ThZeal - The Zeal

pnm-20250630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Name of Registrant, State of Incorporation, Address Of Principal Executive Offices, Telephone Number, Commission File No., IRS Employer Identification No.

TXNM Energy, Inc.

(A New Mexico Corporation)

414 Silver Ave. SW

Albuquerque, New Mexico 87102-3289

Telephone Number - (505) 241-2700

Commission File No. - 001-32462

IRS Employer Identification No. - 85-0468296

Public Service Company of New Mexico

(A New Mexico Corporation)

414 Silver Ave. SW

Albuquerque, New Mexico 87102-3289

Telephone Number - (505) 241-2700

Commission File No. - 001-06986

IRS Employer Identification No. - 85-0019030

Texas-New Mexico Power Company

(A Texas Corporation)

577 N. Garden Ridge Blvd.

Lewisville, Texas 75067

Telephone Number - (972) 420-4189

Commission File No. - 002-97230

IRS Employer Identification No. - 75-0204070

Securities registered pursuant to Section 12(b) of the Act:


Registrant	Title of each class	Trading Symbol(s)	Name of exchange on which registered
TXNM Energy, Inc.	Common Stock, no par value	TXNM	New York Stock Exchange

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

TXNM Energy, Inc. (“TXNM”)

Yes

☑

☐

Public Service Company of New Mexico (“PNM”)

Yes

☑

☐

Texas-New Mexico Power Company (“TNMP”)

Yes

☐

☑

(NOTE: As a voluntary filer, not subject to the filing requirements, TNMP filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

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Indicate by check mark whether each registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

TXNM

Yes

☑

☐

PNM

Yes

☑

☐

TNMP

Yes

☑

☐

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated

filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

TXNM

☑

☐

Large accelerated filer

Accelerated

filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

PNM

☐

☑

☐

Large accelerated filer

Accelerated

filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

TNMP

☐

☑

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of July 25, 2025, 105,378,979 shares of common stock, no par value per share, of TXNM were outstanding.

The total number of shares of common stock of PNM, no par value per share, outstanding as of July 25, 2025, was 39,117,799 all held by TXNM (and none held by non-affiliates).

The total number of shares of common stock of TNMP, $10 par value per share, outstanding as of July 25, 2025, was 6,358 all held indirectly by TXNM (and none held by non-affiliates).

PNM AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a) AND (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).

This combined Form 10-Q is separately filed by TXNM, PNM, and TNMP. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants. When this Form 10-Q is incorporated by reference into any filing with the SEC made by TXNM, PNM, or TNMP, as a registrant, the portions of this Form 10-Q that relate to each other registrant are not incorporated by reference therein.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

INDEX


			Page No.
GLOSSARY			4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
TXNM ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings			8
Condensed Consolidated Statements of Comprehensive Income			9
Condensed Consolidated Statements of Cash Flows			10
Condensed Consolidated Balance Sheets			12
Condensed Consolidated Statements of Changes in Equity			14
PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings			15
Condensed Consolidated Statements of Comprehensive Income			16
Condensed Consolidated Statements of Cash Flows			17
Condensed Consolidated Balance Sheets			19
Condensed Consolidated Statements of Changes in Equity			21
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings			22

Condensed Consolidated Statements of Cash Flows			23
Condensed Consolidated Balance Sheets			24
Condensed Consolidated Statements of Changes in Common Stockholder’s Equity			26
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS			27
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			76
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			109
ITEM 4. CONTROLS AND PROCEDURES			111
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			112
ITEM 1A. RISK FACTORS			112
ITEM 5. OTHER INFORMATION			114
ITEM 6. EXHIBITS			114
SIGNATURE			117

Table of Contents

GLOSSARY


Definitions:


2024 Rate Change						PNM’s request for a general increase in electric rates filed with the NMPRC on December 5, 2022 using a calendar year 2024 FTY
2025 Rate Request						PNM’s request for a general increase in electric rates filed with the NMPRC on June 14, 2024 using a FTY beginning July 1, 2025

2028 Resource Application						PNM’s November 22, 2024 application with the NMPRC for approval of resources to be available for the 2028 summer peak


ACE Rule						Affordable Clean Energy Rule
AEP OnSite Partners						AEP OnSite Partners, LLC, a subsidiary of American Electric Power, Inc. until the completion of its sale on September 30, 2024 to Basalt Infrastructure Partners LLC
AFUDC						Allowance for Funds Used During Construction


AOCI						Accumulated Other Comprehensive Income

APS						Arizona Public Service Company, the operator and a co-owner of PVNGS and Four Corners
ARO						Asset Retirement Obligation
ARP						Alternative Revenue Program
ASU						Accounting Standards Update

Blackstone Infrastructure						Blackstone Infrastructure Partners L.P.
Board						Board of Directors of TXNM


CAA						Clean Air Act
CAISO						California Independent System Operator
Carbon Pollution Standards						Carbon Pollution Standards established by the EPA on August 3, 2015

CCN						Certificate of Convenience and Necessity
CCR						Coal Combustion Residuals
CCS						Carbon Capture and Storage/Sequestration
CIAC						Contributions in Aid of Construction
CO2						Carbon Dioxide
CODM						Chief Operating Decision Maker
Community Solar Act						Senate Bill 84 effective June 18, 2021
Convertible Notes						TXNM’s $550.0 million junior subordinated convertible notes issued on June 10, 2024 and June 21, 2024
COVID-19						Novel coronavirus global pandemic




DC Circuit						United States Court of Appeals for the District of Columbia Circuit
DCRF						TNMP’s applications for a distribution cost recovery factor
DOE						United States Department of Energy

EEI						Edison Electric Institute, an association representing all U.S. investor-owned electric companies
Effective Time						The time the Merger is consummated
EGU						Electric Generating Unit
EIM						Western Energy Imbalance Market developed and operated by CAISO
ELG						Effluent Limitation Guidelines
Energy Transition Charge(s)						Rate rider established to collect non-bypassable customer charges for repayment of the ETBC I Securitized Bonds
EPA						United States Environmental Protection Agency

ERCOT						Electric Reliability Council of Texas
ESA(s)						Energy Storage Agreement(s)

ETA						The New Mexico Energy Transition Act
ETBC I						PNM Energy Transition Bond Company I, LLC, formed on August 25, 2023
ETBC I Securitized Bonds						On November 15, 2023, ETBC I issued $343.2 million aggregate principal amount of its senior secured energy transition bonds, Series A in two tranches
EUEA						The New Mexico Efficient Use of Energy Act
EV						Electric Vehicle
Exchange Act						Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board

FERC						Federal Energy Regulatory Commission
FIP						Federal Implementation Plan
FMB						First Mortgage Bond
Four Corners						Four Corners Power Plant

Four Corners CSA						Four Corners’ coal supply contract with NTEC

FPPAC						Fuel and Purchased Power Adjustment Clause

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FTY						Future Test Year
GAAP						Generally Accepted Accounting Principles in the United States of America
GHG						Greenhouse Gas
Grid Modernization Plan						PNM’s NMPRC approved plan for grid modernization that includes investments of approximately $344 million for the first six years of a broader 11-year strategy
GWh						Gigawatt hours


INDC						Intended Nationally Determined Contribution
IRA						Inflation Reduction Act of 2022
IRC						Internal Revenue Code
IRP						Integrated Resource Plan
IRS						Internal Revenue Service
ISFSI						Independent Spent Fuel Storage Installation
kV						Kilovolt
KW						Kilowatt
KWh						Kilowatt Hour

La Joya Wind II						La Joya Wind Facility generating 140 MW of output


Lightning Dock Geothermal						Lightning Dock geothermal power facility, also known as the Dale Burgett Geothermal Plant


MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations
Merger						The merger of TXNM pursuant to the Merger Agreement, with TXNM surviving as a direct, wholly-owned subsidiary of Parent (an affiliate of Blackstone Infrastructure Partners L.P.)
Merger Agreement						The Agreement and Plan of Merger, dated May 18, 2025, by and among TXNM, Parent, and Merger Sub
Merger Sub						Troy Merger Sub Inc., a New Mexico corporation, direct subsidiary of Parent and affiliate of Blackstone Infrastructure Partners L.P., which will merge with and into TXNM at the Effective Time of the Merger
Meta						Meta Platform, Inc., formerly known as Facebook Inc.
MMBTU						Million British Thermal Units
Moody’s						Moody’s Investor Services, Inc.
MW						Megawatt
MWh						Megawatt Hour
NAAQS						National Ambient Air Quality Standards
NAV						Net asset value
NDT						Nuclear Decommissioning Trusts for PVNGS
NEE						New Energy Economy

New Mexico Wind						New Mexico Wind Energy Center
NM						New Mexico
NM 2015 Rate Case						Request for a General Increase in Electric Rates Field by PNM on August 27, 2015
NM 2016 Rate Case						Request for a General Increase in Electric Rates Filed by PNM on December 7, 2016

NM Supreme Court						New Mexico Supreme Court
NMED						New Mexico Environment Department
NMMMD						The Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources Department
NMPRC						New Mexico Public Regulation Commission
NMRD						NM Renewable Development, LLC, previously owned 50% each by PNMR Development and AEP OnSite Partners, LLC (“AEP OnSite Partners”)
NOx						Nitrogen Oxides
NPDES						National Pollutant Discharge Elimination System
NRC						United States Nuclear Regulatory Commission
NTEC						Navajo Transitional Energy Company, LLC, an entity owned by the Navajo Nation


OBBBA						One Big Beautiful Bill Act of 2025
OCI						Other Comprehensive Income
OMB						Office of Management and Budget
OPEB						Other Post-Employment Benefits
OSM						United States Office of Surface Mining Reclamation and Enforcement
Parent						Troy ParentCo LLC, a Delaware limited liability company and an affiliate of Blackstone Infrastructure Partners L.P.
Paris Agreement						A legally binding international treaty on climate change adopted on December 12, 2015
Pattern Wind						Pattern New Mexico Wind, LLC, an affiliate of Western Spirit and Pattern Development

PCRBs						Pollution Control Revenue Bonds
PEP						Performance Equity Plan

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PM						Particulate Matter
PNM						Public Service Company of New Mexico and Subsidiaries
PNM New Mexico Credit Facility						PNM’s $40.0 million Unsecured Revolving Credit Facility



PNM 2024 Term Loan						PNM’s $200.0 million term loan that matures on November 10, 2025
PNM 2025 Term Loan						PNM’s $195.0 Million Unsecured Term Loan issued on January 21, 2025
PNM April 2025 Note Purchase Agreement						PNM’s agreement for sale of PNM’s April 2025 SUNs
PNM April 2025 SUNs						PNM’s $300.0 million Senior Unsecured Notes issued on April 23, 2025
PNM Revolving Credit Facility						PNM’s $400.0 million Unsecured Revolving Credit Facility

PNMR Development						PNMR Development and Management Company, an unregulated wholly-owned subsidiary of TXNM
PPA						Power Purchase Agreement

PUCT						Public Utility Commission of Texas
PV						Photovoltaic
PVNGS						Palo Verde Nuclear Generating Station


RD						Recommended Decision
REA						New Mexico’s Renewable Energy Act of 2004
RECs						Renewable Energy Certificates
Red Mesa Wind						Red Mesa Wind Energy Center
REP(s)						Retail Electricity Provider
RFP						Request for Proposal

ROE						Return on Equity
RPS						Renewable Energy Portfolio Standard
S&P						Standard and Poor’s Ratings Services


