Good morning, and welcome to the PNM Resources First Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions]. I would now like to turn the conference over to Jimmie Blotter. Please go ahead.

Thank you, Chad, and thank you everyone for joining us this morning for the PNM Resources First 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 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 reports on Form 8-K filed with the SEC. And with that, I will turn the call over to Pat.

Thank you, Jimmie. And good morning, everyone. Thank you for joining us on this beautiful May 1. As we outlined in the news release, we had another good quarter building on the momentum we continued through 2014. Going to begin today on Slide 4. Our GAAP earnings per share for the first quarter of 2015 were $0.18 compared to $0.16 in the first quarter of last year. Ongoing earnings were $0.21 compared to $0.18 last year. We are pleased with the results of the quarter. We are also affirming our guidance for the year of $1.50 to $1.62. Before Chuck walks us through the financial detail, I want to take a few moments to talk about the regulatory proceedings that are underway, particularly in New Mexico. I will discuss both the BART and general rate case proceedings in New Mexico and do a quick wrap-up on proceedings at FERC and in Texas. As most of you are aware, the hearing examiners in both the BART case and the general rate case issued disappointing recommendation. In the 2016 future test year general rate case, the hearing examiner is recommending that our filing be rejected for being incomplete. I will talk more about this in a few minutes. For BART, the hearing examiner is going against established regulatory policy in recommending that the Commission not approve the settlement agreement that we have reached without parties in the case. The negotiating process with the other parities included a lot of give and take that resulted in the best solution to not only the significant burden of compliance with the EPA's Clean Air Act, but also well positions the state for compliance with a recently announced Clean Power Plan. I want to take a few minutes to outline the strong response we are using…

Thank you, Pat, and good morning to everyone. Beginning on Slide 10, let me give you a few more details on agreements that Pat discussed. Starting with the coal agreement with Westmoreland, this agreement goes through 2022 and can be extended beyond that timeframe. The agreement has significantly improved pricing due to today's competitive market. We expect this to represent fuel savings of about 15% to 20% in 2016 and 2017 with continued savings through the life of the contract. These savings will be passed on to customers through the fuel cost. The contract with Westmoreland will be a fixed cost contract as opposed to the cost plus agreement that we have with BHP today. BHP's contract would have expired at the end of 2017. With Westmoreland contract beginning at January 2016, we are able to capture these savings for customers two years earlier. The contract with Westmoreland also has more stringent coal quality requirements. This will allow us to run the San Juan plant more efficiently going forward. Also, included our details on mine reclamation and coal ash disposal, which will all help to preserve the viability and longevity of the plant. We are also filing a restructuring agreement that include the economics around dealing with both exciters and remainders in the San Juan plant. Today, San Juan has nine owners and is a 1684 megawatt plant. After we shutdown Units 2 and 3, we will have six remaining owners and 847 megawatts of generation. This represents a shutdown of 847 megawatts of coal generation that supports compliance with EPA's Clean Air Act. Assuming that our CCN for the 132 megawatts and Unit 4 is approved, our total ownership in San Juan would go from 783 megawatts to 562 megawatts, a 28% reduction of San Juan related coal generation…

Thanks, Chuck. While we had a good quarter financially the regulatory environment in New Mexico has presented a series of challenges that our team at PNM have continued to meet. I would like to take a moment to thank the many employees who are working tirelessly on the agreements, preparing regulatory documents, responding to discovery request and all of those who are out communicating with the various stakeholders to help them understand the implication that what happen depending upon various regulatory outcomes. While all of this is being done, our employees are continuing to deliver excellent customer service and reliable power. Their hard work and dedication is appreciated. Operator, I'd like to now open it up for questions.

Thank you. [Operator Instructions]. Our first question comes today from Anthony Crowdell with Jefferies.

Just two quick questions. I guess one is on the coal supply, the new coal supply agreement I just spoke about. You mentioned 15% to 20% savings. If we would -- I'm sure you are not looking to giving us numbers behind that agreement. Is it a great way we can maybe back into it, and think of where fuel price, coal price per ton was under the old agreement that we find maybe a FERC Form 1 and knock out 15% to 20% from there?

