TEXAS NEW MEXICO POWER CO - FORM 10-Q/A

Attached files

file	filename
EX-31.5 - EXHIBIT 31.5 - TEXAS NEW MEXICO POWER CO	exh31-5_011510.htm
EX-31.6 - EXHIBIT 31.6 - TEXAS NEW MEXICO POWER CO	exh31-6_011510.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A (Amendment No.1)
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009



Commission	Name of Registrant, State of Incorporation,	I.R.S. Employer
File Number	Address and Telephone Number	Identification No.
002-97230	Texas-New Mexico Power Company	75-0204070
	(A Texas Corporation)
	577 N. Garden Ridge Blvd.
	Lewisville, Texas 75067
	(972) 420-4189

Indicate by check mark whether Texas-New Mexico Power Company (“TNMP”) (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. YES NO ü (NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web sites, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES___ NO___ (No Interactive Data Files required to be submitted)

Indicate by check mark whether TNMP is a large accelerated filer, accelerated filer, or non-accelerated filer (as defined in Rule 12b-2 of the Act).

Large accelerated filer

Accelerated filer

Non-accelerated filer ü

Indicate by check mark whether the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO ü

The total number of shares of common stock of TNMP outstanding as of April 30, 2009 was 6,358 all held indirectly by PNM Resources, Inc. (“PNMR”) (and none held by non-affiliates).

EXPLANATORY NOTE REGARDING AMENDMENT NO. 1

This Amendment No. 1 to the Quarterly Report on Form 10-Q (“Amendment No. 1”) amends TNMP’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009, initially filed with the Securities and Exchange Commission ("SEC") on May 6, 2009 (the “Original Filing”).

The Certifications of TNMP’s Chief Executive Officer and Principal Financial Officer, included as Exhibits 31.5 and 31.6 of the Original Filing inadvertently omitted certain language concerning internal controls over financial reporting. TNMP is filing Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 to include the correct form of Certifications of its Chief Executive Officer and Principal Financial Officer, which are included as Exhibits 31.5 and 31.6 to Amendment No. 1. In accordance with the requirements of the SEC, this Amendment No. 1 also includes Part I – Item 1 – Financial Statements and Item 4 – Controls and Procedures. In addition, Item 4 has been amended to clarify management’s evaluation of disclosure controls and procedures.

The Original Filing was a combined filing of TNMP along with its ultimate parent, PNMR, and Public Service Company of New Mexico (“PNM”), another wholly owned subsidiary of PNMR. Amendment No. 1 is being filed only by TNMP because no information about PNMR or PNM is being amended. Accordingly, the Condensed Consolidated Financial Statements included in Item 1 are presented for TNMP only and not on a combined basis with PNMR and PNM. The Notes to the Condensed Consolidated Financial Statements and cross references thereto have not been renumbered from the Original Filing. Where an entire note was eliminated because it contained no information pertinent to TNMP, the note number was retained with an indication that the note was omitted. The elimination of information concerning PNMR and PNM that is not necessary for TNMP’s financial statements necessitated minor grammatical and contextual changes in information from that included in the Original Filing. However, there have been no substantive changes and no numerical changes in this Amendment No. 1 from TNMP’s financial statements included in the Original Filing. With the exception of the minor corrections described above, Amendment No. 1 sets forth the financial statements of TNMP as contained in the Original Filing in their entirety. Amendment No. 1 has been signed as of a current date and certifications of the TNMP’s Chief Executive Officer and Principal Financial Officer attached as exhibits hereto are given as of a current date. This Amendment No. 1 does not reflect events occurring after the filing of the Original Filing or modify or update the Original Filing in any way other than to correct the items described above.

