Good day, ladies and gentlemen, and welcome to the PNM Resources Fourth Quarter Conference Call [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Jimmie Blotter, Investor Relations Manager. You may begin.

Thank you, Kate, and thank you, everyone, for joining us this morning for the PNM Resources Fourth Quarter 2012 Earnings Conference Call. Please note that the presentation for this conference call and other supporting documents are available on our website at pnmresources.com. Joining me today are PNM Resources' Chairman, President and CEO Pat Vincent-Collawn; and Chuck Eldred, our CFO, as well as several other members of our executive management team. Before I turn the call over 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 this information. For a detailed discussion of factors affecting PNM Resources' results, please refer to our current and future annual reports on Form 10-K, quarterly reports on Form 10-Q, as well as other reports on Form 8-K filed with the SEC. And with that, I will turn the call over to Pat.

Thank you, Jimmie. Good morning, everyone. Happy March 1, and let me add my welcome to Jimmie's to our 2012 earnings call. We thank you all for joining us this morning. I will start the presentation on Slide 4. I'm going to provide a brief overview of our fourth quarter and year end performance and then provide some company updates. I'm sure you've all seen our news release issued this morning. We are very pleased to report that 2012 ongoing earnings came in at the upper end of our guidance range at $1.31 per diluted share. This compares with 2011 ongoing earnings at $1.08 per diluted share. On a GAAP basis, the year also ended at $1.31 per diluted share compared to $1.96 in 2011 and remember, 2011 included the gain from the sale of First Choice Power of $1.08. 2012 marks the first full year of our operating as a traditional regulated utility so we are pleased to have our business strategy already demonstrating to shareholders strong earnings growth. We saw both PNM retail and TNMP earning their allowed returns in 2012. Ongoing earnings for the fourth quarter were $0.13 per diluted share compared to $0.22 in the fourth quarter of 2011. Fourth quarter 2011 GAAP earnings were $0.11 per diluted share. The comparable GAAP number for the fourth quarter of 2011 is $1.35 per diluted share, due primarily to the gain on the sale of First Choice Power of $1.17. Our Board of Directors yesterday showed their long-term confidence in the company by approving a 14% increase to the company's dividend. They also moved the annual dividend review to December and Chuck will cover more details on this in this discussion. Today, we are also affirming 2013 guidance of $1.32 to $1.42 per diluted share. Next, let's review…

Thank you, Pat, and good morning to everyone. As Pat mentioned, we are very pleased with the 2012 performance and the progress we have made as we continue to focus on our efforts of our regulated utilities. We achieved positive rate outcomes in late 2011 and 2012 and we're on a constructive path to resolve the BART compliance at the San Juan generating station with the agreement reached on February 15 with the EPA and the New Mexico Environmental Department to pursue a revised plan. I'll discuss this in more detail later in the presentation. As we turn to the details of the year, ongoing consolidated earnings were up $0.23 from 2011. PNM was up $0.38 for the year and TNMP added $0.04. Corporate and Other decreased $0.02. The exit from First Choice Power and Optim caused a combined $0.17 decrease year-over-year. Now turning to Slide 11. The biggest driver for PNM was a retail rate increase implemented on August 2011 and the renewable writer implemented on August 2012. These were a combined $0.29 improvement for the year. AFUDC, driven by -- primarily by higher rate because of lower short-term debt balances added $0.07. Our focus on process improvement continues to deliver O&M reductions, resulting in a net improvement of $0.06 year-over-year. FERC generation rate relief accounted for a $0.02 improvement and the FERC generation rate relief was up $0.01 for a total of $0.03. We expect the returns for these businesses to continue to improve. Outage costs were $0.03 higher in 2012, driven primarily by planned outages at San Juan. In 2012, we had 2 major outages at San Juan compared to only one in the prior year. Interest expense increased $0.03 due to the $160 million debt issuance at PNM in October 2011. Load was down compared to…

Thanks, Chuck. On Slide 17, we'll wrap up today's call with a checklist for 2013. We are committed to ensuring cost recovery of our rate base additions in New Mexico and we'll complete the necessary filings to earn our allowed return. We expect to achieve positive regulatory outcomes in our FERC and Texas rate filings. We will continue to focus on strong reliability and power plant availability. And of course, we will not take our eye off the ball when it comes to our O&M and capital costs. With that, operator, we can start the question-and-answer portion of the call.

[Operator Instructions] Our first question comes from the line of Brian Russo with Ladenburg Thalmann. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: Just at the evaluation of adding Palo Verde 3 to the rate base versus, I guess, building or requiring a gas plant. What kind of criteria will you be using in that evaluation?

