debt incrtmcd from $ 4.3 million in including allowance for funds used exceeded a band of 13.5 pcrce 1979 to $ 12.3 million in 1980. In- during construction of S161 million. to 14.5 pcrecnt. Today, adjustmcq terest on long-term debt also grew Included in this total amount are are made annually when thc rctui,'n in 1980 from $ 24.2 million in 1979 proposed cxpcnditurcs during the year-cnd common equity vari) to S29.0 million. Preferred dividends five-year period of approximately from the allowed 15.5 percent.
increased about S5.6 million in 1980. $ 72 million for PNM's share of On April 16, 1980, thc Commis nuclear fuel for the Palo Verde sion issued an order approving a 1980 EARNINGS Nuclear Generating Station. In addi- stipulation allowing an Sl I millio The Company's incrcascd earnings tion, the Company forecasts expen- increase in retail rates. This incrc; reflect operating economies resulting ditures of S100 million by its wholly- was based on operating results fo from cost control programs, a higher owncd subsidiaries, Paragon thc calendar year 1979. This boos Resources, Inc. and Sunbelt Mining rates reflecte thc increased cost rate for allowance for funds used during construction, and increased Company, Inc. Construction expen- providing electric service as well ditures for the years 1981 and 1982 certain changes made by the Cog operating revenues.
arc estimated at $ 372 million and mission in thc Cost of Service Ind During 1980, PNM's nct earnings S325 million, rcspcctivcly, and werc calculation. In carly 1981, PNM fi applicable to common stock grew approxinntcly $ 284 million in 1980. an updated Cost of Service Index from approximately S42.6 million to
$ 53.6 million, while thc number of External capital requirements for factor applicable for the year bast average shares of common stock 1981 to 1985 are cstimatcd to bc ap- on 1980 operating results. The C outstanding increased from 14.4 proximately $ 633 million, including pany anticipates tint thc 1981 fac million shares to 15.9 million slnrcs. approximately $ 316 million for 1981.
ll become cffcrtive, subject to re- PNM's Sharc WATER OPERATIONS td, on March I, 1981. The final of Capacity Location and Generating Station (MW) Under the terms of thc recently ision will bc reached by June negotiated franchise with the City of Coal fired Stations Near 1981. Farmington Santa Fe, water service will now be Ibward thc end of 1980, PNM Four Corners Units 4 & 5 208 available in certain areas outside the sieved settlement with four San Juan Units l, 2 & 3 548 oplcmcntal wholesale power city limits. The new Metropolitan Gas- and Oil fired Stations Water Board will play a lead role in stomers and the FERC staff on Albuquerque four of the outstanding rate pro- Person Station lt6 determining those new service area Reeves Station 175 boundaries as well as studying long-
.dings with these customers. Thc Prager Station 22 range source of supply and other tlcmcnt resulted in an increase of Santa Fe
,8 million in 1980 settlement rates Santa Fe Station water policy matters. Thc new Ser-er 1979 filed rates. This settlement Las Vegas vice Expansion Policy prompted Las Vegas titrbine 20 franchise negotiations with the i been approved by the FERC and ~1080 l not include the 1980 rate cases County of Santa Fe, and during 1980 those negotiations were successfully i>ding for the City of Gallup, Ncw PNM, through its operating divi- completed.
xiro. Hearings for the test year sions, provides electric service to The Las Vegas Division is pro-80 Gallup rase are scheduled to about half the people in New Mex-
-~in in April 1981. Final FERC ceeding with a review of various ico. The Albuquerque Division ser- methods of increasing the water sup-ults on thc earlier cases are vice area includes roughly a third of
<<ding. ply to the community. Thc decision the population of the entire state. concerning what methods will be tt ncw rate case based upon The Helen and Bernalillo divisions used to incorporate this supply will iccasts of revenues and expenses serve thc rapidly growing areas bc made in the near future.
1981 was filed in December 1980 south and north of Albuquerque.
all five customers. The new case Thc Santa Fc Division scrvcs thc state SUBSIDIARIES lucsts an additional S13.9 million capital and surrounding communi-lncrcascd rates. PNM has an interest in three sub-tics. Thc Las Vegas Division scrvcs sidiaries: Paragon Resources, Inc.,
I'he Company has fuel adjustmcnt Las Vcgas in north-central Ncw Sunbelt Mining Company, Inc. and uses for both FERC and Commis- Mexico. The Deming Division n jurisdirtional rates which allow Western Coal Co.
service area lies in the extreme Paragon Resources, Inc. is a
, pass-through of inrrrmcd fuel southern portion of the state, just ts. The adjustmcnts apply to all wholly-owned subsidiary, princi-north of the Mexican border. The pally engaged in the acquisition of es. A revised Commission fuel ad- Wcstcrn Division serves a portion of tmcnt clause is currently being water rights and property for the the uranium and coal-mining areas Company's various projects and iewcd. The greatest rltangc west of Albuquerque.
auld bc the use of an estintatcd business-related needs. Chief among In addition to the operating divi- these needs are future generating I cxpcnsc on a quarterly basis sions, PNM-generated electricity is plant sites and water for both the hcr than actual cost on a monthl) purchased by several other utilities, iis. Company's water systems and both publicly and privately owned, future use at generating plants.
for distribution to their customers Sunbelt Mining Company, Inc.
ELECTRIC OPERATIONS within thc state. began operation in 1980 on a limited I'he Company holds 13 percent Total system requirements in 1980, basis. It holds coal leases and will ncrship of Units 4 and 5 of thc including sales to wholesale custom- provide supplemental fuel to the ur Corners Generating Station, a ers, were 5,683,373 megawatt- San Juan Generating Station. It is percent ownership of San Juan hours, an increase of 8.8 percent anticipated that Sunbelt will supply its 1, 2, and 3, and 100 percent over 1979. Total peak demand in coal to the proposed New Mexico ncrship of the gas- and oil-fired 1980 was 913 megawatts. This was Station and, in addition, will mine tions. The Pragcr, Santa Fe and an increase of 6.8 percent over 1979. coal for sale to others.
Vegas stations are used primarily Thc forecasted peak demand for the Western Coal Co. adopted a plan meet peak loads. summer of 1981 is 997 megawatts. of liquidation in Dercmbcr 1980. All In 1980, PNM's generating fuel To supply this peak demand and of its coal processing equipment was is mostly coal, accounting for ntaintain an adequate rcscrvc margin subsequently sold to San Juan Coal out 84 percent of total kilowatt- for rontingcnries, PNM will ltavc Company, a wholly-owned subsid-urs produced. Natural gas provid- a total installed capacity of 1,080 iary of Utah International, Inc., for 15.9 percent and oil 0.1 percent. megawatts and ready rapacity of $ 25 million. 'pproximately
'M forecasted generation require- 1,047 megawatts. The Company The surface coal leases adjacent to
- nts in 1981 are 82.8 percent coal, also llas rontractually arranged to the San Juan plant were subleased to
,6 percent natural gas and 0.6 purrliase an additional 190 mega- Utah. As part of the transaction, San rrent oil. watts of capacity. This provides a Juan Coal Company contracted to I'hc power produced by PNM total resource rapacity of 1,237 provide coal to San Juan Generating mcs from generating facilities as mcga tvat ts. Station under a 37-year fuel supply nvn in thc following table: contract.
"The use of Cost of Service Indexing... has demonstrated the extent to tvhich risk can be minimized in utility operations... Indexing saved our customers millions of dollars through reduced cost of capital."
As we begin the 1980s, we find ourselves facing some of the familiar financial challenges with which wc Gross Plant Investment wrestled in the 1970s. In the fore- (millions of dollars) front, of course, is inflation along with the ability to earn the full cost 1,47l of borrowed capital. While these thcmcs remain the same, our re-sponse, as well as the environment in 1,198 which wc are operating, is clianging.
This means new opportunitics and thc need for new financial strategies 880 to achieve our corporate mission. PNM's financial risk can continue to During the past several years, our be reduced, the Company's owners 682 main concern was raising the capital and ratcpayers will benefit. 532 necessary to fund our very hcavy A.J. Robison construction program. There werc Vice President, Finance times when PiVM was the fastest growing utility in the nation in terms of increasing capitalization. We arc In Revenue Planning, we are ad-clearl> in the top group today. Thc dressing today a different environ- 1976 1977 1978 1979 raising of capital in cost-effective ment tlian wc have known in the Return on Average Common Equity ways has bccn paramount to us, and past. The first change is in thc (percentage) we have been successful chiefl number of responses now required because of the financial strength we of PNM by our regulators. Wc have 14.91 ltave achieved under our unique in- about twice as many reporting and 13.6 filing rcquircments this year is we 13.0 dexing format for rates and through thc efforts of our employccs work- had last year. Much of this is the 11.6 ing to solve the complex problems result of the National Energy Act.
10.3 facing PNM. Thc second major change is that The use of Cost of Service Indexing all regulatory cases today are more during recent years has demonstrated sophisticated than they were a few the extent to which risk can bc mini- years ago. When you combine in-mized in utility operations. Because creased complexity and increased investors loan on risk premiums, in- frequency of filing, the problems can dexing saved our customers millions bc staggering. We are working very of dollars through reduced cost of liard to manage the process and capital. Equally important, indexing simplify it where we can.
allowed PNM to maintain its AA/Aa Ari cxiimplc is our posture with first mortgage bond rating. This thc Federal Energy Regulatory Com- 1976 1977 1978 1979 198 financial strength gave PNM access mission (I'ERC), which has jurisdic-to financial markets which at times tion over our rates for wholesale were unavailable to most of thc customers. Over the past few years, utility industry. wc ltavc litigated a number of new-If we take this experience of lower- rate issues at thc FERC. This was ing risk and project it into the 1980s, done to protect the Company in its our next logical step is to improve clianging environment and ntaintain profitability of PiVM by diversifying a healthy, contemporary rate-making our risks over more activities. If posture. As a result, we are now in a position where we do not have to litigate cvcry issue.
