The following Management's Discussion and Analysis of Financial Condition and
Results of Operations for PNMR is presented on a combined basis, including
certain information applicable to PNM and TNMP. The MD&A for PNM and TNMP is
presented as permitted by Form 10-Q General Instruction H(2). This report uses
the term "Company" when discussing matters of common applicability to PNMR, PNM,
and TNMP. A reference to a "Note" in this Item 2 refers to the accompanying
Notes to Condensed Consolidated Financial Statements (Unaudited) included in
Item 1, unless otherwise specified. Certain of the tables below may not appear
visually accurate due to rounding.

                                 MD&A FOR PNMR

                               EXECUTIVE SUMMARY
Overview and Strategy

PNMR is a holding company with two regulated utilities serving approximately
801,000 residential, commercial, and industrial customers and end-users of
electricity in New Mexico and Texas. PNMR's electric utilities are PNM and TNMP.
PNMR strives to create a clean and bright energy future for customers,
communities, and shareholders. PNMR's strategy and decision-making are focused
on safely providing reliable, affordable, and environmentally responsible power
built on a foundation of Environmental, Social and Governance (ESG) principles.

Recent Developments

Merger

On October 20, 2020, PNMR, Avangrid and Merger Sub entered into the Merger Agreement pursuant to which Merger Sub will merge with and into PNMR, with PNMR surviving the Merger as a wholly-owned subsidiary of Avangrid.



Pursuant to the Merger Agreement, each issued and outstanding share of the
common stock of PNMR (other than (i) the issued shares of PNMR common stock that
are owned by Avangrid, Merger Sub, PNMR or any wholly-owned subsidiary of
Avangrid or PNMR, which will be automatically cancelled at the Effective Time
and (ii) shares of PNMR common stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of, or consented
in writing to, the Merger who is entitled to, and who has demanded, payment for
fair value of such shares) at the Effective Time will be converted into the
right to receive $50.30 in cash.

The proposed Merger has been unanimously approved by the Boards of Directors of
PNMR, Avangrid and Merger Sub and approved by PNMR shareholders at the Special
Meeting of Shareholders held on February 12, 2021. On January 20, 2021, the FTC
notified PNMR and Avangrid that early termination of the waiting period under
the HSR Act in connection with the Merger was granted. CFIUS completed its
review of the Merger on February 2, 2021, and has concluded that there are no
unresolved national security concerns with respect to the Merger. On March 10,
2021, PNMR and Avangrid received FCC approval of the transfer of operating
licenses related to the Merger. If the Merger is not completed within 180 days
of March 10, 2021, then extension of FCC approval will be required. On April 20,
2021, FERC issued an order authorizing the Merger. Consummation of the Merger
remains subject to the satisfaction or waiver of certain customary closing
conditions, including, without limitation, the absence of any material adverse
effect on PNMR, the receipt of required regulatory approvals (including the
PUCT, the NMPRC, and the NRC), and the agreements relating to the divestiture of
Four Corners being in full force and effect and all applicable regulatory
filings associated therewith being made. The agreement relating to the
divestiture of Four Corners has been entered into and related filings have been
made with the NMPRC. The Merger is currently expected to close in the second
half of 2021.

On March 30, 2021, TNMP, Merger Sub, Avangrid and all parties to the stipulation
(the "Signatories") filed a unanimous stipulation and agreement in its Joint
Application for approval of the Merger. The Signatories to the unanimous
stipulation agree that a negotiated resolution of this proceeding is in the
public interest, will conserve the parties' resources, and will eliminate
controversy. The approval of the unanimous stipulation is included on the PUCT's
May 6, 2021 open meeting agenda. On April 20, 2021, PNM, PNMR, Merger Sub,
Avangrid (the "Joint Applicants"), the NMAG, WRA, the International Brotherhood
of Electrical Workers Local 611, Dine, Nava Education Project, the San Juan
Citizens Alliance and To Nizhoni Ani, entered into a stipulation and agreement
in the Joint Application for approval of Merger pending before the NMPRC. On
April 23, 2021, an amended stipulation was filed, which joined CCAE in the
stipulation and updated certain stipulated regulatory requirements. On April 25,
2021, the Hearing Examiner in the case issued an order vacating the pre-hearing
conference and procedural schedule. The order requires the Joint Applicants to
meet with all parties to discuss and negotiate, in good faith, a potential
stipulation and establishes a deadline of May 7, 2021 for the Joint Applicants
to file a stipulation and a proposed procedural schedule.


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EIM

On April 1, 2021, PNM joined and began participating in the EIM. The EIM is a
real-time wholesale energy trading market operated by the California Independent
System Operator (CAISO) that enables participating electric utilities to buy and
sell energy. The EIM aggregates the variability of electricity generation and
load for multiple balancing authority areas and utility jurisdictions. In
addition, the EIM facilitates greater integration of renewable resources through
the aggregation of flexible resources by capturing diversity benefits from the
expanding geographic footprint and the expanded potential uses for those
resources. PNM completed a cost-benefit analysis, which indicated participation
in the EIM would provide substantial benefits to retail customers. In 2018, PNM
filed an application with the NMPRC requesting, among other things, to recover
an estimated $20.9 million of initial capital investments and authorization to
establish a regulatory asset to recover an estimated $7.4 million of other
expenses that would be incurred in order to join the EIM. The NMPRC approved the
establishment of a regulatory asset but deferred certain rate making issues,
including but not limited to issues related to implementation and ongoing EIM
costs and savings, the prudence and reasonableness of costs to be included in
the regulatory asset, and the period over which costs would be charged to
customers until PNM's next general rate case filing.

Texas Winter Storm



In mid-February 2021, Texas experienced a severe winter storm delivering the
coldest temperatures in 100 years for many parts of the state. As a result, the
ERCOT market was not able to deliver sufficient generation load to the grid
resulting in significant, statewide outages as ERCOT directed transmission
operators to curtail thousands of firm load megawatts. TNMP complied with ERCOT
directives to curtail the delivery of electricity in its service territory and
did not experience significant outages on its system outside of the ERCOT
directed curtailments. Though several REPs have filed for bankruptcy, TNMP has
regulatory authorization to defer bad debt expense from REPs to a regulatory
asset and seek recovery in a general rate case. At this time, the Company does
not expect significant financial impacts related to this event.

Financial and Business Objectives
PNMR is focused on achieving three key financial objectives:

•Earning authorized returns on regulated businesses •Delivering at or above industry-average earnings and dividend growth •Maintaining investment grade credit ratings

In conjunction with these objectives, PNM and TNMP are dedicated to:



•Maintaining strong employee safety, plant performance, and system reliability
•Delivering a superior customer experience
•Demonstrating environmental stewardship in business operations, including
transitioning to an emissions-free generating portfolio by 2040
•Supporting the communities in their service territories

Earning Authorized Returns on Regulated Businesses



PNMR's success in accomplishing its financial objectives is highly dependent on
two key factors: fair and timely regulatory treatment for its utilities and the
utilities' strong operating performance. The Company has multiple strategies to
achieve favorable regulatory treatment, all of which have as their foundation a
focus on the basics: safety, operational excellence, and customer satisfaction,
while engaging stakeholders to build productive relationships. Both PNM and TNMP
seek cost recovery for their investments through general rate cases, periodic
cost of service filings, and various rate riders.

Fair and timely rate treatment from regulators is crucial to PNM and TNMP in
earning their allowed returns and critical for PNMR to achieve its financial
objectives. PNMR believes that earning allowed returns is viewed positively by
credit rating agencies and that improvements in the Company's ratings could
lower costs to utility customers.

Additional information about rate filings is provided in Note 17 of the Notes to Consolidated Financial Statements in the 2020 Annual Reports on Form 10-K.

State Regulation

The rates PNM and TNMP charge customers are subject to traditional rate regulation by the NMPRC, FERC, and the PUCT.