TNMP MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX

	Page No.
GLOSSARY	3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings	6
Condensed Consolidated Balance Sheets	7
Condensed Consolidated Statements of Cash Flows	9
Condensed Consolidated Statements of Changes in Common Stockholder’s Equity	11
Condensed Consolidated Statements of Comprehensive Income	12
Notes to Condensed Consolidated Financial Statements	13
ITEM 4. CONTROLS AND PROCEDURES	20
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS	21
SIGNATURE	22

GLOSSARY

Definitions:
Afton		Afton Generating Station
AG		New Mexico Attorney General
ALJ		Administrative Law Judge
Altura		Optim Energy Twin Oaks, LP; formerly known as Altura Power L.P.
Altura Cogen		Optim Energy Altura Cogen, LLC; formerly known as Altura Cogen, LLC (the CoGen Lyondell Power Generation Facility)
AOCI		Accumulated Other Comprehensive Income
APS		Arizona Public Service Company, which is the operator and a co-owner of PVNGS and Four Corners
APB		Accounting Principles Board
BART		Best Available Retrofit Technology
Board		Board of Directors of PNMR
Cal PX		California Power Exchange
Cascade		Cascade Investment, L.L.C.
Continental		Continental Energy Systems, L.L.C.
CRHC		Cap Rock Holding Corporation, a subsidiary of Continental
CTC		Competition Transition Charge
Decatherm		Million BTUs
Delta		Delta-Person Limited Partnership
DOE		Department of Energy
ECJV		ECJV Holdings, LLC
EIP		Eastern Interconnection Project
EITF		Emerging Issues Task Force
EnergyCo		EnergyCo, LLC, a limited liability company, owned 50% by each of PNMR and ECJV; now known as Optim Energy
EPA		United States Environmental Protection Agency
EPE		El Paso Electric Company
ERCOT		Electric Reliability Council of Texas
ESPP		Employee Stock Purchase Plan
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN		FASB Interpretation Number
FIP		Federal Implementation Plan
First Choice		First Choice Power, L. P. and Subsidiaries

Four Corners		Four Corners Power Plant
FPPAC		Fuel and Purchased Power Adjustment Clause
FSP		FASB Staff Position
GAAP		Generally Accepted Accounting Principles in the United States of America
GEaR		Gross Earnings at Risk
GHG		Greenhouse Gas Emissions
GWh		Gigawatt hours
IBEW		International Brotherhood of Electrical Workers, Local 611
KWh		Kilowatt Hour
LBB		Lehman Brothers Bank, FSB, a subsidiary of LBH
LBH		Lehman Brothers Holdings Inc.
LCC		Lyondell Chemical Company
Lordsburg		Lordsburg Generating Station
Luna		Luna Energy Facility
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Moody’s		Moody’s Investor Services, Inc.
MW		Megawatt
MWh		Megawatt Hour
Navajo Acts		Navajo Nation Air Pollution Prevention and Control Act, the Navajo Nation Safe Drinking Water Act, and the Navajo Nation Pesticide Act
NDT		Nuclear Decommissioning Trusts for PVNGS
Ninth Circuit		United States Court of Appeals for the Ninth Circuit
NMED		New Mexico Environment Department
NMGC		New Mexico Gas Company, a subsidiary of Continental
NMPRC		New Mexico Public Regulation Commission
NOX		Nitrogen Oxides
NOI		Notice of Inquiry
NRC		United States Nuclear Regulatory Commission
O&M		Operations and Maintenance
OCI		Other Comprehensive Income
Optim Energy		Optim Energy, LLC, a limited liability company, owned 50% by each of PNMR and ECJV; formerly known as EnergyCo
PG&E		Pacific Gas and Electric Co.
PNM		Public Service Company of New Mexico and Subsidiaries
PNM Facility		PNM’s $400 Million Unsecured Revolving Credit Facility
PNMR		PNM Resources, Inc. and Subsidiaries
PNMR Facility		PNMR’s $600 Million Unsecured Revolving Credit Facility
PPA		Power Purchase Agreement
PRP		Potential Responsible Party
PUCT		Public Utility Commission of Texas
PVNGS		Palo Verde Nuclear Generating Station
REC		Renewable Energy Certificates
REP		Retail Electricity Provider
RFP		Request for Proposal
RMC		Risk Management Committee
SEC		United States Securities and Exchange Commission
SFAS		FASB Statement of Financial Accounting Standards
SJCC		San Juan Coal Company
SJGS		San Juan Generating Station
SO2		Sulfur Dioxide
SPS		Southwestern Public Service Company
SRP		Salt River Project
S&P		Standard and Poor’s Ratings Services
TECA		Texas Electric Choice Act
Term Loan Agreement		PNM’s $300 Million Unsecured Delayed Draw Term Loan Facility
TNMP Bridge Facility		TNMP’s $100 Million Bridge Term Loan Credit Agreement
TNMP Facility		TNMP’s $200 Million Unsecured Revolving Credit Facility
TNMP		Texas-New Mexico Power Company and Subsidiaries
TNP		TNP Enterprises, Inc. and Subsidiaries
Twin Oaks		Assets of Twin Oaks Power, L.P. and Twin Oaks Power III, L.P.