Another major area we are ad- In the planning area, we lnve This has been especially true in thc
'ssing is our rate design concepts. developed the ability to look into working capital finance area. It was
- are now participating in Ncw the future with some very sophis- not too long ago that a bank prime
.xico llcarings to shift our rate ticated computer models". These rate of over 10 percent was tanta-sign from an imbedded or histori- include distribution planning models mount to economic chaos. Today, we cost basis to a marginal cost basis. used in the Company's operating hope to see the prime rate once more e new rate designs will more ror- divisions to make long-range predic- drop to 10 percent. This drastic risc
- tly reflec the actual rost of pro- tions about system requirements, in interest rates experienced in 1980 ling a'dditional service without rcsourrc utilization models to op- resulted in tremendous increases in cr-collecting revenues, while pro- timize our.generation plans, load and the costs of financing construction ling proper price signals to our energy eronom'etric and end-usc projects.
tomcrs. These rates will then mode'ls as well as corporate financial Because of the large rash flow re-irk in harmony with our modeling systems. These capabilities quirements generated by PNM's con-efforts. load'agement allow management to make good struction program (we expect to L. Yaryan decisions about circumstances that spend around S30 million pcr month inager, Revenue Planning are going to arise not only in thc in 1981), cash management has short-term biit also out into the 10- quickly risen in importance. In 1980, to 20-year time'horizon. it cost PNM approximately 13C to because of ilic significant cron- I think it is important from thc finance every dollar in the bank. By ic prcssurcs PNM felt during its re- stockholders'erspective to rec- initiating good rash management it growth period, we werc forced. ognize tint we have some finan- procedures, such as zero balance
,nnovate programs to enlnnrc the cial objectives that are specifically accounts, we have been able to hold inpany's financial perfornnnrc, related to them. These include main- the cost of bank balances to a l basically rethink the whole taining financial performance lcvcls minimum.
irept of financing. Wc werc suc- of return on equity that are adequate To mimimize the impact of bor-sful, and today as a company, for those stockholders, achieving rowing short-term, we have expand-are much better off. good quality of earnings, coverage ed our efforts in daily cash flow
)uring the past fcw years, wc ratios tint allow us to maintain pro- forecasting. Through a better re experiencing operating ratios tection for our bondholders and to understanding of our rash needs, he range of 55.1 percent to 55.5 maintain the AA/Aa rating. Wc arc we have eliminated unnecessary bor-rent; that is, the ratio of fuel, working toward achieving a markct- rowing and implemented a more ag-chased power, operation and to-book ratio of at least one. gressive program of investing of intenanre expenses to total op- M.A. Clifton cash. Wc lnve also expanded uur t.ing revenues. In mid-1979 we sourre of borrowings. PNM lns Manager, Financial Planning
<<blished a'ost Reduction hsk entered into borrowing arrangcmcnts rc, which represented all areas of which open up a number of money Company, to invcstigatc ways of nnrket sourres of funds, such as Inflation, and the resulting high uring expenditures. As a result of Bankers Acceptances, Commercial se activities, we were able to're-cost of capital, has created financ-ing problems which heretofore had Paper or Federal Funds. Thc multiple c the 1980 operating ratio from sources increase our availability of I pc'rrent to about 54 p'errcnt.
never been experienced. As a result, companies like PNM have had to funds and allow us to borrow in I we net reduced our opirating whichever nnrkct has the lowest adapt to new ideas to finance the o, PNM's return on equity for growth in assets required to meet prevailing interest rate.
'0 would have been about 143 thc ever-increasing demands of M.J. Marzec cent rather than approximately Director its market.
> percent. Working Capital Finance
"Tlx>p7 e>ssu7T> from inc7T>ase>d cust0777e7 de777a77ds and t/ae eco77o777y feat e spurred us to find 77eu~ opportunities for sen>ice."
My business is people. As Vice President of Division Operations, I am thc corporate link between PNM and our customers. I am responsible for thc six operating divisions which provide electricity to about half thc state's population, plus the water operations in Santa Fc and Las Vcgas.
Thus, our operating divisions are charged with providing quality scr-virc to our customers. I3ut the world is changing, and what was quality service ycstcrday may not be pcrrcived that way today.
We arc seeing more and more groups raising new customer efficiency. Wc have a Work Imrre demands and wc are experiencing iVIanagemcnt program in effect now more governmental regulations in all to help us manage that change and areas of our operations. Usually, this growth.
is not a major problem because one Thus far, wc have surreedcd in of our niain goals is to anticipate providing high-quality servire to and plan for impending regulations both our electric and water cus-and customer dcniands. tomers. Thc demands will grow in A case in point is the "Consumer the future and the job will berome I3ili of Rights" issued by our state more complex. Thc pressure from Public Service Commission. At thc increased customer demands and the time thc order was adopted, PNM economy have spurred us to find already was in 90 percent to 95 per- ncw opportunities for scrvire. In cent compliance. Wc were doing this regard, my job is made cmicr what thc regulators required before because of the exceptional managers the order was written. And wc werc who work with me.
providing thcsc services not because J. P. Bundrant someone outside PNill insisted we Vire President do them but because we felt it was Division Operations thc proper thing to do.
Overall, I think we will be seeing in thc 1980s an expansion of thc As thc number of PNM customers Total Operating Revenues concept of service. Customer infor- has grown in rercnt years, we lrave (millions of dollars) mation needs regarding electric or been pressed to come up with a bet-water bills and energy in general ter way to process customer infor-arc growing; even the technology mation in order to provide quality of customer servirc is growing. service. Our Customer Service I3crause of the increased number of System Project is one answer to this 244 PNM customers, more advanced problem. This $ 3.6 million rom-systems arc being put in place to putcrizcd customer accounting manage customer information for system replaces our present system our billing department. This last fac- which, while it was state of the art tor also means we ltave to pursue 15 years ago, ran no longer accom-bcttcr ways of managing our work modate the growing number of force in terms of productivity and customer data rcquircd. 100 1976 1977 1978 1979 198
I'he new system automates a great long it should take, and measuring Those of us who serve today must ti of manual work plus provides the results. This program allows us strive to identify the expectations customer service employees to make adjustments and reach a 'that will be placed upon our suc-h instant and complete billing in- higher level of utilization of the cessors, and by doing so, help ensure mation for each of our customers. day-to-day work force. a company responsive to the expec-cans our customer service peo- In addition, our concept of service tations of the communities we serve.
can handle more telephone calls is expanding in other areas. Working Fortunately, we are blessed with re quickly, thus increasing their with New Mexico State University, people whose dedication, vision cicncy. For our customers it we have a wind power project in and leadership have positioned the ans they can get the information Dcming which we hope will even- Company to meet this challenge.
y want faster and they deal with tually be a cost-effective alternative J. T. Ackerman y one person at PNM. for ranchers and farmers. Through District Vice President his Customer Service System our many solar energy projects Albuquerque and Western Area ject is just one of several pro- around the state, we are gct ting ms we are pursuing to provide good data on passive and active ter services. It is important to systems as well as water heating. I think our challenges in the water
>ember that the notion of I think that in the not-too-distant business are essentially the same as tomcr service is a dynamic one. future, PNM will be using some of the electric business, but in some oon as one problem is solved, these energy sources that today are cases more intense. An obvious dif-volves into something else. The called "exotic." Tcn years ago, we ference is that water is more of a rid of customer information were not even thinking about wind necessity than electricity. Customers ds and demands changes con- power, solar energy, geothermal, are more willing to cut down on tly. It is our job to keep up and pumped storage; today, PNM electricity than water. In the 1970s h those changes. has an exciting array of programs in there werc significant price increases R. Stone these areas. for water, with a resulting price erations Manager R. A. Lake elasticity for the first 25 percent or District Vice President 30 percent of the demand.
Belen, Bernalillo and Deming Because of thc semiarid climate of mproving the management of Divisions New Mexico, the source of water rk force and our people has supply is a major concern. In Santa wn in importance in recent years. Fe and Las Vegas, we had been using ese improvements affect not only A consistent theme emerges in water that was replenishable every tomer service but all aspects of thc day-to-day management and year from the snowfall and rain in M. As a result of a total Company operations of PNM: uncertainty. the mountains. We have now gone nagemcnt Audit we commis- Cltange is occurring (as it always beyond thc capacity of river systems ed in 1977, we have created a has), but at a much faster rate than to supply thc total needs. Water now rk Force Management Program ever before. When economic condi- has to be pumped out of wells in igncd to help us identify a tions, human and natural resource Santa Fe and Las Vegas. The cost of thodology for determining when constraints, regulatory constraints, doing that is much greater than the nit of work should be done, how customer expectations and, of cost of the water we used before.
course, expectations and dcsircs P. R. Gamertsfelder of our employees change at such District Vice President a rapidly increasing rate, our daily Santa Fe and Las Vegas eral, State, Local and General Taxes lions of dollars) working environment becomes W. M. Hicks, Jr.
heavily influenced by uncertainty. Manager The future has become a rapidly Water Operations, Santa Fe 36 moving target of unknown 33 destination.
As a result of these conditions, our ultimate challenge is not just to 26 manage the change, but to deal with the uncertainty introduced by rapid cliange. Many of the programs 19 already discussed and underway at PNM are attempts to address this.
These programs not only tell us how we do, they also contain prcdictivc clemcnts that enable us to look ahead and minimize some of the uncertainty.
76 1977 1978 1979 1980
"Meeting PiVM's manpower needs in energy generation and the managing of advanced dispatch systems is my first priority in the 1980s."
In recent years we have scen growth in complexity of power plant operations and dispatch systems. The power plants are becoming more computer directed and, in thc case of coal plants, more sophisticated pollution control equipment has gone into operation.
Dispatch systems, too, arc under-going a similar trend in complexity.
We are now installing a computerized system called the Energy Manage-ment System which will allow us to monitor and control more precisely our overall generation and transmis-sion system. ects. As technology and economic Beyond providing reliable and conditions dictate, we will continue economic service to our customers, to pursue fuel operations in many these growth trends mean the in- areas, trying to take advantage of Net Generating Capability (thousands of kilowatts) creasing need for highly skilled plant the enormous energy resources of operators, craftsmen and technicians. New Mexico. 1,08 1,08 Meeting PNM's manpower needs in R. Mullins energy generation and the managing Vice President, Operations of advanced dispatch systems is my 858 858 first priority in the 1980s. 842 As Vice President of Operations, As Mr. Mullins mentioned, PNM is my other major priority is fuel. In primarily a coal-fired utility. But we this regard, PNM is in an enviable still use the natural gas- and oil-fired position; in 1975 about 55 percent plants for mid-range and peaking of our total requirements were met purposes. To give you some idea of with coal; in 1980 this figure grew the difference in fuel costs, in 1980 to about 84 percent. PNM is a coal- we paid an average of about 82.45 fircd utility operating in a state per million Btu for natural gas and with enormous coal reserves. Thus, about $ 4.25 per million Btu for unlike utilities which have to trans- residual fuel oil. In contrast, our coal port coal to their plants at significant cost about 790 per million Btu. Very 1976 1977 1978 1979 198 cost, we can build and operate mine- quickly you have thc basic picture of mouth plants. This is the case with Generation Mix the tremendous benefits realizablc (percentage of generation)
Four Corners, San Juan and the pro- from coal.
posed New Mexico Generating 55.1 59.9 63.6 67.0 84.0 Furthermore, the Power Plant and Station. Industrial Fuel Use Act mandates a In the long-term, we expect PNM's cutoff in the use of natural gas as a fuel mix to continue to be domi- boiler fuel by 1990. However, there nated by coal, with the addition of are exemptions. For instance, ifgas-nuclear energy from the Palo Verde fired units are used for mid-range or Nuclear Generating Station, geother- peaking and their retirement dates 43.1 38.8 mal energy, hydro by way of the are in the 1990s, natural gas can still 34.0 31.5 Pumped Storage Project, and pos- be used after the legislated cutoff sibly gas from coal gasification proj- date. Our natural gas and oil plants 15.9 clearly fall within these exemptions.