New Mexico 2016 Rate Case - In January 2018, the NMPRC approved a settlement
agreement that authorized PNM to implement an increase in base non-fuel rates of
$10.3 million, which includes a reduction to reflect the impact of the decrease
in
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the federal corporate income tax rate and updates to PNM's cost of debt
(aggregating $47.6 million annually). This order was on PNM's application for a
general increase in retail electric rates filed in December 2016 (the "NM 2016
Rate Case"). The key terms of the order include:

•A ROE of 9.575%
•A requirement to return to customers over a three-year period the benefit of
the reduction in the New Mexico corporate income tax rate to the extent
attributable to PNM's retail operations (Note 14)
•A disallowance of PNM's ability to collect an equity return on certain
investments aggregating $148.1 million at Four Corners, but allowing recovery of
a debt-only return
•An agreement to not implement non-fuel base rate changes, other than changes
related to PNM's rate riders, with an effective date prior to January 1, 2020
•A requirement to consider the prudency of PNM's decision to continue its
participation in Four Corners in PNM's next general rate case filing

PNM implemented 50% of the approved increase for service rendered beginning February 1, 2018, and implemented the rest of the increase for service rendered beginning January 1, 2019.



On December 29, 2020, Sierra Club filed a motion to re-open the NM 2016 Rate
Case. The motion requests that the NMPRC re-open the NM 2016 Rate Case for the
limited purpose of conducting a prudence review of certain Four Corners capital
expenditures that the NMPRC deferred in its order approving the settlement
agreement. Alternatively, Sierra Club requested that the deferred prudence
review be conducted, and given weight as appropriate, in the Four Corners
Abandonment Application. On February 10, 2021, the NMPRC rejected Sierra Club's
motion to re-open the NM 2016 Rate Case and stated that issues on whether the
terms of the ETA provide an opportunity for consideration of prudence for Four
Corners undepreciated investments included in a financing order or what effects
the rates approved in the NM 2016 Rate Case may have on determining energy
transition cost should be considered in the Four Corners Abandonment
Application.

2020 Decoupling Petition - On May 28, 2020, PNM filed a petition for approval of
a rate adjustment mechanism that would decouple the rates of its residential and
small power rate classes. Decoupling is a rate design principle that severs the
link between the recovery of fixed costs of the utility through volumetric
charges. If approved, customer bills would not be impacted until January 1,
2022. On October 2, 2020, PNM requested an order to vacate the public hearing
and stay the proceeding until the NMPRC decides whether to entertain a petition
to issue a declaratory order resolving the issues raised in the motions to
dismiss. On October 7, 2020, the Hearing Examiner approved PNM's request to stay
the proceeding and vacate the public hearing and on October 30, 2020 PNM filed a
petition for declaratory order asking the NMPRC to issue an order finding that
full revenue decoupling is authorized by the EUEA. On March 17, 2021, the NMPRC
issued an order granting PNM's petition for declaratory order which commences a
proceeding to address petitions. See Note 12. PNM cannot predict the outcome of
this matter.

PVNGS Leased Interest Abandonment Application - On April 2, 2021, PNM filed the
PVNGS Leased Interest Abandonment Application. In the application PNM is
requesting NMPRC authorization to decertify and abandon its Leased Interest and
to create regulatory assets for the associated remaining undepreciated
investments with consideration of cost recovery of the undepreciated investments
in a future rate case. PNM is also seeking NMPRC approval to sell and transfer
the PNM-owned assets and nuclear fuel supply associated with the Leased Interest
to SRP, which will be acquiring the Leased Interest from the lessors upon
termination of the existing leases. In addition, PNM is seeking NMPRC approval
for a 150 MW solar PPA combined with a 40 MW battery storage agreement, and a
stand-alone 100 MW battery storage agreement to replace the Leased Interest. To
ensure system reliability and load needs are met in 2023, when a majority of the
leases expire, PNM is also requesting NMPRC approval for a 300 MW solar PPA
combined with a 150 MW battery storage agreement. For additional information on
PNM's Leased Interest and the associated abandonment application see Note 12 and
Note 13.

Advanced Metering - Currently, TNMP has more than 242,000 advanced meters across
its service territory. Beginning in 2019, the majority of costs associated with
TNMP's AMS program are being recovered through base rates. On October 2, 2020,
TNMP filed an application with the PUCT for authorization to implement necessary
technological upgrades of approximately $46 million to its AMS program by
November 2022. On January 14, 2021, the PUCT approved TNMP's application. TNMP
will seek recovery of the investment associated with the upgrade in a future
general rate proceeding or distribution cost recovery factor filing.

In February 2016, PNM filed an application with the NMPRC requesting approval of
a project to replace its existing customer metering equipment with Advanced
Metering Infrastructure ("AMI"), which was denied. As ordered by the NMPRC,
PNM's 2020 filing for energy efficiency programs to be offered in 2021, 2022,
and 2023 included a proposal for an AMI pilot project, although PNM did not
recommend the proposal due to the limited benefits that are cost-effective under
a pilot structure. On September 17, 2020, the Hearing Examiner in the energy
efficiency case issued a recommended decision recommending that PNM's proposed
2021 energy efficiency and load management program be approved, with the
exception of the proposed AMI pilot program. On October 28, 2020, the NMPRC
approved the recommended decision.

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Rate Riders and Interim Rate Relief - The PUCT has approved mechanisms that
allow TNMP to recover capital invested in transmission and distribution projects
without having to file a general rate case. The NMPRC has approved PNM
recovering fuel costs through the FPPAC, as well as rate riders for renewable
energy and energy efficiency. These mechanisms allow for more timely recovery of
investments.

On April 5, 2021, TNMP filed its 2021 DCOS that requested an increase in annual
distribution revenues of $14.0 million. TNMP requested a procedural schedule
that would result in rates being effective in September 2021. See Note 12.

FERC Regulation



Rates PNM charges wholesale transmission customers are subject to traditional
rate regulation by FERC. Rates charged to wholesale electric transmission
customers are based on a formula rate mechanism pursuant to which rates for
wholesale transmission service are calculated annually in accordance with an
approved formula. The formula includes updating cost of service components,
including investment in plant and operating expenses, based on information
contained in PNM's annual financial report filed with FERC, as well as including
projected transmission capital projects to be placed into service in the
following year. The projections included are subject to true-up. Certain items,
including changes to return on equity and depreciation rates, require a separate
filing to be made with FERC before being included in the formula rate.

In May 2019, PNM filed an application with FERC requesting approval to purchase
a new 153-mile long 345-kV transmission line and related facilities (the
"Western Spirit Line"). Under related agreements, PNM will provide transmission
service to approximately 800 MW of new wind generation to be located in eastern
New Mexico beginning in 2021 using an incremental rate. All necessary regulatory
approvals for PNM to purchase and provide transmission service from the Western
Spirit Line have been obtained.

On March 12, 2021, PNM filed four unexecuted TSAs with FERC totaling 145 MW with
Leeward Energy. The unexecuted TSAs provide long-term firm, point-to-point
transmission service on PNM's transmission system. The unexecuted TSAs are based
on the pro-forma transmission service agreements with certain non-conforming
provisions under Attachment A of PNM's OATT and include PNM's OATT rate. PNM is
filing the unexecuted TSAs at the request of Leeward because the parties have
been unable to reach an agreement on the terms and conditions for transmission
service. See Note 12.

Delivering At or Above Industry-Average Earnings and Dividend Growth



PNMR's financial objective to deliver at or above industry-average earnings and
dividend growth enables investors to realize the value of their investment in
the Company's business. Earnings growth is based on ongoing earnings, which is a
non-GAAP financial measure that excludes from GAAP earnings certain
non-recurring, infrequent, and other items that are not indicative of
fundamental changes in the earnings capacity of the Company's operations. PNMR
uses ongoing earnings to evaluate the operations of the Company and to establish
goals, including those used for certain aspects of incentive compensation, for
management and employees.

PNMR targets a dividend payout ratio in the 50% to 60% range of its ongoing
earnings. PNMR expects to provide at or above industry-average dividend growth
in the near-term. The Board will continue to evaluate the dividend on an annual
basis, considering sustainability and growth, capital planning, and industry
standards.

