PNM Resources, Inc.
Q1 2015 Earnings Call Transcript

Published: 1 May 2015

[Operator:]

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.

[Jimmie Blotter:]

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.

[Pat Vincent-Collawn:]

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 to earn approval from the commission, which will allow PNM to continue to deliver the safest, most reliable, most cost effective and environmentally responsible power possible to our customers. Let's turn to Slide 5 to review the BART filing. The hearing examiner issued his recommendation in the decision case on April 8. It included the denial of the CCN for the 132 megawatt of additional capacity of unit 4, which could be reconsidered when there is a substantially final ownership restructuring agreement and a contract for the post 2017 coal supply. It also included approval of a CCN for the 134 megawatts of Palo Verde Unit 3 at the projected net book value as of December 31, 2017, which is estimated to be $1,071 per kilowatt. The stipulated settlement agreement had valued Palo Verde 3 at $1,650 per kilowatt. It also included conditional approval of the abandonment of San Juan Unit 2 and 3 and recovery of 50% of the undepreciated assets from Units 2 and 3, which would include $26 million that the settlement assigned to the additional Unit 4 capacity. And finally, it included deferral of the determination for the balanced draft technology to the 2016 general rate case. On April 20, PNM filed a robust series of exceptions to the hearing examiner's recommended decision. Our exceptions were based on these key concepts. First, in recommending rejection of the stipulation, the hearing examiner failed to adhere to the important public policy of favoring settlements. The stipulations recommendations upset the balance inherent in settlements. In recommending denial of a CCN for additional capacity in San Juan Unit 4, the commission would fail to properly apply its own standards for approval. The concerns about uncertainties can adequately be addressed through appropriate conditions attached to the approval of a CCN. Denial of the CCN for additional capacity in San Juan Unit 4 and granting only conditional approval to retire San Juan Units 2 and 3 creates further uncertainty that is unnecessary. It would jeopardize the continued operation of all San Juan units, which would negatively impact customers, particularly in line for a substantially complete agreement that would provide significant customer benefits in the coal pricing. A full-time closure would also have a devastating impact on the Four Corners region. Third, in recommending a lower valuation for Palo Verde Unit 3, the recommended decision improperly imposes additional burdens on shareholders to gain additional benefits for customers, even though the recommended decision acknowledges that customers benefit from the valuation proposed in the settlement agreement. Related to the SNCR and balance draft capital, the record does not support the hearing examiner's view that serious doubt has been established about the need for balance draft. Balance draft is required by San Juan new stores review permit. There is no evidence in the record that justifies the hearing examiner's second guessing the decision of another agency with jurisdiction to require balance draft. Want to go now to Slide 6 for an update on the coal supply and restructuring agreement. I am pleased to announce that we intend to file two substantially final agreements with the commission later today, a new coal supply agreement and a participant restructuring agreement. The coal supply agreement indicates that the new owner will be Westmoreland Coal Company, which will take over operations from BHP at the beginning of 2016 rather than the end of 2017, which is when our agreement with BHP would have terminated. Significantly, the cost of coal related to this contract will result in substantial savings for PNM customers. The earlier transaction date will allow PNM customers to more quickly benefit from fuel savings of approximately 15% to 20% in 2016 and 2017. This is a big win for PNM's electric customers and for New Mexico as a whole. The new coal price further reduces the cost to customers of operating the San Juan plant strongly reinforcing the conclusion that keeping two units running at San Juan is unequivocally the best option to continue to providing safe, reliable and cost effective power to our customers, while also providing significant environmental benefits. As a PNM customer I know how important this balance is. We also have substantially final restructuring agreement among our participants. This agreement identify who the ongoing owners of the plant will be. The agreement does identify that PNMR Development and Management Company, a subsidiary of PNM Resources, will take ownership of an additional 65 megawatt of San Juan Unit 4, which the City of Farmington had considered acquiring. Chuck will provide you with more information about these agreements in a few moments. Final steps for both of these documents are the New Mexico Commission's approval of the CCN for additional 132 megawatts in San Juan Unit 4 and the party obtaining final approval from their respective governing bodies. We are extremely pleased with the progress that has been made on these agreements. We strongly believe that based on these significant development, the commission will see the value in conditionally approving the CCN for a 132 megawatt in Unit 4. This will then give us the ability to finalize the agreement and opens the door for us to provide customers with access to affordable, reliable power for years to come. Moving to Slide 7, I will review PNM 2016 future test year general rate case filing. We received a substantial amount of attention on our general rate case filing, with much of it focused on the DG interconnection fee that we have proposed. We anticipated this would be the case and we are working though the many request for data that are coming in on this topic, as well as other items of interest as part of the discovery process. In March, interveners raised a few specific issues regarding our filing. These were related to an appropriate date for our future test year, whether appropriate cost justification was included in our application and complaints that our electronic files were not fully functional. On April 17, the hearing examiner proposed the decision. It recommended that the commission find our rate application to be incomplete and reject it on the grounds that it does not meet the future test year rule. The hearing examiner cites procedural defects in the filing, including insufficient justification of forecasted cost and a lack of fully functional electronic file. The hearing examiner does, however, allow keeping calendar year 2016 as our future test year. She also recognizes that an alternative to dismissing the application would be to allow PNM to supplement the filing. We disagree with the hearing examiner's conclusion and filed exceptions to the initial recommended decision yesterday. We believe our filing meets the requirements established for a future test year. However, the commission finds that it needs more information we will of course provide it. If that's necessary, we believe it can be done through a supplemental filing rather than having to re-file the entire case. The next steps in the case are for reply to exceptions to be filed by May 5. Following that, the general counsel's office will prepare a recommended order and the commission will then consider that order. We expect the commission will vote at the end of May or the beginning of June. If the commission were to accept the hearing examiner's recommendation, we believe that this could delay the implementation of new rates until mid 2016 and we would expect to make the needed fillings very quickly. However, we are confident that our filing is complete and meets the necessary requirement and we are hopeful the commission will put the case back on track. Let's now move to Slide 8 and a quick overview of two other regulatory filings. In the FERC transmission case, we filed an uncontested settlement agreement on March 20 of this year and the rates took effect April 1. We were able to achieve a 10% ROE in this filings. And based on our past experience, FERC approval generally takes from six months to a year. In Texas, we made our first TCOS filing of the year for TNMP in January, on January 16. It was approved and the $4.4 million increase went into effect on March 16. Now, I'll turn things over to Chuck for an in-depth look at the numbers.