1.8 1.3 2.4 1.5 0.1 1976 1977 1978 1979 1980 Q coal Q naturalgas Q oil
~ <r A point to remember, particularly generated from PNM's gas-fired "This sharing of resources is hen speaking of natural gas and oil, plants. Natural gas may not be as not only" beneficial to our that we are moving into a transi- cheap as coal, but it is cheaper than customers and shareholders, in stage where other fuel sources oil. Assuming transmission paths are but also helps achieve our ill gain ascendancy. Granted, we available, we can make money for national goal of reduced ill need coal and nuclear energy PNM's ratepayers and stockholders r base-loaded generation. But under and help people in'other states save dependency on foreign oil."
ch legislation as thc Synfuels Bill, on the high cost of burning oil. As Vice Prcsidcnt of Administra-can expect to scc growth in areas T. Morse tion, my responsibilities range wide-e coal gasification and liqucfac- Manager, Gas and Oil Plants-.. ly over the corporation. They in, shale oils and tar sands. Thc in'elude System Planning, Load onomics presently do not exist for Management and Forecasting, velopment of these resources but My area of responsibility is the Resource Development, Environ-,
will see tltat change in the 1980s. operation of PNM's bulk.transmis- mental Affairs," Procuremcnt and S charming sion system. As PNM's generation Contracting,'.Infoi;mation Systems, pervisor facilities ltave grown in size and and Methods Analysis. All of ihese erations Administration complexity, so too has the bulk areas interact,ori Company projects transmission system operation. To and activities. In fact, such interac-*
keep pace, we have computerized tive pr'occsscs arc part of thc With thc growth of coal as PNM's our operations to monitor our own strength of PNM.
ijor fuel source, certain oppor- system and the array of transmission -As a function of Rcsohrcc Dcvil- .
'ties have arisen in the usc of interties we have with many other opmcnt, PNM conducts and supports r natural gas- and oil-fired power western utilities. RD8cD. We have been very active ints. Recently we completed a We will have our third generation in research over thc years, and ex-idy which indicated tltat if we of system dispatch computers in- pect ncw solutions to some prob-cled these older plants, PNM could scrvice this summer. Called the lems to come out of this area. For e more than S100 million in fuel Energy Management System; this instance, wc and the other par-sts over the remaining life of thc computer system will allow us a ticipating utilities in the Western ints. Cycling means that wc bring continuous review of what is hap- Energy and Supply Iiansmission r gas and oil plants into scrvicc pening on our bulk transmission Associates ltavc an elaborate net-ery morning and shut them down system. It also gives us better and work in the Southwest to measure night. In this way, the units become faster control over dispatching our solar insolation. There are more than d-range and peaking facilities. generating units. That is, we go to 50 monitoring stations in this pro-f course, there is a price tag for our most economical generating gram. We have participated in many cling. These older units werc units first, such as coal, and then other solar research projects as well, signed for base loading which load other units into thc system mostly in demonstrations of technol-ans that they were designed to following the most economic ogy. Wind is another area in which put on-line and run at their full criterion. we have taken the initiative. Wc Through the use of new computer have several monitoring stations to edacity continuously. They were rmally brought down once a year systems; we have economic oppor- measure how much of thc resource
. maintenance. tunitics that were unavailable 'to us is actually available in our service Cycling has put itional stresses on the units that in the past. For example, PNM is par- territory.
ticipating in a computerized energy The Baca Geothermal Project is y were not designed to handle.
compensate for these additional brokerage system. With this system, demonstration of a ncw technology esses, we have started a main- we are able to increase our exposure on a much larger scale. PNM's sltarc nnce program that is much to morc economic purchases or of thc power plant is about 820 ire aggressive than normal oper- sales. This may mean that wc are million to S25 million, and thc total ons call for. The resulting fuel buying cheaper power from another project cost is about five times tltat ings more titan cover the cost utility or we arc selling power and amount. The contracts we arrangt:d the program. ntaking money for PNM. Either way, among Union Geothermal of Ncw esides cycling, there is another our customers benefit. thc Department of Energy 'exico, ortunity that could be realized R. Lowry (DOE) and PNM called for the m these plants. Due to the large Manager, Power Operations of a geothermal unit which con-'truction ntities of oil being burned by would produce energy at a cost er utilities in thc West, thcrc is comparable to that produced by a opportunity to scil electricity base load coal-fired unit built in the same time frame.
These research projects tend to originate from our planning process.
In this process, we begin with a load
PNM's load forecast is constantly shifting. In the last fcw years, we have seen softening of load growth from what we expected. Changes in the economic picture require th:
wc devise a planning envelope. Aft the explicit forecast is developed, we create a high and low around, that forecast, based on our view of how economic paramctcrs may shi In this way, wc anticipate the tlut the forecast envelope con-'ingency may be this high or that low.
Only a short time ago, load fore casting was relatively straightfor- t ward. The utility industry had a good understanding of how the lo:
was going to grow and how to me it. Then came 1973 and the era of.
the oil embargo. Some parts of the country had negative growth. But forecast. We take econometric vari- PNM, after a momentary lull, pickt ables into consideration. What is the up and had substantial growth fror population growth going to be in the 1975 to 1978. With double-digit service area? What is the competing inflation and thc uncertainty sur-fuel going to cost? Wlut rate of rounding the uranium industry, growth in income is cxpccted? We in 1980 PNM experienced slower look at a broader range of load alter- load growth than anticipated, natives tlun just a single estimate. although its load growth is above That way, we design our system so the national average.
that we can reasonably meet a higher PNM is required by Iaw to prov forecast but not have our customers electric service to our customers.
paying for excess capacity if the fore- Once we make a decision to build cast load is not actually tlut high. and funds arc committed to a proj Looking to the future, I expect it is pretty lurd to turn that aroun there will be much tighter intercon- It is our position that it is prudent nection with all the utilitics in the to go ahead and build the facilities United States within five years. as long as there is a market for tha Presently there are substantial quan- surplus capacity when thc plant tities of oil being burned on the West comes in-service. Studies show th Coast. Wc ship that region as much insufficient capacity is far more coal energy as possible to displace costly tlun excess capacity.
oil, but we are constrained by the W.C. Wygant lack of transmission capacity. Such Group Manager regional utilization of coal-fired elec- Planning and Resources tricity can materially reduce the total R.C. Cainski amount of imported oil consumed. Manager, System Planning This sharing of resources is not only beneficial to our customers and shareholders, but also helps achieve Unless there are major changes our national goal of reduced depen- in the National Environmental dency on foreign oil. I expect to see Policy Act (NEPA), we anticipate morc resource sharing in the future. a continuing need for cxtcnsive en C.D. Bedford vironmcntal work. And this work Vice President, Administration must be done early in the project planning process. For instance, w have been doing environmental work for four years on the potcnti 12
.w Mexico Generating Station site. when electricity costs about one- state-of-thc-art data base and data ie plant is not scheduled for com- quarter as much to produce. communications strategies to sup-
- tion for 10 more years. Because of Load management can also pro- port the increasing requirements many regulatory requirements, vide a more reliable system when for rapid information retrieval and Company is put in a position one considers options such as direct analysis for decision making and iere it has to spend considerable load control of cnd uses. This in- productivity improvement.
>ney and energy to maintain proj- cludes uses that can be dcfcrrcd R.L. Barber t options or flexibilit. for a number of hours without any Manager fhis long process explains why customer inconvcnicncc and that Information Systems Division have an extensive environmental have inherent storage capabilities.
~airs staff. With such people, PNM Electric water heating is an example.
s a resource of substantial skills Ifa major generating station sud- For its size, PNM is possibly the it it can draw upon as a project denly broke down, under direct most active utility in the RD&D area.
angcs. If the site changes, for cx- load control PNM could flip a fcw Our research, development and
)ple, we ltave the ability to inform switches to turn off nonessential demonstration program is based on engineers very quickly how tltat ~ uses, protecting its system from an both internal and external research
.inge imparts the plant and the ap-~
~ outage or blackout. activities. The internal program is wal process. Such rcsponsivcncss Basically, the primary emphasis directed very specifically toward in achieving load management is to PNM's needs. The principal method es time and money. Having a skilled ffgives PNM additional flexibility provide our customers with a price of external research is through the ier companies may not have. incentive to defer or modify their Electric Power Research Institute IVc cxpcct that the 1980s will sec consumption behavior. PNM is cur- (EPRI), which tailors its programs
>rc balance among the environ- rently in a rate hearing in which we to national needs.
.ntal, cnginecring and economic are proposing the usc of time-of-day FNM is active in EPRI's utility ad-ics. While environmental issues rates. These rates could provide our visory structure. The advisors deter-ll still bc considered important, customers with a price incentive mine what research willbe under-taken and evaluate potential proj-y will be viewed in conjunction that could lead to cost-effective load th other issues, specifically, the management. ects for benefit to the industry.
te of thc economy. The pendulum D. Peck PNM also has selective research ll swing more toward the middle. Director, Load Management and development programs with t many laws will be taken off the the Department of Energy (DOE).
oks, but they will be made morc In 1980, we werc awarded $ 2.7 Thc biggest problem wc have in million for an underground coal workable or morc practical.
providing data processing service for gasification feasibility study. In D. Kist PNM is forecasting data processing nager, Environmental Affairs previous years, we have done some needs for the timely upgrading of large solar power generation studies B. Rodney computer capacity. We have to for DOE.
pervisor predict a demand in order to have Additionally, in the solar energy ivironmental Sciences computer capacity available when field, we have several projects needed. underway. One example, now in the oad management is defined as One of the strategies that we have data monitoring phase, is the EPRI-recently adopted to mcct thc grow- SHAC (solar heating and cooling) y changes to real or projected ands for electric energy rc- ing demand for electronic informa- solar home project. The goal of this iremcnts. When load manage- tion processing service is acquiring multi-million dollar program is to
- nt is effective, it alters the way prcdcveloped systems of packaged assess how utilities and solar homes pie consume electricity in a way software. We try to match these should be interfaced and integrated ieficial to customers and FNM. systems as closely as possible to to the optimum benefit of the solar r customers, load management PNM's requirements in order to customer and the utility's other z mean a savings in dollars, and save developmental costs. customers. Another solar study is a PNM, it means more efficient use In 1980, we increased our com- power plant project in which we are its resources. puter capacity by 40 pcrccnt, the acting as the lead utility in the opera-
~
or example, if we invested minimum needed to meet growth tion'of a small solar plant to be built 000 in a coal plant, we would in data processing requirements at Sandia Laboratories, Albuquerque.
to ltave that coal plant run full for PNM. This will be among the first hands-In our Information Systems Divi- on utility cxperiencc with solar ie, even during off-peak periods.
sion, we are rapidly adopting ad- g'eneration of clcctricity.
nomically, there is no sense in vanced computer ltardware and D.J. Groves itting the coal unit down when its software strategies which will be iable costs are relatively inexpcn- Resource Analysis Supervisor
- e. By thc same token, PNM wants required to support the Company's defer the use of electricity during growth expected in future years.
ak periods to off-peak periods Major emphasis has been placed on
"But the world is changing and the way of doing business is constantly evolving...
to control and ntanage 1'ave the change... and direct it where it willdo the most good for our customers and shareholders."
