Good day, ladies and gentlemen, and welcome to the PNM Resources Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference may be recorded. I would now like to turn it over to your host, Lisa Eden, Director of Investor Relations. Please go ahead.

Thank you, everyone, for joining us this morning for a discussion of the company's third quarter 2011 earnings. Please note that the presentation and the accompanying materials for this conference call and supporting documents are available on the PNM Resources website at www.pnmresources.com. Joining me today are PNM Resources' CEO, Pat Collawn; and Chuck Eldred, our CFO; as well as several members of our executive management team. Before I turn over the call to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates, and that PNM Resources assumes no obligation to update the information. For a detailed discussion of factors affecting PNM Resources' results, please refer to our current and future annual reports on Form 10-K and the quarterly reports on Form 10-Q, as well as other current and future reports on Form 8-K filed with the SEC. And with that, I will turn over the call to Pat.

Thank you, Lisa, and good morning, everyone. Earlier today, we issued our financial news release reporting quarterly ongoing earnings of $0.61 per diluted share compared with $0.63 during the same period in 2010. While our quarterly results are slightly lower this year compared with 2010, this year's third quarter performance was driven by our utilities, PNM and TNMP, which accounted for more than 90% of our ongoing earnings. Chuck will go into detail on the quarter in his portion of the presentation. Just want to recap the news from earlier this week. As you know, PNM Resources completed its sale of First Choice Power to Direct Energy, and we are now at the beginning of a new business direction in which PNM Resources will be solely operating regulated utilities. I'd just like to take a minute and say that since 2005, First Choice Power has been a valuable part of our business. Brian Hayduk and his team have done a great job in positioning First Choice Power to produce solid and sustainable results, and I speak on behalf of the entire company in wishing all of the First Choice Power employees the very best. We remain steadfast in controlling utility cost at both PNM and TNMP, and are making significant strides in improving our earnings and narrowing the gap between earnings and allowed returns. TNMP remains on track to achieve its allowed return of 10.125% in 2011. For PNM, initiatives are underway to reduce cost, so that expenses are synced with the increased revenues recently approved by state regulators. With our efforts to further streamline our operations, we expect PNM to earn its allowed retail rate base return of 10% by the end of 2012. We have also tightened our 2011 guidance range to $1 to $1.05, and we have…

Thank you, Pat, and good morning to everyone. As Pat reported, ongoing earnings were $0.61 per share for the third quarter, down $0.02 from last year. However, a breakdown of EPS by segment shows earnings at PNM increasing by $0.03 and TNMP, up $0.02. Total earnings of the competitive businesses, which included full quarter First Choice and 2 months of Optim were down $0.08 from last year. As you're aware, our exit from Optim was completed in September, and shortly I'll give you the details on the First Choice sale, which closed on November 1. The individual business segments are on Slide 9. In the third quarter, PNM's ongoing earnings were up $0.03 from last year. The primary driver increasing PNM's performance was a $72.1 million annual rate relief implemented on August 21. This accounted for $0.07. Weather was another factor in New Mexico, with cooling degree days up 10% compared to last year. This contributed $0.03 towards earnings. Outage costs were less than last year reflecting the reduction in the number of plant outages days, impacting EPS positively by $0.01. Negative factors affecting PNM's performance this quarter included the expiration of the Palo Verde Toll 3 on December 31 of last year. For the quarter, the toll's expiration reduced earnings by $0.07. At TNMP, earnings were up $0.02. The implementation of new transmission rates last year, along with the new general rates that were put into place in February of this year added $0.01. As I mentioned earlier, extreme heat in Texas was a contributor to the quarter results. At TNMP, the weather also accounted for an increase of $0.01 to earnings as cooling degree days in TNMP's territory were up more than 14% compared to last year. Now moving on to Slide 10. The sale of First Choice…

Thank you, Chuck. As we always do, we'll finish the presentation portion of the call with a review of PNM Resources' key strategic goals and checklist and our progress on those. Our main focus is operating regulated utilities and earning our allowed returns, and we have made significant strides in accomplishing that goal. We'll continue to make progress by aligning cost with revenues, i.e., controlling our expenses and continuing to seek appropriate regulatory recovery. As I said earlier, TNMP is on its way to earning its return this year, and we expect to finish 2012 with PNM earning its allowed return on its retail rate base. And you'll remember that not that long ago, PNM's regulated return was in the low single digits. The exit from the competitive businesses in Texas is now complete and we have unlocked the maximum value from those businesses for our shareholders. On our third goal, as Chuck mentioned, we have seen progress here also. The journey to returning to a solid investment grade has been a long one. Our hard work over the years has resulted in PNM Resources being a financially healthier company and a good investment for our shareholders. We believe we are very well positioned for providing solid, predictable and sustainable financial results with our 2 utilities. We have ample opportunity to grow our utilities with investments in their infrastructure, while securing appropriate recovery. With the exit from our competitive businesses, we have a stronger and more stable platform, which leaves us well positioned as we consider our dividend path going forward. The board takes a long-term strategic view of the dividend and strive to manage the dividend in order to ensure a competitive total return position comparable to our peers. As you know, the board addresses the dividend every February, so we won't have definitive guidance and until then, but we expect to grow our dividend over time to reflect our earnings growth. Operator, we are now ready for the Q&A portion of the call.

