Good day, and welcome to the PNM Resources Q3 2022 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Lisa Goodman, Executive Director of Investor Relations. Lisa, please go ahead. Thank you, Marlise, and thank you everyone for joining us this morning for the PNM Resources Q3 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 on both National Jersey Friday and National Candy Day. We are all decked out in our jerseys today, eating our leftover Halloween candy with, of course, the exception of our general counsel. Since it's also Love Your Lawyer Day, we're going to let that slide. On slide four, I'll start with our financial results. GAAP and ongoing earnings increased in the Q3 over the prior year, bringing year-to-date ongoing earnings to $2.54. As a result, we are raising our guidance for 2022 ongoing earnings to a range of $2.63-$2.68. We are maintaining our guidance for 2023 at a range of $2.60-$2.75 based on the continued strength at the utilities offset by higher interest rates. Lisa will walk through these numbers in more detail. In October, PNM filed its application for a grid modernization plan to bring smart meters and other system upgrades to our customers. We asked for approval of our plan by next July, and hearings have been scheduled for March. Don will talk more about our application. This quarter also brought us a step forward as we execute our plan to be emissions-free by 2040 with the retirement of our last unit of the San Juan Generating Station. This significantly reduces the amount of coal in PNM's generation to less than 10% and brings our portfolio to 55% carbon-free. I'd like to thank the teams at San Juan who operated the plant safely and efficiently to continue serving our customers through one last summer. On the regulatory front, the New Mexico Commission had ordered us to begin providing rate credits associated with the retirement of San Juan. We appealed the order and requested a stay of the rate credits during the appeal. In September, the court responded with an emergency stay, stopping the credits, and then earlier this week, confirmed the stay will remain in place for the duration of the appeal. The New Mexico Public Regulation Commission is preparing to change in January to a new appointed commission. The nominating committee will present the governor with at least five names for appointment by November 14th. The governor will select three commissioner appointees who will begin their terms on January 1, 2023 and serve staggered terms of up to six years. These appointments will need to be confirmed by the Senate, but commissioners will be able to begin acting in their roles while awaiting confirmation. Lastly, in our merger with Avangrid, as Tom Petty so beautifully sung, the waiting is truly the hardest part. There have been no procedural updates since our last call. We've requested the court to hear oral arguments and are waiting to see if the court grants that request. There is no requirement for the court to hear oral arguments, nor any timeframe for their consideration. We estimate a 12-18-month process from our initial filing in January. Before I turn it over to Don, I will cover some quick highlights on ESG on slide five. As I've already mentioned, the shutdown of San Juan significantly reduces the amount of coal in PNM's generation portfolio and marks significant progress in the full elimination of carbon emissions from our generation. Our first interim target was for a 60% reduction by 2025, and we have reached this target ahead of schedule, along with significant reductions in NOx and SO2. Particularly important here in New Mexico, this closure also significantly reduces the majority of our fresh water consumption. We've also had a number of social highlights this quarter as we were finally able to return to some community activities in New Mexico that hadn't happened in person for some time. We volunteered company-wide for our annual day of service and also returned to hosting our Albuquerque Community Assistance Fair. This is the largest of the PNM customer assistance events held statewide throughout the year, and this one is particularly valued by our customers as we coordinate to bring together resources from the gas and water utilities and dozens of other organizations in the community in a single venue. Our employees coordinated and volunteered at the event, and nearly 300 customers and families received over $100,000 in assistance. We've also taken part in activities within our own organization to learn and grow from each other. In recognition of Indigenous Peoples' Day in October, we gathered to view a documentary about the recognition of Pueblo independence and the struggle for sovereignty by New Mexico's 19 Pueblos. We have these types of learning opportunities regularly to continue developing a mindset of diversity and a culture of inclusion. Native Americans are an important voice in our community. We integrate this mindset into our business decisions as well. We just issued an RFP this week for new resources and are specifically looking for proposals located on Navajo lands utilizing a best-in-class bid evaluation and shortlist selection to encourage more of these proposals. We value our business relationships with our tribal partners and look for opportunities to help this community thrive. With that, I will turn it over to Don for an operations and regulatory update. Thank you, Pat, and good morning, everyone. I'll start on slide seven with our load growth by service area