In recent years, we have seen tremendous growth in New Mexico, and we expect tltat trend to con-tinue. With growth has come changes in how we do business and how we seek opportunities as a cor-pontion. As Senior Vice President of PNM, I am charged with acquiring future resources for generation and other projects. This means water, fuel and land resources. But because water rights, for instance, can be maintained only if they are used, Some people find the whole no-we have been led into farming and tion of subsidiaries confusing, par-ranching. These kinds of businesses ticularly when the parent company are managed by our wholly-owned is a utility. But the world is changing subsidiary, Paragon Resources, Inc. and the way of doing business is Another of our subsidiaries is constantly evolving. For us to main-Sunbelt Mining Company, Inc. Its tain quality service and enhance thc main function relates to future fuel financial integrity of the corpontion, needs of thc parent company. How- we have to control and manage the ever, Sunbelt is aggressively pur- change that is occuring and direct it suing other mineral-related oppor- where it will do the most good tunities as well. We fully expect for our customers and shareholders.
Sunbelt to be involved in mining R.B. Rountree beyond the immediate needs of Senior Vice President, PNM PNM's power plants. We anticipate President a number of coal opportunitics in Paragon Resources, Inc.,
New Mexico in the coming years, Sunbelt Mining Company, Inc.
such as coal-fired power and and Western Coal Co.
gasification plants.
PNM's subsidiaries will expand their operations in the years to While holding land and water come, providing the Company with resources for possible future use by opportunitics tltat we can only guess PNM, Paragon is engaged in exten-at today. Thc business environment sive cattle ranching and farming ac-in which we arc opcnting is becom- tivities. Our major crops are alfalfa, ing more complex and more dif- pinto beans, potatoes and small ficult. Thc trend is toward morc gnins.
regulation, not less, and economic While the 1960s and 1970s were uncertainty will be with us for years. difficult years for thc farmer and Through subsidiaries, thc parent rancher, prices of farm products rose company has thc flexibilitto adapt sltarply across thc board in 1980.
to change more quickly, benefiting This was partially duc to the 1980 our customers and investors. drought but, I feel, more important-ly, due to increased world demand of United States'griculture products.
14
sce this trend continuing into the Aside from the development of iture. There may be instances San Juan Basin coal resources which here oversupply can be a problem, we currently have under our juris-ut thc overall supply and demand diction, we are looking for ways to tuation is projected to result in employ ouf engineering and produc-ighcr farm prices into the 1980s. tion expertise in the surrounding Thc competitive nature of agricul- Rocky Mountain states as well as irc has forced us to strive for high New Mexico. Our principal search is
'elds and quality at low cost. for energy-related resources tllat other Nature is very unforgiving might be amenable to development id docs not tolerate mistakes. If for PNM. However, we are also look-c arc going to be successful in ing for noncncrgy resources that riculturc, or any competitive vcn- might be required for power produc-
)re, wc must consistently achieve a tion in the future, such as limestone, igh-quality product or service at sand, gravel and even salt.
)mpctitive costs. Because wc depend on regulatory Other areas Paragon is involved in agencies from all levels of govern-delude construction, building main- ment, Sunbelt Itas to continue to nancc and property management. build bridges of understanding with In addition to these ongoing them. Wc are sharing information,
>crations, Paragon is always alert such as drill logs or cores used in ld searching for opportunities to mining but which arc also valuable crcasc growth and profitability. in palcontological research. Wc also lsorough screening of thcsc oppor- work with governmental agencies on initics is critical to our future suc- wildlife and archaeological research.
ss, and that is being done. I am This is the collaborative approach, a confident tllat we will select one mutual bcncfit approach. We stand scvcral of the dozens of oppor- our ground when we need to, but nities that are being reviewed, we also work well with groups and ith the effect that we can achieve agencies.
eater growth and profitability. Although small, Sunbelt's staff has G. Frank a full range of capability in mineral ice President exploration, mining engineering, cn-aragon Resources, Inc. vironmcntal quality control, market-ing and mining operations. With thc dedication and resourcefulness of Sunbelt Mining Company's first oui'eople, I:lm confident thilt ejective is to provide a mining and Sunbelt Mining Company llas a bright iergy fuel supply service. Through future that will contribute signifi-
.vclopment of the De-Na-Zin Mine cantly to PNM's earnings for ninny
! d establishment of Sunbelt's truck- years to come.
g operations, wc have taken thc C.E. Hunter st step in meeting this objective. Vice President oduction of crushed stone for use Sunbelt Mining Company, Inc.
facilities construction is an addi-inal service business in which we e involved.
Probably thc most exciting thing out Sunbelt is our charter to seek w business opportunities and to vclop those opportunitics into ofitablc operations. It clearly is r responsibility as a management lm to cllannel Sunbelt's business jcctives into areas that can most
'cctivcly utilize our past surface ning experience in New Mexico.
15
DIRECTORS AND OFFICERS Board of Directors Officers P.R. Gamertsfelder District Vice President, A.B. Collins, J.D. Geist Santa Fe and Lw Vegas Rcddy Jr.'resident, President Communications, Inc. F.E. Gray R.B. Rountree Vice President, Urban Dcvclopment Greenwich, Connecticut Senior Vice President H.L. Galles, Jr." R.A. Lake C.D. Bedford District Vice President, Bclcn, Chairman of the Board, Vice President, Administration Galles Chevrolet Company Bcrnalillo and Deming Divisions Albuquerque, New Mexico J.P. Bundrant WA. Badsgard Vice President, Division Operations Western Division Manager J.D. Geist" President, Public Service Company B.D. Lackey L.C. Edwards of Ncw Mexico Controller Bernalillo Division Manager C.E. Leyendecker R.F. Mershon E.L. Fogleman President, Mimbres Valley Bank Vice President, Industrial Relations Las Vcgas Division Manager Deming, New Mexico J.B. Mulcock, Jr. R.H. Hallford D.W. Reeves" Vice President, Public Affairs Deming Division Manager Chairman of the Executive R. Mullins W.M. Hicks, Jr.
Committee of the Board of Vice President, Operations Manager, Water Operations, Santa Fc Directors, Public Service Company D.E. Peckham of Yew Mexico J.L. Smith Secretary and Assistant Treasurer Belcn Division Manager R.R. A.J. Robison Rehder'rofessor of Management, Vice President, Finance Robert O. Anderson Graduate School of Management, P J. Archibeck Executive Offices University of New Mexico Treasurer and Assistant Secretary Alvarado Square Albuquerque, Ycw Mexico Albuquerque, Ncw Mexico J.L. Wilkins G.A. Schreiber" Vice President, Engineering Transfer Agents Chairman of thc Board of Directors and Construction Public Service Company Albuquerque National Bank B.P. Lopez of Ncw Mexico Albuquerque, Ncw Mexico Assistant Secretary R.H. Chemical Bank, Ncw York, Yew Yor Stcphcns'tephens-Irish H.L. Hitchins, Jr.
Agency Assistant Secretary and Lw Vegas, New Mexico Assistant lleasurer Registrars E.R. Wood First National Bank in Albuquerque J.T. Ackerman President, Santa Fc Motor Company Albuqucrquc, Ycw Mexico District Vice President, Santa Fe, New Mexico Albuquerque and Western Area Chemical Bank, Ycw York, Ycw Yorl
'Members of the Audit Committee "Members of the Exccutivc Commit tee 16
OMPARATIVEOPERATING STATISTICS 1980 1979 1978 1977 1976
'lectric Service Energy Sales kWhr (in thousands)
Residential 1,090,003 1,067,755 1,000,564 957,390 916,748 Commercial 1,441,634 1,403,282 1,353,805 1,320,651 1,277,025 Industrial 859,178 858,533 797,314 686,845 605,559 Other ultimate customers 167 070 159 396 164 901 160 922 '157 694
'ibtal sales to ultimate customers 3,557,885 3,488,966 3,316,584 3,125,808 2,957,026 Sales for resale 1 844 213 1 471 485 1 211 242 1 241 195 638 207
'ibtal energy sales ~5402 0 8 4 960 451 4 527 826 4 367 003 3 595 233 Electric Revenues (in thousands)
Residential $ 727596 S 66,262 $ 51,414 S 39,547 S 32,423 Commercial 85,480 77,806 60,125 45,520 36,198 Industrial 44,524 40,467 28,860 Other ultimate customers
'Ibtal revenue from ultimate
~750 8 704 7 052 18,918 5 215 13,070 4 168 customers 212,350 193,239 147,451 109,200 85,859 Sales for resale 59 475 44 000 32 568 23 219 9 340
'Ibtal revenue from energy 271,825 sales Miscellaneous electric revenues
'ibtal electric revenue
~25 S 274 423 8
S 237,239 2532 239 771 S 180,019 2581 182 600 S 132,419 1
2605 024 S 95,199 1935 97 134 Customers at Year End Residential 191,495 184,979 175,439 164,803 156,116 Commercial 20,932 20,334 19,496 18,374 17,483 Industrial 466 4s5 4s2 493 489 Other 264 264 263 265 250
'Ibtal ultimate customers 213,157 206,062 195,680 183,935 174,338 Sales for resale 6 5 5 5 5
'Ibtal customers 213 163 206 067 195 685 183 940 174 343 Reliable net capability kW 1,080,000 1,082,000 842,000 858,000 Coincidental peak demand kW 913,000 855,000 105.52'58,000 809,000 715,000 633,000 Average fuel cost per million BTU 109.614 120.724 92.74e 61.834 BTU per kWhr of net generation 10 551 10 746 10993 11 004 11 084 ater Service Sales Gallons (in thousands) ~26 9 816 2 515 815 2 753 122 2 731 801 2 963 223 Revenues (in thousands) ~560 3 S 4599 S 4605 S 3612 S 2389 Customers at Year End ~1303 18 755 18 079 17 427 16 838 17
SELECTED FINANCIALDATA 1980 1979 1978 1977 1976 (In thousands except per share amounts and ratios)
Operating revenues:
As reported $ 280,516 8 244,370 8187,205 $ 138,636 8 99,52.'144,06C In average 1980 dollars S 280,516 8 277,417 8236,449 8 188,514 Net earnings:
As reported $ 71,436 S 54,803 8 37,464 8 24,921 S 17,35)
In average 1980 dollars:
Adjusted for general $ 54 303 8 51,110 for changes in inflation'djusted specific prices'et
$ 53,639 8 49,632 earnings per common share:
As reported $ 3.36 8 2.97 8 2.83 8 2.46 8 2.1(
In avcragc 1980 dollars:
Adjusted for general $ 2.29 8 2.59 for changes in inflation'djusted specific $ 2.25 8 2.49 assets prices'otal
$ 1,458,412 $ 1,186,446 $ 888,747 8664,449 8498,94 Net assets at net recoverable cost:
As rcportcd $ 487,525 8 453,328 $ 382,289 $ 271,448
$ 310,30 8214,37'369,109 In average 1980 dollars $ 465,099 8 486,652 8482,850 Preferred stock with mandatory redemption requirements $ 90,000 8 40,000 Long-term debt, less current maturities $ 567,190 $ 431,655 8356,347 8244,720 $
178,43'ommon stock data:
Cash dividends declared per common share:
As reported $ '.04 8 1.88 S 1.72 S 1.61 8 1.4 2.0 In average 1980 dollars $ 2.04 8 2.13 8 2.17 8 2.19 8 Market price per common share at year end:
As reported $ 19.75 8 18.25 8 19.87 8 21.50 8 240 In average 1980 dollars $ 18.84 8 19.59 8 24.18 8 28.51 8 33.9 Dividend pay-out ratio 60.7~/o 63.3'Jo 60.8 /o 65.4W 657 Book value per common share at year end S 23.36 S 22 26 8 21.85 8 21.61 8 21.0 Average number of common shares outstanding 15,933 14,363 10,289 7,569 6,10 Return on average common equity 14.9o/o 13.60/o 13.09o 11.6/o Excess of increase in general price level over increase in 10.3'70.