Under the terms of the Merger Agreement, PNMR has agreed not to declare, set
aside, make or pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its equity securities, or make any
other actual, constructive or deemed distribution in respect of any equity
securities (except (i) PNMR may continue the declaration and payment of planned
regular quarterly cash dividends on PNMR common stock for each quarterly period
ended after the date of the Merger Agreement, in an amount not to exceed $0.3275
for any fiscal quarters in 2021 and 2022, with usual record and payment dates in
accordance with past dividend practice, and (ii) for any cash dividend or cash
distribution by a wholly-owned subsidiary of PNMR to PNMR or another
wholly-owned subsidiary of PNMR).

The Board approved the following increases in the indicated annual common stock
dividend:

                         Approval Date        Percent Increase

                       December 2019                6.0%
                       December 2020                6.5%


Maintaining Investment Grade Credit Ratings

The Company is committed to maintaining investment grade credit ratings in order to reduce the cost of debt financing and to help ensure access to credit markets, when required. See the subheading Liquidity included in the full discussion of Liquidity and Capital Resources below for the specific credit ratings for PNMR, PNM, and TNMP. All of the credit ratings issued by both Moody's and S&P on the Company's debt continue to be investment grade.


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Business Focus



To achieve its business objectives, focus is directed in key areas: Safe,
Reliable and Affordable Power; Utility Plant and Strategic Investments;
Environmentally Responsible Power; and Customer, Stakeholders, and Community
Engagement. The Company works closely with its stakeholders to ensure that
resource plans and infrastructure investments benefit from robust public
dialogue and balance the diverse needs of our communities. Equally important is
the focus of PNMR's utilities on customer satisfaction and community engagement.

Safe, Reliable, and Affordable Power



Safety is the first priority of our business and core value of the Company. PNMR
utilizes a Safety Management System to provide clear direction, objectives and
targets for managing safety performance and minimizing risks and empowers
employees to "Be the Reason Everyone Goes Home Safe".

PNMR measures reliability and benchmark performance of PNM and TNMP against other utilities using industry-standard metrics, including System Average Interruption Duration Index ("SAIDI"), System Average Interruption Frequency Index ("SAIFI") and Customer Average Interruption Duration Index ("CAIDI"). PNM's and TNMP's investment plans include projects designed to support reliability and reduce the amount of time customers are without power.



PNMR and its utilities are aware of the important roles they play in enhancing
economic vitality in their service territories. Management believes that
maintaining strong and modern electric infrastructure is critical to ensuring
reliability and supporting economic growth. When contemplating expanding or
relocating their operations, businesses consider energy affordability and
reliability to be important factors. PNM and TNMP strive to balance service
affordability with infrastructure investment to maintain a high level of
electric reliability and to deliver a safe and superior customer experience.
Investing in PNM's and TNMP's infrastructure is critical to ensuring reliability
and meeting future energy needs. Both utilities have long-established records of
providing customers with safe and reliable electric service.

In March 2020, the World Health Organization declared COVID-19 a global pandemic
and President Trump declared the COVID-19 pandemic a national emergency in the
U.S. The Company continues to closely monitor developments and has taken and
continues to take steps to mitigate the potential risks related to the COVID-19
pandemic. The Company has assessed and updated its existing business continuity
plans in response to the impacts of the pandemic through crisis team meetings
and working with other utilities and operators. It has identified its critical
workforce, staged backups and limited access to control rooms and critical
assets. The Company has worked to protect the safety of its employees using a
number of measures, including minimizing exposure to other employees and the
public and supporting work-from-home and flexible arrangements for all
applicable job functions. The Company is also working with its suppliers to
manage the impacts to its supply chain and remains focused on the integrity of
its information systems and other technology systems used to run its business.
However, the Company cannot predict the extent or duration of the ongoing
COVID-19 pandemic, its effects on the global, national or local economy, or on
the Company's financial position, results of operations, and cash flows. The
Company will continue to monitor developments related to COVID-19 and will
remain focused on protecting the health and safety of its customers, employees,
contractors, and other stakeholders, and on its objective to provide safe,
reliable, affordable and environmentally responsible power. As discussed in Note
12, both PNM and TNMP suspended disconnecting certain customers for past due
bills, waived late fees during the pandemic, and have been provided regulatory
mechanisms to recover these and other costs resulting from COVID-19.

Utility Plant and Strategic Investments



Utility Plant Investments - During the 2019 and 2020 periods, PNM and TNMP
together invested $1.3 billion in utility plant, including substations, power
plants, nuclear fuel, and transmission and distribution systems. New Mexico's
clean energy future depends on a reliable, resilient, secure grid to deliver an
evolving mix of energy resources to customers. PNM has launched the Wired for
the Future capital initiative, which emphasizes new investments in its
transmission and distribution infrastructure with three primary objectives:
delivering clean energy, enhancing customer satisfaction and increasing grid
resilience. Projects are aimed at advancing the infrastructure beyond its
original architecture to a more flexible and redundant system accommodating
growing amounts of intermittent and distributed generation resources and
integrating evolving technologies that provide long-term customer value. See the
subheading Capital Requirements included in the full discussion of Liquidity and
Capital Resources below for additional discussion of the Company's projected
capital requirements.

Strategic Investments - In 2017, PNMR Development and AEP OnSite Partners
created NMRD to pursue the acquisition, development, and ownership of renewable
energy generation projects, primarily in the state of New Mexico. Abundant
renewable resources, large tracts of affordable land, and strong government and
community support make New Mexico a favorable location for renewable generation.
New Mexico ranks third in the Nation for energy potential from solar power
according to the Nebraska Department of Energy & Energy Sun Index and ranks
third in the Nation for land-based wind capacity according to the U.S. Office of
Energy Efficiency and Renewable Energy. PNMR Development and AEP OnSite
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Partners each have a 50% ownership interest in NMRD. Through NMRD, PNMR
anticipates being able to provide additional renewable generation solutions to
customers within and surrounding its regulated jurisdictions through partnering
with a subsidiary of one of the United States' largest electric utilities. As of
March 31, 2021, NMRD's renewable energy capacity in operation was 135.1 MW,
which includes 130 MW of solar-PV facilities to supply energy to the Facebook
data center located within PNM's service territory, 1.9 MW to supply energy to
Columbus Electric Cooperative located in southwest New Mexico, 2.0 MW to supply
energy to the Central New Mexico Electric Cooperative, and 1.2 MW of solar-PV
facilities to supply energy to the City of Rio Rancho, New Mexico. In addition,
PNM's February 8, 2021 application with the NMPRC for approval to service the
Facebook data center includes construction of a 50 MW solar facility owned by
NMRD, which is expected to be operational in 2023. NMRD actively explores
opportunities for additional renewable projects, including large-scale projects
to serve future data centers and other customer needs.

Integrated Resource Plan



NMPRC rules require that investor-owned utilities file an IRP every three years.
The IRP is required to cover a 20-year planning period and contain an action
plan covering the first four years of that period.

NMPRC rules required PNM to file its 2020 IRP in July 2020. In April 2020, the
NMPRC approved PNM's request to extend the deadline to file its 2020 IRP until
six months after the NMPRC issues a final order approving replacement resources
in PNM's SJGS Abandonment Application. On January 29, 2021, PNM filed its 2020
IRP. The plan focuses on a carbon-free electricity portfolio by 2040 that would
eliminate coal at the end of 2024. This includes replacing the power from San
Juan with a mix of approved carbon-free resources and the plan to exit Four
Corners at the end of 2024. The plan highlights the need for additional
investments in a diverse set of resources, including renewables to supply
carbon-free power, energy storage to balance supply and demand, and efficiency
and other demand-side resources to mitigate load growth.