with PNM first. The Q3 is typically our highest demand, and as temperatures soared in early July, PNM set a new system peak, our first since 2013. In terms of overall load, our growth has been coming in slightly lower than our original expectations. The primary driver of growth in our original guidance was from our industrial customers. Delays related to customer supply chain issues and other pressures have moved this timing out till next year. Residential and commercial load has done better than expectations for the year. With these overall shifts in load, we have reduced our 2022 retail load growth expectations to 0.5%-1.5%. Industrial customers have the lowest rate, so this does not have significant impacts on our EPS. Looking ahead to 2023, our expectation is for industrial customers to move through their delays and get back to the original forecast of 2%-3%. Economic development efforts in New Mexico have increased the number of continuing inquiries coming from companies looking to relocate or expand in our state, particularly from those who are looking to achieve their own clean energy goals. We play a key role in working with these companies to plan for their energy needs. As a result, we anticipate growth in our system in the years to come. Load growth at TNMP has exceeded expectations across the board. Volumetric growth has been 2.8% year to date, and we have increased our expectations for the year to a range of 2%-3%. On demand-based load, usage from crypto mining customers has pushed growth up to double-digit levels. Without crypto mining usage, demand-based load has grown consistent with our expectations for the year of 2.5%-3.5%. For this year, our demand-based load should come in around 14%-16%. Weather was also a factor for TNMP in the Q3. The quarter started out looking like it would set a new record for the hottest summer in Texas until a shift in weather pattern brought in some rain. The record for the hottest summer in Texas still belongs to 2011. TNMP's peak demand, however, has grown nearly 40% since 2011 and hit its most recent peak at the end of September. Now turning to slide eight. I'll cover some operational highlights for PNM. As Pat mentioned, PNM filed its grid modernization plan with the commission in October. Legislation passed in 2020 encourages utility investments in grid infrastructure to meet the evolving needs of customers today and into the future. Our current infrastructure only provides one-way communication when monthly usage data is collected by meter readers, so our first priority in the plan is for smart meters and multi-directional communication. With these investments, customers will be able to gain insight into their own energy usage and make real-time decisions to impact their bills. PNM will also be able to improve service to our customers by using the real-time data to identify and respond to outages more quickly. Our proposed grid mod investment also supports the addition of both utility scale and distributed renewable generation and storage resources, which will be critical in PNM meeting the state's clean energy goals. Newer technology can also facilitate more demand response programs, something that has been requested by our commission. The $344 million plan was filed in early October and hearings are scheduled to begin March 20. We requested approval for our investment plan by July 1st, with implementation for a rate rider beginning in September, which is after summer rates end and customer bills are lower. Year one of investments under the plan begins upon plan approval, and the table on this slide shows how the $344 million is expected to break down by calendar year. I also wanted to highlight our FERC-regulated transmission business as we have been seeing strong earnings growth in this area. The Western Spirit contract began in December of last year and is providing $0.17-$0.18 of increased earnings for us this year. This contract is tied to a new transmission line, one of the only new lines constructed in New Mexico in decades. In addition to this contract, we've also seen higher overall system demand. Resource constraints across the West have driven up market prices as well as demand for transmission to move energy across our grid. As power prices increase, we see greater interest in higher frequency, short-term transmission purchases to meet specific needs at the lowest cost. As demand remains elevated across the West, we expect to see a corresponding level of transmission activity. On slide nine, I will cover updates on our key regulatory proceedings. We've already covered this week's ruling from the New Mexico Supreme Court. We'll be filing a PNM general rate review in December. Our last rate review was based on a 2018 test year, with rates phased in over 2018 and 2019. We will file this review with a 2024 future test year, so there will be six years of rate-based investments to recover. Our original plans to file rate cases in 2020 and 2021 were deferred because of COVID and the merger proceedings. The rate-based additions in this case will show steady investments in T&D infrastructure to improve grid resilience, enhance reliability, and support the transition to carbon-free resources. New substations, feeders, and power lines directly enhance service to our customers. The impact to our customers' rates of these investments will be significantly mitigated by the benefits of our transition out of coal and the lower cost renewable resources coming online. In addition, PNM's