Txnm Energy Inc's Business Segments

TNMP provides transmission and distribution services to Retail Electric Providers (REPs) supplying electric service within its service territories. The company's profitability relies on recovering costs through regulated rates and earning a return on invested capital. TNMP is undertaking significant capital expenditures, projecting $10.2 billion in construction expenditures from 2026 to 2030. These investments cover generation, transmission, and distribution systems, as well as asset retirement, environmental compliance, renewable resource acquisition, nuclear safety, cybersecurity, and financing costs. The Public Utility Commission of Texas (PUCT) regulates TNMP's rates. In November 2025, TNMP filed a Base Rate Review seeking recovery of $2.8 billion of rate base, a 10.4% return on equity, and a 47.54% equity ratio, including costs related to Hurricane Beryl restoration. The company faces risks from rising costs and declining power demand due to energy efficiency, alternative power sources, and economic factors, which may affect liquidity and operations. TNMP is subject to environmental laws and regulations addressing climate change and greenhouse gas emissions, potentially increasing compliance costs and operational restrictions. Changes in federal policies, such as the repeal of the 2009 Endangerment Finding, contribute to regulatory uncertainty. Environmental liabilities related to coal combustion residuals and site cleanups also present financial risks.

TXNM's reportable operating segment, TNMP, defines utility margin as electric operating revenues minus the cost of energy, which includes charges from third-party transmission providers. Utility margin is a non-GAAP measure used by TNMP to evaluate its operations. The segment's financial results for the years ended December 31, 2025, and 2024 include electric operating revenues, cost of energy, utility margin, operating expenses, depreciation and amortization, operating income, other income (deductions), interest charges, segment earnings before income taxes, income taxes, and segment earnings. TNMP provides transmission and distribution services to Retail Electric Providers (REPs) serving customers within TNMP's service territories in Texas. The segment reports total gigawatt-hour (GWh) sales by retail tariff consumer class and average number of consumers, including residential and commercial classes, with volumetric and demand-based load data. Significant changes in gross margin and utility margin for 2025 compared to 2024 are summarized, including the effects of transmission and distribution rate relief and changes in ERCOT-approved demand.