specific prices after reduction to net recoverable cost* $ 121,508 8 116,265 Gain from decline in purchasing power of net amounts $ 87,092 S 72,531 consumer price index owed'verage 246.8 217.4 195.4 181.5
'See page 34 for discussion of Supplementary Information on Changing Prices.
18
NAGEMENT'S DISCUSSION AND ANALYSISOF FINANCIAL NDITIONAND RESULTS OF OPERATIONS uidity and Capital Resources e Company's five-year construction budget for the period 1981-1985 provides for the expenditure of approximate-
,077 million including allowance for funds used during construction (AFUDC) of $ 161 million. In addition, the pany forecasts expenditures of $ 100 million by the Company's wholly-owned subsidiaries, Paragon Resources, Inc.
Sunbelt Mining Company, Inc. The Company's construction expenditures for the years 1981 and 1982 are estimated 72 million and $ 325 million, respectively, and were approximately $ 284 million in 1980.
e Company conducts a continuing review of its construction program, and such program and the above estimates ubject to periodic revisions based upon changes in assumptions as to system load growth, rates of inflation, the ability and timing of environmental and other regulatory approvals and the availability and costs of outside sources ipital. The Company has in the past revised its construction budget in light of such factors and may effect further ions in the future.
ie construction program which will be necessary to meet prospective customer service requirements will require tantial external capital. The cost and availability of such additional capital may bc adversely affected unless nues and nct earnings can be maintained at levels which will attract capital on a favorable basis, and may be depen-upon conditions prevailing in the financial markets.
order to meet its external capital needs in 1980 of approximately S233 million, the Company sold 500,000 shares of ulative preferred stock, realizing therefrom approximately $ 50 million, issued S78 million principal amount of first tgage bonds, drew down approximately S58 million from pollution control revenue bond financings, raised $ 14 on in equity capital through PNM's special stock plans, and utilized proceeds from thc sale of commercial paper as as short-term borrowings.
ie Company currently estimates its external capital requirements for the 1981-1985 period to be approximately million, including approximately $ 316 million for 1981. In order to meet such 1981 requirements and reduce t-term debt, the Company proposes to sell approximately $ 173 million of common stock, $ 60 million of first mort-bonds and $ 25 million of cumulative preferred stock, depending on market conditions and other factors, and also
.e $ 120 million of proceeds from pollution control financings.
ults of Operations ectric revenues increased S47.6 million in 1978, $ 57.2 million in 1979 and $ 34.6 million in 1980. The principal fac-contributing to these increases are as follows:
1980 1979 1978 (In thousands) ase in electric revenues due to:
creased kWhr sales (a) $ 13,915 $ 14,660 S 4,584 creased base rates (b) 27,711 27,597 29,912 creased (decreased) fuel cost adjustment factor (c) ~703 14 963 13 104 S34 587 357 220 347 600 kWhr sales the number of customers increased in each period while the kWhr sales increased 3.7% in 1978, 0 in 1979 and 8.9% in 1980.
) Base rates the Company bills most customers under a Cost-of-Service Index Order based upon the jurisdictional n on common equity. The Index Order, formerly a quarterly adjustment, was revised to provide for annual ad-ents to base rates effective May 15, 1979. These rates are subject to the jurisdiction of the New Mexico Public Ser-Commission (Commission). The Company has periodically negotiated higher rates with certain other customers, rates being subject to the jurisdiction of the Federal Energy Regulatory Commission.
Fuel cost adjustmcnt factor during 1978 and 1979 the increased costs of fuels used for generation were passed the customers, increasing revenues during the respective periods. During 1980, the Company utilized coal, a less nsive fuel, for a greater proportion of its generation, reducing fuel cost adjustment revenues during this period.
19
Operation and maintenance expenses increased $ 27.3 million in 1978, $ 30.7 million in 1979 and $ 16.8 million in 1980. Principal causes are:
(a) Production of energy from the Company's own generating units decreased 14.3N in 1978, increased 16.396 in 1979 and increased 16.6/o in 1980. A boiler explosion causing the shutdown of the first unit at the San Juan Generat Station in July of 1977 and the return to service of the unit in May 1978, coupled with the purchase of lower-cost energy on the interchange market rather than generating from the Company's gas and oil-fire units, resulted in the Company being a nct purchaser of 957 million kWhr in 1978. The growth in kWhr sales in 1979 over 1978 resulted i the Company being a net purchaser of 752 million kWhr for the year. The third San Juan unit, providing the Compar with 240 megawatts of coal-fired capacity, became operational in December 1979. This added generating capacity, coupled with increased plant efficiency, resulted in the Company being a net purchaser of 471 million kWhr in 1980 decrease of approximately 281 million kWhr from 1979.
(b) Fuel costs increased generation and rapidly rising fuel costs.
(c) Higher cost of labor and related benefits due to higher wage rates and an increase in the number of employees necessary to operate the expanded electric generating and water facilities.
(d) General inflationary factors.
(e) Maintenance and repair expenses increased by $ 3.0 million in 1978, $ 1.9 million in 1979 and $ 6.1 million in and inspections at Las Vcgas, Person Station, Four Corners Generating Station, and the San Juan Gcneratin, 19'verhauls Station accounted for increased costs of $ 2.4 million in 1978, $ 1.3 million in 1979 and $ 5.5 million in 1980.
The Company's gross utility plant increased by approximately 29 Jo in 1978, 36/o in 1979 and 23 Jo in 1980 as a result of expanded operations, the need to maintain reliable service, and increasing cnvironmcntal protection re-quirements. In addition, the Company purchased the fifty-percent undivided interest of Tucson Electric Power Com-pany in San Juan Unit 4 in 1979. The increase in utility plant and the Company's construction program have been th primary causes of increases experienced in the following areas of operations:
(a) Depreciation and amortization.
(b) Faxes, other than income taxes, primarily franchise and ad valorem taxes.
(c) AFUDC increased construction at the San Juan Generating Station and Palo Verde Nuclear Generating Station.
increased AFUDC rates ordered by the Commission.
(d) Interest charges and preferred stock dividend requirements from December 31, 1977 through December 31, 1980 the Company has issued $ 160 million principal amount of First Mortgage Bonds, utilized $ 169 million principal amount of Pollution Control Revenue Bonds and issued $ 116 million of preferred stock, generally at higher rates tlia previous issues, and had up to $ 130 million principal amount of short-term debt outstanding.
As a result of items detailed above, earnings before income taxes, income taxes, net earnings and earnings per shar of common stock all increased in 1978, 1979 and 1980.
Sec page 34 for discussion of Supplementary Information on Changing Prices.
20
NNAGEMENT'S RESPONSIBILITY FOR FINANCIALSTATEMENTS he management of Public Service Company of New Mexico is responsible for the preparation and presentation of accompanying financial statements. The financial statements have been prepared in conformity with generally ac-ed accounting principles and include amounts that are based on informed estimates and judgments of management.
anagement maintains a system of internal accounting controls which it believes is adequate to provide reasonable rance that assets are safeguarded, transactions are executed in accordance with management authorization, and the cial records are reliable for preparing the financial statements. The system of internal accounting controls is sup-ed by written policies and procedures, a staff of internal auditors who conduct comprehensive internal audits, and e selection and training of qualified personnel.
e Board of Directors, through its Audit Committee comprised entirely of outside directors, meets periodically with agement, internal auditors, and the Company's independent public accountants to discuss auditing, internal control financial reporting matters. To ensure the auditors'ndependence, both the internal auditors and independent ic accountants have full and free access to the Audit Committee.
e independent auditors,.Peat, Marwick, Mitchell A Co., are engaged to examine the Company's financial ments in accordance with generally accepted auditing standards.
OUNTANTS'EPORT Board of Directors and Stockholders ic Service Company of New Mexico:
'e have examined the consolidated balance sheet of Public Service Company of New Mexico and subsidiaries as of mber 31, 1980 and 1979 and the related consolidated statements of earnings, capitalization and changes in financial tion for each of the years in the three-year period ended December 31, 1980. Our examinations were made in ac-ance with generally accepted auditing standards, and accordingly included such tests of the accounting records and other auditing procedures as we considered necessary in the circumstances.
our opinion, the aforementioned consolidated financial statements present fairly the financial position of Public ice Company of New Mexico and subsidiaries at December 31, 1980 and 1979 and the results of their operations changes in their financial position for each of the years in the three-year period ended December 31, 1980, in con-ity with generally accepted accounting principles applied on a consistent basis.
PEAT, MARWICK, MITCHELL& CO.
querque, New Mexico uary 9, 1981 21
CONSOLIDATED BALANCESHEET Assets December 31, 1980 1979 (in thousands)
Utilityplant, at original cost (notes 4 and 8):
Electric plant in service S 743,837 S 712; Water plant in service 33,535 31, Common plant in service 18 643 17 796,015 761, Less accumulated depreciation and amortization 152 102 127 643,913 633, Construction work in progress 680,603 435, Electric plant held for future use 1126 1 Net utility plant 1 325 642 1 069 Other property and investments:
Non-utility property, at cost, nct of accumulated depreciation of $ 1,340,000 in 1980 and S757,000 in 1979 33,588 17, Investment in fifty-percent-owned company 3,099 6, Other, at cost 2738 1 1btal other property and investments 39 425 25 Current assets:
Cash (note 5) 6,012 Receivables:
Customers 29,794 23 Other 5,320 13, Allowance for doubtful receivables (192) (
Fuel, materials and supplies, at average cost 26,353 22'1 Prepaid expenses 2,220 Deferred fuel costs 8 536 11
'Ibtal current assets 78 043 76 Deferred charges 15 302 14 Sl 458 412 Sl 186 See accompanying notes to consolidated financial statements.