Well, we'll certainly -- we'll have our own view what the valuation would be of nuclear generation, but this is really a comprehensive approach to how we replace all the baseload and the peaking generation and other aspects of the ultimate settlement and agreement we filed with the commission. So we certainly are very open and wanting to pursue the opportunity to bring that into retail rate base, but we want to make sure we do it at a reasonable expectation of receiving fair value and a reasonable outcome. So it's really too early to really discuss more details other than the fact that we're very open and willing to consider that as a replacement power. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: Right. And so, I guess, it's not necessarily the least cost option, but it also could be diversification of your generation capacity, et cetera, right?

It does, exactly right. And at the same time, it does provide opportunities, as you mentioned, for the diversification of our generation supply and the -- willing to take a look at ways in which we can provide good baseload going forward in the future, along with the gas generation, et cetera. And good for the customers, but keep in mind the base economics of all the analysis will be against the economics associated with installing the SCRs, which is really the baseline of making sure we understand where customers receive the benefits and where we can bring value to shareholders with the ultimate solution. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: And correct me if I'm wrong, but the EPA's BART cost was estimated at $398 million, correct?

Brian, are you talking about our share of the SCRs? Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: Yes.

Yes, that's about where our share was, yes. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: Okay. And so, in this new alternative plan, it looks like you're spending a minimum of $340 million on the SNCRs in the 2 gas peaker plants, then there's additional upside depending on PV 3 and/or a third gas plant, is that the right way to look at it?

Yes, I mean, that's right. And also, we have looked at incremental T&D capital spend at PNM roughly about $154 million, which we have in the capital numbers you have in the slide, but that's some additional capital that we were able to work into a prioritizing and working into our plans over the next 3 years, a little bit of that will be spent this year and then the -- putting that into rates would actually go through 2015. So the next 3 years, roughly $154 million. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: And that all flows through the TCOS silence?

This will be for PNM. If you recall, we were going to spend about $100 million on SCRs this year. That allows us since the capital really in replacement power comes in latter years, we're able to release some opportunities for aging infrastructure improvements and improving reliability in our systems. So we'll be spending roughly about $150 million over the next 3 years. Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division: Okay, great. And one last question. I think at your Analyst Day back in December, you were fairly confident that you could finance the EPA's BART plan without any external block equity. Should we consider that the same for this new state alternative plant?

Yes, currently, no plans for any equity issuance.

Our next question comes from the line of Maury May with Wellington Shields.

Going to Palo Verde 3 earnings. You said that earnings in 2012 were down $0.05 a share, but I'm just wondering about the absolute level of earnings at Palo Verde 3 in 2012 versus 2011.

In 2012 Palo Verde 3 was about $0.09 down as far as earnings are concerned. $0.07 down for total for the year. Is that right, Jimmie? Okay. And we had some of that basically still unhedged throughout the year we had that on a rolling 12-month basis. So we have hedged it out for this year and I showed in guidance for 2013 that would be another $0.07 loss.

Okay. But what were the absolute level of earnings or loss in 2011 and 2012?

I actually don't have those numbers. I will call -- have IR call you and give you those numbers.

Okay, great. Because looking -- if you were to put this in the rate base, I think your book value -- if you got it in the rate base at $116 million and finance the 50% by equity, 10% RoE, you could actually earn about $6 million, $5 million to $6 million on this aspect in rate base, could you not?

I mean, I think if you, obviously, if you do away with a negative drag and then you get the 10% of whatever value you agree to put it in the rates. So your thought is right. This is a question of what that contribution and value would be that we put into rates.

The net book value, Maury, is about $125 million.

$125 million, okay. So it could be a little bit better than $6 million. Okay, good enough.

Our next question comes from the line of Ali Agha with SunTrust.

Chuck, could you remind us what were the actual earned ROE for TNMP and PNM retail in '12?

For PNM, we earned our allowed return, we were at a solid 10% for PNM. And TNMP, we were at -- our allowed return was well. So solid earnings in that business for TNMP.

Yes. I mean, if I run the quick math, I thought TNMP was over earning. Would that be fair?

I'm sorry, what did you say?

TNMP looked like it earned more than its allowed ROE in '12. Is that a fair statement?

No. They were...

It's very close. You have 10 and an 8, so we're very close to that 10 and the 8.

Separately, as, I guess, the commission also, New Mexico Commission would also approve the plan -- that state plan on San Juan. If I look at the map, I think you were mentioning earlier if you had gone down the SCR path, you would have spent there, what was it, $398 million, is that right?

That's right.

That's right, roughly.

And as part of this plan, you're going to spend $343 million plus, perhaps more, depending on the national generation options. So help me understand how the cost saving is going to be looked at from the commission's perspective? I mean, the total CapEx spend roughly is the same in this plan versus SCR plan?