Valencia		Valencia Energy Facility
VaR		Value at Risk

Accounting Pronouncements (as amended and interpreted):

FIN 46R		FIN 46R “Consolidation of Variable Interest Entities an Interpretation of ARB No. 51”
FSP FAS 157-2		FSP FAS 157-2 “Effective Date of FASB Statement No. 157”
SFAS 5		SFAS No. 5 “Accounting for Contingencies”
SFAS 57		SFAS No. 57 “Related Party Disclosures”
SFAS 106		SFAS No. 106 “Employers' Accounting for Postretirement Benefits Other Than Pensions”
SFAS 112		SFAS No. 112 “Employers’ Accounting for Postemployment Benefits – an amendment of FASB Statements No. 5 and 43”
SFAS 128		SFAS No. 128 “Earnings per Share”
SFAS 133		SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities”
SFAS 141		SFAS No. 141 “Business Combinations”
SFAS 144		SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”
SFAS 157		SFAS No. 157 “Fair Value Measurements”
SFAS 160		SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”
SFAS 161		SFAS No. 161 “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”

Note: The above Glossary has not been updated from that included in the Original Filing and, therefore, contains defined terms and definitions that are not referred to in this Amendment No. 1.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three Months Ended March 31,
	2009			2008
	(In thousands)
Electric Operating Revenues	$	41,225		$	42,228

Operating Expenses:
Cost of energy		8,595			7,812
Administrative and general		8,329			6,570
Depreciation and amortization		8,598			8,359
Transmission and distribution costs		4,941			4,464
Taxes, other than income taxes		4,677			4,440
Total operating expenses		35,140			31,645
Operating income		6,085			10,583

Other Income and Deductions:
Interest income		-			2
Other income		417			414
Other deductions		(25	)		(19	)
Net other income and deductions		392			397

Interest Charges:
Interest on long-term debt		1,012			4,408
Other interest charges		3,083			581
Net interest charges		4,095			4,989

Earnings Before Income Taxes		2,382			5,991

Income Taxes		961			2,261

Net Earnings	$	1,421		$	3,730

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,		December 31,
	2009		2008
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	59	$	124
Special deposits		50		50
Accounts receivable		11,219		11,457
Unbilled revenues		4,594		6,421
Other receivables		1,872		480
Affiliate accounts receivable		5,004		7,110
Materials and supplies		1,718		1,625
Income taxes receivable		-		9
Other current assets		409		958

Total current assets		24,925		28,234

Other Property and Investments:
Other investments		556		550
Non-utility property		2,111		2,111

Total other property and investments		2,667		2,661

Utility Plant:
Electric plant in service		834,240		815,588
Common plant in service and plant held for future use		488		488
		834,728		816,076
Less accumulated depreciation and amortization		296,294		291,228
		538,434		524,848
Construction work in progress		17,700		30,948

Net utility plant		556,134		555,796

Deferred Charges and Other Assets:
Regulatory assets		132,512		134,660
Goodwill		226,665		226,665
Other deferred charges		29,095		23,982

Total deferred charges and other assets		388,272		385,307

	$	971,998	$	971,998

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31,			December 31,
	2009			2008
	(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term debt	$	-		$	150,000
Short-term debt – affiliate		38,800			14,100
Current installments of long-term debt		-			167,690
Accounts payable		3,850			11,846
Affiliate accounts payable		1,943			1,238
Accrued interest and taxes		26,878			35,118
Other current liabilities		2,508			3,111

Total current liabilities		73,979			383,103

Long-term Debt		309,242			-

Deferred Credits and Other Liabilities:
Accumulated deferred income taxes		110,105			111,193
Regulatory liabilities		33,748			35,028
Asset retirement obligations		726			711
Accrued pension liability and postretirement benefit cost		15,985			16,453
Derivative instruments		840			-
Other deferred credits		2,803			1,820