[Operator Instructions] Our first question comes from Paul Fremont from Jefferies. Paul B. Fremont - Jefferies & Company, Inc., Research Division: Just a point of clarification on your statement that PSNM will earn its authorized return on retail. That excludes -- that's exclusive of the contribution from Palo Verde 3, right?

Yes, that is. Paul B. Fremont - Jefferies & Company, Inc., Research Division: And of the $0.72 to $0.75 that PNM is going to earn this year, can you give us a sense of what the level of contribution is from Palo Verde 3 in that number?

Yes, Paul, we're going to provide more color around the -- we're looking via Palo Verde 3. But this year, it's more of a breakeven. So it's easily, at this point, given where market prices are. It could be anywhere from a breakeven to maybe a few cents drag on earnings. But we've got that factored into the $0.72 and $0.75. But I'm going to break that out and give you more color on that in December, when we talk about guidance. Paul B. Fremont - Jefferies & Company, Inc., Research Division: Great. And then real quickly. When I look at the remaining holding company debt, should we expect that the company will try and retire the additional debt that's outstanding, particularly the 9.25% debt and over what time period would we expect that to happen?

Yes. If you -- as you may have -- as we said, we've got the open market, the tender going on at this point for $50 million. And that brings the balance down to roughly about $150 million thereabouts. And then we would look for that debt to be retired in 2015, when it matures. Paul B. Fremont - Jefferies & Company, Inc., Research Division: So in 2015?

Yes. When the maturity date, yes. Paul B. Fremont - Jefferies & Company, Inc., Research Division: Okay. And then the last question is on San Juan. Would you contemplate any regulatory filing before, I guess, July of next year, when you're at least eligible to file a general rate case?

Paul, we might. We are discussing whether or not we want to file a CCN for that project. And if we did that, we would make the filing for that and we'll just wait to see from there. But we may make a regulatory filing, we just haven't decided yet.

Our next question comes from Ali Agha from SunTrust.

One, a near-term question, is the third quarter results particularly at the utilities, where they pretty much in line with your expectations? Particularly, I thought that the weather impact, that just look a little light versus -- given the weather. So overall, did the third quarter pretty much come in line on the utility front as you would have expected?

I think, a couple of things, Ali. The rates didn't go into effect in New Mexico until August 21. So that was in line. And then the rate design now is different. So we would -- we expected less in the third quarter because the upper blocks took the bigger portion of the rate increase here in New Mexico. They tend to use more year round. So you didn't see a big as impact in the third quarter because you'll see them contributing more through the other quarters.

So, Ali, it's a past point. I mean, given that, we're well within our expectations of what we expected for the third quarter.

And those were the 2 things that really drove the third quarter expectations. With PNM, it was rate designs and when rates went into effect.

I see. Because relative to the numbers out there, I mean -- the quarter was light. But I guess it was a timing issue, is what you're saying.

Yes.

Yes, I mean, third and fourth quarter, if you really go back and look at those that do break it down by quarter. It looks to be more of a timing factor than anything.

Because the rate design will really show more into the fourth quarter.

Understood. And in your '11 guidance for PNM Electric, what is the implied retail ROE for this year?

For PNM?

For PNM?

Yes.

Yes, 8% is what we expect this year for rate base return.

Okay. And you said that TNMP should earn its authorized 10-point -- was it 10...

10.125%, yes.

10.125% this year. Okay. And then separate question on the share buyback. I guess, if I recall, so $230 million was authorized and $73.5 million were used up for the preferred retirement. So about $158 million or so is left. I mean, are you thinking of an accelerated program? I mean, what are the various options you're looking at? When do you think that program gets completed?

Yes, we will announce our plan just as soon as we have made decisions. But that gives us $156 million to work with, that we have authority to buyback additional shares. And so looking at acceleration of the repurchase programs, tenders, other arrangements that can be made in order to accelerate that, to try to execute as quickly as we possibly can. But at this point, until we have the details firmed up and our plans, I refrain from any announcements beyond that.

Okay. And is that something you'd have firmed up as part of the December 9 or so meeting?

Well, hopefully, we'll be able to provide some additional insight on that.

Okay. And then lastly, on the dividend. Going back, just clarifying your remarks, as you said you'd grow it over, with earnings going forward. But to get you to your benchmark, relevant benchmark as a regulated utility, what would you consider to be your peer group payout ratio right now?

Well, as you look at, I know you see the regulated businesses tend to be up to 75% payout ratio. And we're still within the 50% to 60%. We're looking at, as Pat mentioned, total return, a way to complement the dividend along with our earnings growth, and we'll discuss that with the board in September -- excuse me in February of next year to determine what that next step would be, and how we can go about executing that strategy around consistency and that's comparable to our peers over time. So that's our goal.

Comparable to peers would mean ultimately getting to that 70%-plus range?