SEC						United States Securities and Exchange Commission
Securities Act						Securities Act of 1933, as amended
Securitized Bonds						Energy transition bonds
SIP						State Implementation Plan

SJGS						San Juan Generating Station


SO2						Sulfur Dioxide
SOFR						Secured Overnight Financing Rate
SRP						TNMP’s System Resiliency Plan
SUNs						Senior Unsecured Notes

TCJA						Federal tax reform legislation enacted on December 22, 2017, commonly referred to as the Tax Cuts and Jobs Act
TCOS						Transmission Cost of Service
TECA						Texas Electric Choice Act
TEP						Transportation Electrification Program
TNMP						Texas-New Mexico Power Company and Subsidiaries
TNMP 2018 Rate Case						TNMP’s General Rate Case Application filed on May 30, 2018


TNMP 2024 Bonds						TNMP’s First Mortgage Bonds issued under the TNMP 2024 Bond Purchase Agreement
TNMP 2024 Bond Purchase Agreement						TNMP’s Agreement for the sale of an aggregate $285.0 million of TNMP’s 2024 Bonds
TNMP February 2025 Bonds						TNMP’s First Mortgage Bonds issued under the TNMP February 2025 Bond Purchase Agreement
TNMP February 2025 Bond Purchase Agreement						TNMP’s Agreement for the sale of an aggregate $140.0 Million of TNMP February 2025 Bonds
TNMP Revolving Credit Facility						TNMP’s $200.0 million Secured Revolving Credit Facility

TSA(s)						Transmission Service Agreement(s)

TXNM						TXNM Energy, Inc. formerly known as PNM Resources, Inc. (“PNMR”)
TXNM 2021 Delayed-Draw Term Loan						TXNM’s $1.0 billion Unsecured Delayed-Draw Term Loan that matures on May 18, 2025

TXNM 2023 Term Loan						TXNM’s $500.0 million term loan that matures on June 30, 2026
TXNM 2024 ATM Program						TXNM’s distribution agreement pursuant to which the Company issued and sold an aggregate sales price of $300.0 million of its common stock, no par value, through the sales agents
TXNM Revolving Credit Facility						TXNM’s $300.0 million Unsecured Revolving Credit Facility

Table of Contents


U.S.						The Unites States of America
U.S. Supreme Court						United States Supreme Court
Valencia						Valencia Energy Facility
VIE						Variable Interest Entity
WACC						Weighted Average Cost of Capital
Western Spirit Line						An approximately 150-mile 345-kV transmission line
Westmoreland						Westmoreland Coal Company
WFB LOC Facility						Letter of credit arrangements with Wells Fargo Bank, N.A., entered into in August 2020


WRAP						Western Resource Adequacy Program

WSJ LLC						Westmoreland San Juan, LLC, a subsidiary of Westmoreland Mining Holdings, LLC, and current owner of San Juan Coal Company

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands, except per share amounts)




Electric Operating Revenues	$	502,420	$	488,102	$	985,212	$	924,979
Operating Expenses:
Cost of energy	167,622		154,706		336,804		287,010
Administrative and general	75,991		59,581		136,760		115,008
Energy production costs	26,081		24,584		50,627		46,796
Regulatory disallowances	—		—		—		4,459
Depreciation and amortization	105,235		94,413		209,786		187,600
Transmission and distribution costs	26,461		25,051		51,966		47,815
Taxes other than income taxes	28,329		24,084		54,679		50,018
Total operating expenses	429,719		382,419		840,622		738,706
Operating income	72,701		105,683		144,590		186,273
Other Income and Deductions:
Interest income	3,872		4,470		8,119		9,050
Gains on investment securities	23,556		558		22,315		18,556
Other income	5,704		7,688		10,433		12,599
Other (deductions)	(6,481)		(1,636)		(8,739)		(18,158)
Net other income and deductions	26,651		11,080		32,128		22,047
Interest Charges	72,013		55,828		135,564		109,590
Earnings before Income Taxes	27,339		60,935		41,154		98,730
Income Taxes (Benefits)	1,326		8,971		2,344		(3,600)
Net Earnings	26,013		51,964		38,810		102,330
(Earnings) Attributable to Valencia Non-controlling Interest	(4,305)		(3,783)		(8,047)		(6,827)
Preferred Stock Dividend Requirements of Subsidiary	(132)		(132)		(264)		(264)
Net Earnings Attributable to TXNM	$	21,576	$	48,049	$	30,499	$	95,239
Net Earnings Attributable to TXNM per Common Share:
Basic	$	0.22	$	0.53	$	0.32	$	1.05
Diluted	$	0.22	$	0.53	$	0.32	$	1.05
Dividends Declared per Common Share	$	0.4075	$	0.3875	$	0.8150	$	0.7750

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

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TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands)
Net Earnings	$	26,013	$	51,964	$	38,810	$	102,330
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Debt Securities:
Net increase (decrease) in unrealized holding gains arising during the period, net of income tax (expense) benefit of $(60), $274, $(128), and $149	177		(804)		376		(438)
Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $51, $421, $86, and $3,192	(150)		(1,235)		(252)		(9,374)
Pension Liability Adjustment:

Reclassification adjustment for amortization of experience losses recognized as net periodic benefit cost, net of income tax (benefit) of $(349), $(309), $(698), and $(618)	1,026		908		2,051		1,815
Fair Value Adjustment for Cash Flow Hedges:
Change in fair market value, net of income tax (expense) of $633, $1,111, $633, and $1,094	(1,860)		(3,263)		(1,860)		(3,213)
Reclassification adjustment for gains included in net earnings, net of income tax (expense) benefit of $0, $(716), $0, and $(1,413)	—		2,102		—		4,150
Total Other Comprehensive Income (Loss)	(807)		(2,292)		315		(7,060)
Comprehensive Income	25,206		49,672		39,125		95,270
Comprehensive (Income) Attributable to Valencia Non-controlling Interest	(4,305)		(3,783)		(8,047)		(6,827)
Preferred Stock Dividend Requirements of Subsidiary	(132)		(132)		(264)		(264)
Comprehensive Income Attributable to TXNM	$	20,769	$	45,757	$	30,814	$	88,179

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

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TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(In thousands)
Cash Flows From Operating Activities:
Net earnings	$	38,810	$	102,330
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	235,245		206,365
Deferred income tax expense	1,796		15,385
(Gain) on sale of NMRD	—		(4,449)

(Gains) losses on investment securities	(22,315)		(18,556)
Stock based compensation expense	5,266		6,676
Regulatory disallowances	—		4,459
Allowance for equity funds used during construction	(5,266)		(8,130)
Other, net	1,753		2,039
Changes in certain assets and liabilities:
Accounts receivable and unbilled revenues	(30,921)		(10,120)
Materials, supplies, and fuel stock	(4,313)		(17,110)
Other current assets	(20,651)		(19,479)
Other assets	(8,211)		(16,382)
Accounts payable	(3,669)		(17,502)
Accrued interest and taxes	(19,588)		(6,935)
Other current liabilities	(17,140)		(28,350)

Other liabilities	(6,001)		(20,717)
Net cash flows from operating activities	144,795		169,524

Cash Flows From Investing Activities:
Additions to utility plant and non-utility plant	(608,800)		(581,818)
Proceeds from sale of plant assets	—		2,840
Proceeds from sales of investment securities	198,728		412,750
Purchases of investment securities	(201,174)		(417,599)



Proceeds from sale of NMRD	—		116,936

Investments in NMRD	—		(12,550)

Other, net	(53)		(57)
Net cash flows used in investing activities	(611,299)		(479,498)

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

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TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(In thousands)
Cash Flows From Financing Activities:

Revolving credit facilities borrowings	$	1,398,900	$	1,584,300
Revolving credit facilities repayments	(1,662,500)		(1,519,800)
Long-term borrowings	1,719,300		1,065,000
Repayment of long-term debt	(1,442,706)		(737,000)
Issuance of common stock	645,309		—


Awards of common stock	(8,249)		(6,248)

Dividends paid	(75,781)		(70,169)
Valencia’s transactions with its owner	(8,918)		(7,853)
Transmission interconnection and security deposit arrangements	21,215		64,752
Refunds paid under transmission interconnection and security deposit arrangements	(95,028)		(28,702)
Debt issuance costs and other, net	(9,599)		(17,929)

Net cash flows from financing activities	481,943		326,351

Change in Cash, Cash Equivalents, and Restricted Cash	15,439		16,377
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	22,085		3,943
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	37,524	$	20,320

Restricted Cash included in Other Current Assets and Other Deferred Charges on Condensed Consolidated Balance Sheets:
At beginning of period	$	17,587	$	1,728
At end of period	$	15,354	$	17,085

Supplemental Cash Flow Disclosures:
Interest paid, net of amounts capitalized	$	132,849	$	97,747
Income taxes paid (refunded), net	$	2,350	$	(395)

Supplemental schedule of noncash investing activities:
Decrease in accrued plant additions	$	53,154	$	47,369

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	22,170	$	4,498
Accounts receivable, net of allowance for credit losses of $1,319 and $1,398	146,444		130,351
Unbilled revenues	81,989		69,176
Other receivables	46,981		37,236

Materials, supplies, and fuel stock	171,174		166,861
Regulatory assets	41,891		41,492

Prepaid assets	39,869		25,452
Income taxes receivable	9,486		7,684

Other current assets	13,723		16,086
Total current assets	573,727		498,836
Other Property and Investments:

Investment securities	487,033		475,524

Other investments	246		259
Non-utility property, net	32,218		28,832
Total other property and investments	519,497		504,615
Utility Plant:
Plant in service and plant held for future use	10,965,483		10,697,774
Less accumulated depreciation and amortization	2,904,763		2,829,296
	8,060,720		7,868,478
Construction work in progress	677,897		495,976
Nuclear fuel, net of accumulated amortization of $32,051 and $28,245	76,887		72,554
Net utility plant	8,815,504		8,437,008
Deferred Charges and Other Assets:
Regulatory assets	953,795		962,003
Goodwill	278,297		278,297
Operating lease right-of-use assets, net of accumulated amortization	265,919		272,894

Other deferred charges	268,525		258,080
Total deferred charges and other assets	1,766,536		1,771,274
	$	11,675,264	$	11,211,733

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands, except share information)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	345,700	$	609,300
Current installments of long-term debt (includes $7,102 and $6,907 related to ETBC I)	416,701		611,603
Accounts payable	147,646		204,468
Customer deposits	6,509		6,533
Accrued interest and taxes	86,970		104,756
Regulatory liabilities	21,787		34,173
Operating lease liabilities	13,640		14,293

Dividends declared	132		36,889

Transmission interconnection arrangement liabilities	—		68,085
Other current liabilities	81,313		84,998
Total current liabilities	1,120,398		1,775,098
Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs (includes $328,179 and $331,726 related to ETBC I)	4,782,536		4,311,765
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	918,217		899,392
Regulatory liabilities	751,467		748,738
Asset retirement obligations	246,647		244,618
Accrued pension liability and postretirement benefit cost	18,211		23,065
Operating lease liabilities	245,847		255,376