Environmentally Responsible Power PNMR has a long-standing record of environmental stewardship. PNM's environmental focus is in three key areas:

•Developing strategies to provide reliable and affordable power while transitioning to a 100% emissions-free generating portfolio by 2040 •Preparing PNM's system to meet New Mexico's increasing renewable energy requirements as cost-effectively as possible •Increasing energy efficiency participation



PNMR's corporate website (www.pnmresources.com) includes a dedicated section
providing key environmental and other sustainability information related to
PNM's and TNMP's operations and other information that collectively demonstrates
the Company's commitment to ESG principles. This information highlights plans
for PNM to be coal-free by 2024 (subject to regulatory approval) and to achieve
an emissions-free generating portfolio by 2040.

On September 21, 2020, PNM announced an agreement to partner with Sandia
National Laboratories in research and development projects focused on energy
resiliency, clean energy, and national security. The partnership demonstrates
PNMR's commitment to ESG principles and its support of projects that further its
emissions-free generation goals and plans for a reliable, resilient, and secure
grid to deliver New Mexico's clean energy future.

The Energy Transition Act ("ETA")



On June 14, 2019, Senate Bill 489, known as the ETA, became effective. The ETA
amends the REA and requires utilities operating in New Mexico to have renewable
portfolios equal to 20% by 2020, 40% by 2025, 50% by 2030, 80% by 2040, and 100%
zero-carbon energy by 2045. The ETA also amends sections of the REA to allow for
the recovery of undepreciated investments and decommissioning costs related to
qualifying EGUs that the NMPRC has required be removed from retail
jurisdictional rates, provided replacement resources to be included in retail
rates have lower or zero-carbon emissions. The ETA provides for a transition
from fossil-fueled generating resources to renewable and other carbon-free
resources by allowing utilities to issue securitized bonds, or "energy
transition bonds," related to the retirement of certain coal-fired generating
facilities to qualified investors. See additional discussion of the ETA in Note
11 and in Note 16 of the Notes to Consolidated Financial Statements in the 2020
Annual Reports on Form 10-K.

PNM expects the ETA will have a significant impact on PNM's future generation
portfolio, including PNM's planned retirement of SJGS in 2022 and the planned
Four Corners exit in 2024. PNM cannot predict the full impact of the ETA on
potential future generating resource abandonment and replacement filings with
the NMPRC.

SJGS Abandonment Application - As discussed in Note 12, on July 1, 2019, PNM
filed a Consolidated Application for the Abandonment and Replacement of SJGS and
Related Securitized Financing Pursuant to the ETA (the "SJGS Abandonment
Application"). The SJGS Abandonment Application sought NMPRC approval to retire
PNM's share of SJGS in mid-2022, and
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for approval of replacement resources and the issuance of approximately $361
million of Securitized Bonds as provided by the ETA.

The NMPRC issued an order requiring the SJGS Abandonment Application be
considered in two proceedings: one addressing SJGS abandonment and related
financing and the other addressing replacement resources but did not
definitively indicate if the abandonment and financing proceedings would be
evaluated under the requirements of the ETA. After several requests for
clarification and legal challenges, in January 2020, the NM Supreme Court ruled
the NMPRC is required to apply the ETA to all aspects of PNM's SJGS Abandonment
Application, and that any previous NMPRC orders inconsistent with their ruling
should be vacated.

In February 2020, the Hearing Examiners issued two recommended decisions
recommending approval of PNM's proposed abandonment of SJGS, subject to approval
of the separate replacement resources proceeding, and approval of PNM's proposed
financing order to issue Securitized Bonds.  The Hearing Examiners recommended,
among other things, that PNM be authorized to abandon SJGS by June 30, 2022, to
issue Securitized Bonds of up to $361 million, and to establish a rate rider to
collect non-bypassable customer charges for repayment of the bonds (the "Energy
Transition Charge"). The Hearing Examiners recommended an interim rate rider
adjustment upon the start date of the Energy Transition Charge to provide
immediate credits to customers for the full value of PNM's revenue requirement
related to SJGS until those reductions are reflected in base rates. In addition,
the Hearing Examiners recommended PNM be granted authority to establish
regulatory assets to recover costs that PNM will pay prior to the issuance of
the Securitized Bonds, including costs associated with the bond issuances as
well as for severances, job training, and economic development funds. On April
1, 2020, the NMPRC unanimously approved the Hearing Examiners' recommended
decisions regarding the abandonment of SJGS and the Securitized Bonds.

On June 24, 2020, the Hearing Examiners issued a second recommended decision on
PNM's request for approval of replacement resources that addressed the entire
portfolio of replacement resources. On July 29, 2020, the NMPRC issued an order
approving resource selection criteria identified in the ETA that include PPA's
for 650 MW of solar and 300 MW of battery storage. See additional discussion of
the ETA and PNM's San Juan Abandonment Application in Notes 11 and 12.

Four Corners Abandonment Application - On January 8, 2021, PNM filed the Four
Corners Abandonment Application, which seeks NMPRC approval to exit PNM's 13%
share of Four Corners as of December 31, 2024, and issuance of approximately
$300 million of energy transition bonds as provided by the ETA. As ordered by
the Hearing Examiner in the case, PNM filed an amended application and testimony
on March 15, 2021. The amended application provided additional information to
support PNM's request, provided background on the NMPRC's consideration of the
prudence of PNM's investment in Four Corners in the NM 2016 Rate Case and
explained how the proposed sale and abandonment provides a net public benefit.
If approved, PNM would exit its 200 MW ownership interest in Four Corners seven
years earlier than planned and accelerate its exit of coal to 2024. See
additional discussion of the ETA and PNM's Four Corners Abandonment Application
in Notes 11 and 12.

PNM enhanced its plan to exit Four Corners and emphasized its ESG strategy to
reduce carbon emissions on March 12, 2021 with an announcement for additional
plans for seasonal operations at Four Corners beginning in the fall of 2023. The
solution for seasonal operations ensures the plant will be available to serve
each owners' customer needs during times of peak energy use while minimizing
operations during periods of low demand. This approach results in an estimated
annual 20 to 25 percent reduction in carbon emissions at the plant and retains
jobs and royalty payments for the Navajo Nation.

Other Environmental Matters - SJGS and Four Corners may be required to comply
with environmental rules that affect coal-fired generating units, including
regional haze rules and the ETA.  On June 19, 2019, EPA repealed the Clean Power
Plan, promulgated the ACE Rule, and revised the implementing regulations for all
emission guidelines issued under the CAA Section 111(d). EPA set the Best System
of Emissions Reduction ("BSER") for existing coal-fired power plants as heat
rate efficiency improvements based on a range of "candidate technologies" that
can be applied inside the fence-line. Rather than setting a specific numerical
standard of performance, EPA's rule directs states to determine which of the
candidate technologies to apply to each coal-fired unit and establish standards
of performance based on the degree of emission reduction achievable based on the
application of BSER. However, on January 19, 2021, the DC Circuit issued an
opinion vacating and remanding the rule, holding that it was based on a
misconstruction of Section 111(d) of the Clean Air Act. In addition, on January
27, 2021, President Biden signed an executive order requiring a review of
environmental regulations issued under the Trump Administration, which will
include a review of the ACE rule. The Biden Administration has made clear that
it will seek greater authority in regulating greenhouse gas emissions to address
climate change.

SJGS may also be required to comply with additional CO2 emissions restrictions
issued by the New Mexico Environmental Improvement Board pursuant to the
recently enacted ETA. PNM cannot predict the impact these standards may have on
its operations or a range of the potential costs of compliance, if any.

PNMR is building upon its ESG goal of 100% emissions-free generation by 2040
with plans for additional emissions reductions through the electrification of
its vehicle fleet. Growing the number of electric vehicles within the Company's
fleet
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will benefit the environment and lower fuel costs furthering the commitment to
ESG principles. Under the commitment, existing fleet vehicles will be replaced
as they are retired with an increasing percentage of electric vehicles. The new
goals call for 25% of all light duty fleet purchases to be electric by 2025 and
50% to be electric by 2030.

To demonstrate PNMR's commitment to increase the electrification of vehicles in
its service territory, PNM filed a Transportation Electrification Program
("TEP") with the NMPRC on December 18, 2020. The TEP supports customer adoption
of electric vehicles by focusing on addressing the barriers to electric vehicle
adoption and encourage use. PNM's proposed program budget will be dedicated to
low and moderate income customers by providing rebates to both residential and
non-residential customers towards the purchase of chargers and/or
behind-the-meter infrastructure. See Note 12.

