ML20062K523
| ML20062K523 | |
| Person / Time | |
|---|---|
| Site: | Palo Verde  |
| Issue date: | 12/31/1992 |
| From: | Ackerman J PUBLIC SERVICE CO. OF NEW MEXICO |
| To: | |
| Shared Package | |
| ML17310A857 | List: |
| References | |
| NUDOCS 9312220189 | |
| Download: ML20062K523 (18) | |
Text
l Public Service Company of New Mexico Annual Report 1992
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A COMMITMENT TO PRICE, CHOICE & SERV 1CE -!
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' ' ' D3 n l'ublic Service Company of New hiexico is a public utility providing electric, gas and water service
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% @ % nton W Service Area . . . Inside Front Cover Our Business Direction . . .8 Financial Highlinhts.. .I Board of Directors . . .14 1
Chainnan's Lener . .2 Officers . . 15 l Introduction . .4 Fonn 10-K . .Following l' age 16 A Year in Review. .4 Shareholder infonnation . . .inside Back Cover l
$@M@MN Public Service Cornpmy of New Mexico aml Subsidiaries l l
l99.' 1991 Clumge Operating revenues $ 851,953.000 $857,168,000 (0.6)% Operating expenses $ 740,018,000 $759,915,000 (2.6)% Net canunus (loss) $(104,255,000) $ 22,960,000 N/M Return on average conunon equity (14.0)% 1.8% N/M Earnings (los3) per conunon sh.ue $ (2.67) $ 032 N/M ikok value per conunon share at 3 ear-end $ 15.00 $ 17.69 (15.2)% Electric: Total kilowatt-hour sales 9,043,664,000 8,231,495,000 9.9% Ga3: Decathenn throughput 120,798,000 110,291,000 9.5% NIM: Percent clumge not meanmgful l l l Revenues Electric Gas no ,, nth. .n o 'I urat Ldua an ham 3.dn Dec.nhenni ch oughpur hn 6dh<md hn indh.ini) l# 10 IN m y nai W " " 4u se e 85 , ,,,, y 800 4 8 m n % $ N - q q
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'88 '89 '90 '91 '92 '88 '89 '90 '91 '92 '88 '89 '90 '91 '92 E Lter Revenues E Gas Revenues E Electric Resenues I
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_t i '1 7-- ]'" In 1991, we conunitted to improve the financial For 75 years, we have served customers as a }1 . 1 health of the Company and become more regulated monopoly. But the next several years will
.. ;c competitive. To achieve this, we concentrated on be a time of unprecedented change. Federal Energy ,
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- .4 In 1992, we made progress on meeting these desire for service choices are bringing a new era of
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.(' 7 In 1992, we saw the results of our continuing competitive future.
S; commitment to become more profitable. Net Our strategy has its roots in our historf.
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* [V h earninns before one-time charges for the year were Seventy-five years ago our motto was "At Your
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$30.5 milhon or 73 cents per share compared to Service." These three simple words conveyed our
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{.:l $25.0 milhor or 62 cents per share in 1991. dedication to the customer. Our strategy today t lav,ever, as previously reported to you, we took a centers on rededicating ourselves to our customer n [. { Ej '[j $115.3 million after-tax write-offin the fourth by focusing on price, clwice and service. 4 ] ' ;, :.l1.? - quarter to recogni:e losses from our excluded Our price for electric service must be lower. s;J . resources. His charge left us with a negative I ower electric rates is one key to retaining our
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However, the write-offs we took in 1992 will Real choice for customers - from the services
' ;. .~.;.( .f.r. .- reduce the losses from excluded resources by 40 to they want, to the supplier they prefer-is new to
...... -7 '[q 50 cents per share beginning in 1993. the electric utility industry. We will work with 7.
; : j. With the close of 1992, we are k>oking to the customers as we reshape the Company to ensure
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years ahead. Today, Public Service Company of that when they have a choice, they choose us.
.-..f~ . I New Mexico has crossed the threshold into a Customers have given our service high marks.
f .- f y. _ future that includes increased competition. We will continue to work hard to meet each
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Our vision is to become New Mexico's best energy services company. This vision is not a radical departure from the course of action we committed to in 1991; we are simply accelerating g
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For 1993 and beyond we have set the following goals- L . A; , , c.
- To sh.upen our focus on providing energy j sertices to New Mexico customers. Consistent with this focus, we have decided to sell parts of our gas and all of our water businesses The decision to take these actions was not
- To lower our prices, we will attempt to made lightly. We believe that the electric industry will fund.unentally change over the next several reduce power plant capacity not needed to serve New Mexico customers, including the years. Some fonn of competition tcdl come to this sale of part or all of our invest .ent in Palo industry, just as it did to the airline, telephone, and Verde Nuclear Generating Station. gas industries. We cannot escape it - we can only
- To accelerate our cost-cutting effbrt, we pregrare for it.
