TXNM Energy, Inc. (TXNM) Business Profile

What it does

TXNM Energy is a holding company for two regulated electric utilities, PNM and TNMP. Together they serve approximately 842,000 residential, commercial, and industrial customers in New Mexico and Texas. TXNM was incorporated in New Mexico in 2000, and its headquarters is the PNM Building.

PNM generates electricity and provides transmission and distribution service to rate-regulated customers in New Mexico. It also provides wholesale transmission service to third parties. Transmission lines carry electricity over longer distances, while distribution systems deliver it locally. PNM uses a mix of its own generation and contracted power resources to serve customers.

TNMP operates in Texas and provides transmission and distribution service rather than selling power. It charges retail electric providers for delivering electricity; those providers sell retail electric service to consumers in TNMP’s service territory. TNMP is the exclusive provider of transmission and distribution services in most of the areas it serves.

Both utilities operate under rules that govern their rates and services. They seek to recover their investments through regulatory proceedings and other approved charges. TXNM also has a corporate-services business that provides shared services to its business units at cost. At December 31, 2025, TXNM had 1,755 employees, including utility and corporate personnel.

How it makes money

TXNM’s principal businesses earn revenue from regulated electric service. PNM charges for generating and delivering electricity to retail customers in New Mexico and for wholesale transmission service. TNMP charges retail electric providers regulated rates for transmission and distribution in Texas. Electricity use varies by season, with consumption in both states increasing during hot summer months and revenues traditionally peaking then.

Regulators determine the rates the utilities can charge. PNM and TNMP seek recovery of investments through general rate cases, periodic cost-of-service filings and rate riders, which are additional charges approved for specified costs. Their profitability depends on recovering costs through regulated rates and earning a return on invested capital.

In New Mexico, PNM has approved riders for renewable energy procurement, fuel and purchased power, energy efficiency and transportation electrification costs. Most wholesale transmission rates are calculated annually using an approved formula that updates plant investment and operating costs. Some projected transmission investments are included and later adjusted to actual amounts.

In Texas, approved mechanisms allow TNMP to recover capital invested in transmission and distribution projects without filing a general rate case for each investment. TNMP also has riders for energy efficiency and third-party transmission costs. In November 2025, it filed a base rate review seeking recovery of $2.8 billion of rate base, the regulated investment amount on which a utility seeks to earn a return.

The Corporate and Other segment includes holding-company debt activities and PNMR Services Company, which bills shared corporate services to TXNM’s business units at cost each month.

Customers and how it sells

TXNM serves residential, commercial and industrial customers through its two utilities. PNM’s retail territory covers much of north-central New Mexico, including Albuquerque, Rio Rancho and Santa Fe, as well as parts of southern New Mexico and 9 sovereign nations. PNM also provides wholesale transmission service to other parties.

TNMP serves three non-contiguous regions of Texas: communities around and north of Fort Worth, an area along the Gulf Coast between Houston and Galveston, and parts of far west Texas between Midland and El Paso. Its service territory includes small and medium-sized communities.

In Texas, retail electric providers are TNMP’s direct customers for regulated transmission and distribution service. Those providers supply retail electric service to consumers. As of December 31, 2025, 125 active retail electric providers received services from TNMP; its two largest providers accounted for portions of TNMP’s operating revenues. PNM serves retail customers directly and also earns revenue from wholesale transmission.

Electricity consumption in both states rises during hot summer months. Mild or extreme weather can also cause operating results to fluctuate.

Suppliers and costs

PNM obtains electricity from owned and contracted resources, including solar, wind, energy storage, gas, nuclear and coal. It buys renewable power under long-term power purchase agreements and stores energy under energy storage agreements. It also participates in a wholesale trading market where utilities can buy and sell energy.

Four Corners obtains coal from a mine near the plant. Its coal supply arrangement runs through July 6, 2031 and includes pricing adjustments based on economic indices. PNM procures natural gas on the open market, with third parties providing transportation. PNM has contracted for firm gas transmission capacity to reduce the potential for disruptions.