22
capitalization and Liabilities December 31, 1980 1979 (ln thousands) pitalization:
- ommon stock equity (note 2):
Common stock of $ 5 par value. Authorized 40,000,000 shares; outstanding 16,330,304 shares in 1980 and 15,601,739 shares in 1979 $ 81,652 S 78,009 Additional paid-in capital 195,026 185,600 Retained earnings 104 847 83 719 Total common stock equity 381,525 347,328
- umulative preferred stock. Authorized 10,000,000 shares (note 3):
Without mandatory redemption requirements.
Outstanding 860,000 shares of S100 stated value and 800,000 shares of S25 stated value 106,000 106,000 With mandatory redemption requirements.
Outstanding 900,000 shares in 1980 and 400,000 shares in 1979 of Sloo stated value 90,000 40,000 ng-term debt, less current maturities (note 4) ~567 1 0 431655 Total capitalization 1 144 715 924 983 ent liabilities:
tort-term debt (note 5) 129,355 95,960 ccounts payable 49,836 51,695 referred dividends declared 4,712 2,869 urrcnt maturities of long-term debt (note 4) 1,487 5,224 crucd interest 10,456 5,577 crued taxes 7,141 9,418 ther current liabilities 5 645 4 220 Total current liabilities 208 632 174 963 erred credits:
cumulated deferred investment tax credits (note 6) 62,991 47,896 cumulated deferred income taxes (note 6) 25,756 22,529 ther deferred credits 16 318 16075 Total deferred credits 105,065 86,5oo unitments and contingencies (notes 8, 9 and 11)
$1 458 412 81 186446 23
CONSOLIDATED STATEMENT OF EARNINGS Year ended December 31, 1980 1979 1978 (in thousands except per share amounts Operating revenues:
S 274,423 S182,6 Electric (note 10)
Water ~60280 516 3
$ 239,771 4 599 244 370 187 2 Total operating revenues Operating expenses:
Fuel and purchased power 84,125 85,143 62, Other operation expenses 46,017 34,351 28, Maintenance and repairs 21,201 15,045 13,1 Provision for depreciation and amortization 25,003 17,603 14,
'ihxes, other than income taxes 12,299 10,531 8, Income taxes (note 6) 20 073 21 881 16 Total operating expenses 208 718 184 554 143 Operating income ~71 7 8 59816 43 Other income and deductions:
Allowance for equity funds used during construction 27,236 15,594 10, Equity in earnings of fifty-percent-owned company, net of taxes (note 6)
Other, net of taxes (note 6)
Net other income and deductions 2,953 385 30 574
~20 2,151 17 995 12, Income before interest charges 102 372 77 811 56, Interest charges:
Interest on long-term debt 29,012 24,236 21,:
Other interest charges 12,771 4,696 2 Allowance for borrowed funds used during construction 10 847 5 924 4 Net interest charges ~30 36 23 008 19 Net earnings 71,436 54,803 37 Preferred stock dividend requirements 17 834 12 196 8, Net earnings applicable to common stock S 53602 S 42607 S 29 Average number of common shares outstanding 15 933 . 14 363 10 Per share amounts:
Net earnings S 3.36 S 2.97 S 2 Dividends $ 2.04 S 1.88 S 1 See accompanying notes to consolidated financial statements.
,24
3NSOLIDATED STATEMENT OF CAPITALIZATION Year ended December 31, 1980 1979 1978 (in thousands) nmon stock equity:
ommon stock:
Balance at beginning of year $ 78,009 S 63,211 S 44,287 Issuance of common stock 3 643 14 798 18 924 Balance at end of year 81 652 78 009 63 211 dditional paid-in capital:
Balance at beginning of year 185,600 145,433 90,947 Premium on common stock issued Expenses of stock issuance Balance at end of year
~64 10,120 195 026
~2299 42,466 185 600
~275 57,241 145 433 tained earnings:
Balance at beginning of year 83,719 67,645 56,213 Net earnings 71 436 54 803 37 464 155 155 122 448 93 677 Cash dividends:
Cumulative preferred stock 17,834 12,196 8,383 Common stock 32 474 26 533 17 649 50 308 38 729 26 032 Balance at end of year 104 847 83 719 67645 Total common stock equity 381 525 33.3% 347 328 37.5% 276 289 37.4%
ulative preferred stock:
ithout mandatory redemption requirements:
Balance at beginning of year 106,000 106,000 80,000 Issuance of preferred stock 26 000 Balance at end of year 106 000 9.3 106 000 11.5 106 000 14.4 ith mandatory redemption requirements:
Balance at beginning of year 4o,ooo Issuance of preferred stock 50 000 40 000 Balance at end of year 0 000 79 40000 43
-term debt, less current maturities:
Balance at beginning of year 431,655 356,347 244,721 Addition to long-term debt 137,837 82,763 114,561 Reduction of long-term debt (2,284) (6,544) (2,305)
Net change in unamortized discount and premium Balance at end of year ~567 1 0~4.5 431655 46.7 356 347 48.2
'Ibtal capitalization at end of year 81 144715 100.0% 1924983 100.0% 8738 636 100.0%
ber of shares issued:
S100 stated value cumulative preferred stock 500 4oo 26o Common stock ~72 2 960 3 785 iccompanying notes to consolidated financial statements.
25
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIALPOSITION Year ended December 31, 1980 1979 (In thousands) 197'unds provided:
Net earnings S 7i,436 S 54,803 S 374 Charges (credits) to earnings not requiring funds:
Depreciation and amortization 26,889 19,128 15 0 Provision for noncurrent deferred income taxes, net 3 227 4 549 1, Investment tax credit, net 15,095 11,672 10,.
Allowance for equity funds used during construction (27,236) (15,594) (10, Undistributed earnings of fifty-percent-owned company 1 Funds derived from operations 82,555 72,342 52,.
Sale of first mortgage bonds 78,000 17,000 65,<
Sale of cumulative preferred stock 50,000 40,000 26,<
Proceeds from pollution control revenue bonds 57,942 62,166 48, Sale of common stock i3,763 57,264 76, Proceeds from other long-term debt 1,895 3,597 Proceeds from short-term debt 308,834 290,315 i42, Dividends from fifty-percent-owned company 9,868 Decrease in deferred charges 12,405 Utilityplant retirements, net of removal costs 141 14,137 Decrease in working capital other than short-term debt 8,154 Other 311 6 113
$ 603 309 $ 583 493 S416 Funds used:
Cash dividends S 507308 S 38,729 S 26t Utilityplant additions 254,805 308,526 189,.
Payment of short-term debt 275,439 218, 160 168,4 Reduction of long-term debt 2,284 6,544 2 Additions to non-utility property 16,749 8,157 Increase in deferred charges 966 22 Increase in working capital other than short-term debt 1,121 4 Other 1 637 3 377 3
$ 603 309 S583 493 S4 16 Changes in working capital other than short-term debt:
Cash S 2,202 S 1,881 S (3, Receivables (2,481) 443 15, Fuel, materials and supplies 4,280 6,058 1, Prepaid expenses 180 924 (
Deferred fuel costs (2,786) (553) 4 Accounts payable 1,859 (8,623) (9, Preferred dividends declared (1,843) (875) (
Current maturities of long-term debt 3 $ 737 (4 035)
Accrued interest (4,879) (1,153)
Accrued taxes 27277 (2,227)
Other current liabilities 6 Increase (decrease) in working capital other than short-term debt $ 1 121 S 8 154 See accompanying notes to consolidated financial statements.
26
3TES TO CONSOLIDATED FINANCIALSTATEMENTS December 31, 1980, 1979 and 1978
) Summary of Significant Accounting Policies stem of Accounts fhe Company maintains its accounting records in accordance with the uniform system of accounts prescribed by the feral Energy Regulatory Commission (FERC) and adopted by the New Mexico Public Service Commission (Commis-
'). As a result of the rate-making process, the application of generally accepted accounting principles by the Com-fy differs in certain respects from the application by nonregulated businesses. Such differences generally regard the
.e at which certain items enter into the determination of net earnings in order to follow the principle of matching ts and revenues.
nciples of Consolidation l'he consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Para-i Resources, Inc. and Sunbelt Mining Company, Inc. All significant intercompany transactions have been eliminated.
lity Plant Jtility plant is stated at original cost, which includes payroll-related costs such as taxes, pensions and other fringe befits, administrative costs and an allowance for funds used during construction.
t is Company policy to charge repairs and minor replacements of property to maintenance expense and to charge or replacements to utilityplant. Gains or losses resulting from retirements or other dispositions of operating proper-n the normal course of business are credited or charged to the accumulated provision for depreciation.
preciation
'rovision for depreciation of utility plant is made at annual straight-line rates approved by the Commission. The rage depreciation rates used were as follows:
1980 1979 1978 Electric plant 3.36% 3.62% 3 39%
Water plant 1.94% 1.88%'.89%
Common plant 7.36% 7. 13% 5.89%
he provision for depreciation and amortization of certain equipment, including amortization applicable to capital es, is charged to clearing accounts along with other costs of operation and subsequently apportioned to operating enses and property accounts based on the use of the equipment. Depreciation of non-utility property is computed he straight-line method.
wance for Funds Used During Construction (AFUDC) i accordance with the uniform system of accounts, AFUDC, a non-cash item, is charged to utility plant. AFUDC esents the cost of borrowed funds (allowance for borrowed funds used during construction) and a return on other 1s (allowance for equity funds used during construction). The Commission, which has primary rate-making jurisdic-over the Company, has limited AFUDC to electric generation construction, including pollution control devices and r water plant construction. The allowance is charged to other construction projects to the extent they pertain to omers subject to FERC jurisdiction.
he AFUDC was computed using rates of 6 1/2 percent until May 15, 1979 and 7 1/2 percent from then until ember 31, 1979 and was allocated between borrowed funds and equity funds based on the method required by C. Beginning January 1, 1980 AFUDC was computed using the maximum rate, net of taxes, permitted by FERC ch was 8.65 percent for 1980. The Commission also ordered the Company to record additional AFUDC in 1980 esenting a recalculation of 1979 AFUDC based on the maximum rate allowed by FERC. The effect of this adjustment not significant.
27
Capitalized Interest The Company capitalizes interest costs on non-utility property in compliance with Financial Accounting Standard>>
Board Statement No. 34. Interest capitalized amounted to S2,003,000 in 1980 and $ 626,000 in 1979.
Investment in Fifty-Percent-Owned Company The Company's investment in a fifty-percent-owned company is stated at equity. The co-owner, 'Ihcson Electric Power Company, is participating with the Company in the construction and operation of a steam turbo-electric generating plant described in note (8). Prior to December 1, 1980, the generating plant utilized coal from properties i the fifty-percent-owned company as a source of fuel. Effective December 1, 1980, the coal supply for the generating plant was restructured with an unrelated supplier. The fifty-percent-owned company has adopted a plan of liquidatic Deferred Fuel Costs The Company uses the deferral method of accounting for the portion of fuel costs which is recoverable in subseqr periods under fuel adjustment clauses.
