Hello, and welcome to the PNM Resources Fourth Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jimmie Blotter, Director of Investor Relations. Please go ahead.

Thank you, Carrie and thank you everyone for joining us this morning for the PNM Resources fourth quarter 2015 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 Executive Vice President and Chief Financial Officer 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. And thank you for joining us as we close out our discussion on 2015 which is a very productive year for the company. We’ll begin the presentation today on slide four with a look at our regulatory and operational achievement over the year. 2015 was to say the least an interesting year. I am very proud that we are able to successfully over several challenges and finished the year on a strong note. Our most significant accomplishment was PNM obtaining final approval for the San Juan Generation Station BART plan. We received that approval two years from when we filed with the commission. Many things were dependant on a positive decision and we are now able to move forward with our comprehensive plan. It is the most cost effective path forward and the best option for our customers who are already seeing lower build as a result of the new core supply agreement. It will also benefit the entire state by minimizing economic impact and providing significant environmental improvements. Ultimately, the position that we and other utilities had regarding the definition of what constitutes the future test year was upheld. The commission revised its definition in a way that agrees with our understanding as the New Mexico Supreme Court has dismissed the appeal. We are also pleased that we were able to settle our first transmission formula rate case. The settlement is awaiting final approval from FERC. In Texas, TNMP successfully implemented two TCOS increases totalling $5.8 million annually. In addition, on January 8th of this year, the staff of the Public Utility Commission of Texas recommended that the Commission approve without changes TNMPs filing for reconciliation regarding its AMS deployment. We anticipate the commission to rule at its open meeting on March 24.…

Thank you, Pat and good morning everyone. We continue to make progress towards achieving our goal. The Westmoreland coal contract that became effective February the 1st brings substantial savings to customers. We received approval on the BART and resolution of the future test year definitions under New Mexico Commission in December. We also ended 2015 with an improvement in earnings compared to our revised guidance range. So beginning on slide seven, let’s start by reviewing load of both PNM and TNMP. Both were within the guidance ranges that we had for the year. At PNM, 2015 was down 1.4% compared to 2014. I want to point out the residential loan was flat both for the fourth quarter and for the entire year. Customer growth came in higher than our expectations at 0.8% for fourth quarter and 0.7% for the year. The economy in New Mexico continues to have mixed indicators. The employment growth recently in Albuquerque Metro area has been strong and you can see that even on a 12-month rolling average its moving up with the strongest numbers we have seen in three years. The state overall is not faring as well though. That softness is driven primarily by the low oil and natural gas prices. While we do not serve the regions of the state that produce oil and gas, we do expect the impacts of layoffs and the decrease in state royalty revenues will somewhat soften the economies in our service territory, particularly in Albuquerque metro area in Santa Fe as the state deals with budget shortfalls. We continue to expect 2016 load to be flat to down 2% for the year. Moving to TNMP, load for 2015 was up 2.6% compared to 2014. Customer growth was higher than forecast at 1.5% for Q4 and for the…

Thanks, Chuck. As Chuck said, we are very proud of what we accomplished in 2015. We reached positive conclusions on key regulatory filings. The company delivered another solid financial performance and most importantly, we continued to focus on serving our customers with reliable, affordable and environmentally responsible electricity. Given the challenges and oppositions we faced through this year and continue to face, these achievements confirm that our strategy is sound and our hard work is creating positive results. Going forward, we plan to stay the course and continue to work in the best interest of our customers, the communities we serve, our employees and our shareholders. One more note about our rate case. No one likes rate increases. We understand that and we take it very seriously. This request is driven primarily by capital improvements to our system designed to ensure continued reliability for our customers. As filed, the rate case would increase rates by 14%, but when you consider the customer benefits from the Westmoreland coal contract and other items, the total increase is about 5%. That’s an average of about 1% a year since our last increase. I want to emphasize that it is of great importance that we achieved timely rate recovery in this proceeding and we are confident that we have strong justification for the revenue requirement. As we have been saying all along, given the number of interveners in this case, it is likely that the best way to achieve this will be through litigation. And in closing, I cannot say enough about the tremendous effort of our employees. They are responsible for our ongoing success and progress and they make us proud every day. Operator, let’s now open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Anthony Crowdell of Jefferies. Please go ahead.

Good morning.

Good morning, Anthony.

I have a couple questions. One is I wanted to know, what’s left on your Palo Verde leases after you file for the rate case at the end of this year for new rates in 2018?

Yeah. Anthony, the leases about 114 megawatts and still remain, but actually extend on half price as a path through to O&M through 2022, 2023.