participation in the Western Energy Imbalance Market provides offsets to fuel costs, and this year has benefited customers $23 million through September. As a result, PNM's customer bills have remained well below the regional and national averages. Through July 2022, the average annual residential bill at PNM was $83 compared to our regional peers of $117. We'll share more details about our general rate review once we have submitted our application with the commission in December. At TNMP, we have implemented new distribution and transmission rates for timely recovery of over $225 million of new rate-based investments. I'm gonna turn things over to Lisa to walk through earnings impacts for the quarter and considerations for guidance going forward. Thank you, Don, and good morning, everyone. Turning to slide 11, with a summary of the changes in Q3 earnings compared to last year. As usual, the detail drivers for each segment are available in appendix. Earnings per share for the Q3 grew from $1.37 in 2021 to $1.46 in 2022. As Don mentioned, load and weather increased earnings this year, particularly in Texas, and the TCOS and DCOS rate mechanisms increased earnings on our capital investments at TNMP. Continued resource constraints in the West increased market prices and FERC transmission demand at PNM, in addition to earnings from the new Western Spirit transmission line. These increases were partially offset by depreciation expense on new investments across both utilities. At PNM, lower market performance on our decommissioning and reclamation trusts reduced earnings compared to last year. These long-term trusts, along with our pension, remain well funded despite the challenging market conditions in 2022, and we don't anticipate making any cash contributions to these trusts in our current plan. Higher interest expense also reduced earnings, and I will talk more about our financing plans in a few minutes. Slide 12 has our revised capital plan through 2025 of $3.7 billion. This investment plan continues to be focused on T&D infrastructure and meeting the growing needs of our customers across New Mexico and Texas. We have added $131 million for our grid mod plan as part of PNM T&D, along with an additional $100 million across the business to support investments in reliability and resiliency. We continue to monitor supply chain and inflation, and our partnership with our integrated supplier has mitigated impacts to our business. We have also taken steps to improve our equipment standardization, identify critical equipment, and where possible, we have put in earlier orders for long lead time equipment. We will continue to monitor these trends and look to manage any impacts within our capital investment plans. Slide 13 shows the rate base associated with this investment plan grows 8% over 2020 levels. At PNM Retail, we continue our transition out of coal plant investments, and the rate base remains stable over the period. The majority of growth in our plans comes from recovery of rate base attributed to PNM's FERC transmission operations and TNMP. The recovery mechanisms for these investments through deferred formula rates and the TCOS and DCOS mechanisms at PNM allow for more timely recovery as these portions of our business expand. In addition, investments made associated with PNM's Grid Mod program are expected to be recovered through a rate rider, resulting in approximately 75% of our rate base growth being recovered through formula rates, annual filings or riders. Slide 14 provides details around our financing plans. We have limited refinancing needs in the near term and have ample liquidity under our existing facilities. At PNM, the proceeds from securitization bonds next year will reduce the need for new debt to fund near capital investments. At PNM, we have been accessing the capital market each year, and these issuances will be included in future rate filings. Most of our variable rate debt is associated with a term loan at our holding company that is planned to be transferred to Avangrid under the terms of the merger agreement at closing. In the meantime, we have taken steps to mitigate the impact of rising short-term interest rates. We now have $850 million hedged, fixing the variable rate portion of our debt at an average rate of 3.5% through 2023. Beyond 2023, we're focused on investing in the business while being mindful of customer impact and maintaining investment-grade credit metrics across our business. Over a longer-term horizon, we would look to optimize our financing needs based on current market conditions as we have done in the past. As I've indicated before, we intend to implement an ATM program before the year-end, and you will see that filing come across shortly so that we have another tool available to meet future equity needs. Turning to slide 15, I will wrap up with our forward-looking guidance. We are raising our guidance for 2022 based on the strength of earnings year to date and are projecting earnings per share in the range of $2.63-$2.68. For 2023, we are maintaining our range of $2.60-$2.75. We continue to expect strong growth at the utilities with load growth and rate recovery driven by FERC transmission and PNM, and we'll see some offset by higher interest rates. We plan to provide our typical segment-level details and EPS drivers as part of our year-end call in February. We have a strong track record of delivering results and remaining flexible and adaptable to changing market conditions. We are continuing to target the 5% growth rate from 2020 to 2025, and our annual guidance shows that we are on track to achieve this target. We will continue to monitor changes in our environment and look for ways to offset impacts to customers and maintain our long-term objectives. With that, I'll turn it back over to Pat. Thank you, Lisa. Before I open it up for questions, and please make sure you save some questions for us at EEI, I'd like to thank our crews in Texas who made their way to Florida to assist in the restoration efforts after Hurricane Ian. This type of assistance exemplifies the best of our company and the best of our industry as our partners get together to help customers. Marlise, let's open it up for questions. Thank you very much. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your questions have been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Thank you. Our first question comes from Ryan Levine from Citi. Ryan, please go ahead. Thank you. For the 2023 guidance that was maintained, can you walk us through what the impact was from the higher interest rates that were hedged that you highlighted in terms of the impact that was offset by other factors? Sure. Good morning, Ryan. It's Pat. I'm going to have Lisa answer that one. Yeah. Hi, Ryan. Good to talk to you. Yeah, so we have hedged $850 million of our variable rate debt through 2023 at 3.5%. We will have our normal year-end guidance call in February, and so at that time, we will provide detailed drivers and EPS drivers, Ryan. Okay. Load growth was very strong for your outlook for 2022. You mentioned crypto demand. Are you seeing any drop-off in that demand into the Q4 and into next year? Yeah. Good morning, Ryan. How are you doing today? No, we haven't. I mean, we continue to see it hit about that level as we take into consideration in 2023, we look at all factors associated with that. I think one of the key things is our core demand growth continues at that 2.5%-3.5%, and the crypto is on top of that, so. Okay. Last question from me. In terms of the equity issuance that you highlighted, the pending filing of an ATM. Do you anticipate utilizing any of that ahead of any decision around the pending merger? Yeah, Ryan, like we've said, we have identified up to $200 million of equity needs by the end of 2023. Like I said before, we've put an ATM in place to make sure that we have ample of tools in the toolbox. We will just look at the next year and we just want to make sure with the ATM program that we have the flexibility. Okay. Thanks for taking my questions. Look forward to seeing you at EEI. Thanks, Ryan. See you there. Thanks, Ryan. Our next question comes from Jonathan Reeder from Wells Fargo. Jonathan, please go ahead. Hey, good morning, team. Good morning, Jonathan. Good morning. Per the appendix, it looks like, you know, above normal weather year to date has been $0.11 favorable. Should we be thinking that, you know, weather is what really drives the midpoint to midpoint 2022 guidance increase, whereas, you know, the higher non-weather related demand is offsetting the interest expense headwind? You know, I think that's a good way to look at it. I mean, I think the core business. I think there's a couple of things, Jonathan. I think clearly we saw the benefits of weather. We saw our FERC transmission business with the constraints in the West provide benefits in that arena as well. Yeah, those things, the strong utility performance both at TNMP and PNM, that helped offset some of that corporate debt interest. Okay. When we look at kind of 2023, that weather benefit goes away, you know. In other words, you're kind of then the starting point is back at the middle of that original 2022 guidance range, perhaps. You know, your normal growth and that, I guess, the interest headwind again is offset by that core business strength, and that's how you're able to kind of maintain the 2023 range. Yeah. We always look at weather when we prepare a guidance range to normal weather, right? That's what we had anticipated in 2023. We feel very comfortable with the range that we have provided in 2023. We did have some upside on weather this year, and so of course, you're going to see the growth being a little lower between 2022 and 2023 as a result. Right. Okay. On the grid mod application, can you remind us about the rate rider request? Like, is there a precedent for a grid mod rider in the state, or is this a, you know, a novel request that? Yeah. It's actually included. Jonathan, it's actually included in the legislation, so it provides that avenue to be able to file under a rider. Okay. Assuming the commission upholds the legislation might be the question in New Mexico, but hopefully that'll be, you know, I guess a little better if or when the new commission. Yeah, Jonathan, this will be heard in March. The timeframe will be the hearings and decision in next year under a new commission. Okay. Is there any update on the appeal by the, like, I think it was a women's Indigenous group, or maybe both a women's and an Indigenous group, to the Supreme Court regarding, you know, the constitutionality of that constitutional amendment to move to the appointed commission? Ryan, there isn't really any update on that. The attorney general has filed and spoken out that they believe that the appeal is not based on anything. That is not on the list of things that we worry about. Okay. What is on the list that you worry about? Well, you know, I worry that my general counsel is gonna now try