Total deferred credits and other liabilities		164,207			165,205

Total liabilities		547,428			548,308

Commitments and Contingencies (See Note 9)

Common Stockholder’s Equity:
Common stock outstanding ($10 par value, 12,000,000 shares authorized:
issued and outstanding 6,358 shares)		64			64
Paid-in-capital		427,320			427,320
Accumulated other comprehensive income (loss), net of income tax		(683	)		(142	)
Retained earnings (deficit)		(2,131	)		(3,552	)

Total common stockholder’s equity		424,570			423,690

	$	971,998		$	971,998

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2009			2008
	(In thousands)
Cash Flows From Operating Activities:
Net earnings	$	1,421		$	3,730
Adjustments to reconcile net earnings to
net cash flows from operating activities:
Depreciation and amortization		10,317			9,321
Deferred income tax expense (benefit)		(789	)		(1,484	)
Other, net		13			(681	)
Changes in certain assets and liabilities:
Accounts receivable and unbilled revenues		2,065			(596	)
Materials and supplies		(93	)		(5	)
Other current assets		(144	)		545
Other assets		(11	)		37
Accounts payable		(7,996	)		(1,560	)
Accrued interest and taxes		(8,230	)		(2,995	)
Other current liabilities		2,209			4,991
Other liabilities		(796	)		220
Net cash flows from operating activities		(2,034	)		11,523

Cash Flows From Investing Activities-
Utility plant additions		(8,052	)		(8,669	)
Net cash flows from investing activities		(8,052	)		(8,669	)

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
	2009			2008
	(In thousands)
Cash Flow From Financing Activities:
Short-term borrowings (repayments), net		(150,000	)		-
Short-term borrowings – affiliate		24,700			(2,904	)
Long-term debt issuance		309,242			-
Repayment of long-term debt		(167,690	)		-
Other, net		(6,231	)		(50	)
Net cash flows from financing activities		10,021			(2,954	)

Change in Cash and Cash Equivalents		(65	)		(100	)
Cash and Cash Equivalents at Beginning of Period		124			187
Cash and Cash Equivalents at End of Period	$	59		$	87

Supplemental Cash Flow Disclosures:
Interest paid, net of capitalized interest	$	8,650		$	5,269
Income taxes paid (refunded), net	$	(935	)	$	(858	)

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDER’S EQUITY

(Unaudited)

							Accumulated						Total
	Common Stock						Other			Retained			Common
	Number of		Aggregate		Paid-in		Comprehensive			Earnings			Stockholder’s
	Shares		Value		Capital		Income (Loss)			(Deficit)			Equity
					(Dollars in thousands)

Balance at December 31, 2008		6,358	$	64	$	427,320	$	(142	)	$	(3,552	)	$	423,690
Net earnings		-		-		-		-			1,421			1,421
Total other comprehensive income (loss)		-		-		-		(541	)		-			(541	)
Balance at March 31, 2009		6,358	$	64	$	427,320	$	(683	)	$	(2,131	)	$	424,570

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,
	2009			2008
	(In thousands)

Net Earnings	$	1,421		$	3,730

Other Comprehensive Income (Loss):

Fair Value Adjustment for Designated Cash Flow Hedges:
Change in fair market value, net of income tax (expense)
benefit of $300 and $0		(541	)		-

Total Other Comprehensive Income (Loss)		(541	)		-

Comprehensive Income	$	880		$	3,730

The accompanying notes are an integral part of these financial statements.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1)	Significant Accounting Policies and Responsibility for Financial Statements

Financial Statement Preparation

In the opinion of management, the accompanying unaudited interim Condensed Consolidated Financial Statements reflect all normal and recurring accruals and adjustments that are necessary to present fairly the consolidated financial position at March 31, 2009 and December 31, 2008, and the consolidated results of operations, comprehensive income, and cash flows for the three months ended March 31, 2009 and 2008. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could ultimately differ from those estimated. The results of operations presented in the accompanying Condensed Consolidated Financial Statements are not necessarily representative of operations for an entire year.

These Condensed Consolidated Financial Statements are unaudited, and certain information and note disclosures normally included in the annual Consolidated Financial Statements have been condensed or omitted, as permitted under the applicable rules and regulations. Readers of these financial statements should refer to TNMP’s audited Consolidated Financial Statements and Notes thereto that are included in its 2008 Annual Report on Form 10-K/A.