At this point, it's a long-term view. And so we want to be comparable to our peers about the regulated businesses. But we see that as several steps in order for the company to really address that and the board's comfort with the long-term view of the business. So at this point, I think that's probably enough that we can talk about.

[Operator Instructions] Our next question comes from Chris Shelton from Millennium.

It's actually Jeff Gildersleeve. Just -- most of the questions were asked. But on the buyback, you said market conditions, what exactly did you mean by that?

Well, I think that's probably a good parameter to think about, trying to determine the balance of proceeds we have and what to expect in the way of using those proceeds to buy back additional shares. So market is probably a good parameter to work with. Certainly, if we can find ways to execute in a more favorable manner, we'll do that. But at this point, I don't really have any details to talk about.

Okay. And we'll hear more of that in December as well?

Right.

Absolutely.

Okay. And then on Palo Verde, when we think of '12 and then into '13, does that -- that should improve? I guess, it's improving for other owners...

Jeff, the way -- yes, the way to look at that is -- you're talking about Palo Verde 3, the unregulated, it's 135 megawatts. So you need to think of it in terms of when we got out of the toll, we're really working with kind of a rolling 12 months at how we look of that generation given where prices are relative to the market being exceptionally low. We're not wanting to lock down that asset for any longer period of time. So I would just look at it as the forward curve relative to a rolling 12 months and how we'll eventually work that into our ability to maximize its value over time.

And on the cost and the operational front, Pinnacle West is doing a very nice job managing the cost at Palo Verde in a downward slope, and also keeping the production of that plant up.

Right. Yes, I'm sorry, I wasn't clear. I was referring to the cost, that improving over time.

Yes, we see -- we haven't got the finals from Pinnacle yet, but we see the trends going in the right direction on the cost at Palo Verde.

Okay, great. And then the comment about earnings, the allowed return by the end of 2012. So that will be a process through '12 that by the -- so in other words, by the end of '12, you would be at that level of earned return, allowed return?

Yes, Jeff...

That's right, Jeff.

That's correct.

And when we go in December, we'll have more details about how we get there in terms of cost cuts and other things.

Our next question comes from Ashar Khan from Visium Asset Management.

My questions have been answered.

Our next question comes from Tim Winter from Gabelli. Timothy M. Winter - Gabelli & Company, Inc.: I was wondering if you could give us an update on how the rule-making procedures are going with trying to get in place a process for forward-looking test here in New Mexico?

It haven't gotten started yet, Tim. Timothy M. Winter - Gabelli & Company, Inc.: Okay. What's hindering that process? Is it the turnover in the Commission or?

Yes, the Commission really needs to get fully staffed up. And unfortunately, around the resignation of Jerome Block, there was allegations of a credit card misuse that may have spread to some of the Commission's staff. So they have just been a little distracted. But I think as soon the governor gets the new commissioner onboard, they'll get going. Timothy M. Winter - Gabelli & Company, Inc.: Okay. And is there any -- can you talk about any ways that you could address the San Juan expenditures? Should they end up at the higher amount? Would you just have to wait until they're spent and then file or?

No. We, in the rate case made sure that there was an opening that we could file for any environmental expenditures that came from regulations. There's multiples ways we could do it. We could file for a CWIP. We could file yearly rate cases. We could file an environmental tracker. We're exploring all those kinds of things with our internal folks and with our legislator, in case we decide we need any legislation for that.

Our next question comes from Maury May from Power Insights.

Just a couple of quick questions. I wanted to get 2012 straight. You are going to be earning your allowed ROE at PNM in 2012? Or are you going to be earning at that rate by the end of 2012, implying that you earn it in 2013?

By the end -- go ahead, Chuck.

We'll be earning our allowed return in 2012. And as we talked about, in the guidance in December, we'll give you more clarity around the expectations and how we're looking at earning that return. But it is tied to some cost reductions that Pat mentioned earlier as well.

And, Maury, remember, it's on the retail piece. So you got it for Palo Verde and don't forget, there's FERC in there too.

Right. Okay. And then on your cash position right now, where are you? Following the close...

We're actually sitting on cash. We got about $166 million of surplus in cash right now. So all...

The $329 million that walked in the door the other day was very helpful.

So you have $166 million. So you can sleep well at night, Chuck.

I sleep very well at night.

In fact, there is a, in the appendix...

He can.

If you look at the slide at the end, there's a detail.

Our next question comes from Mike Bolte from Wells Fargo.

I guess I just have a follow-up question on the PNM earning, the allowed ROE by the end of 2012. Will that be on, like the authorized $1.8 billion of rate base? Or would it be kind of on an average for the year? Like in other words, you pick up any kind of incremental rate base between kind of like, I guess, the end of the test period, which is I think mid-2010? Can you give me that number?

Yes. It would really be more of an average rate base and our earnings projection for '12 will be based on that calculation. So we'll give you more details of that when we talk about it in December. But that's the way to look at it.

And I'm showing no further questions at this time. I would like to turn the call back over to management for closing remarks.

Well, everyone, thank you for joining us on what in New Mexico is a beautiful fall morning. And we look forward to seeing many of you next week at the EEI Financial Conference.