Renewable Energy



PNM's renewable procurement strategy includes utility-owned solar capacity, as
well as solar, wind and geothermal energy purchased under PPAs. As of March 31,
2021, PNM has 158 MW of utility-owned solar capacity in operation. In addition,
PNM purchases power from a customer-owned distributed solar generation program
that had an installed capacity of 169.5 MW at March 31, 2021. PNM also owns the
500 KW PNM Prosperity Energy Storage Project. The project was one of the first
combinations of battery storage and solar-PV energy in the nation and involved
extensive research and development of advanced grid concepts. The facility also
was the nation's first solar storage facility fully integrated into a utility's
power grid. PNM also purchases the output from New Mexico Wind, a 200 MW wind
facility, and the output of Red Mesa Wind, an existing 102 MW wind energy
center. PNM's 2020 renewable energy procurement plan was approved by the NMPRC
in January 2020 and includes a PPA to procure 140 MW of renewable energy and
RECs from La Joya Wind II beginning in March 2021. The NMPRC's approved
portfolio to replace the planned retirement of SJGS will result in PNM executing
solar PPAs of 650 MW combined with 300 MW of battery storage facilities. The
majority of these renewable resources are key means for PNM to meet the RPS and
related regulations that require PNM to achieve prescribed levels of energy
sales from renewable sources, including those set by the recently enacted ETA,
without exceeding cost requirements.

As discussed in Strategic Investments above, PNM is currently purchasing the
output of 130 MW of solar capacity from NMRD that is used to serve the Facebook
data center which includes two 25-year PPAs to purchase renewable energy and
RECs from an aggregate of approximately 100 MW of capacity from two solar-PV
facilities constructed by NMRD to supply power to Facebook, Inc. The first 50 MW
of these facilities began commercial operations in November 2019 and the second
50 MW facility began commercial operations in July 2020. Additionally, PNM has
entered into three separate 25-year PPAs to purchase renewable energy and RECs
to be used by PNM to supply additional renewable power to the Facebook data
center. These PPAs include the purchase of power and RECs from a 50 MW wind
project, which was placed in commercial operation in November 2018, a 166 MW
wind project which became operational in February 2021, and a 50 MW solar-PV
project to be operational in December 2021. On February 8, 2021, PNM filed an
application with the NMPRC for approval to service the Facebook data center for
an additional 190 MW of solar PPA combined with 100 MW of battery storage and a
50 MW solar PPA expected to be operational in 2023. See Note 12.

On May 31, 2019, PNM filed an application with the NMPRC for approval of a
program under which qualified governmental and large commercial customers could
participate in a voluntary renewable energy procurement program ("PNM Solar
Direct"). The costs of the program would be recovered directly from subscribing
customers through a rate rider, including the costs to procure renewable energy
from 50 MW of solar-PV facilities under a 15-year PPA. These facilities are
expected to be placed in commercial operation in September 2021. In March 2020,
the NMPRC approved PNM's application, including the rate rider and PPA.

PNM will continue to procure renewable resources while balancing the impact to
customers' electricity costs in order to meet New Mexico's escalating RPS and
carbon-free resource requirements.

Energy Efficiency



Energy efficiency plays a significant role in helping to keep customers'
electricity costs low while meeting their energy needs and is one of the
Company's approaches to supporting environmentally responsible power. PNM's and
TNMP's energy efficiency and load management portfolios continue to achieve
robust results. In 2020, incremental energy saved as a result of new
participation in PNM's portfolio of energy efficiency programs exceeded 87 GWh,
which was the maximum level of profit incentive allowed under the NMPRC approved
program. This is equivalent to the annual consumption of approximately 12,155
homes in PNM's service territory. PNM's load management and annual energy
efficiency programs also help lower peak demand requirements. In 2020, TNMP's
incremental energy saved as a result of new participation in TNMP's energy
efficiency programs is estimated to be approximately 17 GWh. This is equivalent
to the annual consumption of approximately 2,011 homes in TNMP's service
territory. TNMP's High-Performance Homes residential new construction energy
efficiency program was honored for the 6th year in a row by ENERGY STAR. This
recognition includes the program's 4th straight Partner of the Year Sustained
Excellence Award. For information on PNM's and TNMP's energy efficiency filing
with the NMPRC and PUCT see Note 12.

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Water Conservation and Solid Waste Reduction

PNM continues its efforts to reduce the amount of fresh water used to make
electricity (about 35% more efficient than in 2007). Continued growth in PNM's
fleet of solar and wind energy sources, energy efficiency programs, and
innovative uses of gray water and air-cooling technology have contributed to
this reduction. Water usage has continued to decline as PNM has substituted less
fresh-water-intensive generation resources to replace SJGS Units 2 and 3
starting in 2018, as water consumption at that plant has been reduced by
approximately 50%. As the Company moves forward with its mission to achieve 100%
carbon-free generation by 2040, it expects that more significant water savings
will be gained. PNM has set a goal to reduce freshwater use 80% by 2035 and 90%
by 2040 from 2005 levels. Focusing on responsible stewardship of New Mexico's
scarce water resources improves PNM's water-resilience in the face of persistent
drought and ever-increasing demands for water to spur the growth of New Mexico's
economy.

In addition to the above areas of focus, the Company is working to reduce the
amount of solid waste going to landfills through increased recycling and
reduction of waste. In 2020, 18 of the Company's 23 facilities met the solid
waste diversion goal of a 65% diversion rate. The Company expects to continue to
do well in this area in the future.

Customer, Stakeholder, and Community Engagement



Another key element of the Company's commitment to ESG principles is fostering
relationships with its customers, stakeholders and communities. The Company
strives to deliver a superior customer experience. Through outreach,
collaboration, and various community-oriented programs, the Company has
demonstrated a commitment to building productive relationships with
stakeholders, including customers, community partners, regulators, intervenors,
legislators, and shareholders. PNM continues to focus its efforts to enhance the
customer experience through customer service improvements, including enhanced
customer service engagement options, strategic customer outreach, and improved
communications. These efforts are supported by market research to understand the
varying needs of customers, identifying and establishing valued services and
programs, and proactively communicating and engaging with customers. As a
result, PNM has seen significant gains in customer satisfaction in recent years
in both the JD Power Electric Utility Residential Customer Satisfaction StudySM
and its own proprietary relationship surveys. In September 2020, J.D, Power also
ranked PNM as one of the top performers in the industry for improved impression
of the company based on PNM's response to the COVID-19 pandemic.

The Company has leveraged a number of communications channels and strategic
content to better serve and engage its many stakeholders. PNM's website
www.pnm.com, provides the details of major regulatory filings, including general
rate requests, as well as the background on PNM's efforts to maintain
reliability, keep prices affordable, and protect the environment. The Company's
website is also a resource for information about PNM's operations and community
outreach efforts, including plans for building a sustainable energy future for
New Mexico and to transition to an emissions-free generating portfolio by 2040.
PNM has also leveraged social media in communications with customers on various
topics such as education, outage alerts, safety, customer service, and PNM's
community partnerships in philanthropic projects. As discussed above, PNMR's
corporate website, www.pnmresources.com, includes a dedicated section providing
additional information regarding the Company's commitment to ESG principles and
other sustainability efforts.

With reliability being the primary role of a transmission and distribution service provider in Texas' deregulated market, TNMP continues to focus on keeping end-users updated about interruptions and to encourage consumer preparation when severe weather is forecasted. Last summer, TNMP provided a 33-person team for two weeks in support of another utility that experienced significant damage to their transmission and distribution system as a result of Hurricane Laura.



Local relationships and one-on-one communications remain two of the most
valuable ways both PNM and TNMP connect with their stakeholders. Both companies
maintain long-standing relationships with governmental representatives and key
electricity consumers to ensure that these stakeholders are updated on Company
investments and initiatives. Key electricity consumers also have dedicated
Company contacts that support their important service needs.