PNM participates with other owners in the PVNGS nuclear plant. The participants contract for uranium and fuel services, using inventories or spot-market transactions for additional supplies. APS operates both PVNGS and Four Corners.

Costs include fuel and purchased power, utility plant investments, operations and maintenance, financing, and environmental obligations. PNM recovers substantially all fuel and purchased power costs through an approved rate mechanism. TNMP’s approved rate riders also provide for recovery of certain third-party transmission and energy-efficiency costs.

Competitive position

PNM does not have direct competition for services provided to its New Mexico retail electric customers. TNMP is not currently in direct retail competition with another regulated electric utility in Texas, and it is the exclusive transmission and distribution provider in most areas it serves.

PNM faces competition in some territories adjacent to or within its service area from other regional utilities, rural electric cooperatives and municipal utilities. In wholesale electricity markets, it competes with regional utilities, merchant power suppliers and larger trading entities. TNMP competes to attract new customers to locate within its territory. Neither utility names a competing company in these markets.

Both utilities are also affected by customer conservation and energy-efficiency activity and by alternative energy sources, including customer self-generation that can bypass their systems.

Our reading: TNMP’s exclusive-provider position and PNM’s lack of direct retail competition are substantial sources of protection in their existing service areas. Our reading: That protection is narrower in wholesale markets and at the edges of PNM’s territory, while customers’ own generation can reduce their use of either utility’s system.

Growth opportunities

TXNM’s investment plans emphasize transmission and distribution infrastructure to support demand, grid reliability and resilience, and delivery of cleaner energy. During the 2024 and 2025 periods, PNM and TNMP together invested $2.4 billion in utility plants, including networks, substations, power plants and nuclear fuel.

TNMP has received more interconnection requests and data-center applications, requiring new transmission stations and upgrades to existing stations and lines. Its data center load, including distribution and transmission, increased 70.5% in 2025 compared to 2024. TNMP’s approved system resiliency plan includes $545.8 million of capital investments and $86.1 million of operations and maintenance expenses in 2025 through 2027.

PNM is modernizing its grid through infrastructure and technology improvements. Its updated plan includes $367 million of investment for the first six years of a broader 11-year strategy. Regulators have also approved additional energy and storage resources to serve retail customers and a data center in PNM’s territory. PNM expects some resources to be in service by summer of 2026 and others to be available for the 2028 summer peak.

TXNM projects consolidated capital requirements for 2026 - 2030, including construction expenditures and dividends. It anticipates needing additional long-term financing to fund those requirements.

Structural risks

• Rate recovery: Utility profitability depends on recovering costs through regulated rates and earning returns on invested capital. Regulatory outcomes can affect recovery of operating and capital expenditures and the economic viability of generating facilities.
• Financing: TXNM anticipates needing additional long-term financing for its capital requirements. Rising interest rates can raise borrowing costs, and worsening market conditions could limit access to capital or credit facilities.
• Operations and supplies: Generating plants and electric networks can be affected by unplanned outages, fuel or supply-chain disruptions, extreme weather, wildfires, storms and cybersecurity breaches. Repairs and third-party liabilities may exceed insurance coverage.
• Environmental and nuclear obligations: Environmental requirements can affect compliance costs and plant operations. PNM also faces nuclear operating and spent-fuel disposal uncertainties, and uncertainty over decommissioning and coal-mine reclamation costs.
• Proposed merger: Completion of the Blackstone Infrastructure transaction is not assured. It was reported on 30 October 2026 that Nuclear Regulatory Commission approval had been received and approval from the New Mexico Public Regulation Commission was still being pursued. If the merger is not completed, TXNM may incur transaction costs and experience adverse reactions from customers, regulators and employees.

Bottom line

Our reading

TXNM is a regulated electric utility holding company whose business rests on serving established territories and recovering investment through rates, rather than selling power in an unrestricted retail market alone. [item1] Its growth depends on grid and energy investment, while returns depend on regulatory recovery and access to financing. [item1a] [item7] The proposed acquisition adds a separate source of uncertainty alongside the utilities’ operating and environmental risks. [item1a] [facts]