Principles of Consolidation

The Condensed Consolidated Financial Statements of TNMP (the “Company”) include its accounts and those of subsidiaries in which it owns a majority voting interest. PNMR shared services’ administrative and general expenses, which represent costs that are primarily driven by corporate level activities, are allocated to the business segments. Other significant intercompany transactions between PNMR, PNM, and TNMP include energy purchases and sales as well as transmission and distribution services. All intercompany transactions and balances have been eliminated. See Note 12.

Presentation

Certain amounts in the 2008 Condensed Consolidated Financial Statements and Notes thereto have been reclassified to conform to the 2009 financial statement presentation.

(2)	[omitted because not applicable]

(3)	Segment Information

TNMP

TNMP is a regulated utility operating in Texas. TNMP’s operations are subject to traditional rate regulation by the PUCT. TNMP provides regulated transmission and distribution services in Texas under the TECA. TNMP operates in only one reportable segment.

(4)	[omitted because not applicable]

(5)	[omitted because not applicable]

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(6)	Stock-Based Compensation

Information concerning stock-based compensation plans is contained in Note 13 of Notes to Consolidated Financial Statements in the 2008 Annual Report on Form 10-K/A.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards with the following weighted-average assumptions for options granted in the three months ended March 31, 2009:

Dividend yield		6.27%
Expected volatility		42.03%
Risk-free interest rates		1.56%
Expected life (years)		4.48

The assumptions above are based on multiple factors, including historical exercise patterns of employees in relatively homogeneous groups with respect to exercise and post-vesting employment termination behaviors, expected future exercising patterns for these same homogeneous groups and both the implied and historical volatility of PNMR’s stock price.

(7)	Capitalization

Information concerning financing activities is contained in Note 6 of Notes to Consolidated Financial Statements in the 2008 Annual Report on Form 10-K/A.

Short-term Debt

TNMP had a revolving credit facility for borrowings up to $200.0 million under the TNMP Facility that was scheduled to expire May 13, 2009. The maximum borrowing amount under the TNMP Facility was reduced to $75.0 million on March 23, 2009. On April 30, 2009, TNMP entered into the $75 million TNMP Revolving Credit Facility described under Financing Activities below and the TNMP Facility terminated. Short-term debt outstanding consists of:

	March 31,		December 31,
Short-term Debt	2009		2008
	(In thousands)

TNMP – Revolving credit facility	$	-	$	150,000

At April 30, 2009, TNMP had $73.5 million of availability under its revolving credit facility, including reductions of availability due to outstanding letters of credit. At April 30, 2009, TNMP had no cash investments.

As of March 31, 2009, TNMP had outstanding borrowings of $38.8 million from PNMR under its intercompany loan agreement.

Financing Activities

On October 31, 2008, TNMP entered into a $100.0 million term loan credit agreement with two lenders (the “TNMP Bridge Facility”) to provide an additional source of funds to repay TNMP’s $167.7 million of senior unsecured notes that matured January 15, 2009. On January 14, 2009, TNMP borrowed $100.0 million under the TNMP Bridge Facility. On January 15, 2009, TNMP repaid the entire principal and interest due on the $167.7 million principal amount outstanding of 6.25% senior unsecured notes utilizing the proceeds from the TNMP Bridge Facility and inter-company borrowings from PNMR.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On March 23, 2009, TNMP issued $265.5 million aggregate principal amount of 9.50% First Mortgage Bonds, due 2019, Series 2009A at a price equal to 97.643% of their face value. The bonds bear interest at the rate of 9.50% per annum of their face value. TNMP may redeem some or all of the bonds at any time at a redemption price that reflects a make-whole provision, plus accrued interest. The bonds are secured by a first mortgage on substantially all of TNMP’s property.