Amortization of Debt Discount, Expense and Premium Discount, expense and premium incurred in the issuance of the presently outstanding debt are being amortized by charges to income over the lives of the respective issues on the debt outstanding method.
Investment Tax Credits The Company follows the practice of deferring investment tax credits and amortizes them over the estimated usef lives of the related properties. Investment tax credit carryforwards are recorded, as a reduction of deferred income taxes, to the extent of the sum of the additional investment tax credits which would have been realized if taxes paya had been based on pretax accounting income adjusted for permanent differences and the existing net deferred tax credits which would reverse during the investment tax credit carryforward period.
Income Taxes Certain revenue and expense items in the Consolidated Statement of Earnings are recorded in a year different fron the year in which they are recorded for income tax purposes. Deferred income taxes are provided on these timing d ferences to the extent allowed for rate-making purposes. This normalization method is used primarily for difference.
tributable to deferred fuel costs, the use of liberalized depreciation methods and different lives under the asset depr tion range (ADR) than under the guideline depreciation provisions. Certain other differences result in a reduction in come tax expense in the current year. This flow-through method is used primarily for differences between tax depre tion computed under the guideline life provisions and book depreciation and certain capitalized construction costs, principally AFUDC, deducted currently for income tax purposes.
At present, rates applicable to certain customers subject to FERC control allow recovery of amounts necessary to vide additional tax normalization of the items described above which are accounted for under the flow-through met for other customers. Provision has been made for additional deferred income taxes attributable to amounts collecte under these rates.
Revenues Revenues are recognized based on cycle billings rendered to customers monthly. The Company does not accrue revenues for services provided but not billed at the end of a fiscal period.
Pension Plan The Company's policy is to fund pension costs which are composed of normal costs and amortization of past se costs over thirty years.
(2) Common Stock Equity The Board of Directors has reserved 2,700,000 shares of unissued common stock for the dividend reinvestment p gram, the Employee Stock Purchase Plan and the Tax Reduction Act Stock Ownership Plan, of which 1,200,847 shar remained unissued at December 31, 1980.
Charter provisions relating to the cumulative preferred stock and the indenture securing the first mortgage bonds pose certain restrictions upon the payment of cash dividends on common stock of the Company. At December 31, 1980, there were no retained earnings restricted under such provisions.
28
Cumulative Preferred Stock ormation concerning the cumulative prcfcrrcd stock is as follows:
Aggregate Stated Stated Shares Stated Value Redemption Series Value Outstandin (In thousands) Price a ithout mandatory redemption requircmcnts:
1965 Series, 4.58% $ 100 130,000 $ 13,000 $ 102.516 1974 Series, 9.2% 100 170,000 17,000 107.00 1975 Series, 10.12% 100 100,000 10,000 107.00
- 9. 16% Series (b) 25 800,000 20,000 27.29 8.48% Series (b) 100 200,000 20,000 108.48 8.80% Series (b) 100 260,000 26,000 108.80 1 660000 1106 PPP ith mandatory redemption requircmcnts:
8.75% Series (b) (c) 100 400,000 $ 40,000 108.75 14.75% Series (b) (c) 100 500 000 50 000 114.75 900 000 S 90000 The cumulative preferred stock may be redeemed by the Company, upon thirty days notice thereof, at stated redemption prices (plus accrued and unpaid dividends). Redemption prices are at reduced premiums in future years.
Redemption may not be made through certain refunding operations prior to June 1, 1981 for the 9.16% Series, April 1, 1982 for the 8.48% Scrics, April 1, 1983 for the 8.80% Series, February 1, 1984 for the 8.75% Series, or April 1, 1990 for the 14.75% Scrics.
Beginning in 1984 for the 8.75% Series and 1986 for the 14.75% Series, thc Company must annually redeem 13,000 and 20,000 shares, respectively, at a price of $ 100 per share plus accrued and unpaid dividends.
Long-Term Debt ic details of the Company's outstanding long-term debt including unamortized discount and premium, less current irities, are as follows:
Issue and Maturit Interest Rates 1980 1979 (in thousands)
Mortgage Bonds:
81 through 1985 3 5/8% to 12.95% $ 55,171 $ 5,241 86 through 1990 4 3/8% 8,470 8,580 91 through 1995 4 7/8% 9,762 9,880 96 through 2000 5 7/8% to 7 1/4% 31,876 32,197 01 through 2005 7 1/2% to 10 1/8% 107,239 79,781 06 through 2010 8 1/8% to 9% 94,355 94,323 00 through 2010 pollution control series, securing pollution control revenue bonds 6% to 8 1/8% 300,014 274,061 Funds held by trustee ~121 717 ~153 660 Total first mortgage bonds 485,170 350,403 ition control revenue bonds, due 1984 5% to 7.6% 77,000 77,000 5 020 4 252
'i'ong-term debt S 567 190 S 431 655 29
Substantially all utility plant is pledged to secure the first mortgage bonds.
Approximately 25 percent of the original principal amount of each series of first mortgage bonds will be redeemet through sinking fund requirements prior to the aforementioned due dates. The aggregate amounts (in thousands) of maturities on all long-term debt outstanding at December 31, 1980 are as follows:
1981 S 1,487 1982 5,566 1983 2,887 1984 4,992 1985 52 679 In August 1977 the City of Farmington, New Mexico, issued and sold S77,045,000 principal amount of its 5.9 Pollution Control Revenue Refunding Bonds, Series 1977, the proceeds of which are expected to be used to retie 7.6% Pollution Control Revenue Bonds and 5% Pollution Control Revenue Bonds at their maturity in 1984. Fro and after such retirement, but not before, the Refunding Bonds will be payable out of revenues received by thc City from the Company. Upon such retirement the Company will also guarantee the payment of the Series 1977 Bonds and secure its guaranty with an equal principal amount of its first mortgage bonds.
(5) Short-Term Debt and Compensating Balance Arrangements The Company's interim financing requirements are met through issuance of unsecured notes payable to banks and commercial paper. The Company has agreed to maintain compensating balances with certain lending banks or to pay fees in lieu of such balances. Compensating balances are generally equal to 20 percent of the outstanding indebtedn or 10 percent of the lines of credit at such banks, whichever is greater. Details of the Company's short-term debt at December 31, 1980, 1979 and 1978 and for the years then ended are as follows:
1980 '1979 19 (In thousands)
Aggregate short-term debt outstanding:
Notes payable to banks $ 79,575 $ 37,250 S 4, Commercial paper $ 49,780 $ 58,710 $ 19, Average interest rate on outstanding debt:
Notes payable to banks 18 3/8% 14 3/4% 11 1 Commercial paper 18 3/8% 13 3/8% 101 Maximum outstanding during year:
Notes payable to banks $ 80,175 $ 51,835 $ 50, Commercial paper $ 67,825 $ 58,710 S37, Average outstanding during year:
Notes payable to banks $ 317092 S 8,747 $ 10, Commercial paper $ 61,437 $ 29,713 $ 12, Weighted average stated interest rate on debt outstanding during year, computed using daily outstanding balances:
Notes payable to banks 14 1/4 12 5/8% 81 Commercial paper 12 3/8% 11 1/2% 7 1 Unused lines of credit (subject to cancellation at the banks'ption) $ 76,878 $ 60,140 $ 53, Compensating balances at end of year S 3 193 S 1956 S Compensating balances have bccn reduced by the average difference between collected bank balances and book balances.
30
Income Tmres come taxes consist of the following components:
1980 1979 1978 (In thousands) rent Federal income tax $ 4,185 $ 3,864 $ 1,609 rent state income tax 1,205 1,467 l,o48 rred Federal income tax 2,347 3,583 2,130 rrcd state income tax 1,089 677 657 unt equivalent to current investment tax credit 16,688 13,611 12,413 irtization of accumulated investment tax credit 1 802 ital income taxes $ 23 712 $ 22 460 $ 17 330 rged to operating expenses $ 20,073 $ 21,881 $ 16,722 rgcd to other income and deductions ital income taxes
~363 579 608
$ 23 712 $ 22 460 $ 17 330 ie Company has investment tax credit carryforwards, for tax purposes, of approximately $ 58,000,000 as of mbcr 31, 1980 which will expire in 1986 and 1987. Of this amount, approximately $ 21,954,000 has been record-
'or financial statement purposes, as a reduction of deferred Federal income tax credits.
fcrred income taxes result from timing differences in the recognition of income and expenses for tax and accoun-purposes. The major sources of these differences and the tax effects of each arc as follows:
1980 1979 1978 (In thousands) rred fuel costs $ (1,353) S (495) S 2,396 lizcd depreciation methods and asset class lives orter than guideline lives 9,386 8,049 4,376 r miscellaneous items 282 662 47
'tment tax credit carryforward ~4879 ~3936 ~4032 S 3 436 S 4 260 S 2 787 c current portion of deferred income taxes (included in accrued taxes) results from timing differences on deferred osts. Such balances amounted to $ 1,529,000 as of December 31, 1980 and $ 1,688,000 as of December 31, 1979 reduction for investment tax credit carryforwards.
e Company's effective income tax rate was less than the Federal income tax statutory rate for each of the years
- n. The differences are attributable to the following factors:
1980 1979 1978 ral income tax statutory rate 46.o% 46.o% 80%
lepreciation in excess of book depreciation caused by of guideline depreciation provisions (1 0) (2 7) (1.2) ance for funds used during construction, of depreciation adjustments (17.8) (12.1) (12.3) in employee benefits and taxes capitalized for financial tcmcnts, net of depreciation adjustments (6) (5) tization of investment tax credits (1.9) (1.0) r miscellaneous items ompany's effective income tax rate
.2 24.9%
~6 29.1% 31.6%
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(7) Pension Plan The Company and its subsidiaries have a pension plan covering substantially all of their employees, including offic The plan provides for monthly pension payments to participating employees upon their attaining the age of 65 or th age of 62 with 30 years of service. The amount of such payments are depcndcnt upon length of service and the aver.
wage of the five most highly compensated consecutive years of employmcnt.
Thc total pension expense was S4,815,000 in 1980, S3,058,000 in 1979 and S2,807,000 in 1978 including amorti'ion of past service cost over 30 years.
As of January 1, 1980, the most recent valuation date, accumulated plan benefits and plan net assets (in thousands) the Company's defined benefit plan are as follows:
Actuarial present value of accumulated plan benefits:
Vested S 17,892 Nonvested 1 825
$ 19 717 Nct assets available for bcncfit (market value) $ 21 539 Thc weighted average assumed rate of return used in determining the actuarial present value of accumulated plan benefits was scvcn percent.