Other deferred credits	363,618		358,867
Total deferred credits and other liabilities	2,544,007		2,530,056
Total liabilities	8,446,941		8,616,919
Commitments and Contingencies (Note 11)
Cumulative Preferred Stock of Subsidiary
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)	11,529		11,529
Equity:
TXNM common stockholders’ equity:
Common stock (no par value; 200,000,000 shares authorized; issued and outstanding 105,378,979 and 92,659,335 shares)	2,366,770		1,724,444
Accumulated other comprehensive income (loss), net of income taxes	(75,393)		(75,708)
Retained earnings	879,388		887,649
Total TXNM common stockholders’ equity	3,170,765		2,536,385
Non-controlling interest in Valencia	46,029		46,900
Total equity	3,216,794		2,583,285
	$	11,675,264	$	11,211,733

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


		Attributable to TXNM											Non- controlling Interest in Valencia
	Common Stock			AOCI			Retained Earnings			Total TXNM Common Stockholders’ Equity					Total Equity
		(In thousands)
Balance at March 31, 2025		$	1,721,109		$	(74,586)		$	857,812		$	2,504,335	$	46,372		$	2,550,707
Net earnings before subsidiary preferred stock dividends		—			—			21,708			21,708		4,305			26,013
Total other comprehensive income (loss)		—			(807)			—			(807)		—			(807)
Subsidiary preferred stock dividends		—			—			(132)			(132)		—			(132)


Awards of common stock		(1,942)			—			—			(1,942)		—			(1,942)
Issuance of common stock		645,309			—			—			645,309		—			645,309
Stock based compensation expense		2,294			—			—			2,294		—			2,294
Valencia’s transactions with its owner		—			—			—			—		(4,648)			(4,648)
Balance at June 30, 2025		$	2,366,770		$	(75,393)		$	879,388		$	3,170,765	$	46,029		$	3,216,794

Balance at December 31, 2024		$	1,724,444		$	(75,708)		$	887,649		$	2,536,385	$	46,900		$	2,583,285



Net earnings before subsidiary preferred stock dividends		—			—			30,763			30,763		8,047			38,810
Total other comprehensive income		—			315			—			315		—			315
Subsidiary preferred stock dividends		—			—			(264)			(264)		—			(264)
Dividends declared on common stock		—			—			(38,760)			(38,760)		—			(38,760)

Awards of common stock		(8,249)			—			—			(8,249)		—			(8,249)

Issuance of common stock		645,309			—			—			645,309		—			645,309
Stock based compensation expense		5,266			—			—			5,266		—			5,266
Valencia’s transactions with its owner		—			—			—			—		(8,918)			(8,918)



Balance at June 30, 2025		$	2,366,770		$	(75,393)		$	879,388		$	3,170,765	$	46,029		$	3,216,794


Balance at March 31, 2024	$	1,623,991	$	(67,608)	$	799,348	$	2,355,731	$	48,999	$	2,404,730
Net earnings before subsidiary preferred stock dividends	—		—		48,181		48,181		3,783		51,964
Total other comprehensive income (loss)	—		(2,292)		—		(2,292)		—		(2,292)
Subsidiary preferred stock dividends	—		—		(132)		(132)		—		(132)


Awards of common stock	(808)		—		—		(808)		—		(808)
Stock based compensation expense	2,068		—		—		2,068		—		2,068
Valencia’s transactions with its owner	—		—		—		—		(3,850)		(3,850)
Balance at June 30, 2024	$	1,625,251	$	(69,900)	$	847,397	$	2,402,748	$	48,932	$	2,451,680

Balance at December 31, 2023	$	1,624,823	$	(62,840)	$	787,110	$	2,349,093	$	49,958	$	2,399,051
Net earnings before subsidiary preferred stock dividends	—		—		95,503		95,503		6,827		102,330
Total other comprehensive income (loss)	—		(7,060)		—		(7,060)		—		(7,060)
Subsidiary preferred stock dividends	—		—		(264)		(264)		—		(264)
Dividends declared on common stock	—		—		(34,952)		(34,952)		—		(34,952)

Awards of common stock	(6,248)		—		—		(6,248)		—		(6,248)

Stock based compensation expense	6,676		—		—		6,676		—		6,676
Valencia’s transactions with its owner	—		—		—		—		(7,853)		(7,853)



Balance at June 30, 2024	$	1,625,251	$	(69,900)	$	847,397	$	2,402,748	$	48,932	$	2,451,680

The accompanying notes, as they relate to TXNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands)




Electric Operating Revenues	$	338,372	$	333,671	$	671,752	$	641,786
Operating Expenses:
Cost of energy	124,336		114,772		255,290		212,184
Administrative and general	59,526		54,876		117,136		106,612
Energy production costs	26,081		24,584		50,627		46,796
Regulatory disallowances	—		—		—		4,459
Depreciation and amortization	60,778		54,230		120,581		107,517
Transmission and distribution costs	15,750		15,350		31,576		29,700
Taxes other than income taxes	15,262		11,768		28,565		25,477
Total operating expenses	301,733		275,580		603,775		532,745
Operating income	36,639		58,091		67,977		109,041
Other Income and Deductions:
Interest income	3,729		4,443		7,946		8,970
Gains on investment securities	23,556		558		22,315		18,556
Other income	3,561		4,224		5,363		7,642
Other (deductions)	(4,301)		(913)		(5,819)		(1,783)
Net other income and deductions	26,545		8,312		29,805		33,385
Interest Charges	31,975		25,880		61,791		50,996
Earnings before Income Taxes	31,209		40,523		35,991		91,430
Income Taxes	2,410		5,821		2,373		11,632
Net Earnings	28,799		34,702		33,618		79,798
(Earnings) Attributable to Valencia Non-controlling Interest	(4,305)		(3,783)		(8,047)		(6,827)
Net Earnings Attributable to PNM	24,494		30,919		25,571		72,971
Preferred Stock Dividend Requirements	(132)		(132)		(264)		(264)
Net Earnings Available for PNM Common Stock	$	24,362	$	30,787	$	25,307	$	72,707

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,

	2025		2024		2025		2024
	(In thousands)
Net Earnings	$	28,799	$	34,702	$	33,618	$	79,798
Other Comprehensive Income:
Unrealized Gains on Available-for-Sale Debt Securities:
Net increase (decrease) in unrealized holding gains arising during the period, net of income tax (expense) benefit of $(60), $274, $(128), and $149	177		(804)		376		(438)
Reclassification adjustment for (gains) included in net earnings, net of income tax expense of $51, $421, $86, and $3,192	(150)		(1,235)		(252)		(9,374)
Pension Liability Adjustment:

Reclassification adjustment for amortization of experience losses recognized as net periodic benefit cost, net of income tax (benefit) of $(349), $(309), $(698), and $(618)	1,026		908		2,051		1,815



Total Other Comprehensive Income (Loss)	1,053		(1,131)		2,175		(7,997)
Comprehensive Income	29,852		33,571		35,793		71,801
Comprehensive (Income) Attributable to Valencia Non-controlling Interest	(4,305)		(3,783)		(8,047)		(6,827)
Comprehensive Income Attributable to PNM	$	25,547	$	29,788	$	27,746	$	64,974

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(In thousands)
Cash Flows From Operating Activities:
Net earnings	$	33,618	$	79,798
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	134,216		120,385
Deferred income tax expense (benefit)	2,439		12,049

(Gains) losses on investment securities	(22,315)		(18,556)
Regulatory disallowances	—		4,459
Allowance for equity funds used during construction	(3,095)		(6,476)
Other, net	1,900		1,935
Changes in certain assets and liabilities:
Accounts receivable and unbilled revenues	(21,040)		(2,654)
Materials, supplies, and fuel stock	(375)		(10,671)
Other current assets	(10,205)		(28,462)
Other assets	1,463		(3,324)
Accounts payable	(14,257)		(12,753)
Accrued interest and taxes	4,457		10,619
Other current liabilities	9,661		(6,113)

Other liabilities	(15,943)		(22,576)
Net cash flows from operating activities	100,524		117,660

Cash Flows From Investing Activities:
Utility plant additions	(272,669)		(311,475)
Proceeds from sale of plant assets	—		2,840
Proceeds from sales of investment securities	198,728		412,750
Purchases of investment securities	(201,174)		(417,599)


Other, net	(62)		(57)
Net cash flows used in investing activities	(275,177)		(313,541)

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(In thousands)
Cash Flows From Financing Activities:
Revolving credit facilities borrowings	$	627,700	$	737,900
Revolving credit facilities repayments	(756,900)		(804,800)

Long-term borrowings	495,000		398,000
Repayment of long-term debt	(107,406)		(198,000)
Equity contribution from parent	—		55,000
Dividends paid	(264)		(264)
Valencia’s transactions with its owner	(8,918)		(7,853)
Transmission interconnection and security deposit arrangements	2,415		58,002
Refunds paid under transmission interconnection and security deposit arrangements	(74,278)		(23,852)
Debt issuance costs and other, net	(2,654)		(3,734)
Net cash flows from financing activities	174,695		210,399

Change in Cash, Cash Equivalents, and Restricted Cash	42		14,518
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	20,285		2,586
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	20,327	$	17,104

Restricted Cash included in Other Current Assets and Other Deferred Charges on Condensed Consolidated Balance Sheets:
At beginning of period	$	17,587	$	1,728
At end of period	$	15,354	$	17,085

Supplemental Cash Flow Disclosures:
Interest paid, net of amounts capitalized	$	53,933	$	32,905
Income taxes paid (refunded), net	$	—	$	(1,707)

Supplemental schedule of noncash investing activities:
Decrease in accrued plant additions	$	11,569	$	26,848

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	4,973	$	2,698
Accounts receivable, net of allowance for credit losses of $1,319 and $1,398	106,747		95,932
Unbilled revenues	61,194		52,983
Other receivables	30,847		24,174
Affiliate receivables	8,883		9,241
Materials, supplies, and fuel stock	142,884		142,510
Regulatory assets	32,920		36,224

Prepaid assets	25,200		14,746
Income taxes receivable	16,376		16,309
Other current assets	13,711		16,091
Total current assets	443,735		410,908
Other Property and Investments:

Investment securities	487,033		475,524
Other investments	246		184
Non-utility property, net	13,998		13,647
Total other property and investments	501,277		489,355
Utility Plant:
Plant in service and plant held for future use	6,929,296		6,797,493
Less accumulated depreciation and amortization	2,131,450		2,079,363
	4,797,846		4,718,130
Construction work in progress	392,455		328,403
Nuclear fuel, net of accumulated amortization of $32,051 and $28,245	76,887		72,554
Net utility plant	5,267,188		5,119,087
Deferred Charges and Other Assets:
Regulatory assets	845,630		857,310
Goodwill	51,632		51,632
Operating lease right-of-use assets, net of accumulated amortization	265,016		271,433

Other deferred charges	218,962		207,554
Total deferred charges and other assets	1,381,240		1,387,929
	$	7,593,440	$	7,407,279

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term debt	$	234,600	$	363,800

Current installments of long-term debt (includes $7,102 and $6,907 related to ETBC I)	206,995		560,637
Accounts payable	98,057		123,883
Affiliate payables	31,593		15,695
Customer deposits	6,509		6,533
Accrued interest and taxes	51,447		46,923
Regulatory liabilities	21,787		33,571
Operating lease liabilities	13,253		13,542

Dividends declared	132		132

Transmission interconnection arrangement liabilities	—		68,085
Other current liabilities	54,832		50,099
Total current liabilities	719,205		1,282,900
Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs (includes $328,179 and $331,726 related to ETBC I)	2,639,407		1,898,955
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	775,235		756,218