Another demonstration of the Company's commitment to ESG principles is the
Company's tradition of supporting the communities it serves in New Mexico and
Texas. This support extends beyond corporate giving and financial donations from
the PNM Resources Foundation to also include collaborations on community
projects, customer low-income assistance programs, and employee volunteerism. In
response to COVID-19, additional efforts were made in each of these areas and
exhibit the Company's core value of caring for its customers and communities.

During the three years ending December 31, 2020, corporate giving contributed
$7.7 million to civic, educational, environmental, low income, and economic
development organizations. PNMR recognizes its responsibility to support
programs and organizations that enrich the quality of life across its service
territories and seeks opportunities to further demonstrate its commitment in
these areas as needs arise. In response to COVID-19 community needs, PNMR
donated to an Emergency Action Fund in partnership with key local agencies to
benefit approximately ninety nonprofits and small businesses facing challenges
due to lack of technology, shifting service needs, and cancelled fundraising
events. Additionally, employee teams have supported first responders and other
front-line workers through the delivery of food and other supplies often
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procured from local businesses struggling during stay-at-home orders. PNM also
donated to the Pueblo Relief Fund and delivered personal protective supplies to
pueblo areas and tribal nations throughout New Mexico. While its service
territory does not include the Navajo Nation, PNM's operations include
generating facilities and employees in this region that has been
disproportionately affected by the pandemic. In response, employee teams focused
efforts to this region and also provided available supplies of personal
protective equipment. PNM has also collaborated with the Navajo Tribal Utility
Authority Wireless ("NTUAW") to set up wireless "hot spots" throughout the
Navajo Nation in areas without internet access to assist first responders and
support continued education opportunities amidst school closures. These actions
supplement PNM's continued support for the Navajo Nation. The PNM Navajo Nation
Workforce Training Scholarship Program provides support for Navajo tribal
members and encourages the pursuit of education and training in existing and
emerging jobs in the communities in which they live. In 2019, PNM invested an
additional $500,000 into this scholarship program to further assist in the
development and education of the Navajo Nation workforce. PNM has invested in
paid summer college engineering internship programs for American Indian students
available in the greater Albuquerque area. PNM also continues to partner in the
Light up Navajo project, piloted in 2019 and modeled after mutual aid to connect
homes without electricity to the power grid. In 2020, PNM also partnered with
key local organizations to initiate funding for programs focused on diversity,
equity, and inclusion.

Another important outreach program is tailored for low-income customers and
includes the PNM Good Neighbor Fund to provide customer assistance with their
electric utility bills. COVID-19 has increased the needs of these customers
along with customers who may not otherwise need to seek assistance. In addition
to the suspension of customer disconnections and expansion of customer payment
plans, PNM responded with increased communications through media outlets and
customer outreach to connect customers with nonprofit community service
providers offering financial assistance, food, clothing, medical programs, and
services for seniors. As a result of these communication efforts, 3,487 families
in need have received emergency assistance through the PNM Good Neighbor Fund
during 2020.

Additionally, as a part of corporate giving, on October 1, 2020, PNM introduced
$2.0 million in funding for new COVID Customer Relief Programs to support
income-qualified residential customers and small business customers who have
been impacted by the financial challenges created by COVID-19 and have past due
electric bills. Qualified customers that pay a portion of their past-due balance
can receive assistance toward their remaining balance.

Volunteerism is also an important facet of employee culture keeping our
communities safer, stronger, smarter and more vibrant. In 2020, PNM and TNMP
employees and retirees contributed over 6,200 virtual and in-person volunteer
hours serving local communities by supporting at least 250 organizations.
Volunteers also participate in a company-wide annual Day of Service at
nonprofits across New Mexico and Texas along with participation on a variety of
nonprofit boards and independent volunteer activities throughout the year.

In addition to the extensive engagement both PNM and TNMP have with nonprofit
organizations in their communities, the PNM Resources Foundation provides more
than $1 million in grant funding each year across New Mexico and Texas. These
grants help nonprofits innovate or sustain programs to grow and develop
business, develop and implement environmental programs, and provide educational
opportunities. Beginning in 2020, the PNM Resources Foundation is funding grants
with a three-year focus on decreasing homelessness, increasing access to
affordable housing, reducing carbon emissions, and community safety with an
emphasis on COVID-19 programs. As part of this emphasis, $0.4 million has been
awarded to nonprofits in New Mexico and Texas to assist with work being done on
the front lines of the pandemic for community safety, with a focus on helping
senior citizens and people currently experiencing homelessness during the
shelter-in-place directives. In 2020, the PNM Resources Foundation expanded its
matching donation program to offer 2-to-1 matching on employee donations made to
social justice nonprofits and increased the annual amount of matching donations
available to each of its employees. PNM Resources Foundation awarded $0.3
million of additional grants to non-profits supporting TNMP communities
following the winter storm in February 2021.

Economic Factors



PNM - In the three months ended March 31, 2021, PNM experienced a decrease in
weather normalized commercial load of 9.6%, mostly offset by an increase in
weather normalized retail load of 7.3% compared to 2020 primarily due to New
Mexico state restrictions related to COVID-19. PNM did not experience
significant impacts to its other customer classes.

TNMP - In the three months ended March 31, 2021, TNMP experienced an increase in
volumetric weather normalized retail load of 3.1% compared to 2020. Weather
normalized demand-based load, excluding retail transmission customers in the
three months ended March 31, 2021 is flat when compared to 2020. TNMP has
experienced increased volumetric usage related to residential consumers offset
by decreases in its demand based commercial consumer class as a result of
impacts related to COVID-19.

The Company is unable to determine the duration or final impacts from COVID-19
as discussed in more detail in Item 1A. Risk Factors of the 2020 Annual Report
on Form 10-K. The Company does not currently expect significant negative impacts
to customer usage at PNM and TNMP resulting from the economic impacts of
COVID-19. However, if current
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economic conditions worsen, the Company may be required to implement additional
measures such as reducing or delaying operating and maintenance expenses and
planned capital expenditures.

Results of Operations

Net earnings (loss) attributable to PNMR were $17.6 million, or $0.20 per
diluted share in the three months ended March 31, 2021 compared to $(15.3)
million, or $(0.19) per diluted share, in 2019. Among other things, earnings in
the three months ended March 31, 2021, benefited from higher weather normalized
residential load at PNM, higher volumetric load at TNMP, colder weather at PNM
and TNMP, higher transmission rates at PNM and TNMP, higher distribution rates
at TNMP, lower surface mine reclamation expense and lower accretion expense at
PNM, lower interest expense at PNM, improved performance on PNM's NDT and coal
mine reclamation investment securities and higher equity AFUDC at PNM and TNMP.
These increases were partially offset by lower weather normalized commercial
load at PNM, higher operational and maintenance expense, including higher plant
maintenance and administrative costs at PNM, higher employee related, outside
service and vegetation management expense at PNM and TNMP, increased
depreciation and higher property taxes at PNM and TNMP due to increased plant in
service, and higher interest charges at TNMP. Additional information on factors
impacting results of operations for each segment is discussed below under
Results of Operations.

Liquidity and Capital Resources



PNMR and PNM have revolving credit facilities with capacities of $300.0 million
and $400.0 million that currently expire in October 2023. Both facilities
provide for short-term borrowings and letters of credit and can be extended
through October 2024, subject to approval by a majority of the lenders. In
addition, PNM has a $40.0 million revolving credit facility with banks having a
significant presence in New Mexico that expires in December 2022, and TNMP has a
$75.0 million revolving credit facility, which expires in September 2022 and
contains two one-year extension options, subject to approval by a majority of
the lenders. PNMR Development has a revolving credit facility with a capacity of
$40.0 million that expires in January 2022 and gives PNM the option, subject to
lender approval, to further increase the capacity up to $50.0 million upon
15-days advance notice. The PNMR Development Revolving Credit Facility bears
interest at a variable rate and contains terms similar to the PNMR Revolving
Credit Facility. Total availability for PNMR on a consolidated basis was $644.8
million at April 23, 2021. Total availability at PNMR, on a consolidated basis,
does not reflect a reduction of $100.3 million that PNM has reserved to provide
liquidity support for the PNM Floating Rate PCRBs. The Company utilizes these
credit facilities and cash flows from operations to provide funds for both
construction and operational expenditures. PNMR also has intercompany loan
agreements with each of its subsidiaries.