to eat all of my Halloween candy, so. Hopefully you got some Reese's Pieces, not the peanut butter cup. No, there are absolutely no Reese's here, Jonathan. So if you want to be nice at EEI, you can bring me some. You can bring me some. Either way. I'll bring some. Okay. I'll bring some. We'll see you at EEI. Thanks. Okay. Thanks, Jonathan. Bye. Thanks, Jonathan. Let me remind you, if you would like to pose a question, please press star then one. Our next question comes from Julien Dumoulin-Smith from Bank of America. Julien, please go ahead. Thank you, operator. Good morning, team. Thank you guys for the opportunity. Good update here. So just a couple things, just to tick through. Again, I can't promise I'm not ticking through all the EEI questions here. Maybe to take it from the top here. The grid mod seems to have been reflected through the CapEx. Seems like average rate base didn't see a tick up for 2023 and hence why there's no change in the 2023 guidance, or at least it's not material enough to change the range, especially against the interest rate dynamic you spoke about earlier. Is that kind of a fair way to characterize that? That's a fair way of characterizing it, Julien. Got it. Excellent. Thank you. Related here, can you talk about financing? Just, again, I know you guys are going to come up with this later, but you alluded to the ATM. You had some equity needs in the plan, or the legacy plan. I'll call it that. You've updated your CapEx and rate base through 25 here. 8% CAGR versus 7.7% earlier. Is there incremental equity to fund that or just is it still kind of ballpark the same? Again, obviously it's embedded in that to make it explicit, how do you think about AMT as a part and other factors that may play into it as well, right? Again, this is more of a cash flow question versus the earlier equity needs. We're still keeping the same equity needs that we had defined before, Julien. We have up to $200 million through 2023. Beyond that, we will optimize our financing plans based on market conditions. We're really focused on reaching that earnings growth target of 5%. Excellent. Okay, great. Thank you. Then maybe if I can, just in terms of the rate case timing, the grid mod filing, and then ultimately the backdrop of another bite at the apple of the deal, if you will. Can you talk about sort of the parallel process here, especially between the rate case and the deal? I mean, just how do you think about that timeline, both the filing and ongoing prosecution of both efforts or all three efforts here as they come to some fruition here in 2023, each of them? Yeah. Julien, the grid mod schedule is already set, so that one's in there, and that will proceed along the normal administrative proceedings for the commission. The rate case will be filed, as we said, this year in December. It will go on the normal schedule where it gets suspended and hearings set, et cetera. That will go after the grid mod filing in terms of when the commission hears it. As we said in the merger agreement, or excuse me, in the settlement with the intervenors, we wouldn't file a rate case until December of this year. We need to file a case. We haven't filed one for a long time. Those two go on a normal path. Then the merger. If the commission decides they'd like to hear it again and bring it back to the Supreme Court, that's kind of on their timetable. If it goes through the court process, it's a little longer. I think the one that we don't know exactly when the schedule will be yet is the merger. That would not get in the way of either the grid mod or the rate case. Conversely, the rate case or the grid mod wouldn't get in the way of having the merger heard early in the year. Got it. All right, excellent. I presume for at least the time being, I know that Western Resource Advocates is a hot button subject across all states. No updates here from that and/or IRA, you know, juxtaposed here as well, at least thus far, right? Again, obviously, there's a lot moving perhaps behind the scenes here, but more formally to reflect on the need and the cost coming down. Yeah. The team continues to work on resource advocacy and is making good progress. We'll have more of an update when we do our year-end call. In terms of the IRA, will it help? You know, yes, the issue is the rules haven't been written yet. As you know, with Treasury, the devil's in the details. Until we see the final rules, we aren't going to plug that in yet. But I think people have underestimated what a game changer that bill will be, so. Right. Underestimated what a game changer it will be for your service territory and the opportunities it affords, your customers. Is that a fair way of saying that? No, I think it's a game changer for climate in general. I'm sorry, that wasn't a particular statement about us, so. Always gotta check. Totally. I know. Absolutely. All right, there we go. That's the deal. Reese's Pieces it is. All right, we'll see you then. Great. See you. Yeah. Thanks, Julien. Thanks, Julien. Take care. Ciao. Ciao. This concludes our question and answer session. I would like to turn the conference back over to PNM CEO Pat Vincent-Collawn for some closing remarks. Thank you. Thank you, Marlise, and thank you again, all of you, for joining us this morning. We look forward to meeting with many of you at the EEI Financial Conference. Until then, if you haven't voted already, please do so. Stay safe and always love your lawyer. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a good day.