Regulatory liabilities	502,243		518,701
Asset retirement obligations	245,652		243,663
Accrued pension liability and postretirement benefit cost	17,607		22,067
Operating lease liabilities	245,330		254,702

Other deferred credits	226,423		234,346
Total deferred credits and liabilities	2,012,490		2,029,697
Total liabilities	5,371,102		5,211,552
Commitments and Contingencies (Note 11)
Cumulative Preferred Stock
without mandatory redemption requirements ($100 stated value; 10,000,000 shares authorized; issued and outstanding 115,293 shares)	11,529		11,529
Equity:
PNM common stockholder’s equity:
Common stock (no par value; 40,000,000 shares authorized; issued and outstanding 39,117,799 shares)	1,602,918		1,602,918
Accumulated other comprehensive income (loss), net of income taxes	(73,533)		(75,708)
Retained earnings	635,395		610,088
Total PNM common stockholder’s equity	2,164,780		2,137,298
Non-controlling interest in Valencia	46,029		46,900
Total equity	2,210,809		2,184,198
	$	7,593,440	$	7,407,279

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Attributable to PNM
							Total PNM Common Stockholder’s Equity		Non- controlling Interest in Valencia

	Common Stock		AOCI		Retained Earnings						Total Equity

	(In thousands)
Balance at March 31, 2025	$	1,602,918	$	(74,586)	$	611,033	$	2,139,365	$	46,372	$	2,185,737
Net earnings	—		—		24,494		24,494		4,305		28,799
Total other comprehensive income	—		1,053		—		1,053		—		1,053
Dividends declared on preferred stock	—		—		(132)		(132)		—		(132)


Valencia’s transactions with its owner	—		—		—		—		(4,648)		(4,648)
Balance at June 30, 2025	$	1,602,918	$	(73,533)	$	635,395	$	2,164,780	$	46,029	$	2,210,809

Balance at December 31, 2024	$	1,602,918	$	(75,708)	$	610,088	$	2,137,298	$	46,900	$	2,184,198


Net earnings	—		—		25,571		25,571		8,047		33,618
Total other comprehensive income	—		2,175		—		2,175		—		2,175
Dividends declared on preferred stock	—		—		(264)		(264)		—		(264)


Valencia’s transactions with its owner	—		—		—		—		(8,918)		(8,918)





Balance at June 30, 2025	$	1,602,918	$	(73,533)	$	635,395	$	2,164,780	$	46,029	$	2,210,809


Balance at March 31, 2024	$	1,547,918	$	(73,371)	$	511,324	$	1,985,871	$	48,999	$	2,034,870
Net earnings	—		—		30,919		30,919		3,783		34,702
Total other comprehensive income (loss)	—		(1,131)		—		(1,131)		—		(1,131)
Dividends declared on preferred stock	—		—		(132)		(132)		—		(132)
Equity contributions from parent	55,000		—		—		55,000		—		55,000

Valencia’s transactions with its owner	—		—		—		—		(3,850)		(3,850)
Balance at June 30, 2024	$	1,602,918	$	(74,502)	$	542,111	$	2,070,527	$	48,932	$	2,119,459

Balance at December 31, 2023	$	1,547,918	$	(66,505)	$	469,404	$	1,950,817	$	49,958	$	2,000,775
Net earnings	—		—		72,971		72,971		6,827		79,798
Total other comprehensive income (loss)	—		(7,997)		—		(7,997)		—		(7,997)
Dividends declared on preferred stock	—		—		(264)		(264)		—		(264)
Equity contribution from parent	55,000		—		—		55,000		—		55,000

Valencia’s transactions with its owner	—		—		—		—		(7,853)		(7,853)





Balance at June 30, 2024	$	1,602,918	$	(74,502)	$	542,111	$	2,070,527	$	48,932	$	2,119,459

The accompanying notes, as they relate to PNM, are an integral part of these condensed consolidated financial statements.

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands)




Electric Operating Revenues	$	164,048	$	154,431	$	313,460	$	283,193
Operating Expenses:
Cost of energy	43,286		39,934		81,514		74,826
Administrative and general	14,994		13,705		27,035		27,374

Depreciation and amortization	34,926		31,033		70,139		61,415
Transmission and distribution costs	10,711		9,701		20,390		18,115
Taxes other than income taxes	11,444		10,743		22,948		21,410
Total operating expenses	115,361		105,116		222,026		203,140
Operating income	48,687		49,315		91,434		80,053
Other Income and Deductions:
Interest income	159		127		313		296
Other income	1,764		2,982		4,284		4,155
Other (deductions)	(229)		(277)		(497)		(574)
Net other income and deductions	1,694		2,832		4,100		3,877
Interest Charges	23,942		14,451		41,264		27,787
Earnings before Income Taxes	26,439		37,696		54,270		56,143
Income Taxes	5,471		7,771		11,019		11,635
Net Earnings	$	20,968	$	29,925	$	43,251	$	44,508

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2025		2024
	(In thousands)
Cash Flows From Operating Activities:
Net earnings	$	43,251	$	44,508
Adjustments to reconcile net earnings to net cash flows from operating activities:
Depreciation and amortization	75,899		61,963
Deferred income tax expense	10,464		10,322

Allowance for equity funds used during construction and other, net	(2,319)		(1,653)

Changes in certain assets and liabilities:
Accounts receivable and unbilled revenues	(9,880)		(7,466)
Materials and supplies	(3,938)		(6,439)
Other current assets	(11,469)		6,979
Other assets	(4,716)		(4,251)
Accounts payable	8,036		(2,381)
Accrued interest and taxes	(23,947)		(8,246)
Other current liabilities	13,888		179
Other liabilities	6,994		(780)
Net cash flows from operating activities	102,263		92,735
Cash Flows From Investing Activities:
Utility plant additions	(317,739)		(253,537)


Net cash flows used in investing activities	(317,739)		(253,537)
Cash Flows From Financing Activities:

Revolving credit facilities borrowings	264,600		338,900
Revolving credit facilities repayments	(416,200)		(293,400)

Long-term borrowings	1,224,300		117,000
Repayment of long-term debt	(1,084,300)		—

Equity contribution from parent	250,000		—
Transmission interconnection and security deposit arrangements	18,800		6,750
Refunds paid under transmission interconnection and security deposit arrangements	(20,750)		(4,850)

Debt issuance costs and other, net	(5,207)		(2,324)
Net cash flows from financing activities	231,243		162,076

Change in Cash and Cash Equivalents	15,767		1,274
Cash and Cash Equivalents at Beginning of Period	233		—
Cash and Cash Equivalents at End of Period	$	16,000	$	1,274

Supplemental Cash Flow Disclosures:
Interest paid, net of amounts capitalized	$	46,365	$	24,624
Income taxes paid (refunded), net	$	2,350	$	1,312

Supplemental schedule of noncash investing activities:
Decrease in accrued plant additions	$	44,636	$	14,697

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	16,000	$	233
Accounts receivable	39,697		34,419
Unbilled revenues	20,795		16,193
Other receivables	17,894		15,144

Materials and supplies	28,290		24,351
Regulatory assets	8,971		5,268

Prepaid and other current assets	10,226		4,908
Total current assets	141,873		100,516
Other Property and Investments:
Other investments	—		75
Non-utility property, net	16,146		13,137
Total other property and investments	16,146		13,212
Utility Plant:
Plant in service and plant held for future use	3,795,571		3,635,550
Less accumulated depreciation and amortization	651,123		616,741
	3,144,448		3,018,809
Construction work in progress	268,957		165,527
Net utility plant	3,413,405		3,184,336
Deferred Charges and Other Assets:
Regulatory assets	108,165		104,693
Goodwill	226,665		226,665
Operating lease right-of-use assets, net of accumulated amortization	388		923
Other deferred charges	16,700		18,780
Total deferred charges and other assets	351,918		351,061
	$	3,923,342	$	3,649,125

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2025		December 31, 2024
	(In thousands, except share information)
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Short-term debt	$	—	$	151,600


Accounts payable	30,515		67,116
Affiliate payables	18,414		7,339
Accrued interest and taxes	32,793		56,740

Regulatory liabilities	—		602
Operating lease liabilities	348		713

Other current liabilities	9,535		6,964
Total current liabilities	91,605		291,074
Long-term Debt, net of Unamortized Premiums, Discounts, and Debt Issuance Costs	1,604,722		1,464,079
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes	219,653		208,107
Regulatory liabilities	249,224		230,037
Asset retirement obligations	995		955
Accrued pension liability and postretirement benefit cost	604		998
Operating lease liabilities	31		167
Other deferred credits	98,068		88,519
Total deferred credits and other liabilities	568,575		528,783
Total liabilities	2,264,902		2,283,936
Commitments and Contingencies (Note 11)
Common Stockholder’s Equity:
Common stock ($10 par value; 12,000,000 shares authorized; issued and outstanding 6,358 shares)	64		64
Paid-in-capital	1,120,066		870,066

Retained earnings	538,310		495,059
Total common stockholder’s equity	1,658,440		1,365,189
	$	3,923,342	$	3,649,125

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

Table of Contents

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

A WHOLLY-OWNED SUBSIDIARY OF TXNM ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCKHOLDER’S EQUITY

(Unaudited)


	Common Stock		Paid-in Capital		Retained Earnings		Total Common Stockholder’s Equity
	(In thousands)
Balance at March 31, 2025	$	64	$	870,066	$	517,342	$	1,387,472
Net earnings	—		—		20,968		20,968
Equity contribution from parent	—		250,000		—		250,000

Balance at June 30, 2025	$	64	$	1,120,066	$	538,310	$	1,658,440

Balance at December 31, 2024	$	64	$	870,066	$	495,059	$	1,365,189
Net earnings	—		—		43,251		43,251

Equity contribution from parent	—		250,000		—		250,000

Balance at June 30, 2025	$	64	$	1,120,066	$	538,310	$	1,658,440


Balance at March 31, 2024	$	64	$	846,066	$	406,114	$	1,252,244
Net earnings	—		—		29,925		29,925


Balance at June 30, 2024	$	64	$	846,066	$	436,039	$	1,282,169

Balance at December 31, 2023	$	64	$	846,066	$	391,531	$	1,237,661
Net earnings	—		—		44,508		44,508



Balance at June 30, 2024	$	64	$	846,066	$	436,039	$	1,282,169

The accompanying notes, as they relate to TNMP, are an integral part of these condensed consolidated financial statements.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Significant Accounting Policies and Responsibility for Financial Statements

Financial Statement Preparation

In the opinion of management, the accompanying unaudited interim Condensed Consolidated Financial Statements reflect all normal and recurring accruals and adjustments that are necessary to present fairly the consolidated financial position at June 30, 2025 and December 31, 2024, and the consolidated results of operations, comprehensive income, and cash flows for the six months ended June 30, 2025 and 2024. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could ultimately differ from those estimated. Weather causes the Company’s results of operations to be seasonal in nature and the results of operations presented in the accompanying Condensed Consolidated Financial Statements are not necessarily representative of operations for an entire year.

On August 2, 2024, PNM Resources, Inc. (“PNMR”) amended its Articles of Incorporation to change its name to TXNM Energy, Inc. (“TXNM”) and increase the number of authorized shares of the Company’s common stock from 120,000,000 to 200,000,000. The Notes to Condensed Consolidated Financial Statements include disclosures for TXNM, PNM, and TNMP. This report uses the term “Company” when discussing matters of common applicability to TXNM, PNM, and TNMP. Discussions regarding only TXNM, PNM, or TNMP are so indicated.