Indeed, we have cnissed the threshold. We see will reduce our operating costs by another i
$25 million a 3 ear by 1994 an opportunity, unparalleled in our history. We are
- We will complete the final 3tep of our moving forward with the belief that this ceus-board restruc 1 which began in 1990. will reward your continued confidence in and The positions of Chairman of the Board support of your Company.
1 and President /CEO will be separated. I have decided to rehnquish the President's position Sincerely, during 199.3, but wdl remain as Chainnan of the Board. We are in the pmcess of kuking
,/ . L nationwide, both inside and outside the electric utility industry, to fill the John T. Ackennan President's position. Ciudtinan of the 130ard March II,1993 3
ELECTRIC AYesrllapevimi. FRANCHISE Introductlen[ Our Business Climate Even in a sluggish economic environment, annual retail KWh sales increased 43 [xrcent. 1992 was a year of mixed results. Our ongoing Wholesale sales increased 19.2 percent. Electric business operations showed improvement; and water operating revenues rose $28.7 million however, the acceleration of our business strategy to $608.8 million. Oas operating revenues required us to take significant write offs. This decreased $33.9 million to $243.2 million, the annual report discusses the events of 1992, and result of a reduction in the cost of gas, a outlines our strategic direction. component of gas revenues. A better indicator of financial perfonnance is total gross margin (revenues less fuel, purchased power and cost of gas sold). We achieved an increase in total gross margin of 2.6 percent, or
$14.3 million.
Cost Control Reduced Expenses in 1991, we committed to keep non-fuel operations and maintenance (O&M) expense growth at no more than two percent per year. : 1 1992 O&M expenses were lower than 1991 expenses by $7.2 million or 2.2 percent.
L<ncer costs through consolidation To find more efficient ways of conJucting business, we Loked at consoliJating certain electric anJ nas oivrations. We organi:ed Im[mned efficiency and incentites for better 15 Service Ibign Teants to find opportunities perfmntmcc to eliminate Juplicate services. The teams Benchmarking our perfonnance against identified functions that we could combine other companies will help us streamline our while continuing to provide the same or better operations and improve service to customers. service at a lower cost. We Pl an to submit We are inve3 ting in more training for a filing to the New Mexico Public Service the Company's managers to Jevelop Commis.sion (Commission) in July 1993 the skills needed to compete in the to pnwse the framework for aJJressing these changing marketplace.
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As part of the Electric Wise program, Energy Management Consultant Lynette Candelaria, at left, meets with customer Carol 1 _ -h g Leyendecker to find ways to save energy in Carol's 1
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I ' INTEGRATED We announced another potential sale l RESOURCE l PLANNING last year, a 40 hiW portion of San Juan Unit 4 to Utah Associated hiunicipal Power Systems l (UAh1PS). We are still in the pmcess of l l negotiating the tenns of this transaction. If the proposal is finali:ed, we will need Commission approval before a sale can Reduced [ttioms be consummated. Last year we renegotiated our coal contract The Albuquerque Franchise with the supplier at San Juan Generating Station. The new agreement provides, in part, We continue to serve the city of Albuquerque for a reduction in the base price of delivered without a franchise. Its absence has not coal and an incremental pricing structure that adversely affected the Company's operations. reduces the cost of coal above a certain usage The Commission has affinned its authority level. We estimate that these modifications to determine rates and service territory will save the Company's customers in Albuquerque. approximately $6 to $7 million per year. The Company acknowledges and intends to carry out its obligation to provide electric Reduction of Excess Capacity service to the city of Albuquerque. Approval of our sale of 50 htW of San Juan Unit 4 to the city of Anaheim, California is pending before the Commission. A recommended decision was issued by the hearing examiner on hiarch 1,1993, which endorsed the sale. A final order is expected in late hiarch. Assuming approval, a final consummation date is anticipated in hiay of this year.