There's a couple of things here, Ali. One is the capital expenditures here are -- depending on what your baseload replacement is, will be less than the SCR plans. Obviously, not as small as just -- if we just did 4 SNCRs, but there is a lot of savings for customers involved when you look at avoided costs on coal handling, coal supply, greenhouse gas cost. So there's a lot of sort of incremental savings there that we get from reducing our exposure to coal.

Okay. And the timing of this, remind me, assuming this all goes as planned and assuming you determined and the commission agrees that Palo Verde 3 is the best base load replacement option, when at the earliest could that transfer happen in to rate base?

Well, the assumption built into the current plan is the base load would go in by 2018. So all this will be worked through to determine the right solution for that base load replacement, but the target would be 2018.

Okay. And last question and you folks alluded to that, that when you look at the dividend again in December the goal was -- the goal is to get you into that 50% to 60% payout and you're almost there right now. So that should get you there, but when you look longer term, I mean, utilities with a purely regulatory footprint like yours target a payout closer to the 60% to 70% range or mid-60% range, have you folks thought about taking it further beyond the 50% to 60% target or what's the thinking there along that?

Ali, we're taking things, as you well know, in steps and making sure that we understand the certainty of the capital spend and we'll be getting some clarity around what that plan is going forward. So we'll continue to look towards the movement of a comparable increase in December of this year and we'll always consider what we think is the right move on a payout ratio and currently, it's 50% to 60% and any other consideration, certainly, will be brought up to the board and discussed. We do want to maintain predictability and sustainability in a payout ratio that's comparable to the industry. So we're keeping a very close eye on that.

And your target total return, if I recall, was for the 10% to 12% of the 12 to 17 period. Just remind me of those parameters and dividend, was it EPS yield [indiscernible]?

You're close. I mean, it was off in 2012 as a base and looking at 10% to 13% total return. We didn't break down EPS or dividend yield. We really just kept that as a component of both of those combinations would get us to that 10% to 13%.

'12 through '17, was it?

'12 through '16.

'12 through '16, got it.

Our next question comes from the line of Anthony Crowdell with Jefferies Group. Anthony C. Crowdell - Jefferies & Company, Inc., Research Division: I'm not sure if you addressed these questions. Just a couple of things. One is I guess, when your Unit 1 came up with your lease option, you guys assumed to re-lease. Can I make the same assumption for Unit 2? And the next 2 questions is kind of similar. If I think of the -- what type of proceeding determines the retirement of San Juan Unit 2 and 3? Does that become part of a general rate case? And then also, what type of proceeding would determine, what type of generation would be needed to make up for the retirement of San Juan? Is that going into like an integrated resource planning or JRC?

It would be -- I'll start with your second question and then have Chuck answer your first question. It's a series of filings we would need to do with the PRC. Obviously, we need to have the State Environmental Improvement Board and then the EPA approve the revised shift. In terms of the PRC, we will need to make an abandonment filing because we're shutting down 2 of the units at San Juan. So that would be an abandonment filing. And then the filing that determines the baseload would really be a CCN, a Certificate of Convenience and Necessity, and we're starting -- we're kicking off our IRP process this year. So I think that will be a part of, it but the real trigger is that CCN's filing and then ultimately, we would file a rate case for the recovery of these costs. So it's really probably 3 filings. It's an abandonment filing, it's a CCN filing and then ultimately, it's a rate proceeding.

And your earlier comment was relative to the plans for Unit 2 and the lease extensions and discussion around that. So we gave notice on Unit 2 in January, which we indicated will retain our interest in Unit 2. And then we'll give notice in January of 2014 and indicate at that point what our decision will be to either extend the lease or purchase option and we haven't made that decision at this point.

[Operator Instructions] Our next question comes from the line of John Alli [ph] with Decade Capital.

Just a quick question. I apologize if I missed this, there's kind of a lot going on. The San Juan units, what is the remaining book value there? And is there any chance you picked up any incremental capacity from those units?

When we looked at what the San Juan, we're really not interested in any incremental capacity with coal. We still are hanging onto our share in Four Corners, we like to have that diversity of assets and in terms of the stranded cost, it's about $200 million, $283 million.

$283 million?

$283 in the unrecovered assets, yes.

And that will get rolled in the rate filing?

We would roll that into the rate filing, yes.

I'm not showing any further questions at this time. I'd like to turn the call back to Pat Vincent-Collawn for closing remarks.

Okay. Thank you. And thank you, everyone, for joining us this morning. We know it's been a busy morning for everyone. We look forward to continue to bringing value to our shareholders and continue to chatting with all of you. Have a great day.