Good morning and welcome to the PNM Resources Third Quarter 2015 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. Please go ahead.

Thank you, [Annie] and thank you everyone for joining us this morning for the PNM Resources third 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 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 New Mexico morning. I'm sorry you aren't here in person to enjoy the weather and to see our wonderful Halloween costumes. I am pleased to report that PNM Resources delivered a solid performance in the third quarter continuing to build on the momentum that we have established. Start with Slide 4. Our GAAP earnings per share for the third quarter of 2015 were $0.76 compared to $0.69 in the third quarter of last year. Year-to-date in 2015 our GAAP earnings are a $1.34 compared to a $1.21 in 2014. Ongoing earnings were $0.76 compared to $0.68 from the third quarter last year. Year-to-date ongoing earnings in 2015 are a $1.41, up $0.16 from this time last year. We are also narrowing our guidance range for the year to a $1.56 to $1.61. Chuck will provide more detailed look into the numbers in a few moments. Before we do that, I will provide updates regarding our BART plan and other regulator proceedings and review the timeline for PNM’s general rate case filing. But first I would like to take a momentum to share something of which we are very proud. PNM was recently honored with the 2015 reliability one award recognizing the company as one of the very best midsized investor of utilities in the nation. As Jeff Lewis ReliabilityOne program Director stated in the new release about the award, reliability is ultimately one of the most tangible means to customer engagement any added. PNM has demonstrated that is understand the essence of customer engagement and is consistently providing superior service. This achievement is the result of tireless efforts and dedication of our employees who focus each and everyday on serving our customers and our communities.…

Thank you, Pat and good morning, everyone. Beginning with Slide 8, load at PNM continues to be in line with our guidance of flat to down 3%. We saw continued strength in customer growth at PNM increasing to 0.8% for the quarter and holding to 0.7% year-to-date. Those are above our 2015 forecast at 0.5%. Residential was flat year-to-date and total load is down 1.4%. Economic growth in New Mexico continues to be slow. Looking at employment growth for Albuquerque, which is a major portion of PNM service territory. You can see that we are up from where we were a year ago and then it has trended around 1.5% through this year. This supports what we have been experiencing that the economy has not yet seen any significant upticks, but it’s holding fairly steady. You can see also that the U.S. average is a bit higher than Albuquerque at 2%. The economy in Texas continues to perform well. We do however see some softening of employment growth in recent periods particularly in the Houston area. As you can see on the chart there continues to be employment growth in both the Houston and Dallas, but Dallas is continuing with stronger performance. Load at TNMP is up 2.7% year-to-date which is in the guidance range to 2% to 3%. TNMP did have strong customer growth again coming in at 1.5% year-to-date which is higher than the forecasted 1%. Now turning to Slide 9 for the Q3 financial results. Ongoing earnings were $0.76 compared to $0.68 last year. Looking at the segments, each came in higher than last year, PNM up $0.05 and TNMP up $0.02, corporate and other up $0.01 because of the payoff of the 9.25% in May of this year. Now for more detail on PNM and TNMP…

Thank you, Chuck. As you can see we continue to move forward constructively. The company is on track financially and we are working through our key regulatory filings. We continue to focus on the core elements of our strategy, which is centered on serving our customers. And I'm very pleased to say that in the latest JD Power customer satisfaction scores PNM showed significant increases on all areas and that’s especially significance given our high-profile of regulatory filings. I am proud of what we have accomplished and I am especially proud of the excellent work of our dedicated employees. They truly drive the success of PNM Resources and they do it by putting our customers first every day. Operator, let's open up the call for questions.

Thank you. [Operator Instructions]. Our first question is from Anthony Crowdell at Jefferies.

Hey, good morning. I know there was a lot of moving pieces about the Navopache stuff. But I guess if I look on Slide 13, on the Palo Verde free line, now for 16 years showing a loss of $0.12 there was before you were showing just a loss of $0.05?

Good morning, Anthony. I’m going to turn that one over to Chuck.

Yes, Anthony, as you all know given where power prices are in the market, we’ve shown in the footnote the projections that Palo Verde 3 are down about $29 a megawatt hour, it takes about $43 a megawatt hour to breakeven. So we’ve reflected in our numbers for 2016 the fact that we have prices at a lower level. We continue to manage that, but focus here is to eventually get this into rate base and we’ll have to deal with the volatility of the market until such time occurs.

Over to Navopache the generation I guess that you were serving that contract, now you are going to use that generation to serve I guess retail customers and I’m assuming that’s in a lower margin and what the contract was for?

Yes, if you kind of understand that what we are talking about is whether prices in the market and as low as they are really was not beneficial for us to continue to work with Navopache on wholesale contract that begin to move that generation. That was previously allocated from the retail rate base back into rates so we can serve our customers. And coincide that, we negotiated to coincide this with the 2018 plan, two unit shutdown and Palo Verde coming in and also plans for the gas peaker. So really does balance out nicely for our overall plans and work towards getting out of the wholesale market and allowing these resources to be dedicated to our customers in serving reliable and power further going forward.