On May 18, 2025, TXNM, Parent, and Merger Sub, entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct, wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of Blackstone Infrastructure. See Note 17.

These Condensed Consolidated Financial Statements are unaudited. Certain information and note disclosures normally included in the annual audited Consolidated Financial Statements have been condensed or omitted, as permitted under the applicable rules and regulations. Readers of these financial statements should refer to TXNM’s, PNM’s, and TNMP’s audited Consolidated Financial Statements and Notes thereto that are included in their respective 2024 Annual Reports on Form 10-K.

GAAP defines subsequent events as events or transactions that occur after the balance sheet date but before financial statements are issued or are available to be issued. Based on their nature, magnitude, and timing, certain subsequent events may be required to be reflected at the balance sheet date and/or required to be disclosed in the financial statements. The Company has evaluated subsequent events accordingly.

Principles of Consolidation

The Condensed Consolidated Financial Statements of each of TXNM, PNM, and TNMP include their accounts and those of subsidiaries in which that entity owns a majority voting interest. PNM also consolidates Valencia and ETBC I. See Note 6. PNM owns undivided interests in several jointly-owned power plants and records its pro-rata share of the assets, liabilities, and expenses for those plants. The agreements for the jointly-owned plants provide that if an owner were to default on its payment obligations, the non-defaulting owners would be responsible for their proportionate share of the obligations of the defaulting owner. In exchange, the non-defaulting owners would be entitled to their proportionate share of the generating capacity of the defaulting owner. There have been no such payment defaults under any of the agreements for the jointly-owned plants.

PNMR Services Company expenses, which represent costs that are primarily driven by corporate level activities, are charged to the business segments. These services are billed at cost and are reflected as general and administrative expenses in the business segments. Other significant intercompany transactions between TXNM, PNM, and TNMP include interest and income tax sharing payments, as well as equity transactions. See Note 15. All intercompany transactions and balances have been eliminated.

Equity Method Investment (Previously held)

As discussed in Note 21 of the Company’s 2024 Annual Reports on Form 10-K, PNMR Development and AEP OnSite Partners created NMRD in September 2017 to pursue the acquisition, development, and ownership of renewable energy generation projects, primarily in the state of New Mexico. On February 27, 2024, PNMR Development and AEP OnSite Partners sold their respective interests in NMRD. PNMR Development received net proceeds of $117.0 million and recognized

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

an after-tax gain of $4.4 million, which was presented as cash flows from operating activities on the Condensed Consolidated Statement of Cash Flows in the six months ended June 30, 2024. The recognition of deferred investment tax credits of $15.7 million was also recognized as an income tax benefit on the Condensed Consolidated Statement of Earnings. In the six months ended June 30, 2024, PNMR Development and AEP OnSite Partners each made cash contributions to NMRD of $12.6 million.

Dividends on Common Stock

Dividends on TXNM’s common stock are declared by the Board. The timing of the declaration of dividends is dependent on the timing of meetings and other actions of the Board. The Board declared dividends on common stock attributable to the second quarter of 2025 of $0.4075 per share in July 2025 and declared dividends on common stock attributable to the second quarter of 2024 of $0.3875 per share in July 2024, which are reflected as Dividends Declared per Common Share on the TXNM Condensed Consolidated Statement of Earnings.

TXNM made $250.0 million in cash equity contributions to TNMP in the three and six months ended June 30, 2025. TXNM did not make any cash equity contributions to TNMP in the three and six months ended June 30, 2024. TXNM did not make any cash equity contributions to PNM in the three and six months ended June 30, 2025. TXNM made a $55.0 million cash equity contribution to PNM in the three and six months ended June 30, 2024. Neither PNM nor TNMP declared or paid any cash dividends on their common stock to TXNM in the three and six months ended June 30, 2025 and 2024.

New Accounting Pronouncements

Information concerning recently issued accounting pronouncements that have not yet been adopted by the Company is presented below. The Company does not expect difficulty in adopting these standards by their required effective dates.

Accounting Standards Update 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 enhancing the transparency and decision usefulness of income tax disclosures. Disclosure requirements of this update include (on an annual basis) the disclosure of specific categories in the rate reconciliation and the inclusion of additional information for reconciling items that meet a quantitative threshold (if the effect of the reconciling item is equal to or greater than 5 percent of the amount computed by multiplying pre-tax income by the applicable statutory rate). The amendment also requires the disclosure (on an annual basis) of information about income taxes paid (net of refunds) including the disaggregation by federal, state, and foreign taxes as well as by individual jurisdiction. Additional requirements include the disclosure of income (loss) from continuing operations before income tax expense (benefit) disaggregated between foreign and domestic as well as income tax expense (benefit) from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective for the Company for the annual reporting period beginning after December 15, 2024, with early adoption being permitted. ASU 2023-09 is to be applied on a prospective basis with retrospective application permitted. The Company expects to adopt the disclosure requirements of ASU 2023-09 with its Annual Report on Form 10-K for the year ended December 31, 2025.

Accounting Standards Update 2024-03 - Income Statement (Subtopic 220-40): Reporting Comprehensive Income - Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03 that will require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses at each interim and annual period. Disclosures should include amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization; certain amounts that are already required to be disclosed under GAAP in the same disclosure as other disaggregation requirements; qualitative descriptions of the amounts remaining in relevant expense categories that are not disaggregated; and the total amount of selling expenses including the entity’s definition of selling expenses. In January 2025, ASU 2025-01 was issued to clarify that the amendments of ASU 2024-03 are effective for public business entities for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

(2) Segment Information

TXNM has three reportable segments, namely PNM, TNMP, and Corporate and Other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The measure of profitability used by the CODM is Segment earnings (loss) attributable to TXNM, as presented below. The CODM uses this measure of profitability to allocate resources for each segment predominantly in the annual budget and forecasting process. The CODM

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

considers budget to actual variances on a regular basis when making decisions about allocating capital and operational expense funding to the segments. TXNM’s CODM is its current President and Chief Executive Officer (“CEO”) who is also the President and CEO of the PNM segment and the CEO of the TNMP segment.

PNM

PNM includes the retail electric utility operations of PNM that are subject to traditional rate regulation by the NMPRC. PNM provides integrated electricity services that include the generation, transmission, and distribution of electricity for retail electric customers in New Mexico. PNM also includes the generation and sale of electricity into the wholesale market, which includes the asset optimization of PNM’s jurisdictional capacity as well as providing transmission services to third parties. FERC has jurisdiction over wholesale power and transmission rates. PNM includes the results of ETBC I since its formation in 2023.

TNMP

TNMP is an electric utility providing services in Texas under the TECA. TNMP’s operations are subject to traditional rate regulation by the PUCT. TNMP provides transmission and distribution services at regulated rates to various REPs that, in turn, provide retail electric service to consumers within TNMP’s service area. TNMP also provides transmission services at regulated rates to other utilities that interconnect with TNMP’s facilities.

Corporate and Other

The Corporate and Other segment includes TXNM holding company activities, primarily related to corporate level debt and PNMR Services Company. The activities of PNMR Development and the equity method investment in NMRD were also included in Corporate and Other until the close of the sale of NMRD on February 27, 2024. Eliminations of intercompany transactions are reflected in the Corporate and Other segment.

The following tables present summarized financial information for TXNM by segment. PNM and TNMP each operate in only one segment. Therefore, tabular segment information is not presented for PNM and TNMP.

TXNM SEGMENT INFORMATION


	PNM		TNMP		Corporate and Other		TXNM
	(In thousands)
Three Months Ended June 30, 2025
Electric operating revenues	$	338,372	$	164,048	$	—	$	502,420
Cost of energy
Fuel burn	29,927		—		—		29,927
Purchases for resale	88,870		—		—		88,870
Transmission by others	5,539		43,286		—		48,825
Significant segment expenses
Administrative and general - direct	16,603		134		50,910		67,647
Administrative and general - corporate allocation	35,317		14,110		(49,427)		—
Customer related expenses	7,606		750		(12)		8,344
Energy production costs	26,081		—		—		26,081

Depreciation and amortization	60,778		34,926		9,531		105,235
Transmission and distribution costs	15,750		10,711		—		26,461
Taxes other than income taxes	15,262		11,444		1,623		28,329
Total operating expenses	301,733		115,361		12,625		429,719

Net other income and (deductions)	26,545		1,694		(1,588)		26,651
Interest charges	(31,975)		(23,942)		(16,096)		(72,013)
Income taxes (benefit)	2,410		5,471		(6,555)		1,326
Valencia non-controlling interest	(4,305)		—		—		(4,305)
Subsidiary preferred stock dividends	(132)		—		—		(132)
Segment earnings (loss) attributable to TXNM	$	24,362	$	20,968	$	(23,754)	$	21,576

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	PNM		TNMP		Corporate and Other		TXNM
	(In thousands)
Six Months Ended June 30, 2025
Electric operating revenues	$	671,752	$	313,460	$	—	$	985,212
Cost of energy
Fuel burn	56,468		—		—		56,468
Purchases for resale	186,105		—		—		186,105
Transmission by others	12,717		81,514		—		94,231
Significant segment expenses
Administrative and general - direct	34,469		(1,918)		87,480		120,031
Administrative and general - corporate allocation	67,405		27,486		(94,891)		—
Customer related expenses	15,262		1,467		—		16,729
Energy production costs	50,627		—		—		50,627

Depreciation and amortization	120,581		70,139		19,066		209,786
Transmission and distribution costs	31,576		20,390		—		51,966
Taxes other than income taxes	28,565		22,948		3,166		54,679
Total operating expenses	603,775		222,026		14,821		840,622

Net other income and (deductions)	29,805		4,100		(1,777)		32,128
Interest charges	(61,791)		(41,264)		(32,509)		(135,564)
Income taxes (benefit)	2,373		11,019		(11,048)		2,344
Valencia non-controlling interest	(8,047)		—		—		(8,047)
Subsidiary preferred stock dividends	(264)		—		—		(264)

Segment earnings (loss) attributable to TXNM	$	25,307	$	43,251	$	(38,059)	$	30,499

At June 30, 2025:
Total Assets	$	7,593,440	$	3,923,342	$	158,482	$	11,675,264
Goodwill	$	51,632	$	226,665	$	—	$	278,297




Three Months Ended June 30, 2024
Electric operating revenues	$	333,671	$	154,431	$	—	$	488,102
Cost of energy
Fuel burn	41,821		—		—		41,821
Purchases for resale	68,047		—		—		68,047
Transmission by others	4,904		39,934		—		44,838
Significant segment expenses
Administrative and general - direct	16,111		45		34,854		51,010
Administrative and general - corporate allocation	31,023		12,885		(43,908)		—
Customer related expenses	7,742		775		54		8,571
Energy production costs	24,584		—		—		24,584

Depreciation and amortization	54,230		31,033		9,150		94,413
Transmission and distribution costs	15,350		9,701		—		25,051
Taxes other than income taxes	11,768		10,743		1,573		24,084
Total operating expenses	275,580		105,116		1,723		382,419

Net other income and (deductions)	8,312		2,832		(64)		11,080
Interest charges	(25,880)		(14,451)		(15,497)		(55,828)
Income taxes (benefit)	5,821		7,771		(4,621)		8,971
Valencia non-controlling interest	(3,783)		—		—		(3,783)
Subsidiary preferred stock dividends	(132)		—		—		(132)
Segment earnings (loss) attributable to TXNM	$	30,787	$	29,925	$	(12,663)	$	48,049