Agreement Reached on Gas Take-or-Pay Cost Recovery Gas Compmy of New hiexico signed a stipulated agreement with the Conunission staff and other intervenors in January 1993. The agreement, if approve.1, allows ior the recovery from customers of $60.5 million of gas contract settlement and take or-pay costs over if the stipulated agreement is approved, 1 a five-year period without interest. recovery of these costs from customers can The Commiwion is expected to enter a begin in April 1993. final order in hiarch 1993. Other g:n pricing issues remain and are discussed in the Form 10-K, included as part of this annual rem-e. 4 V
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id gas vehicles are easy to spot. In 1992, Gas Company worked in partnership with the State to promote natural gas vehicles. Together, they won a President's Environment and Conservation Challenge Award. 7 _.____ _ ____ _ ___ ___ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . ________________.___.________J
DEMAND-SIDE As we move into a coup titiw mkMg MANAGEMENT l cu.stomers will expect more from us. l l
- First and foremost, they want competitive pices. To of fer a competitive price, we must lower our costs. ,
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- Secondly, customers are asking for clWces. l Today, our products and services are largely Our industry is changing as customers ask for unJifferentiated. In the future, we will have km er prices, more choices and energy services to meet each customer's individual neeJ3, tailored to their needs. New national energy providing them more freedom to determine legi.slation and efforts toward 3. tate-mandated retail what services they want and are willing to wheeling are driving the change, creating a more pay for, competitive marketplace.
- l.ast, but by no means least, they expect high To improve financial perfonnance in an quality, reliaHe service.
increasingly competitive marketplace, we must Our mission is to be the energy services speed up the process of meeting the goals we set supplier of choice in New Mexico by providing for ourselves in 1991. Our plan is an accelerated, high quality, competitive pralucts, services more sharply-focused extension of the goal to anJ solutions. become more competitive and financially healthy. Lowering Prices Like businesses large and small around the country, we will continue to cut costs. An additional $25 million reduction in our non-fuel operations and maintenance budget has been targeted for 1994. This will require us to restructure the way we do business by chminating those services that Jo not clearly provide value to customers. These cost reductions have begun and will be well underway by the seconJ quarter of 1993.
Providing Moro Choices Our future success will be detennined by the choices customers make. Our marketing effon will speak to each of our customers' needs. We are evaluating integmred resource Through an ongoing dialogue with customers. pknming and demand-side management as a we will offer more choices by providing flexible means to provide customers and regulators rate structures. To accomplish this, we will work with a greater opportunity to panicipate in
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with regulators and other interested parties to our long-range resource decisions. We plan reshape the regulation of our business. to propose an incentit e regulation methodology to the Commission sa both customers and
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investors can share in our efforts to reduce I costs and increase efficiencies. ) i l
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g "When Public Service Company was able to offer us an g- .l experimental interruptible 6888111MP . 8 '
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l . INCENTIVE i REGULATION l 1 l l We intend to submit a plan to the Commission in July 1993 which will include l 1 a framework for lower prices and customer choices. This plan will seek to balance investor ; Finally, we will participate in exploring and customer needs while restunding to the potential opportunities anJ consequences structural changes in the industry. The filing of retail wheeling with customers, regulators wd. l also address organizational restrictions and legislators. Open and in-depth discussions which currently prevent consolidation of of many complex issues must piecede any . certain electric and gas functions. legislation. Hasty decisions coulJ harm retail We will work with regulators to reshape customers, shareholders and the New Mexico our C,ompany and provide our investors with economy. We must try to avoid problems a fair return. other industries have encountered throuch deregulation. Time is needed to work through the transition from a regulated to a more competitive market.
Concentrating on Energy Services for New Mexico Our primary mission is to serve New hiexico. Our retail customers are the heart of our We will also sell our gas gathering We will sell assets that no longer fit our focused stategy of pnwiding energy services to New hiexico customers. Accordingly, with Commission approval, we exivet to sell our pipeline suppliers. water company in 1994. We plan to use pmceeds from these sales to reduce debt.
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worked with Public Service Company to find ways to save, and have cut our energy cost per unit by more than eight percent. PNM is serious about our business." Gary Romontio Pmcess Engineer Holnam,Inc. Tijeras, New Mexico . 11 _ _ _ _ _ _ _ _ _ _ _--_ ___-- _ _ _ _ --____--_-_-_--_-____----__----------_--________]
WHOLESALE
& RETAll WHEELING Board of Directors l
We will complete the final step of our l Ikurd restructuring which began in 1990. The poition.s of Chainnan of the Ibard John Ackernun will retain the Chainnan's and I' resident / Chief Executive OiTicer will p>sition to provide continuity and guide the be separated. We expect that accountability p>licy direction of the Company. A nationwide of management to the Ibard will be enhanced warch is currently underway io fill the as a result of this separation of duties. I' resident's swition. In the interim, an Office of the President has lven created with four senior vice presidents - rep 3rting to Mr. Ackennan. William Eglinton, Chief Operating Officer, has announced his intent to retire later this year. Until then, he will coordinate all transition and restructuring activities.