[Chuck Eldred:]

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 for PNM Resources. Restructuring agreement addresses everything from capital expenditures to coal inventory supplies. This is a complicated set of agreements. Today, we will be following a substantially complete restructuring agreements, we have committed to having the mine reclamation agreement completed by June 1, and we are also working on the decommission agreement, which is expected by July 1. Overall, we are committed to having final execution of all agreements by August 31 of this year. Now, moving on to Slide 11 for load, beginning with PNM, we saw a considerable improvement in residential load, up 2% compared to first quarter of 2014. Both commercial and industrial, however, were down. This brought over our load down 1.3%, which is in-line with our guidance of flat to down 2%. We did see customer growth at PNM come in slightly better than forecasted at 0.7%. We continue to see signs that the economy has stabilized and that that some aspects maybe growing as our residential load would indicate. For example, in February 2015, professional and business services were up 2700 jobs or 4.8% on a year-over-year in Albuquerque. This is the largest gain we've seen since August of 2007 for this sector and the best year-over-year improvement of all sectors. The University of New Mexico's Better Business and Economic Research commonly states that the professional and business services sector drives the local economy more than any other factor. We believe we are beginning to reach a point of stabilization in the New Mexico economy. Moving to TNMP, load is up 1.7%, residential is up 2.1%, while commercial is up 1.6%. First quarter load growth is slightly below the guidance range. While the total degree days from the first quarter of this year and last year are comparable, Texas had severely cold weather early in the first quarter of last year, which is likely to skew in the weather normalization. Our forecast continued to indicate that for the year TNMP load should be up 2% to 3%. We also saw customer grow for TNMP came in higher than forecasted at 1.4% for the first quarter 2015, compared to the first quarter of last year. The economy in Texas continues to perform well, in spite of the downward pressure on oil prices. In fact, the Brookings Institute rated Houston and Dallas number two and three for the top economic recoveries since the recession. And unemployment continues to outpace US average at 4.2%. Now, turning to Slide 12 for the first quarter 2015 financial results. Ongoing earnings were $0.21 compared to $0.18 last year. Looking at the segments, PNM came at $0.03 higher than last year and TNMP was up $0.01, while corporate and other was down $0.01. Now, for more detail on PNM and TNMP's drivers on Slide 13. Starting with PNM, the half price renewable Palo Verde leases caused a year-over-year improvement of about $0.03. We had a $0.01 pick up this quarter, resulting from the Department of Energy reimbursement of the spent fuel cost of Palo Verde from 2011 through 2014. AFUDC contributed $0.01 in the first quarter 2015. This is attributable to higher capital spending related to primarily to the 40 megawatts of solar coming online this year in the installation of SNCRs. The new refined coal process in place of San Juan also improved earnings by $0.01 and the nuclear decommissioning trust had gains that were $0.01 higher than first quarter last year. Load cost earnings to be lower by $0.01 as did higher depreciation in property taxes. The termination of the Gallup FERC generation contract caused results to be $0.01 lower compared to the first quarter of last year. We have requested that these assets be reallocated to the PNM retail jurisdiction in our 2016 rate case. Moving to TNMP, we saw an improvement for rate relief from the semi-annual TCOS filings of $0.02. Depreciation and property taxes caused results to be $0.01 lower than the first quarter 2014. Now, turning to Slide 14. We are pleased with the first quarter results. We are also affirming our 2015 guidance range of $1.50 to $1.62. Moody's issued its statement on April 17, the comment was in response to the hearing examiner recommendation that we have received on BART and the general rate case. Although, Moody's is not changing our rating at this time, they did indicate that if the commission were to adopt these recommendations, they would view this as a credit negative for PNM and PNM Resources. S&P did not issue a comment, but they are closely monitoring the regulatory developments at PNM. Today, we are on a positive outlook at both PNM and -- both at Moody's and S&P. However, unfavorable regulatory outcomes in BART or the rate case would be considerable -- considered credit negative. If downgrades would have happened, our financing cost would increase and those increases would be passed along the customers in the rate making process. We have filed strong exceptions of both the BART proceedings and the rate case. And today, we will file agreements related to the restructuring and coal supply at San Juan. These developments should help us to improve the uncertainty in both of these cases as we continue to focus on executing our plan. With that, I'll turn it back over to Pat.