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	PNM		TNMP		Corporate and Other		TXNM
	(In thousands)
Six Months Ended June 30, 2024
Electric operating revenues	$	641,786	$	283,193	$	—	$	924,979
Cost of energy
Fuel burn	78,502		—		—		78,502
Purchases for resale	122,516		—		—		122,516
Transmission by others	11,166		74,826		—		85,992
Significant segment expenses
Administrative and general - direct	25,150		(1,239)		74,494		98,405
Administrative and general - corporate allocation	66,430		27,121		(93,551)		—
Customer related expenses	15,032		1,492		79		16,603
Energy production costs	46,796		—		—		46,796
Regulatory disallowances	4,459		—		—		4,459
Depreciation and amortization	107,517		61,415		18,668		187,600
Transmission and distribution costs	29,700		18,115		—		47,815
Taxes other than income taxes	25,477		21,410		3,131		50,018
Total operating expenses	532,745		203,140		2,821		738,706

Net other income and (deductions)	33,385		3,877		(15,215)		22,047
Interest charges	(50,996)		(27,787)		(30,807)		(109,590)
Income taxes (benefit)	11,632		11,635		(26,867)		(3,600)
Valencia non-controlling interest	(6,827)		—		—		(6,827)
Subsidiary preferred stock dividends	(264)		—		—		(264)
Segment earnings (loss) attributable to TXNM	$	72,707	$	44,508	$	(21,976)	$	95,239

At June 30, 2024:
Total Assets	$	7,060,151	$	3,354,923	$	168,336	$	10,583,410
Goodwill	$	51,632	$	226,665	$	—	$	278,297

Significant Segment Expenses

Reflected above are certain additional categories of operating expenses that are regularly provided to the CODM. Cost of energy consists primarily of fuel and purchase power costs for PNM and costs charged by third-party transmission providers for TNMP. Administrative and general - direct expenses are those that are incurred directly by the segment while Administrative and general - corporate allocation are those costs that are incurred by the Corporate and Other segment and allocated to the utilities based on the nature of the cost incurred. Administrative and general - corporate allocation is eliminated in the Corporate and Other segment. Customer related expenses include meter reading, customer service, and bad debt expenses.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(3) Accumulated Other Comprehensive Income (Loss)

Information regarding accumulated other comprehensive income (loss) for the six months ended June 30, 2025 and 2024 is as follows:


	Accumulated Other Comprehensive Income (Loss)
	PNM						Corporate and Other		TXNM
	Unrealized Gains on Available-for-Sale Debt Securities		Pension Liability Adjustment				Fair Value Adjustment for Cash Flow Hedges


					Total				Total

	(In thousands)


Balance at December 31, 2024	$	214	$	(75,922)	$	(75,708)	$	—	$	(75,708)
Amounts reclassified from AOCI (pre-tax)	(338)		2,749		2,411		—		2,411
Income tax impact of amounts reclassified	86		(698)		(612)		—		(612)
Other OCI changes (pre-tax)	504		—		504		(2,493)		(1,989)
Income tax impact of other OCI changes	(128)		—		(128)		633		505
Net after-tax change	124		2,051		2,175		(1,860)		315
Balance at June 30, 2025	$	338	$	(73,871)	$	(73,533)	$	(1,860)	$	(75,393)













Balance at December 31, 2023	$	10,652	$	(77,157)	$	(66,505)	$	3,665	$	(62,840)
Amounts reclassified from AOCI (pre-tax)	(12,566)		2,433		(10,133)		5,563		(4,570)
Income tax impact of amounts reclassified	3,192		(618)		2,574		(1,413)		1,161
Other OCI changes (pre-tax)	(587)		—		(587)		(4,307)		(4,894)
Income tax impact of other OCI changes	149		—		149		1,094		1,243
Net after-tax change	(9,812)		1,815		(7,997)		937		(7,060)
Balance at June 30, 2024	$	840	$	(75,342)	$	(74,502)	$	4,602	$	(69,900)

The Condensed Consolidated Statements of Earnings include pre-tax amounts reclassified from AOCI related to Unrealized Gains on Available-for-Sale Debt Securities in gains on investment securities and Fair Value Adjustment for Cash Flow Hedges in interest charges. The income tax impacts of all amounts reclassified from AOCI are included in income taxes in the Condensed Consolidated Statements of Earnings.

(4) Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to TXNM by the weighted average number of common shares outstanding during the period. Diluted earnings per share was computed by dividing net earnings attributable to TXNM by the diluted weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other agreements to issue common stock were settled. TXNM applies the treasury stock method for restricted stock and the unsettled shares sold under forward sale agreements pursuant to the TXNM ATM Programs.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Information regarding the computation of earnings per share is as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
	(In thousands, except per share amounts)
Net Earnings Attributable to TXNM	$	21,576	$	48,049	$	30,499	$	95,239
Average Number of Common Shares:
Outstanding during period	95,793		90,200		94,235		90,200
Vested awards of restricted stock	339		304		348		293
Average Shares – Basic	96,132		90,504		94,583		90,493
Dilutive Effect of Common Stock Equivalents:
Restricted stock	65		48		54		40


Average Shares – Diluted	96,197		90,552		94,637		90,533

Net Earnings Per Share of Common Stock:
Basic	$	0.22	$	0.53	$	0.32	$	1.05
Diluted	$	0.22	$	0.53	$	0.32	$	1.05

TXNM’s weighted average number of common shares outstanding for the three and six months ended June 30, 2025 was impacted by the settlement of the 1.1 million shares forward sold under the TXNM 2024 ATM Program and the issuance of 11.6 million shares of common stock in private placement transactions. See Note 9.

(5) Electric Operating Revenues

TXNM is an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas. TXNM’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 2024 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, adjustments to the allowance for credit losses are made as necessary and amounts that are deemed uncollectible are written off. In addition to the allowance for credit losses on trade receivables, the Company has evaluated other receivables for potential credit related losses. These balances include potential exposures for other non-retail utility services. In the three and six months ended June 30, 2025 and 2024, there were no estimated credit losses related to these transactions.

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 $106.7 million at June 30, 2025 and $94.3 million at December 31, 2024 resulting from contracts with customers. All of TNMP’s accounts receivable result 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). Upon the completion of the Western Spirit Line, PNM entered into a TSA with Pattern Wind under an incremental tariff rate approved by FERC. The terms of the agreement provide for a financing component that benefits the customer. As such, the revenue that PNM recognizes will be in excess of the consideration received at the beginning of the service term resulting in a contract asset. The balance of the contract asset is $36.8 million at June 30, 2025 and $32.0 million at December 31, 2024. This contract asset is presented in Other deferred charges on the Condensed Consolidated Balance Sheets.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Disaggregation of Revenues

A disaggregation of revenues from contracts with customers by the type of customer is presented in the table below.


	PNM		TNMP		TXNM
Three Months Ended June 30, 2025	(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	120,009	$	54,176	$	174,185
Commercial	111,840		44,459		156,299
Industrial	34,659		14,305		48,964
Public authority	5,694		1,988		7,682
Economy energy service	6,762		—		6,762
Transmission	36,352		41,279		77,631
Wholesale energy sales	19,895		—		19,895

Miscellaneous	1,448		952		2,400
Total revenues from contracts with customers	336,659		157,159		493,818
Alternative revenue programs	245		6,889		7,134
Other electric operating revenues	1,468		—		1,468
Total Electric Operating Revenues	$	338,372	$	164,048	$	502,420


Six Months Ended June 30, 2025
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	244,563	$	102,957	$	347,520
Commercial	213,999		91,421		305,420
Industrial	68,291		25,851		94,142
Public authority	10,712		3,982		14,694
Economy energy service	17,998		—		17,998
Transmission	71,369		81,498		152,867
Wholesale energy sales	36,824		—		36,824

Miscellaneous	2,860		1,906		4,766
Total revenues from contracts with customers	666,616		307,615		974,231
Alternative revenue programs	2,391		5,845		8,236
Other electric operating revenues	2,745		—		2,745
Total Electric Operating Revenues	$	671,752	$	313,460	$	985,212

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	PNM		TNMP		TXNM
Three Months Ended June 30, 2024	(In thousands)
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	121,065	$	47,313	$	168,378
Commercial	109,929		40,499		150,428
Industrial	34,201		7,917		42,118
Public authority	5,216		1,740		6,956
Economy energy service	4,033		—		4,033
Transmission	33,333		42,116		75,449
Wholesale energy sales	23,507		—		23,507
Miscellaneous	1,389		962		2,351
Total revenues from contracts with customers	332,673		140,547		473,220
Alternative revenue programs	830		13,884		14,714
Other electric operating revenues	168		—		168
Total Electric Operating Revenues	$	333,671	$	154,431	$	488,102

Six Months Ended June 30, 2024
Electric Operating Revenues:
Contracts with customers:
Retail electric revenue
Residential	$	241,450	$	88,808	$	330,258
Commercial	209,266		76,043		285,309
Industrial	58,970		17,773		76,743
Public authority	9,614		3,456		13,070
Economy energy service	11,595		—		11,595
Transmission	69,482		77,925		147,407
Wholesale energy sales	35,197		—		35,197

Miscellaneous	2,814		1,917		4,731
Total revenues from contracts with customers	638,388		265,922		904,310
Alternative revenue programs	2,736		17,271		20,007
Other electric operating revenues	662		—		662
Total Electric Operating Revenues	$	641,786	$	283,193	$	924,979

(6) Variable Interest Entities

How an enterprise evaluates and accounts for its involvement with variable interest entities focuses primarily on whether the enterprise has the power to direct the activities that most significantly impact the economic performance of a VIE. This evaluation requires continual reassessment of the primary beneficiary of a VIE. Additional information concerning PNM’s VIEs is contained in Note 10 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Valencia

PNM has a PPA to purchase all of the electric capacity and energy from Valencia, a 155 MW natural gas-fired power plant near Belen, New Mexico, through May 2028. In May 2025, the NMPRC approved a new PPA for 167 MW, through 2039, in connection with the 2028 Resource Application. A third party built, owns, and operates the facility while PNM is the sole purchaser of the electricity generated. PNM is obligated to pay fixed operation and maintenance and capacity charges in addition to variable operation and maintenance charges. For the three and six months ended June 30, 2025, PNM paid $5.0 million and $9.9 million for fixed charges and $0.9 million and $1.4 million for variable charges. For the three and six months ended June 30, 2024, PNM paid $5.1 million and $10.2 million for fixed charges and $0.4 million and $0.5 million for variable

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

charges. PNM does not have any other financial obligations related to Valencia. The assets of Valencia can only be used to satisfy its obligations and creditors of Valencia do not have any recourse against PNM’s assets. During the term of the original PPA, PNM has the option, under certain conditions, to purchase and own up to 50% of the plant or the VIE. The original PPA specifies that the purchase price would be the greater of 50% of book value reduced by related indebtedness or 50% of fair market value.

PNM sources fuel for the plant, controls when the facility operates through its dispatch, and receives the entire output of the plant, which factors directly and significantly impact the economic performance of Valencia. Therefore, PNM has concluded that the third-party entity that owns Valencia is a VIE and that PNM is the primary beneficiary of the entity since PNM has the power to direct the activities that most significantly impact the economic performance of Valencia and will absorb the majority of the variability in the cash flows of the plant. As the primary beneficiary, PNM consolidates Valencia in its financial statements. Accordingly, the assets, liabilities, operating expenses, and cash flows of Valencia are included in the Condensed Consolidated Financial Statements of PNM although PNM has no legal ownership interest or voting control of the VIE. The assets and liabilities of Valencia are set forth below and are not shown separately on the Condensed Consolidated Balance Sheets. The owner’s equity and net income of Valencia are considered attributable to non-controlling interest.