I guess, when we think about 2018, you filed a rate case I heard for the August and September, and you filed the rate case maybe get a decision sometime in October. You are going to have to file the second rate case since I guess the future test your decision came during this year was not favorable. Do you file again right after the decision comes out? I'm assuming to get rates in for early 2018, you need to file rather quickly once you get that decision out?

Yes, we would be looking at file in December 2016 in order to work towards an effective rate case of January 2018, so it will be coming very quickly after we settled this current rate case.

And remember Anthony that our future test year cases still on appeal and we hope to get that back and then we’ll have an idea of which definition of the future test year there is so we are still waiting on that decision also.

But you cannot change the current filing now regardless of what have to the future test year, is that correct?

That’s correct.

That’s correct.

Okay. And just lastly, my question was related to – if I go to Slide 5, you list in terms of the settlement you’ve already spend some of the money or maybe a lot of the money on the SNCR for Units 2 and 3. What would be the total – if BART is not going to approve, what is the strength, what is the total amount of stranded cost. You have a 128 here for Unit 2 and 3, but that’s only half of the investment. So that you are looking at a total somewhere like 258 then what’s also the scrubber cost that you’ve put SNCR cost for 258.

Yes. And Anthony, Jimmie can give you more details, but the bottom line, the SNCR capital cost for PNM are about $26 million, so 150% and also the megawatts that we intend to spend for our involvement in Unit 4.

Any other capital that you’ve spent in the plan that’s involving [indiscernible] other than SNCRs?

There is some balance draft capital, but we also have in the current case.

And the total of that?

Total of that is about $52 million so brings it up to about $78 million when you add those together.

Great, thanks for taking my questions.

Thank you.

Thank you, Anthony.

The next question is from Brian Russo of Ladenburg Thalmann.

Hi good morning.

Good morning, Brian.

Hi, Brian.

Just when we look at Slide 14 and the 2017 earnings potential, obviously making assumption of a 10% ROE which I guess would be subject to change, but it seems like while you get a full year of new rates in the pending rate case you are going to file another case for the 2018 future test year. Is there any reason for us to believe that your experience regulatory lag in 2017 or contingent on what the lower ROE is, are there any like major net plant expenses that hit the income statement in 2017 that to create lag?

There could be a slight lag on the ROE, but for the most part given what we assume the 10% continuing to make that assumption going forward. Each year there is a slight lag in returns relative to additional investment in capital and clearings that occurred at depreciation and just normal O&M cost et cetera. So just the – within the 100 basis points, we’d probably again a rule of thumb is that regulatory lag works towards the actual filing and effective rate case for 2018 to get us caught back up.

But nothing major Brian, there is no expenses there.

Okay, got it, okay. And then I think in Texas the staff recently filed a memo noting that TNMP was over earning in 2014 but recommended no action. I was just curious you know what drove the over earning in 2014 was it load, weather?

Yes, I would say it’s mostly load and weather and what they saw when we sat down and have discussions with them is that we continue to invest a significant amount of capital both in transition and distribution. And when you think about the clearing of the capital and the added depreciation it really gives the earnings back in line to what is allowed. So they were very open and supportive and understanding what our business model looks like in Texas and the fact that because of that growth, we’re not holding back, we’re actually investing more as I pointed out in this presentation to continue to improve the growth in the investment and transmission in TNMP.

Yes, Brian we pointed out the PNM on a reliability work but TNMP’s reliability is also very good and customer complaints almost nothing in Texas. So I think the fact that we keep investing and taking care of our - they understand we are committed to the business and that’s very helpful.

Got it. And just could you talk about the voting parameters or requirements by the New Mexico Commission meaning do you need a majority of the five’s, you need three votes in favor or against BART on order for to get approval or not. Do you understand what I am saying meaning if one commissioner [indiscernible] that you down to four, you still need three of those four to vote one sided?

That is correct. You got it Brian.

Okay, great. Thank you.

Thank you.

[Operator Instructions] Our next question is from Paul Ridzon KeyBanc.

I think you said but I may have missed it. What is the weather year-to-date versus 14 in normal?

You mean in terms of the cents?

Yes.

Cents on earnings per share.

Correct.

Hang on let me go back to that page. Okay, weather was $0.043 in PNM and load and weather combined in TNMP were $0.01.

This is year-to-date?

Quarter.

Do you have year-to-date numbers?

Not in front of me right now and why don’t you just call Jimmie shall give to you.

I can dig a more. And then there is no procedural schedule per se at the Supreme Court, but you are expecting an expeditions review.

That is correct, there is no procedural schedule, but we clearly understand the time sensitive nature of it and the benefits of getting the same of restructuring the coal contract and so we would expect them to roll quickly.

Next end of November, is that fair?

By the end of November we would hope sooner, but by the end of November I think that’s fair gas.

Got it. Okay, thank you very much.

Thanks, Paul. End of Q&A

There are no further questions and 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, and again thank you all for joining us today. We are looking forward to seeing many of you in 10 days at EDI and will have any relevant updates there. And I hope you all have a very safe and happy Halloween. Thank you.

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