Okay. Great. Since I guess the BART filing in December or maybe even the third quarter call, you had given this, I don’t want to use the word guidance but maybe a rough estimate of the potential loss to the unregulated portion of the San Juan plant would be. Power prices have since maybe taken another downturn. Could you give us an update on what your estimate would be for the unregulated portion of power of San Juan?

Yeah. Anthony as you know, the 65 megawatts actually doesn’t affect us until the BART implementation in 2018 when we taken on the 65 megawatts. And as you recall in our projections, we use spot prices, real-time prices of the markets. So you are right, prices have decreased considerably since we’ve last talked about it. I think we are around of $0.03 losses and with the additional lower prices, which are close to little less than $30 a megawatt hour is a breakeven in the mid $40 a megawatt. For San Juan 65 megawatt, we are probably additional $0.03 or $0.04. But let me just also comment that as you are aware, with the Westmoreland contract, the financing that we have done through Westmoreland to support the closing of the purchase of the mine that there are some additional earnings that begin to reflect as a result of the financing and the basis spreads between what we were able to financed at PNM versus PNM Resources versus what Westmoreland was charged to reflect more of their credits. That benefit, if you will is roughly around $0.04 or so because it would offset the losses that we would have at the 65 megawatts I just referred to. So, we remain kind of neutral that overall we are on the course that we said we’d be on and we are not really receiving an impact even with the lower prices at the 65.

Okay. And just lastly, Pat, I know you had said you think the best way of achieving what you’ve requested in the rate proceeding given the large number of interveners, it looks like you went to dug in their positions was through a litigated decision. Would you comment at all, if there is even a potential for a settlement or it just seems like it’s not really going to happen here?

There is always a potential but I think in this case, litigation is probably the best path forward because it’s the most expeditious and the quickest path forward.

Great. Thanks for taking my questions.

Thank you.

Thanks.

Thanks, Anthony.

Our next question comes from Brian Russo of Ladenburg. Please go ahead.

Hi. Good morning.

Good morning, Brian.

You mentioned that when the NOLs runoff at the end of 2019, there will be an impact to your rate base for bonus depreciation in 2020, can you quantify that?

Yeah. We actually haven’t put out the 2020 rate base at this point. But it pretty much keeps the rate base slightly lower than what we have through 2019, but we haven’t quantified at this point, Brian. So, I’d rather wait till we really run through the numbers and look to see if there is some additional capital funding that we can benefit from the bonus depreciation and additional cash flow and then we will update the number and provide them to you.

Well. Maybe I will ask in a different way. In 2016 rate base, hypothetically, if you didn’t have the NOL, what would the impact to your rate base be, if you can answer that?

2016?

Or 2015.

I don’t know I have 2015. Let me get -- we will just have to get back with you on that. I have got the numbers of 2016. I don’t have 2015 with me.

Okay. So could you share with us for the 2016?

Yeah. 2016, if you would, roughly with the effects, without NOL, the net effect of that looks like it would be about 2.6 to 2.4 about $200 million net.

Okay. Thank you very much.

[Operator Instructions] Our next question comes from John Allie [ph] of Castleton. Please go ahead.

Good morning, guys.

Good morning, John.

Just two quick questions. You said the litigation is the quickest route, what’s the timeline you guys are thinking for that? And then secondly, do you have any thoughts on the formation of the REIT for your taxes as such?

I’ll take the first one and let Chuck take the second one. The hearings John start on the 14th of March and go till the 25th of March. We would hope that the effective date would be close to the beginning of Q3. I think you will know that Q3 is our largest quarter, so therefore having the rates in place early in that quarter makes a big impact which is why we want timely rate increase. So that’s probably the schedule we are looking at.

Yes John in regards to -- we’re watching as everyone else to see what the commission ultimately does with the on proposal reactions relative to how they pursue that going forward. And whether they actually allow that to be approved in the regions formed and with Encore. So we’ll monitor that and if we feel that that decision is made as I’m sure all the AT&T companies in Texas will do the rigor and analysis necessary to see if it makes any sense for our structures to consider that as well. So at this point we’re just on the sideline keeping a close eye on it.

All right. Thank you.

Okay.

And this concludes our question and answer session. I would now like to turn the conference back over to Pat Vincent-Collawn for any closing remarks.

Thank you. And again thank you all for joining us this morning. We appreciate you joining us on this call to hear about our very successful 2015 and our plans for going forward and we look forward to speaking with you and seeing you all throughout the year. Have a great weekend.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines. Have a great day.