(8) Construction Program and Jointly-Owned Plants The Company is participating with 11icson Electric Power Company in the construction of the steam turbowlectri San Juan Generating Station. The Company owns an undivided fifty-percent interest in the first three units of the st tion. The Company purchased 'Iiicson's fifty-percent undivided interest in the fourth and final unit of the San Juan S tion in 1979 and now owns all of such unit. In 1980, the Company entered into a Letter of Intent regarding the pott tial sale of a 10.6 percent undivided interest in San Juan Unit 4.
The Company is also participating with several other utilities in the construction of the Palo Verde Nuclear Generating Station with the first unit scheduled for completion in 1983.
It is estimated that the Company and its subsidiaries'onstruction expenditures for 1981 will approximate
$ 372,000,000 including expenditures on the jointly-owned projects. In connection, therewith, substantial com-mitments have been made.
Details of the Company's interest in jointly-owned plants at Dccembcr 31, 1980 are as follows:
Construction Plant Accumulated Work in Share o In Service De reciation Pro ress Total Pla (In thousands)
San Juan Generating Station $ 407,165 $ 40,649 $ 335,411 65 Palo Verde Nuclear Gcncrating Station $ 254,627 10.2'I'3 Four Corners Generating Station Units 4 and 5 $ 26 600 $ 7 062 $ 8 866 These amounts reprcscnt the Company's share of capital costs, and the Company has provided its own financing.
Company's share of direct expenses is included in the corresponding operating expenses in the Consolidated State of Earnings. The Company also has undivided interests in transmission facilities which are not significant.
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Lease Commitments
'he Company leases data processing, communication, office and other equipment, office space, utility poles (joint
) and real estate. Certain leases, primarily for data processing equipment, are capital leases. All other leases are rating leases.
'ertain leases provide purchase options in thc approximate amount of $ 1,401,000 for data processing equipment and 9,000 for construction equipment. The lease for an office building provides for a purchase option equal to fair ket value at the end of the primary term of 35 years. Renewal options and contingent rental provisions were not
'ficant.
eased property under capital leases at December 31, 1980 and 1979 is as follows:
1980 1979 (In thousands) a processing equipmcnt $ 3,888 $ 3,871 er 543 232 4 431 4 103 accumulated amortization ~220 1 550 42 222 42 553 uture minimum lease payments at Dcccmbcr 31, 1980 arc:
Capital Operating Lcascs Leases (In thousands) 81 $ 1,042 $ 1,462 82 941 1,310 83 439 1,240 84 349 2,075 85 253 1,926 ltef years 234 56 671 minimum lease payments 3,250 464 604 amount representing executory costs 270 minimum lease payments 2,988 amount representing interest ~79 ent value of net minimum lease payments 42 409
.nts charged to operating expenses were $ 1,486,000 in 1980, $ 1,277,000 in 1979 and $ 1,091,000 in 1978. Such unts exclude payments made on capital lcascs. Rents charged to utility plant werc $ 914,000 in 1980, $ 236,000 in and $ 577,000 in 1978.
) Revenues Subject to Refund hc Company has collected revenues subject to refund since 1977 under wholesale rate cases filed with the FERC. In 0 the Company and the FERC customers settled these rate cases, with the Company agreeing to refund approx-ely $ 9.6 million plus interest. The Company recorded $ 3.3 million as a provision for refund in 1979 and the rc-der was recorded in 1980.
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(11) Subsequent Event In January 1981 the Company's directors approved a plan of merger, whcrcby the electric utility business of New Mexico Electric Service Company (NMESC) will be merged into the Company. NMESC provides electric service to the southern portion of Lea County, New Mexico, including the communitics of Hobbs, Jal and Eunice. The mcrgcr woul involve the issuance of 562,500 sltarcs of the Company's common stock in cxchangc for all of the common stock of NMESC. The Company would assume the long-term debt of NMESC. Consummation of the merger is contingent on tl issuance of a ruling by the Internal Revenue Service that it will qualify as a tax-free reorganization and is also conting on stockholder approvals and approvals by FERC and the Commission and on negotiation of formal agreements, in-cluding a fuel supply agreement for natural gas.
SUPPLEMENTARY INFORMATION ON CHANGING PRICES Thc effect of changing prices upon thc Company's operations is supplied in accordance with the requirements of tl Financial Accounting Standards Board Statement No. 33. It should bc vicwcd as an estimate of the approximate cffcc inflation, rather than as a precise measure. Moreover, these effects of changing prices are not recognized for purpose.
rate-making or income taxation.
For these presentations, "constant dollar" and "current cost" amounts were calculated by applying indices to historical or other amounts. In the case of constant dollars, the index was the Consumer Price Index for all Urban C<
sumers (CPI-U), which approximates the upward trend of prices in general during the indicated periods. In the case t current costs, the primary index was the Handy-Whitman Index of Public UtilityConstruction Costs, although CPI-was used for construction work in progress.
Since the utility plant is not expected to be replaced in kind, current cost does not necessarily represent the rcplac ment cost of the Company's production capacity.
Fuel inventories, the cost of fuel used in generation, and power purchased for resale have not been restated from their historical cost. Regulation limits the rccovcry of fuel through the operation of adjustment clauses. For this rcast fuel inventories are treated as monetary assets.
Cumulative preferred stock subject to mandatory redemption requirements is treated as a monetary item in calculating the gain from the decline in purchasing power of nct amounts owed.
Depreciation is determined by applying the Company's composite dcprcciation rate to the indexed plant amounts.
As prescribed in Statement No. 33, income taxes were not adjusted. Accumulated deferred investment tax credits i treated as a monetary item since it is returned to customers through adjustments in rates.
Under the rate making prescribed by the regulatory commissions to which thc Company is subject, only thc histor cost of plant is recoverable in revenues as depreciation. Therefore, the excess of the cost of plant, stated in terms of-constant dollars or current cost over the historical cost of plant, is not presently recoverable in rates as depreciation, and is rcflcctcd as a reduction to net recoverable cost. While the rate-making process gives no recognition to the cur-rent cost of replacing property, plant and equipment, the Company bclicvcs it will be allowed to earn on the incrcas cost of its net investment when replacement of facilities actually occurs.
To properly reflect the economics of rate regulation in the Statcmcnt of Earnings from Continuing Operations Ad-justed for Changing Prices, thc reduction of net property, plant and cquipmcnt should be offset by the gain from thc decline in purchasing power of net amounts owed. During a period of inflation, holders of monetary assets suffer a l of general purchasing power while holders of monetary liabilities experience a gain. The gain from the decline in pu chasing power of net amounts owed is primarily attributable to the substantial amount of debt which has been used t finance property, plant and equipment. Since the depreciation on this plant is limited to the recovery of historical co.
thc Company does not have the opportunity to realize a holding gain on debt and is limited to recovery only of the embedded cost of debt capital.
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ATEMENTOF EARNINGS FROM CONTINUING OPERATIONS JUSTED FOR CHANGING PRICES Year Ended December 31, 1980 Adjusted for Adjusted for As Reported General Changes in in the Primary Inflation Specific Prices Statement (Constant Dollars) (Current Cost)
(In thousands) rating revenues 5280 516 S 280516 S 280 516 I and purchased power 84, 125 84,125 84,125 er operation expenses 46,017 46,017 46,017 ntenance and repairs 21,201 21,201 21,201 reciation and amortization 25,003 42,136 42,800 s, other than income taxes 12,299 12,299 12,299 me taxes 23,712 23,712 23,712 rest charges 30,936 30,936 30,936 er income and deductions net ~34 213 ~34 213 ~34 213 209 080 226 213 226 877 ngs from continuing operations (excluding duction to net recoverable cost) S 71 436 ~S54 S 53 639 ease in current cost of property, plant d equipment held during the year 03'(122,
$ 198,969 uction to net recoverablc cost 127) (311,515) ct of increase in gcncral price level ~8,962 s of increase in general price level over increase in ecific prices after reduction to net recoverable cost (121,508) from decline in purchasing power of net ounts owed 87 092 87 092
~8~0) ~834 416 luding the reduction to nct recoverable cost, the earnings (loss) from continuing operations on a constant lar basis would have been $ (67,824) for 1980.
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QUARTERLY RESULTS OF OPERATIONS The unaudited results of operations (in thousands except pcr sltare amounts) by quarters for 1980 and 1979 are as follows:
Net Operating Operating Nct Earnings Quarter Ended Rcvenucs Income Earnin s Per Share December 31, 1980 $ 74,386 $ 18,429 $ 18, 104 S .81 September 30, 1980 $ 74,899 $ 21,982 $ 22,698 $ 1.11 June 30, 1980 S66,678 $ 15,852 $ 18,090 S .84 March 31, 1980 $ 64,553 S15,535 S12,544 s .6o December 31, 1979 $ 64,335 $ 16,378 $ 16,623 S .87 September 30, 1979 $ 66,725 $ 18,998 $ 16,661 S .88 June 30, 1979 $ 56,475 $ 13,192 $ 11,504 S .61 March 31, 1979 $ 56,835 S11,248 $ 10,015 S .57 In the opinion of management of the Company, all adjustmcnts (consisting of normal recurring accruals) necessary for a fair statement of the results of operations for such periods ltave been included.
STOCK/DIVIDENDDATA Common Stock:
Range of sales prices of the Company's common stock, on the New York Stock Exchange (Symbol: PNM), and dividends paid on common stock for fiscal 1980 and 1979, by quarters, are as follows:
Range of Sales Prices Dividends High Low Pcr Share Fourth Quarter, 1980 20 1/4 17 $ 0.52 Third Quarter, 1980 21 3/4 17 5/8 0.52 Second Quarter, 1980 2o 3/4 16 1/2 0.52 First Quarter, 1980 18 1/2 15 1/4 0.48 Fiscal Year 21 3/4 15 1/4 s2.o4 Fourth Quarter, 1979 20 1/4 17 1/2 $ 0.48 Third Quarter, 1979 21 1/2 17 3/8 0.48 Second Quarter, 1979 21 1/4 19 0.48 First Quarter, 1979 20 5/8 19 1/8 o.44 Fiscal Year 21 1/2 17 3/8 $ 1.88 On January 14, 1981, the Board of Directors of the Company declared a dividend of S.67 per share of common st payable February 27, 1981 to stockholders of record February 6, 1981.
Cumulative Preferred Stock:
While isolated sales of the Company's preferred stock have occurred in thc past, the Company is not aware of any tive trading market for its preferred stock.
Quarterly cash dividends were paid on each series of the Company's preferred stock at their stated rates during 19 and 1979.
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(STEM MAP San Juan Farmington Four Corners Ojo Los Alamos j
Norton Santa Fe G~ Ambrosia Lake Algodones
~
~ Zia Bernalillo Las Vegas Albuquerque Sandia Belen Hobbs Mimbres Las Cruces Luna y peming El Paso 30 60 miles 115 and 230 kV owned by PNM 345 kV owned by PNM 345 kV owned by PNM and others 230 kV and above owned by others Generation Switching station flic Service Company of New Mexico Cities served by PNM
~t
't t
(
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