PNMR projects that its consolidated capital requirements, consisting of
construction expenditures and dividends, will total $4.6 billion for 2021 -
2025, including amounts expended through March 31, 2021. The construction
expenditures include estimated amounts for an anticipated expansion of PNM's
transmission system, including the planned purchase of the Western Spirit Line,
and expenditures for PNM's Wired for the Future capital initiative.

To fund capital spending requirements to meet growth that balances earnings
goals, credits metrics and liquidity needs, the Company may enter into financing
arrangements in 2021. A complete listing of current financing arrangements is
contained in Note 7 of the Notes to Consolidated Financial Statements in the
2020 Annual Reports on Form 10-K.

See discussion of the NMPRC's April 1, 2020 approval of PNM's request to issue
approximately $361 million of Securitized Bonds upon the retirement of SJGS in
2022, and the related appeal of that order to the NM Supreme Court in Note 12.

After considering the effects of these financings and the Company's short-term
liquidity position as of April 23, 2021, the Company has consolidated maturities
of long-term and short-term debt aggregating approximately $1,215.7 million
through April 2022. In addition to internal cash generation, the Company
anticipates that it will be necessary to obtain additional long-term financing
in the form of debt refinancing, new debt issuances, and/or new equity in order
to fund its capital requirements during the 2021-2025 period. The Company
currently believes that its internal cash generation, existing credit
arrangements, and access to public and private capital markets will provide
sufficient resources to meet the Company's capital requirements for at least the
next twelve months. The Company is in compliance with its debt covenants.

                             RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and Notes thereto. Trends and
contingencies of a material nature are discussed to the extent known. Refer also
to Disclosure Regarding Forward Looking Statements and to Part II, Item 1A. Risk
Factors.


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A summary of net earnings attributable to PNMR is as follows:

                                                                     Three Months Ended March 31,
                                                             2021                 2020               Change
                                                               (In millions, except per share amounts)
Net earnings (loss) attributable to PNMR               $        17.6          $    (15.3)         $     32.9
Average diluted common and common equivalent shares             86.1                79.9                 6.2
Net earnings (loss) attributable to PNMR per diluted
share                                                  $        0.20          $    (0.19)         $     0.39

The components of the change in net earnings attributable to PNMR are:



                                             Three Months Ended
                                               March 31, 2021
                                               (In millions)
                     PNM                    $             34.6
                     TNMP                                  1.6

                     Corporate and Other                  (3.4)
                     Net change             $             32.9


Information regarding the factors impacting PNMR's operating results by segment are set forth below.



Segment Information

The following discussion is based on the segment methodology that PNMR's
management uses for making operating decisions and assessing performance of its
various business activities. See Note 2 for more information on PNMR's operating
segments.

PNM

PNM defines utility margin as electric operating revenues less cost of energy,
which consists primarily of fuel and purchase power costs. PNM believes that
utility margin provides a more meaningful basis for evaluating operations than
electric operating revenues since substantially all fuel and purchase power
costs are offset in revenues as those costs are passed through to customers
under PNM's FPPAC. Utility margin is not a financial measure required to be
presented and is considered a non-GAAP measure.

The following table summarizes the operating results for PNM:



                                                           Three Months Ended March 31,
                                                          2021               2020        Change
                                                                  (In millions)
Electric operating revenues                       $     271.2              $ 248.1      $ 23.1
Cost of energy                                           88.9                 74.5        14.4
   Utility margin                                       182.3                173.6         8.7
Operating expenses                                      107.3                 98.6         8.7
Depreciation and amortization                            41.9                 41.4         0.5
   Operating income                                      33.1                 33.6        (0.5)
Other income (deductions)                                 4.8                (30.5)       35.3
Interest charges                                        (12.9)               (17.6)        4.7
   Segment earnings (loss) before income taxes           25.0                (14.6)       39.6
Income (taxes) benefit                                   (2.8)                 2.4        (5.2)
Valencia non-controlling interest                        (3.5)                (3.7)        0.2
Preferred stock dividend requirements                    (0.1)                (0.1)          -
Segment earnings                                  $      18.5              $ (16.1)     $ 34.6




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The following table shows total GWh sales, including the impacts of weather, by
customer class and average number of customers:
                                                                       

Three Months Ended March 31,


                                                                                                        Percentage
                                                        2021                    2020                      Change
                                                                    (Gigawatt hours, except customers)
Residential                                                 828.2                 768.2                            7.8  %
Commercial                                                  752.4                 838.7                          (10.3)
Industrial                                                  380.0                 334.3                           13.7
Public authority                                             47.4                  48.5                           (2.3)
Economy energy service (1)                                  129.1                 166.5                          (22.5)

Other sales for resale                                      746.4                 605.2                           23.3
                                                          2,883.5               2,761.4                            4.4  %
Average retail customers (thousands)                        538.8                 533.0                            1.1  %



(1) PNM purchases energy for a large customer on the customer's behalf and
delivers the energy to the customer's location through PNM's transmission
system. PNM charges the customer for the cost of the energy as a direct pass
through to the customer with only a minor impact in utility margin resulting
from providing ancillary services.

Operating Results - Three Months Ended March 31, 2021 compared to 2020

The following table summarizes the significant changes to utility margin:


                                                                                                Three Months
                                                                                                   Ended
                                                                                               March 31, 2021
                                                                                                   Change
Utility margin:                                                                                (In millions)

               Retail customer usage/load - Weather normalized KWh sales decreased
               9.6% for commercial customers mostly offset by increased sales to
               residential customers of 7.3%                                                 $          (0.1)
               Weather - Colder weather in 2021; heating degree days were 10.1% higher
               in 2021                                                                                   1.5
               Leap Year - Decreased revenue in 2021 due to additional day in 2020                      (1.8)
               Transmission - Higher revenues under formula transmission rates, the
               addition of a new customer, and higher volumes                                            2.8

               Rate riders - Includes renewable energy, fuel clause, and energy
               efficiency riders which are partially offset in operating expense                         4.3
               Coal mine reclamation - Lower expense on surface mine

reclamation in


               2021 and the 2020 remeasurement of PNM's obligation for Four Corners
               and SJGS coal mine reclamation (Note 11)                                                  1.9
               Other                                                                                     0.1
               Net Change                                                                    $           8.7




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The following tables summarize the primary drivers for changes in operating
expenses, depreciation and amortization, other income (deductions), interest
charges, and income taxes:
                                                                                            Three Months
                                                                                               Ended
                                                                                           March 31, 2021
                                                                                               Change
Operating expenses:                                                                        (In millions)

                 Higher plant maintenance and administrative costs at SJGS, Four
                 Corners, and gas fired plants partially offset by lower costs for
                 PVNGS                                                                   $           2.8

                 Higher property taxes due to increases in utility plant in
                 service                                                                             0.3
                 Higher employee related, outside services, and vegetation
                 management expenses                                                                 3.7
                 Higher energy efficiency and renewable rider expenses                               1.2

                 Other                                                                               0.7
                 Net Change                                                              $           8.7


Depreciation and amortization:



                   Increased utility plant in service                                       $       1.6
                   Lower accretion expense for PVNGS plant decommissioning ARO
                   resulting from 2020 study                                                       (1.1)

                   Net Change                                                               $       0.5



Other income (deductions):

                   Improved performance on investment securities in the NDT
                   partially offset by lower gains in the coal mine reclamation
                   trusts                                                                 $      33.8
                   Higher equity AFUDC                                                            1.1

                   Higher interest income and lower trust expenses related to
                   investment securities in the NDT and coal mine reclamation
                   trusts                                                                         0.1

                   Other                                                                          0.3
                   Net Change                                                             $      35.3



         Interest charges:

                     Lower interest on term loans                          $ 1.6
                     Lower short-term borrowings                             0.8

                     Issuance of $200.0 million of SUNs in April 2020       (1.7)
                     Lower interest on PCRBs remarketed in 2020              4.2
                     Other                                                  (0.2)
                     Net Change                                            $ 4.7



Income (taxes) benefits:

                 Higher segment earnings before income taxes                            $     (10.1)
                 Changes in the anticipated effective tax rate, including
                 amortization of excess deferred income taxes (Note 14)                         4.5

                 Other                                                                          0.4
                 Net Change                                                             $      (5.2)




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TNMP

TNMP defines utility margin as electric operating revenues less cost of energy,
which consists of costs charged by third-party transmission providers. TNMP
believes that utility margin provides a more meaningful basis for evaluating
operations than electric operating revenues since all third-party transmission
costs are passed on to consumers through a transmission cost recovery factor.
Utility margin is not a financial measure required to be presented and is
considered a non-GAAP measure.