Summarized financial information for Valencia is as follows:


Results of Operations
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands)
Operating revenues	$	5,926	$	5,476	$	11,348	$	10,665
Operating expenses	1,621		1,693		3,301		3,838

Earnings attributable to non-controlling interest	$	4,305	$	3,783	$	8,047	$	6,827


Financial Position
	June 30,		December 31,
	2025		2024
	(In thousands)
Current assets	$	3,592	$	3,095
Net property, plant, and equipment	42,990		44,411
Total assets	46,582		47,506
Current liabilities	553		606
Owners’ Equity – Non-controlling Interest	$	46,029	$	46,900

Westmoreland San Juan Mining, LLC

As discussed in the subheading Coal Supply in Note 11, PNM and Westmoreland San Juan Mining, LLC (“WSJ LLC”), a subsidiary of Westmoreland Mining Holdings, LLC have agreements under which mine reclamation services for SJGS will be provided.

TXNM issued $30.3 million in letters of credit to facilitate the issuance of reclamation bonds. The letters of credit support results in TXNM having a variable interest in WSJ LLC since TXNM is subject to possible loss in the event performance by TXNM is required under the letters of credit support. TXNM considers the possibility of loss under the letters of credit support to be remote since the purpose of posting the bonds is to provide assurance that WSJ LLC performs the required reclamation of the mine site in accordance with applicable regulations and the reclamation services agreement provides WSJ LLC the ability to recover the cost of reclamation. As discussed in Note 11, each of the SJGS participants has established and actively fund trusts to meet future reclamation obligations.

WSJ LLC is considered a VIE. TXNM’s analysis of its arrangements with WSJ LLC concluded that WSJ LLC has the ability to direct its reclamation services, which are the factors that most significantly impact the economic performance of WSJ LLC. Other than PNM being able to monitor the reclamation activities, the reclamation services were solely under the control of WSJ LLC, including developing reclamation plans, hiring personnel, and incurring operating and maintenance expenses.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Neither TXNM nor PNM has any ability to direct or influence the reclamation activities. PNM’s involvement through the reclamation services agreement is a protective right rather than a participating right, and WSJ LLC still has the power to direct the activities that most significantly impact the economic performance of WSJ LLC. If WSJ LLC performs reclamation services more efficiently than anticipated, its economic performance will improve. Conversely, if WSJ LLC does not perform reclamation services as efficiently as anticipated, its economic performance will be negatively impacted. Accordingly, TXNM believes WSJ LLC is the primary beneficiary and, therefore, WSJ LLC is not consolidated by either TXNM or PNM. The amounts outstanding under the letters of credit support continue to be TXNM’s maximum exposure to loss from the VIE at June 30, 2025.

ETBC I

ETBC I is a wholly-owned, special purpose subsidiary of PNM that was formed in August 2023 for the limited purpose of purchasing, owning, and administering energy transition property, issuing securitized bonds, and performing related activities authorized by the NMPRC. On November 15, 2023, ETBC I issued the ETBC I Securitized Bonds and used the proceeds to purchase energy transition property from PNM. The energy transition property purchased includes the right to impose, bill, collect, and adjust a non-bypassable energy transition charge from all PNM retail customers until the ETBC I Securitized Bonds are paid in full and all allowed financing costs have been recovered. The ETBC I Securitized Bonds are secured by the energy transition property, and cash collections from the Energy Transition Charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to PNM.

PNM acts as the servicer of the energy transition property on behalf of ETBC I and is responsible for metering, calculating, billing, and collecting the Energy Transition Charges. On behalf of ETBC I, PNM is required to remit all collections of the Energy Transition Charges to the trustee for the ETBC I Securitized Bonds. PNM has the power to direct the activities that most significantly impact the economic performance of ETBC I and will absorb the majority of the variability in the cash flows of the entity. As the primary beneficiary, PNM consolidates ETBC I in its financial statements. Accordingly, the assets, liabilities, operating expenses, and cash flows of ETBC I are included in the Consolidated Financial Statements of PNM.

The following tables summarize the impact of ETBC I on PNM’s Financial Statements:


	Results of Operations
	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(In thousands)
Electric Operating Revenues	$	6,609	$	5,811	$	13,408	$	11,756
Depreciation and amortization	1,724		821		3,424		1,643
Interest Charges	4,947		5,039		9,918		10,064
Other	(62)		(49)		66		49
Net Earnings	$	—	$	—	$	—	$	—


	Financial Position
	June 30, 2025		December 31, 2024
	(In thousands)
Regulatory assets - Current	$	—	$	—
Restricted cash (included in Other current assets)	13,610		15,838
Restricted cash (included in Other deferred charges)	1,744		1,748
Securitized Cost (included in Regulatory assets - Deferred)	332,655		336,079
Current installments of long-term debt	7,102		6,907
Accrued interest and taxes	7,380		7,452
Regulatory liabilities - Current	4,739		6,975
Long-term Debt	328,179		331,726

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(7) Fair Value of Derivative and Other Financial Instruments

Additional information concerning energy related derivative contracts and other financial instruments is contained in Note 9 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value is based on current market quotes as available and is supplemented by modeling techniques and assumptions made by the Company to the extent quoted market prices or volatilities are not available. External pricing input availability varies based on commodity location, market liquidity, and term of the agreement. Valuations of derivative assets and liabilities take into account nonperformance risk, including the effect of counterparties’ and the Company’s credit risk. The Company regularly assesses the validity and availability of pricing data for its derivative transactions. Although the Company uses its best judgment in estimating the fair value of these instruments, there are inherent limitations in any estimation technique.

Energy Related Derivative Contracts

Overview

The primary objective for the use of commodity derivative instruments, including energy contracts, options, swaps, and futures, is to manage price risk associated with forecasted purchases of energy and fuel used to generate electricity, as well as managing anticipated generation capacity in excess of forecasted demand from existing customers. PNM’s energy related derivative contracts manage commodity risk. TNMP does not enter into energy related derivative contracts.

PNM enters into agreements for the purchase and sale of power from third parties. As PNM is required to meet the demand and energy needs of its customers, PNM may be exposed to market risk for the needs of its customers not covered under the FPPAC.

PNM’s operations are managed primarily through a net asset-backed strategy, whereby PNM’s aggregate net open forward contract position is covered by its forecasted excess generation capabilities or market purchases. PNM could be exposed to market risk if its generation capabilities were to be disrupted or if its load requirements were to be greater than anticipated. If all or a portion of load requirements were required to be covered as a result of such unexpected situations, commitments would have to be met through market purchases.

Commodity Risk

Marketing and procurement of energy often involve market risks associated with managing energy commodities and establishing positions in the energy markets, primarily on a short-term basis. PNM routinely enters into various derivative instruments such as forward contracts, option agreements, and price basis swap agreements to economically hedge price and volume risk on power commitments and fuel requirements and to minimize the effect of market fluctuations. PNM monitors the market risk of its commodity contracts in accordance with approved risk and credit policies.

Accounting for Derivatives

Under derivative accounting and related rules for energy contracts, PNM accounts for its various instruments for the purchase and sale of energy, which meet the definition of a derivative, based on PNM’s intent. During the six months ended June 30, 2025 and the year ended December 31, 2024, PNM was not hedging its exposure to the variability in future cash flows from commodity derivatives through designated cash flow hedges. The derivative contracts recorded at fair value that do not qualify or are not designated for cash flow hedge accounting are classified as economic hedges. Economic hedges are defined as derivative instruments, including long-term power agreements, used to economically hedge generation assets, purchased power and fuel costs, and customer load requirements. Changes in the fair value of economic hedges are reflected in Operating income on the Condensed Consolidated Statements of Earnings and are presented in Electric Operating Revenues and Cost of energy according to the intent of the hedge. PNM also uses such instruments under an NMPRC-approved hedging plan to manage fuel and purchased power costs related to customers covered by its FPPAC. Changes in the fair value of instruments covered by its FPPAC are recorded as Regulatory assets and Regulatory liabilities on the Condensed Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities or financing activities on the Condensed Consolidated Statement of Cash Flows consistent with the classification of the hedged transaction. PNM has no trading transactions.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Commodity Derivatives

In November 2024, February 2025, and April 2025, PNM entered into agreements to purchase a total of 250 MW from July 1, 2025 through August 31, 2025 in order to ensure that customer demand during the 2025 summer peak load period will be met. In 2024, PNM had existing agreements to purchase a total of 150 MW from July 1, 2024 through July 31, 2024 and 100 MW from August 1, 2024 through August 30, 2024. All of these agreements are related to customers covered by the FPPAC and are reflected in the commodity derivative table for each of the periods presented below.

PNM’s commodity derivative instruments that are recorded at fair value, all of which are accounted for as economic hedges and considered Level 2 fair value measurements, are presented in the following line items on the Condensed Consolidated Balance Sheets:


	Economic Hedges
	June 30, 2025		December 31, 2024
	(In thousands)
Other current assets	$	—	$	—



Other current liabilities	(8,940)		(5,737)


Net	$	(8,940)	$	(5,737)

Certain of PNM’s commodity derivative instruments in the above table are subject to master netting agreements whereby assets and liabilities could be offset in the settlement process. PNM does not offset fair value and cash collateral for derivative instruments under master netting arrangements and the above table reflects the gross amounts of fair value assets and liabilities for commodity derivatives.

At June 30, 2025 and December 31, 2024, PNM had no commodity derivative instruments, considered economic hedges, that did not pertain to the NMPRC-approved hedging plan discussed above. Changes in fair value had no impact on PNM’s net earnings during the six months ended June 30, 2025 and 2024.

Commodity contract volume positions are presented in MMBTU for gas related contracts and in MWh for power related contracts. The table below presents PNM’s net buy (sell) volume positions:


	Economic Hedges
	MMBTU	MWh
June 30, 2025	—	179,800
December 31, 2024	—	89,900

PNM has contingent requirements to provide collateral under commodity contracts having an objectively determinable collateral provision that are in net liability positions and are not fully collateralized with cash. In connection with managing its commodity risks, PNM enters into master agreements with certain counterparties. If PNM is in a net liability position under an agreement, some agreements provide that the counterparties can request collateral if PNM’s credit rating is downgraded; other agreements provide that the counterparty may request collateral to provide it with “adequate assurance” that PNM will perform; and others have no provision for collateral.

The table below presents information about PNM’s contingent requirements to provide collateral under certain commodity contracts having an objectively determinable collateral provision, that are in net liability positions, and that are not fully collateralized with cash. Contractual liability represents those commodity derivative contracts recorded at fair value on the balance sheet, determined on an individual contract basis without offsetting amounts for individual contracts that are in an asset position and could be offset under master netting agreements with the same counterparty. Cash collateral posted under these contracts does not reflect letters of credit under the Company’s revolving credit facilities that may have been issued as collateral.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Net exposure is the net contractual liability for all contracts, including those designated as normal purchase and normal sale, offset by existing collateral and by any offsets available under master netting agreements, including both assets and liability positions.