On March 25, 2009, TNMP entered into a $50.0 million loan agreement with Union Bank, N. A. (the “2009 Term Loan Agreement”). TNMP borrowed $50.0 million under this agreement on March 30, 2009. Borrowings under the 2009 Term Loan Agreement must be repaid by March 25, 2014 and are secured by $50.0 million aggregate principal amount of TNMP first mortgage bonds (the “Series 2009B Bonds”). Through hedging arrangements, TNMP has established fixed interest rates of 6.05% for the first three years and 6.30% thereafter. The hedging obligations are also secured by the Series 2009B Bonds. The hedge is accounted for as a cash-flow hedge and its March 31, 2009 pre-tax fair value of $(0.8) million is included in other comprehensive income. The fair value determination was made using Level 2 inputs under SFAS 157.

TNMP used the proceeds received from the 9.50% First Mortgage Bonds and the 2009 Term Loan Agreement to repay the $100.0 million borrowed under the TNMP Bridge Facility and the $150.0 million outstanding under the TNMP Facility. The remaining proceeds, after offering expenses, were used to reduce intercompany borrowings from PNMR.

On April 30, 2009, TNMP entered into a new $75.0 million revolving credit facility among TNMP, certain lenders, and JPMorgan Chase Bank, N.A., as administrative agent (the “TNMP Revolving Credit Facility”), and the existing TNMP Facility was terminated. Borrowings under the TNMP Revolving Credit Facility are secured by $75.0 million aggregate principal amount of first mortgage bonds of TNMP (the “Series 2009C Bonds”). The TNMP Revolving Credit Facility, which will expire in April 2011, allows TNMP to borrow up to $75.0 million.

On February 26, 2009, the Finance Committee of the PNMR Board authorized PNMR to provide support for the debt of TNMP by approving additional loans to TNMP as a contingency in the event TNMP was unable to obtain external financing sufficient to pay amounts borrowed under the TNMP Facility and the TNMP Bridge Facility when they came due. With the completion of the financing described above, the PNMR support terminated on April 30, 2009.

(8)	Pension and Other Postretirement Benefit Plans

TNMP maintains a qualified defined benefit pension plan, a postretirement benefit plan providing medical and dental benefits, and an executive retirement program (“TNMP Plans”). PNMR maintains the legal obligation for the benefits owed to participants under these plans.

Readers should refer to Note 12 of Notes to the Consolidated Financial Statements in the 2008 Annual Report on Form 10-K/A for additional information on these plans.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

TNMP Plans

The following tables present the components of the TNMP Plans’ net periodic benefit cost (income):

	Three Months Ended March 31,
	Pension Plan						Other Postretirement Benefits						Executive Retirement Program
	2009			2008			2009			2008			2009		2008
							(In thousands)
Components of Net Periodic
Benefit Cost (Income)
Service cost	$	-		$	-		$	65		$	71		$	-	$	-
Interest cost		1,099			1,061			183			179			19		19
Expected long-term return on assets		(1,523	)		(1,659	)		(124	)		(122	)		-		-
Amortization of net gain		-			(36	)		(66	)		(68	)		-		-
Amortization of prior service cost		-			-			15			15			-		-
Net Periodic Benefit Cost (Income)	$	(424	)	$	(634	)	$	73		$	75		$	19	$	19

TNMP made no first quarter contributions to its pension plan trust in either 2009 or 2008 and no contributions are anticipated for 2009. Based on current law and estimates of portfolio performance, TNMP anticipates making contributions to its pension plan trust of approximately $1.8 million in 2010 and a total of $7.5 million for 2011-2013. For the three months ended March 31, 2009 and 2008, TNMP contributed zero and $0.2 million and expects to make contributions totaling $0.3 million during the year ended December 31, 2009 to the trust for other postretirement benefits. Disbursements under the executive retirement program, which are funded by the Company and considered to be contributions to the plan, were less than $0.1 million in the three months ended March 31, 2009 and 2008, and are expected to total $0.2 million during 2009.

(9)	Commitments and Contingencies

There are various claims and lawsuits pending against the Company. The Company is also subject to federal, state and local environmental laws and regulations, and is currently participating in the investigation and remediation of numerous sites. In addition, the Company periodically enters into financial commitments in connection with its business operations. It is not possible at this time for the Company to determine fully the effect of all litigation and other legal proceedings on its results of operations or financial position. It is the Company’s policy to accrue for expected costs in accordance with SFAS 5, when it is probable that a liability has been incurred and the amount of expected costs of these items to be incurred is reasonably estimable. The Company is also involved in various legal proceedings in the normal course of its business. The legal costs for these matters are accrued when the legal expenses are incurred. The Company does not expect that any known lawsuits, environmental costs, and commitments will have a material adverse effect on its financial condition, results of operations, or cash flows, although the outcome of litigation, investigations, and other legal proceedings is inherently uncertain.