[Pat Vincent-Collawn:]

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.

[Operator:]

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

[Anthony Crowdell:]

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?

[Chuck Eldred:]

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.

[Anthony Crowdell:]

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

[Chuck Eldred:]

15% to 20% of savings, yes.

[Anthony Crowdell:]

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?

[Chuck Eldred:]

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.

[Anthony Crowdell:]

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?

[Chuck Eldred:]

That's correct, yes.

[Anthony Crowdell:]

Great. Thanks for taking my question, guys.

[Chuck Eldred:]

Okay, Anthony.

[Operator:]

Our next question comes from Ali Agha with SunTrust.

[Ali Agha:]

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?

[Pat Vincent-Collawn:]

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.

[Ali Agha:]

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?

[Pat Vincent-Collawn:]

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.

[Ali Agha:]

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?

[Chuck Eldred:]

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.

[Pat Vincent-Collawn:]

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.

[Ali Agha:]

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?

[Chuck Eldred:]

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.

[Ali Agha:]

Yes, got it. Okay. Thanks.

[Pat Vincent-Collawn:]

Thanks Ali.

[Operator:]

Our next question is from Paul Ridzon with KeyBanc.

[Paul Ridzon:]

Good morning. And congratulations on these filings.

[Chuck Eldred:]

Thanks, Paul.

[Pat Vincent-Collawn:]

Thanks, Paul. Good morning.

[Paul Ridzon:]

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

[Chuck Eldred:]

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.

[Paul Ridzon:]

Great, great. Thank you very much.

[Pat Vincent-Collawn:]

Thanks, Paul.

[Operator:]

Our next question is from Paul Fremont of Nexus.

[Paul Fremont:]

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?

[Pat Vincent-Collawn:]

Paul, you are talking about the rate case?

[Paul Fremont:]

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

[Pat Vincent-Collawn:]

That's correct.

[Paul Fremont:]

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?

[Pat Vincent-Collawn:]

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.

[Paul Fremont:]

That's it for me. Thank you.

[Pat Vincent-Collawn:]

Thanks, Paul.

[Operator:]

The next question is from Brian Russo of Ladenburg Thalmann.

[Brian Russo:]

Hi good morning.

[Pat Vincent-Collawn:]

Good morning, Brian.

[Brian Russo:]

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?

[Chuck Eldred:]

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.

[Pat Vincent-Collawn:]

On the fuel piece yeah.

[Chuck Eldred:]

Fuel piece.

[Brian Russo:]

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.

[Pat Vincent-Collawn:]

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.

[Brian Russo:]

Okay, great. Thank you.

[Pat Vincent-Collawn:]

Thanks.

[Operator:]

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

[Feliks Kerman:]

Thank you. And congratulations on a great quarter.

[Pat Vincent-Collawn:]

Thanks, Feliks.

[Feliks Kerman:]

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?

[Chuck Eldred:]

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.

[Feliks Kerman:]

Okay. Thank you. And then just --

[Chuck Eldred:]

[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.

[Feliks Kerman:]

Okay. Thank you.

[Chuck Eldred:]

Welcome.

[Feliks Kerman:]

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?

[Chuck Eldred:]

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.

[Feliks Kerman:]

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?

[Chuck Eldred:]

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.

[Operator:]

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

[Pat Vincent-Collawn:]

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.

[Operator:]

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