The following table summarizes the operating results for TNMP:



                                                       Three Months Ended March 31,
                                                       2021                2020       Change
                                                              (In millions)
    Electric operating revenues              $      93.5                 $ 85.5      $  8.0
    Cost of energy                                  26.5                   24.2         2.3
    Utility margin                                  67.0                   61.3         5.7
    Operating expenses                              27.8                   25.1         2.7
    Depreciation and amortization                   22.2                   21.8         0.4
    Operating income                                17.0                   14.3         2.7
    Other income (deductions)                        1.1                    0.6         0.5
    Interest charges                                (8.5)                  (7.2)       (1.3)

    Segment earnings before income taxes             9.6                   

7.7         1.9
    Income (taxes)                                  (0.9)                  (0.6)       (0.3)
    Segment earnings                         $       8.7                 $  7.1      $  1.6

The following table shows total sales, including the impacts of weather, by retail tariff consumer class and average number of consumers:


                                                             Three Months Ended
                                                                  March 31,
                                                                                    Percentage
                                                     2021               2020          Change

 Volumetric load (1) (GWh)                                676.0         606.7           11.4  %
 Demand-based load (2) (MW)                             5,116.8       4,896.5            4.5  %
 Average retail consumers (thousands) (3)                 261.5         257.1            1.7  %



(1) Volumetric load consumers are billed on KWh usage.
(2) Demand-based load includes consumers billed on monthly KW peak and also
includes retail transmission customers that are primarily billed under TNMP's
rate riders.
(3) TNMP provides transmission and distribution services to REPs that provide
electric service to their customers in TNMP's service territories. The number of
consumers above represents the customers of these REPs. Under TECA, consumers in
Texas have the ability to choose any REP to provide energy.


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Operating Results - Three Months Ended March 31, 2021 compared to 2020

The following table summarizes the significant changes to utility margin:


                                                                                                   Three Months
                                                                                                      Ended
                                                                                                  March 31, 2021
                                                                                                      Change
Utility margin:                                                                                   (In millions)

               Transmission rate relief/load - Transmission cost of service rate
               increases in March 2020, October 2020, and March 2021 as 

well as higher


               wholesale transmission demand-based sales                                        $           3.1
               Distribution rate relief - Distribution cost of service rate established
               in September 2020                                                                            3.3
               Volumetric-based customer usage/load - Weather normalized KWh sales
               increased 3.1%, partially offset by the 2020 leap-year

impact; the average


               number of retail consumers increased 1.9%                                                    0.3
               Demand-based customer usage/load - Weather normalized 

demand-based MW


               sales for large commercial and industrial consumers

excluding retail


               transmission consumers is flat                                                              (0.1)
               Weather - Colder weather in 2021; heating degree days were 

42.8% higher in


               2021                                                                                         1.7
               Rate Riders and other - Impacts of rate riders, including the CTC
               surcharge which ended in August 2020, energy efficiency

rider, rate case


               expense rider, and transmission cost recovery factor, which 

are partially


               offset in operating expense and depreciation and amortization                               (2.8)

               Other                                                                                        0.2
               Net Change                                                                       $           5.7



The following tables summarize the primary drivers for changes in operating
expenses, depreciation and amortization, other income (deductions), interest
charges, and income taxes:
                                                                                           Three Months
                                                                                              Ended
                                                                                          March 31, 2021
                                                                                              Change
Operating expenses:                                                                       (In millions)

                 Higher employee related, outside services, and vegetation
                 management expenses                                                    $           1.9

                 Higher property taxes due to increased utility plant in service                    0.7
                 Higher energy efficiency costs and amortization of rate expenses
                 offset in utility margin                                                           0.3
                 Other                                                                             (0.2)
                 Net Change                                                             $           2.7



   Depreciation and amortization:

                     Increased utility plant in service                          $ 2.5

                     Decreased amortization of CTC offset in utility margin       (2.1)
                     Net Change                                                  $ 0.4



                    Other income (deductions):

                                      Higher equity AFUDC      $ 0.3
                                      Higher CIAC                0.2

                                      Net Change               $ 0.5



    Interest charges:

                Issuance of $185.0 million first mortgage bonds in 2020        $ (1.5)
                Lower short-term borrowings                                       0.2

                Net Change                                                     $ (1.3)


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                                                                                           Three Months
                                                                                              Ended
                                                                                          March 31, 2021
                                                                                              Change
Income (taxes) benefits:                                                                  (In millions)


                 Higher segment earnings before income taxes                            $          (0.4)
                 Amortization of excess deferred federal income taxes (Note 14)                     0.1

                 Net Change                                                             $          (0.3)



Corporate and Other

The table below summarizes the operating results for Corporate and Other:



                                                          Three Months Ended March 31,
                                                          2021               2020       Change
                                                                 (In millions)
  Electric operating revenues                    $        -                $    -      $    -
  Cost of energy                                          -                     -           -
    Utility margin                                        -                     -           -
  Operating expenses                                    1.2                  (5.5)        6.7
  Depreciation and amortization                         5.7                   5.7           -
    Operating income (loss)                            (6.9)                 (0.2)       (6.7)
  Other income (deductions)                            (0.4)                 (0.6)        0.2
  Interest charges                                     (4.5)                 (5.6)        1.1
  Segment earnings (loss) before income taxes         (11.8)                 (6.5)       (5.3)
  Income (taxes) benefit                                2.1                   0.2         1.9
  Segment earnings (loss)                        $     (9.7)               $ (6.3)     $ (3.4)



Corporate and Other operating expenses shown above are net of amounts allocated
to PNM and TNMP under shared services agreements. The amounts allocated include
certain expenses shown as depreciation and amortization and other income
(deductions) in the table above. The change in operating expense for the three
months ended March 31, 2021 include $6.7 million of costs related to the Merger
in 2021 that were not allocated to PNM or TNMP.

Operating Results - Three Months Ended March 31, 2021 compared to 2020 The following tables summarize the primary drivers for changes in other income (deductions), interest charges, and income taxes:


                                                                           Three Months
                                                                               Ended
                                                                          March 31, 2021
                                                                              Change
 Other income (deductions):                                                (In millions)


                   Higher equity method investment income from NMRD      $           0.1

                   Other                                                             0.1
                   Net Change                                            $           0.2



             Interest charges:

                         Lower interest on short-term borrowings      $ 0.9

                         Repayment of PNMR 2018 SUNS                    0.6
                         Higher interest on term loans                 (0.5)
                         Other                                          0.1
                         Net Change                                   $ 1.1



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                                                                                            Three Months
                                                                                               Ended
                                                                                           March 31, 2021
                                                                                               Change
Income (taxes) benefits:                                                                   (In millions)

                 Impact of difference in effective tax rates used by PNMR and its
                 subsidiaries in the calculation of income taxes in interim
                 periods                                                                 $           1.8
                 Higher segment loss before income taxes                                             1.4
                 Investment tax credit amortization                                                 (0.6)
                 Non-deductible merger related costs                                                (0.5)
                 Other                                                                              (0.2)
                 Net Change                                                              $           1.9

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