(10)	Regulatory and Rate Matters

TNMP

TNMP Competitive Transition Charge True-Up Proceeding

The purpose of the true-up proceeding was to quantify and reconcile the amount of stranded costs that TNMP may recover from its transmission and distribution customers. A 2004 PUCT decision established $87.3 million as TNMP’s stranded costs. TNMP and other parties have made a series of appeals on the ruling and it is currently

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

before the Texas Supreme Court. TNMP is unable to predict if the Texas Supreme Court will review the decision or the ultimate outcome of this matter.

Interest Rate for Calculating Carrying Charges on TNMP’s Stranded Cost

The PUCT approved an amendment to the true-up rule in 2006, which results in a lower interest rate that TNMP is allowed to collect on the unsecuritized true-up balance through a CTC. The PUCT concluded that the correct rate at which a utility should accrue carrying costs through a CTC is the weighted average of an adjusted form of its marginal cost of debt and its unadjusted historical cost of debt, with the weighting based on the utility’s most recently authorized capital structure. The revised rate affects TNMP by lowering the previously approved carrying cost rate of 10.93%. After regulatory proceedings, the PUCT issued an order approving the 8.31% rate proposed by TNMP and the PUCT staff. Various municipal intervenors (“Cities”) appealed the PUCT’s order to the District Court in Austin, Texas, with TNMP as an intervenor. The District Court affirmed the PUCT’s decision and the Cities filed an appeal in the Texas 3rd Court of Appeals. Oral argument was held on February 26, 2009. TNMP is unable to predict the ultimate outcome of this matter.

Interest Rate Compliance Tariff

Following the revision of the interest rate on TNMP’s carrying charge, TNMP filed a compliance tariff to implement the new 8.31% rate. TNMP’s filing proposed to put the new rates into effect on February 1, 2008. Intervenors asserted objections to the compliance filing. PUCT staff urged that the PUCT make the new rate effective as of December 27, 2007 when the PUCT’s order establishing the correct rate became final. After regulatory proceedings, the PUCT issued an order making the new rate retroactive to July 20, 2006. TNMP filed an appeal of this order in the District Court in Austin, Texas. While there is inherent uncertainty in this type of proceeding, TNMP believes it will ultimately be successful in overturning any ruling that the effective date should be prior to December 27, 2007.

60-Day Rate Review

In 2005, TNMP made a required 60-day rate review filing. TNMP’s case establishes a CTC for recovery of the true-up balance. In 2006, the PUCT issued a signed order which would allow TNMP to begin collecting its true-up balance, which includes carrying charges, over a 14-year period. The order also allows TNMP to collect expenses associated with several cases over a three-year period. TNMP began collecting its CTC and its rate case expenses on December 1, 2006. In January 2007, this proceeding was appealed by various Texas cities to the District Court, in Austin, Texas. TNMP and First Choice have intervened. TNMP is unable to predict the ultimate outcome of this matter.

2008 Rate Case

On August 29, 2008, TNMP filed with the PUCT for an $8.7 million increase in revenues. If approved, new rates would go into effect in September 2009. In its request, TNMP also asked for permission to implement a catastrophe reserve fund similar to those approved for other transmission and distribution companies in Texas. Catastrophe funds help pay for a utility system’s recovery from natural disasters and acts of terrorism. Once the rate case is finalized by the PUCT, TNMP may update its transmission rates annually to reflect changes in its invested capital. Updated rates would reflect the addition and retirement of transmission facilities, including appropriate depreciation, federal income tax and other associated taxes, and the approved rate of return on such facilities. On October 10, 2008, the PUCT issued a preliminary order permitting TNMP to file supplemental testimony on costs caused by Hurricane Ike. These costs may be included in rates or captured as a regulatory asset for review and approval in a subsequent proceeding.

