Good day, and welcome to the PNM Resources Second Quarter 2022 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 Lisa Goodman, Executive Director of Investor Relations. Please, go ahead.

Thank you, Dave, and good morning. And thank you, everyone for joining us this morning for the PNM Resources second quarter 2022 earnings 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 and CEO, Pat Vincent-Collawn; President and Chief Operating Officer, Don Tarry, and Senior Vice President and Chief Financial Officer, Lisa Eden. 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 reports on Form 8-K filed with the SEC. With that, I will turn the call over to Pat.

Thank you, Lisa. Good morning, everyone and thank you for joining us today. Today is special. You get to pick the National Day you want to celebrate with us; National Chocolate Chip Cookie Day, National IPA Day or National White Wine Day. And I know, the choice don’t come easy. On Slide 4, I’ll start with our financial results. Ongoing earnings increased during the second quarter compared to last year, coming in at $0.57. We are affirming our guidance for both 2022 and 2023. Don and Lisa will talk more about the detailed results and guidance considerations. During the second quarter, we announced the promotion of Don Tarry to President and Chief Operating Officer, and Lisa Eden to Senior Vice President and Chief Financial Officer. Many of you have already met with this team from their roles in the finance organization for over the last 27 years. Both of them have been an integral part of our leadership team, and I congratulate them on their newest role. Tomorrow, we will file our reply brief at the New Mexico Supreme Court in our merger appeal. As you know, we’ve requested the Court hear oral arguments and we’ll be waiting to hear if the court grants this request. There is no requirement for the Court to hear oral arguments, nor any timeframe for their consideration. As a reminder, there is also no statutory timeframe for a decision, and we continue to expect a 12-month to 18-month process from our initial filing in January. The process for appointing Commissioners in New Mexico is also ongoing. The seven members of the Nominating Committee have been announced and the Committee held its first meeting earlier this week, taking care of administrative items. According to their published schedule, candidate applications will be reviewed in October, interviews…

Thanks, Pat and good morning, everyone. I’ll start on Slide 7, with an update on our clean energy transition. The first phase of this transition, our exit from coal, was designed to achieve more than environmental benefits. Each step of our plan has been carefully considered to also balance customer rates and provide support for the communities impacted by our transition. We continue to support New Mexico’s goal to be a clean energy leader and follow the direction laid out in the Energy Transition Act. As Pat mentioned, we retired Unit 1 of the San Juan Generating Station at the end of June. We have planned to keep Unit 4 running through September 30th to ensure we get through our summer peak season. Our teams are doing a phenomenal job, keeping our resources running, monitoring our system needs, and ensuring we have adequate power to meet our rising demand. I wanted to give a special thanks to the team at San Juan who have been working towards these plant retirement days after serving New Mexico for decades. There is still plenty of work to be done to facilitate the decommissioning and reclamation of the plants to mine. But these are significant occasions and I don’t want to pass them up without acknowledging the contribution of our great teams. In July, we completed the funding required by the Energy Transition Act to aid the communities and workers impacted by the closure. This has been a top priority, and you will remember that we have pre-funded some of these amounts earlier this year to support the mine employees who were impacted first and needed the severance and training dollars. In the meantime, the portions of the Energy Transition Act pertaining to when the utility issues bonds and resets customer rates has been…

Thank you, Don. I’m going to pick up on Slide 11, with our high-level year-over-year results for the second quarter. The detailed drivers are available in the appendix. TNMP increased $0.13 year-over-year in the second quarter due to higher load and weather along with rate relief from TCOS and DCOS filings. PNM decreased $0.07 compared to the prior year. Increased transmission margins, including the Western Spirit contract, were more than offset by the realized market performance of our Decommissioning Trust and higher O&M, including planned outage costs. In addition, new investments at both PNM and TNMP increased depreciation and property tax expenses. At Corporate, we’re seeing the impacts of higher interest rates on our outstanding parent company debt. As a reminder, this debt was and still is intended to be paid off at the closing of our merger with AVANGRID. We expect interest expense to continue to be a driver for the remainder of the year. To mitigate some of the exposure created by the current environment, we have entered $450 million in interest rate swaps, which will limit part of the exposure. Turning to Slide 12, we’re affirming our consolidated guidance for 2022 and 2023. The strength in our consolidated earnings for the past two quarters has provided room to cover any cost increases within our guidance. Historically, the third quarter has generated half of our annual earnings and can be significantly impacted by weather. Based on what we have seen so far, and barring any significant unexpected changes, we are targeting results in the top half of our range for 2022. In addition, we have updated our quarterly distribution for 2022 to reflect actual earnings for the first half of the year and revised expectations for the second half. Turning to Slide 13, we’re also maintaining our current capital plan focused on T&D infrastructure. As we indicated last quarter, we continue to monitor supply chain and inflation impacts and are shifting projects as necessary to allow our teams to work the most effectively and maintain our current investment plans. Don mentioned that we will file a Grid Mod plan later this year. We will update our capital plan with this filing when we report third quarter results. As always, we will be mindful of the customer impact. Our plans continue to support 5% annual EPS growth through 2025. With the majority of our forward-looking rate base growth recovered through the FERC formula rate and TNMP rate mechanisms. We have a strong track record of delivering results and remaining flexible and adaptable to changing market conditions. As always, we will continue to focus on ways to navigate in the current environment without losing sight of our long-term goals and strategic direction that supports our customers and communities and deliver shareholder results. With that, I’ll turn it back over to Pat.

