Electric Operating Revenues

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Electric Operating Revenues

Electric Operating Revenues

PNMR is an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are PNM and TNMP.

Additional information concerning electric operating revenue is contained in Note 4 of the Notes to Consolidated Financial Statements in the 2019 Annual Reports on Form 10-K.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable consists primarily of trade receivables from customers. In the normal course of business, credit is extended to customers on a short-term basis. The Company estimates the allowance for credit losses on trade receivables based on historical experience and estimated default rates. Accounts receivable balances are reviewed monthly and adjustments to the allowance for credit losses are made as necessary and amounts that are deemed uncollectible are written off. On January 1, 2020, the Company adopted Accounting Standards Update 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. As a result of the adoption of the new standard, PNM updated its allowance for accounts receivable balances and recorded incremental credit losses of $0.4 million and $0.7 million in the three and six months ended June 30, 2020. See additional discussion of ASU 2016-13 in Note 7.

Disaggregation of Revenues

A disaggregation of revenues from contracts with customers by the type of customer is presented in the table below. The table also reflects alternative revenue program revenues ("ARP") and other revenues.

	PNM		TNMP		PNMR Consolidated
Three Months Ended June 30, 2020	(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	109,090	$	37,302	$	146,392
Commercial	93,364		28,106		121,470
Industrial	20,373		6,857		27,230
Public authority	4,907		1,419		6,326
Economy energy service	3,278		—		3,278
Transmission	14,097		20,238		34,335
Miscellaneous	3,042		1,002		4,044
Total revenues from contracts with customers	248,151		94,924		343,075
Alternative revenue programs	2,529		1,937		4,466
Other electric operating revenues	10,108		—		10,108
Total Electric Operating Revenues	$	260,788	$	96,861	$	357,649
Six Months Ended June 30, 2020
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	211,899	$	69,200	$	281,099
Commercial	179,713		56,791		236,504
Industrial	39,838		13,390		53,228
Public authority	9,254		2,842		12,096
Economy energy service	8,531		—		8,531
Transmission	28,264		38,250		66,514
Miscellaneous	6,410		1,675		8,085
Total revenues from contracts with customers	483,909		182,148		666,057
Alternative revenue programs	4,690		202		4,892
Other electric operating revenues	20,322		—		20,322
Total Electric Operating Revenues	$	508,921	$	182,350	$	691,271

	PNM		TNMP		PNMR Consolidated
Three Months Ended June 30, 2019	(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	86,328	$	33,640	$	119,968
Commercial	98,968		28,058		127,026
Industrial	15,329		5,295		20,624
Public authority	4,596		1,391		5,987
Economy energy service	6,024		—		6,024
Transmission	14,342		17,585		31,927
Miscellaneous	2,474		887		3,361
Total revenues from contracts with customers	228,061		86,856		314,917
Alternative revenue programs	691		5,153		5,844
Other electric operating revenues	9,467		—		9,467
Total Electric Operating Revenues	$	238,219	$	92,009	$	330,228
Three Months Ended June 30, 2019
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	193,629	$	64,072	$	257,701
Commercial	184,201		55,487		239,688
Industrial	30,076		10,911		40,987
Public authority	9,307		2,764		12,071
Economy energy service	12,946		—		12,946
Transmission	27,727		31,589		59,316
Miscellaneous	6,116		1,789		7,905
Total revenues from contracts with customers	464,002		166,612		630,614
Alternative revenue programs	756		5,724		6,480
Other electric operating revenues	42,778		—		42,778
Total Electric Operating Revenues	$	507,536	$	172,336	$	679,872

Contract Balances

Performance obligations related to contracts with customers are typically satisfied when the energy is delivered and the customer or end-user utilizes the energy. Accounts receivable from customers represent amounts billed, including amounts under ARPs. For PNM, accounts receivable reflected on the Condensed Consolidated Balance Sheets, net of allowance for credit losses, includes $65.2 million at June 30, 2020 and $59.3 million at December 31, 2019 resulting from contracts with customers. All of TNMP’s accounts receivable results from contracts with customers.

Contract assets are an entity’s right to consideration in exchange for goods or services that the entity has transferred to a customer when that right is conditioned on something other than the passage of time (for example, the entity’s future performance). The Company has no contract assets as of June 30, 2020 or December 31, 2019. Contract liabilities arise when consideration is received in advance from a customer before satisfying the performance obligations. Therefore, revenue is deferred and not recognized until the obligation is satisfied. Under its OATT, PNM accepts upfront consideration for capacity reservations requested by transmission customers, which requires PNM to defer the customer’s transmission capacity rights for a specific period of time. PNM recognizes the revenue of these capacity reservations over the period it defers the customer's capacity rights. Other utilities pay PNM and TNMP in advance for the joint-use of their utility poles. These revenues are

recognized over the period of time specified in the joint-use contract, typically for one calendar year. Deferred revenues on these arrangements are recorded as contract liabilities. PNMR's, PNM's, and TNMP's contract liabilities and related revenues are insignificant for all periods presented. The Company has no other arrangements with remaining performance obligations to which a portion of the transaction price would be required to be allocated.