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JohnT. Ackerman Edwin A. Kraft Marc D.Christensen Chainnan, Preudent anJ Chief Vice President, Vice President, Executive Officer Electric Customer Service Conununications (21), age 51 (22), age 44 (I ), age 44 William M. Egilnton Ellen A. Wilson Donna M. Burnett Executive Vice President, Vice President. Corgurate Controller and Transition Activities Electric Regional Operanons Chief Accounting OtTicer (22), age 45 (14), age 45 (13), age 39 l l William J. Real Lawrence D. Ratliff Thomas G. Sategna Executive Vwe PresiJent, Vice President, Controller, Customer Service and Operations Power Praluction Electric Operations , (14), age 44 (18), age 46 (16), age 39 Max H. Maerki Michael C. Slota Andrew R. Vogt Senior Vice President, Vice President Controller and Assistant AJministration and Chief ( 19), age 46 Secretary, Financial otricer Gas Operations (9), age 53 Alfonso R. Lujan (5), age 42 Vice President, Jeff E. Sterba Regional Gas Operations Karen A. Knight Senior Vice PresiJent, (20), age 44 Assistant Secretary Asset Restructuring (18), age 53 (15), age 37 D. A. "Zan" James Vice PrestJent, Mitchell J. Marzec M. Phyllis Bourque Strategic Services Treasurer Senior Vice PresiJent, (6), age 49 (17), age 45 Marketing and Energy Management John Renner Robert G. McMahon 4 ( 5), age 45 Vice Presiden:, Assistant Treasurer I Gas Supply Sourcmu (16), age 49 Judith A. Zanotti (6), age 64 Vice President, Terry R. Horn llaman Resources anJ James A. Hunter Assistant Treasurer . Communications Vice PresiJent, (7), age 40 (7), age 54 Marketing / Business Develo; ment (6), age 51 OYcm "I*n a c u ch <he Omean <" a Patrick T. Ortiz ""*""'""" "f# ""' M '*
'wan of 3en ke as of March l, JW1 Senior Vice President, David J. Davis PuNic Policy and General Vice PresiJent, Counsel & Secretary Engmeering & Technical l (1), age 42 Services l (19), age 48 Jerry L. Godwin Senior Vice President, Terry D. Rister l Elecnic Supply Sourcing Vice PresiJent, !
(12), age 50 Metro Operanon, I Gas Operations (21), age 41 15
"The utility industry is changing and we will change with it. By I taking the initiative, we will be in a better position to help shape the changes and define the actions needed to adapt to them. With a streamlined business structure and a flexible regulatory framework, we will be prepared to compete."
-John T. Ackerman, Chainnan of the Board
k.).2Ii9s N k NNjdM k l'ublic Service Company of New hiexico is the For sharch,Ller accormt in/linruttiori, ttrite or cidl: ele transfer agent and registrar for our common I,ublic S,ervice C,ompany of.New hicxico and preferred stock. As of LYeember 31,1992 , Aton: Shareholder Ibcords there were 28,049 registered shareholders. Alvarado Square - hts 1002 Albuquerque,Nhl 87158 Lu. .n n"~ (505)S48 4812 - Albuquerque Thuonunon stock of the Company is listed on 1-800-545-4425 - Other than Albuquerque the New York Stock Exchange and is ako traded on the Pacific and Philadelphia Stock Exchannes. For questiom ahmt the Company, write or call: A conelidated quote is published in numerous . . I,ublic Service C,ompany of New hiexico daily stock tables carrieJ by many newspapers. Attn: Investor Relations The ticker symlut for the common stock is PNht. Alvarado Square - hts 1004 The most common newspaper symbol is PSvNhi. Albuquerque, Nh1 87155 (505)S48 2477 - Albuquerque
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I-800-545-4425 - Other than Albuquerque Date: hiay 25,1993 Time: 9.30 A.ht. (htoontain Daylight Time) location: UNh1 Continuing Education Center 1634 University Boulevard N.E. Albuquerque, New hiexico Notice of meeting, proxy statement and proxy will be mailed to shareholders on or aluut April 19,1993. Qwcrterly high arullow shcire prices: 1992 1991 Iligh law High Law First Quarter i17/S 93/8 95/8 75/8 Second Quarter 131/2 11 115/S 91/8 Third Quarter 14 1/8 12 1/2 10 1/2 83/8 Fourth Quarter 13 1/2 12 97/8 81/2 Suspension of common suxk dividends: In April 1989, the Cmnpany announced the suspension of dividend payments on the Company's common stock as a result of a deficit in retained earnings. For a discussion of dividend restrictions on the Company's common and preferred stock, please tofer to the 1992 Fonn 10-K which is a part of this annual report. l L. I
Public Senice Company of New Mexico suu nue
# U.S. POSTAGE AlvaraJo Square g,o Albuquerque, New hiexico 87158 penuit no. is m.aeounow, w ki _ _ _ _ _ _ _ _ _ - - .
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