Yes. You could look -- think of -- you could go to a rate case filing and look at there what we have for the forward test here, which is around $54 a ton. So that would be the basis of where we would expect to be under the BHP agreement and then you could assume some reduction off of that price that results into the 20% to 25% savings.

Okay. And I know -- I'm sure you guys are thinking positive there.

15% to 20% of savings, yes.

Okay 15%. I'm sure you are thinking positive. But is the Westmoreland agreement predicated that -- because there are fuel savings that could begin in 2016, is that all predicated on if you get the approval for -- the BART approval or is the cause of agreement done regardless of what happened?

Well, we need the rate case and BART approval to -- for the commission in order to grant their 132 to continue going forward. So this would be comfort hopefully to the commission to be ready to make a decision for that 132 megawatts and the 65 megawatts and allow for the restructuring of San Juan one and which will allow for the supply agreement to be put into execution to continue on.

Okay, great. And just lastly, when I look at the Slide 10, the ownership or structuring changes, just to make sure I am clear, those will be the plant owners, I don't know that's the right term, but like the share of the outlet from 2018 to 2022, is that accurate?

That's correct, yes.

Great. Thanks for taking my question, guys.

Okay, Anthony.

Our next question comes from Ali Agha with SunTrust.

Morning. Listen, Pat, just if you can clarify, on the San Juan retrofit given that you filed your expectations to the hearing examiner's proposal, when do you expect the commission to rule on that?

We would hope late May or early June, the latest is the end of the third quarter but we are thinking late May, early June.

Okay. And then the issues that have come up, clearly the hearing examiner has come up on both of these. But do you think behind that, perhaps is also the issue that you do have significant rate increases that will go into affect with both of these you know with the rate case and then with the BART filing two years later? And is that also a dynamic playing out there given the negative load growth and the economic outlook for New Mexico?

We don't think so, Ali. We thinking the hearings examiners look strictly at what they had in front of them. So we don't think there is any overlap from that.

Okay, okay. And then on the load growth you are talking about some stabilization in the economy. But I was looking back and I think it's now nine consecutive quarters, maybe it's even longer, I have to go back on data, we've being seeing this negative load growth weather normalized in New Mexico. Well, is there any light of the end of the tunnel? How low can be go negative every quarter?

I can't really predict that. Ali, we do think based on the trends and what we have seen quarter-over-quarter and the continuation of some improvement in the economy that we begin to see some stabilization. But certainly, you're right as far as what we have seen over the past. But at some point, you do begin to feel like it bottoms out and then it kind of begins to improve, we begin to see some improvement, but it's a very slow recovery process and we continue to expect it to be slow as we look forward.

And Ali, we are hitting a lot of singles. The governor just is making an announcement actually, 10 'clock this morning its public about some more new jobs here. But they are singles as opposed a homerun, so it's just going to take a while to rebuild up the economy.

Got it. And last question, Chuck. I mean, can you remind us embedded in your '15 guidance for PNM, how big of a regulatory lag is built in, in this '15 numbers?

Yes. I think if you go back and look at the earnings power slide you would see that the midpoint of the calculations for 2015, we had about 8.4% ROE that we assume for the retail jurisdiction.

Yes, got it. Okay. Thanks.

Thanks Ali.

Our next question is from Paul Ridzon with KeyBanc.

Good morning. And congratulations on these filings.

Thanks, Paul.

Thanks, Paul. Good morning.

The 15% to 20% savings in '16 and '17, does that contract step-up after that?

Yes, there is a escalation that will be built into the contract, the more inflationary indices that will be used relative to the longer term portions of the contract. But again, overall, there are continued savings, if you were to project to beyond the '17 period that provide value to customers.

Great, great. Thank you very much.

Thanks, Paul.

Our next question is from Paul Fremont of Nexus.

Thanks. In the order permitting responses to exceptions it looks like responses to exception should be filed eight days following the date of that order. So is that today or Monday?

Paul, you are talking about the rate case?

No, I'm talking about -- it looks like BART.

That's correct.

So, does that mean that the Commission can basically than put this on the agenda after those exceptions are filed or -- and when would you anticipate that the commission would actually rule on your BART case?

Yes. They can put it formally on the agenda when they get the draft order, which will probably be a little later in May, and we would think end of May, early June is when they could vote on it.