Thank you, Lisa. Before I open it up for questions, I’d like to add my thanks to the teams that are responsible for the retirement at San Juan, and those who have been working through some incredibly hot summers to keep our systems running and to keep their fellow crew members safe in this heat. Safety is our top priority and one of our core values, whether you work in the field or in an office. Dave, let’s open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Ryan Levine with Citi. Please go ahead.

Good morning. I was hoping –

Good morning, Ryan.

Hi. I was hoping to start off in terms of the IRA. You know how do you see the proposed legislation impacting your core business outlook both as a standalone case and then also into the pending merger?

Okay. Well, Ryan, we have Don answer that question, but before I do, which national day are you going to celebrate?

They all sound pretty good to me.

What a diplomat. Okay. Over to Don.

Hey, Ryan. Good morning. I’m a chocolate chip cookie guy, so I’ll go that route. Absolutely, I mean New Mexico, in our service territories in New Mexico and Texas, and I’ll talk specifically about New Mexico. I mean we see it very beneficial. Obviously, we’re below the billion dollars, so we don’t have that threshold issue. And some of the benefits that we’ve explained in the past of how New Mexico sits third in potential in wind and solar provides opportunities you know from a transmission development perspective as we look longer-term, and the benefits associated with that. But specifically with the tax law change, a couple of the benefits that we really like relate to, the first one probably relates to allowing PTC for solar development, and the benefit that allows utilities may be to participate and more of these as PTC doesn’t get caught up in the tax normalization, and it’s also good for customers. Any type of these credits, they get passed through in lower prices to customers, so that part’s beneficial. On the capacity side, on the battery, being able to do an ITC and with ITC being able to self-select out of tax normalization is a benefit as well too, because it allows us to be competitive from the utility perspective. So in essence, those would be the big areas and I think you’re finding most utility is very positive on this.

Yeah and Ryan, those benefits continue even with the merger from AVANGRID. I’ll let Pedro discuss AVANGRID’s overall corporate benefits, but those are things that I think line up very well for utility ownership of storage and renewables. And as Don said, we’ve got a lot of renewable and storage potential here and we’ll be having some more resource solicitations. So we’re looking forward to that new tax package – the IRA, excuse me, passing Congress.

Thank you. I guess to follow-up on that. If I’m hearing you correctly, you see incremental opportunities for capital deployment, that furthers the strategic rationale to partner with the larger and more capitalized entity or are there any other considerations that may speak to the pluses and minuses of the proposed transaction?

No, I think – Ryan, I think that the strategic rationale for the merger in terms of better capitalized access to technology remains the same and these tax credits just continue to help not only the transaction, but I think mostly help the transition to clean energy and carbon reductions in the US.

Okay. Thanks for taking my question.

Thank you.

Our next question comes from Paul Fremont with Mizuho. Please go ahead with your question.

Good morning.

Good morning, Paul.

Really, two questions this morning. The first question has to do with the timing of when we would expect you to issue securitization bonds?

Okay. And I’m going to celebrate National Wine Day. And what are you going to celebrate, Paul?

The end of second quarter earnings?

Yeah.

And I bet there might be an IPA involved in there. Okay, Don. Don is going to talk about securitization.

Good morning, Paul. I mean, our plan for securitization has been and will continue to be to align the securitization with new rates going into effect, and we expect that to be January of 2024. But clearly, we’ll continue to evaluate the process as it goes through the Supreme Court appeal.

Okay. So I guess maybe a follow-up on that. I mean, there was a proposal to sort of track changes in interest costs between now and when you actually issue the bonds. Is there any potential liability in delaying the issuance?

You know. We have reports that we – you’re right, we have reports that we have to file, and I think the first one comes October 1st. And we’re going through all the analyses that we need to do to do that, but again, you know there’s things we can do to position us, to you know protect us from downside as we move forward so.

Great. The other question that I had is on planned equity issuance. Is there any update to planned equity since the beginning of the year? Is it the same?

And Lisa Eden, who is a National IPA Day person, is going to answer that question.

Hi, Paul. Thank you. So, yeah, our equity plans have not changed. We still have assumed in our plans that we will issue up to $200 million of equity by the end of 2023, and we are right in line with that, Paul.

And can you give us any update? Have you issued any so far under a year-to-date?

No, and we have not. I think you’re referring to an ATM, right? And we are still in the process of putting that in place, Paul and so that’s something that we’re looking to do at the end of the year.

Great. I think that’s it for – questions for me. Thanks.

Thanks, Paul.

Thanks, Paul.

[Operator Instructions]. This concludes our question-and-answer session. I would like to turn the conference back over to Pat Vincent-Collawn, CEO, for any closing remarks.

Thank you, Dave and thank you all for joining us this morning. I hope you enjoy whichever National Day or other Day you choose to celebrate this evening. We hope you enjoy the last of your summer and look forward to seeing many of you in the coming months. Stay safe.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.