Climate Change Report

Climate Change Report 

Real Change | Real Results

We recognize that climate change is a vital issue that demands bold action. We hear the voices of our stakeholders, from investors and businesses to our customers, employees and community partners who are conscientious about reducing their own impact on the environment and are concerned about the greenhouse gas emissions associated with generating electricity. We agree, and at TXNM Energy we are taking action to protect our environment and conserve our natural resources while building a clean, secure and sustainable energy future.

TXNM Energy has a long history of environmental stewardship, balanced with cost conscientiousness. We advance the use of cleaner sources of energy as well as promote responsible conservation measures, including energy efficiency. We have made, and continue to make, significant investments to reduce the environmental impact of delivering power while minimizing the cost to our customers.

PNM, our New Mexico utility, previously announced its plan to completely exit coal generation by 2031 and has already significantly reduced overall power plant emissions by retiring two units of the coal-fired San Juan Generating Station in 2017 and the remaining two units in 2022, reducing coal generation to less than 10% of its system-wide resource portfolio.

Aided by the Energy Transition Act of 2019, PNM will continue down the path of transitioning existing energy resources to carbon-free resources. Our resource changes have achieved dramatic reductions in carbon emissions and our future plans will continue to lead us to a clean portfolio of electricity generation:

• PNM has set a goal for our electricity generation to reach 100% emissions-free by 2040, five years ahead of the state’s carbon-free mandate.

[1] The Paris Agreement's goal is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

The table below reports annual CO₂ emissions and emissions intensity rates from PNM’s system-wide resources (including owned, leased and PPA resources):

The chart below provides the PNM system-wide (including owned, leased and PPA resources) carbon emissions intensity trend between 2005 and 2022. PNM’s carbon intensity has decreased by approximately 35% since 2005.

Greenhouse Gas Accounting Program

TXNM Energy has developed and implemented a company-wide greenhouse gas accounting program based upon industry-recognized and accepted protocols. This expanded program is part of the company’s efforts to improve its overall sustainability program and track carbon reductions as we move towards our 100% emissions-free goal by 2040. TXNM Energy developed its greenhouse gas emissions inventory based upon recognized best practices, including as a primary reference the World Resources Institute and World Business Council for Sustainable Development (WRI/WBCSD) document titled The Greenhouse Gas Protocol, A Corporate Accounting and Reporting Standard, Revised Edition March 2004 (GHG Protocol). Because the GHG Protocol provides limited guidance for electric power utilities, TXNM Energy also used The Climate Registry’s (TCR) Electric Power Sector Protocol, version 1.0 dated June 2009 as a key reference for developing the inventory. TXNM Energy is also participating in the EPRI’s research and development program associated with understanding the electric utility industry’s greenhouse gas inventory and how to identify and quantify direct and indirect greenhouse gas emissions.

TXNM Energy’s program considers greenhouse gas emissions in three categories across the company:

1. direct emissions from combustion sources ("Scope 1”),
2. indirect emissions such as those associated with energy consumption in company-owned buildings (“Scope 2”), and
3. other indirect emissions that occur in the value chain (both upstream and downstream emissions), including greenhouse gases from purchased goods and services and employee commuting (“Scope 3”). 

PNM’s Scope 1 and Scope 2 emissions are included in our full Sustainability Report.

Climate READi

In 2022, PNM joined a consortium of energy companies to address the growing risk of climate change. The Climate Power Resilience and Adaptation initiative (Climate READi) is a three-year initiative directed by the EPRI to develop a comprehensive approach to physical climate risk. To date, a collaboration of over 100 organizations including over 40-member electric utility companies and 70 stakeholders participating as part of an affinity group are involved, including national research laboratories, academia and environmental groups. The Climate READi work is exploring the risks associated with climate and extreme events, including extreme heat and cold, drought, wildfire weather, and heavy precipitation. As the impacts of physical climate risk grow more prevalent each year, a resilient and adaptive grid has become increasingly critical. This collaboration will allow PNM to integrate consistent, science-based insights into our planning process and prioritize the work we do to best serve our customers and the grid in the face of increasing climate challenges. Climate READi is a first-of-its kind initiative in the country where PNM, along with other utility companies and stakeholders, will develop a consistent approach to analyzing the risks of climate change when planning, designing and operating the power system. The initiative is intended to create a more adaptable and resilient power system for energy companies and their customers that reinforces the existing grid while also creating additional safeguards against climate change as PNM and the power industry transitions toward greater use of carbon-free and renewable resources.

Generation Assets

The table below presents the net book value for each of PNM’s owned generation facilities at December 31, 2022:

Notes:

The New Mexico Energy Transition Act allows for the recovery of undepreciated investments, decommissioning and reclamation costs related to the retirement of PNM’s coal assets.  The Energy Transition Act also contemplates the recovery of undepreciated investments and decommissioning costs for other electric generation facilities (such as PNM’s natural gas assets listed above that are in rate base and were granted a certificate of convenience and necessity prior to January 1, 2015) if the NMPRC requires that they be retired and replaced with lower or zero carbon dioxide emitting resources to comply with the increased renewable energy and zero-carbon standards of the Energy Transition Act.

Statements made in this Report that relate to future events or our expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. We assume no obligation to update this information.

Because actual results may differ materially from those expressed or implied by these forward-looking statements, we caution readers not to place undue reliance on these statements. Our business, financial condition, cash flows, and operating results are influenced by many factors, which are often beyond our control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. These factors include the risks and uncertainties described in the "Risk Factors," "Quantitative and Qualitative Disclosures about Market Risk," and "Management's Discussion and Analysis" sections of our Forms 10-K and 10-Q filed with the SEC.