That's it for me. Thank you.

Thanks, Paul.

The next question is from Brian Russo of Ladenburg Thalmann.

Hi good morning.

Good morning, Brian.

Assuming the new supply the co-supply contract I believe that the net customer bill impact from the general rate was 7% to 8%, and I’m just curious with the lower priced coal supply what kind of offset by that offer customers from that 7% to 8% impact?

Yes, we would really look at -- if you look at it from the customer impact and thinking of the savings flow into the fuel cost, it'd be around a 10% area benefit to customers on fuel itself.

On the fuel piece yeah.

Fuel piece.

Okay, got it. And then it seems odd on the weather normalized load growth in New Mexico that you have a positive growth on the residential side, but we negative growth on the commercial and industrial side, maybe can you just comment their dynamic there.

Yes. On the industrial side, Brian, there were a couple of big customer that including in your mind just its going through a different phase in their mining operation so they use less electricity, and that was going in an industrial side. And commercial and residential are always perfectly aligned there is nothing big we see there. There is obviously a turnover and restaurants and offices and small businesses. So it’s nothing we see in particular, but I really do a look at the residential growth is as good sign. And usually when you get that residential and we also seeing job growth and job growth is usually the predecessor to the commercial growth. So, we’re starting to see the job growth. So I think just maybe lagging a little bit behind the residential.

Okay, great. Thank you.

.:

[Operator Instructions]. Our next question comes from Feliks Kerman with Visium Asset Management.

Thank you. And congratulations on a great quarter.

Thanks, Feliks.

Just a general question. Let's say hypothetically that the commission adapts the hearing examiner's recommendation. How should we think about the 2016 earnings potential? If we look at Slide 17, we show a step-up from $2 billion rate base to $2.4 billion. If we can get something in the middle of the year, do we assume that it kind of comes down to $2.2 billion average rate base, how should we think about that?

If you think about the rate base impact on the hearing examiner's recommendation on the BART piece of it, it's about $56 million adjustment to rate base. On the rate case itself, it's just really too early to have any regard towards trying to think about the impacts of these things, because the earnings power is a clearly a plan of how we see. We are focusing on how to execute the business and earnings potential to business. The rate case is more regarding the timing of when we are able to execute on that plan. And so it's just too early at this point to speculate or have any particular details regarding our views to adjust in any numbers until we have more certainly out of the commission's decisions.

Okay. Thank you. And then just --

[indiscernible] keep in mind, the rate base is staying the same. Its question of timing when the revenues are approved and settled in a rate case as to what it does to the earnings of the business and affects the ROE. So from the rate base standpoint, we would still have the same rate base number; it's just more of a timing when that revenue comes in.

Okay. Thank you.

Welcome.

And then just on the new restructuring agreement with the 65 megawatts, how should we think about that? I believe on one of the slides we show that we need a $43 per megawatt-hour price to breakeven, would we need a comparable price to breakeven on this additional 65 megawatts as well?

We put a footnote in the earnings power slide. Although we haven't reflected in the numbers itself, but it's -- when we put the information and made it public, we anticipate about $0.02 to $0.03 impact based on our assumptions of fuel cost at the time in the forward curve in the market, assuming we don't have a PPA tied to that 65 megawatts. So there could be some improvement, because of the contract we just mentioned, it would reflect to maybe a slightly improvement in that $0.02 or $0.03. But at this point, I think that's probably the right way to look at it. It's an earnings drag to the business and we'll continue as that goes into effect in 2018. Try to find solutions that would mitigate and offset that impact.

Okay, thank you. And just one small bookkeeping item. On the quarter-over-quarter, we show pickup of the penny on the Palo Verde spent fuel reimbursement. Is that something we expect to have for the entire year or so, like a $0.04 annualized or is that just onetime?

No, no, no. This is really retro back to 2011 and 2014, and going forward, it would be really caught up at that point. So we don’t see any additional pickup year-over-year.

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

Thank you, operator, and thank all of you for joining us today. We appreciate your interest in PNM Resources. We look forward to providing you updates. And once again, I just really want to thank all the folks. And you can see there's been some really hard work done to come out with some very successful agreement. So thank you all and we will talk to you all soon.

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