In December 2008, the parties in the TNMP rate case requested that the case be abated and the ALJ granted the request. The abatement suspended procedural deadlines until after the submittal of supplemental testimony by TNMP relating to costs incurred during Hurricane Ike and anticipated financing costs. On March 31, 2009, TNMP

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

filed it supplemental testimony, requesting an additional revenue increase of $15.7 million annually. This amount includes a five year amortization of Hurricane Ike restoration cost, recovery of increased interest expense associated with the recent refinancing of TNMP’s debt, and additional carrying charges on the CTC balance. Following a pre-hearing conference on April 30, 2009, the ALJ approved a procedural schedule that sets hearing on the merits for June 16-26, 2009 and contemplates a final order from the PUCT no later than October 9, 2009. Discovery on TNMP’s supplemental filing and the intervenors’ positions is ongoing. TNMP is unable to predict the ultimate outcome of this matter.

Senate Bill 769

On April 16, 2009, the Governor of Texas signed into law Senate Bill 769 (“SB 769”) concerning the recovery of hurricane costs by utilities. SB 769 authorizes the PUCT, after a full review, to permit an electric utility to obtain timely recovery of system restoration costs, and permits utilities to use securitization financing for the recovery of such costs. The proposed costs can be approved in any current or future proceeding.

(11)	[omitted because not applicable]

(12)	Related Party Transactions

PNMR, PNM, and TNMP are considered related parties as defined in SFAS 57. PNMR Services Company provides corporate services. Additional information concerning the Company’s related party transactions is contained in Note 20 of the Notes to Consolidated Financial Statements in the 2008 Annual Report on Form 10-K/A.

The table below summarizes the nature and amount of other related party transactions of PNMR, PNM and TNMP:

	Three Months Ended
	March 31,
	2009		2008
	(In thousands)

Electricity, transmission and related services billings:
TNMP to PNMR	$	9,303	$	14,410

Services billings:
PNMR to TNMP		5,284		4,559
PNM to TNMP		133		-

Income tax sharing payments from:
PNMR to TNMP		-		858

Interest payments:
TNMP to PNMR		430		89

(13)	New Accounting Pronouncements

Note 21 of Notes to Consolidated Financial Statements in the 2008 Annual Report on Form 10-K/A contains information regarding recently issued accounting pronouncements that could have a material impact on the Company.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.

NOTES TO CONDEDSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

FSP FAS 157-2 delayed the effective date of SFAS 157 for nonfinancial assets and liabilities, until January 1, 2009, at which time it was adopted by the Company. This FSP did not have a significant impact on the Company’s March 31, 2009 financial statements. The Company will apply this FSP to the fair value determinations made by the Company in evaluating intangible assets for potential impairment, which will be performed during the second quarter of 2009; however, the Company does not anticipate it will have a significant impact.

In April 2009, the FASB issued the following FSP, which is effective for interim and annual reporting periods ending after June 15, 2009. Early adoption is permitted for periods ending after March 15, 2009. The Company has not early adopted this FSP. The Company is currently reviewing the requirements of this FSP and will implement it and the required disclosures for the period ended June 30, 2009. The Company does not anticipate this FSP will have a significant impact.

FSP FAS 107-1 and APB 28-1 – Interim Disclosures about Fair Value of Financial Instruments

FSP FAS 107-1 and APB 28-1 requires disclosures about fair value of financial instruments, currently required in annual financial statements, to be included for interim reporting periods of publicly traded companies.

(14)	[omitted because not applicable]

(15)	[omitted because not applicable]

(16)	[omitted because not applicable]

ITEM 4. CONTROLS AND PROCEDURES

TNMP

Evaluation of disclosure controls and procedures

As of the end of the period covered by this quarterly report, TNMP conducted an evaluation under the supervision and with the participation of TNMP’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Regulation 13A, Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934). Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective.

Changes in internal controls over financial reporting

There have been no changes in TNMP’s internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended March 31, 2009, that have materially affected, or are reasonably likely to materially affect, TNMP’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS

31.5	TNMP	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.6	TNMP	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TEXAS-NEW MEXICO POWER COMPANY
	(Registrant)


Date: January 15, 2010	/s/ Thomas G. Sategna
	Thomas G. Sategna
	Vice President and Controller
	(Officer duly authorized to sign this report)

TEXAS NEW MEXICO POWER CO - FORM 10-Q/A - January 15, 2010

Attached files

TEXAS NEW MEXICO POWER CO Reports