Contingent Feature - Credit Rating	Contractual Liability		Existing Cash Collateral		Net Exposure
	(In thousands)
June 30, 2025	$	8,940	$	—	$	8,940
December 31, 2024	$	5,737	$	—	$	5,737

At June 30, 2025 and December 31, 2024, PNM had no amounts recognized for the legal right to reclaim cash collateral. However, amounts posted as cash collateral under margin arrangements were zero at June 30, 2025 and $0.1 million at December 31, 2024. These amounts are included in other current assets on the Condensed Consolidated Balance Sheets. At both June 30, 2025 and December 31, 2024, there were no obligations to return cash collateral.

Non-Derivative Financial Instruments

The carrying amounts reflected on the Condensed Consolidated Balance Sheets approximate fair value for cash, receivables, and payables due to the short period of maturity. Investment securities are carried at fair value. Investment securities consist of PNM assets held in the NDT for its share of decommissioning costs of PVNGS, a trust for PNM’s share of decommissioning costs at SJGS, and trusts for PNM’s share of final reclamation costs related to the coal mines serving SJGS and Four Corners. See Note 11. At June 30, 2025 and December 31, 2024, the fair value of investment securities included $407.0 million and $384.6 million for the NDT, $4.0 million and $8.2 million for the SJGS decommissioning trust, and $76.0 million and $82.7 million for the coal mine reclamation trusts.

PNM records a realized loss as an impairment for any available-for-sale debt security that has a fair value that is less than its carrying value. At June 30, 2025 and December 31, 2024, PNM had no available-for-sale debt securities for which carrying value exceeded fair value, where the impairments were considered to be “other than temporary” and included in AOCI rather than recognized in earnings. All gains and losses resulting from sales and changes in the fair value of equity securities are recognized immediately in earnings. Gains and losses recognized on the Condensed Consolidated Statements of Earnings related to investment securities in the NDT, SJGS decommissioning, and coal mine reclamation trusts are presented in the following table:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
	(In thousands)
Equity securities:
Net gains from equity securities sold	$	6,940	$	6,272	$	13,932	$	16,143
Net gains (losses) on equity securities still held	16,616		(3,880)		8,373		(5,085)
Total net gains on equity securities	23,556		2,392		22,305		11,058
Available-for-sale debt securities:


Net gains (losses) on debt securities	—		(1,834)		10		7,498
Net gains on investment securities	$	23,556	$	558	$	22,315	$	18,556

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The proceeds and gross realized gains and losses on the disposition of securities held in the NDT, SJGS decommissioning trust, and coal mine reclamation trusts are shown in the following table. Realized gains and losses are determined by specific identification of costs of securities sold. Gross realized losses shown below exclude the (increase)/decrease in realized impairment losses of zero for the three and six months ended June 30, 2025 and $1.6 million and $15.0 million for the three and six months ended June 30, 2024.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
	(In thousands)
Proceeds from sales	$	108,625	$	110,240	$	198,728	$	412,750
Gross realized gains	7,859		7,549		15,541		21,228
Gross realized (losses)	(919)		(4,661)		(1,609)		(12,573)

At June 30, 2025, the available-for-sale debt securities held by PNM, had the following final maturities:


	Fair Value
	(In thousands)
Within 1 year	$	40,966
After 1 year through 5 years	9,554




	$	50,520

Fair Value Disclosures

The Company determines the fair values of its derivative and other financial instruments based on the hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

For investment securities, Level 2 fair values are provided by fund managers utilizing a pricing service. For Level 2 fair values, the pricing provider predominantly uses the market approach using bid side market values based upon a hierarchy of information for specific securities or securities with similar characteristics. Fair values of Level 2 investments in mutual funds are equal to NAV. For commodity derivatives, Level 2 fair values are determined based on market observable inputs, which are validated using multiple broker quotes, including forward price, volatility, and interest rate curves to establish expectations of future prices. Credit valuation adjustments are made for estimated credit losses based on the overall exposure to each counterparty. For the Company’s long-term debt, Level 2 fair values are provided by an external pricing service. The pricing service primarily utilizes quoted prices for similar debt in active markets when determining fair value. Management of the Company independently verifies the information provided by pricing services. Uncategorized investments include common/collective investment trusts and real estate funds which are measured at NAV at the end of each reporting period. Financial statements are received for each fund and reviewed by the Company quarterly with audited financial statements received and reviewed on an annual basis. Fair value for these funds is measured using a practical expedient provided under GAAP that allows the NAV per share to be used as fair value for investments in certain entities that do not have readily determinable fair values and are considered to be investment companies. Investments valued using this practical expedient are not required to be presented within the GAAP fair value hierarchy.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Items recorded at fair value by PNM on the Condensed Consolidated Balance Sheets are presented below by level of the fair value hierarchy along with gross unrealized gains on investments in available-for-sale debt securities:


			GAAP Fair Value Hierarchy
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Unrealized Gains
	(In thousands)
June 30, 2025
Cash and cash equivalents	$	33,831	$	33,831	$	—
Equity securities:
Corporate stocks, common	145,610		145,610		—

Mutual funds and other	196,710		196,710		—

Available-for-sale debt securities:
U.S. government	41,173		41,173		—		$	325


Corporate and other	9,347		—		9,347		165
Investments categorized within the fair value hierarchy	$	426,671	$	417,324	$	9,347	$	490
Uncategorized collective investment trust	43,442
Uncategorized real estate fund	16,920
Total investment securities	$	487,033



December 31, 2024

Cash and cash equivalents	$	150,745	$	150,745	$	—
Equity securities:
Corporate stocks, common	134,553		134,553		—

Mutual funds and other	135,779		135,779		—
Available-for-sale debt securities:
U.S. government	25,148		25,148		—		$	202


Corporate and other	7,196		—		7,196		122
Investments categorized within the fair value hierarchy	$	453,421	$	446,225	$	7,196	$	324
Uncategorized collective investment trust	22,103
Total investment securities	$	475,524

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The carrying amounts and fair values of long-term debt, all of which are considered Level 2 fair value measurements and are not recorded at fair value on the Condensed Consolidated Balance Sheets, are presented below:



	Carrying Amount		Fair Value
June 30, 2025	(In thousands)
TXNM	$	5,199,237	$	5,231,061


PNM	2,846,402		2,719,072


TNMP	1,604,722		1,586,972


December 31, 2024
TXNM	$	4,923,368	$	4,706,076


PNM	2,459,592		2,284,362


TNMP	1,464,079		1,324,194

The carrying amount and fair value of the Company’s other investments presented on the Condensed Consolidated Balance Sheets are not material and not shown in the above table.

(8) Stock-Based Compensation

TXNM has various stock-based compensation programs, which provide restricted stock awards, that are performance-based and time-based, under the PEP. Although certain PNM and TNMP employees are eligible to participate in the TXNM plans, PNM and TNMP do not have separate employee stock-based compensation plans. Performance stock awards granted under the PEP are awarded for a three-year, overlapping performance period. Performance stock awards with performance periods ending in 2024 and 2025 do not include market targets. Performance stock awards with performance periods ending after 2025 are subject to achieving both performance and market targets. Other awards of restricted stock are only subject to time-based vesting requirements. Additional information concerning stock-based compensation under the PEP is contained in Note 12 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Restricted stock under the PEP refers to awards of stock subject to vesting, performance, or market conditions rather than to shares with contractual post-vesting restrictions. Generally, the awards vest ratably over three years from the grant date of the award. However, awards with performance or market conditions vest upon satisfaction of those conditions. In addition, plan provisions provide that upon retirement, participants become 100% vested in certain stock awards. The vesting period for awards of restricted stock to non-employee members of the Board is one-year.

The stock-based compensation expense related to restricted stock awards without performance or market conditions to participants that are retirement eligible on the grant date is recognized immediately at the grant date and is not amortized. Compensation expense for other such awards is amortized over the shorter of the requisite vesting period or the period until the participant becomes retirement eligible. Compensation expense for performance-based shares is recognized ratably over the performance period as required service is provided and is adjusted periodically to reflect the level of achievement expected to be attained. Compensation expense related to market-based shares is recognized ratably over the measurement period, regardless of the actual level of achievement, provided the employees meet their service requirements. At June 30, 2025, TXNM had unrecognized expense related to stock awards of $9.4 million, which is expected to be recognized over an average of 1.9 years.

The grant date fair value for restricted stock and stock awards with internal TXNM performance targets is determined based on the market price of TXNM common stock on the date of the agreements reduced by the present value of future dividends that will not be received prior to vesting. The grant date fair value is applied to the total number of shares that are anticipated to vest, although the number of performance shares that ultimately vest cannot be determined until after the performance periods end. The grant date fair value of stock awards with market targets were determined using Monte Carlo simulation models, which provide grant date fair values that include an expectation of the number of shares to vest at the end of the measurement period.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the weighted-average assumptions used to determine the awards grant date fair value:


	Six Months Ended June 30,
Restricted Shares and Performance Based Shares	2025			2024
Expected quarterly dividends per share	$	0.4075		$	0.3875
Risk-free interest rate	4.00		%	4.27		%

Market-Based Shares
Dividend yield	3.12		%	4.21%
Expected volatility	15.67		%	13.09%
Risk-free interest rate	4.12		%	4.31%

The following table summarizes activity in restricted stock awards, including performance-based and market-based shares for the six months ended June 30, 2025:


	Restricted Stock
	Shares	Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2024	241,237	$	37.05
Granted	170,560	47.61
Released	(156,284)	40.79
Forfeited	(4,343)	34.92

Outstanding at June 30, 2025	251,170	$	41.93

Included, as granted and released, in the table above are 50,923 previously awarded performance-based shares that were earned for the 2022 - 2024 performance measurement period and ratified by the Board in February 2025 (based upon achieving targets at above “threshold,” below “target” levels). Also included, as granted and released, are 341 of other restricted stock awards for participants who retired and immediately vested. Excluded from the table above are 156,359, 252,375, and 214,085 shares for the three-year performance periods ending in 2025, 2026, and 2027 that will be awarded if all performance and market criteria are achieved at maximum levels and all executives remain eligible.

On December 4, 2023, the Company entered into a retention agreement with its President and Chief Operating Officer under which he would receive a retention bonus of $1.0 million to be paid in increments beginning in December 2023 and continuing each December until 2025. On April 8, 2024, pursuant to the retention agreement, the Board elected to convert the unvested portion of the retention bonus of $0.8 million into restricted stock rights whereby each share of restricted stock is equal to one share of Company common stock as of the first trading day after expiration of the then current black-out period. On May 3, 2024, subsequent to the expiration of the black-out period, 19,851 restricted stock rights were awarded that will vest in accordance with the original terms of the retention agreement.

On September 16, 2024, in connection with a one-time sign-on equity grant, the Company’s newly appointed General Counsel, Senior Vice President Regulatory and Public Policy, and Corporate Secretary was awarded 9,300 shares of restricted stock, of which 50% vested immediately and the remaining 50% will vest on the first anniversary of his start date, subject to continued employment through the vesting date.

The following table provides additional information concerning restricted stock activity, including performance-based and market-based shares:


	Six Months Ended June 30,
Restricted Stock	2025		2024
Weighted-average grant date fair value	$	47.61	$	32.43
Total fair value of restricted shares that vested (in thousands)	$	6,374	$	6,180

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(9) Financing

The Company’s financing strategy includes both short-term and long-term borrowings. The Company utilizes short-term revolving credit facilities, as well as cash flows from operations, to provide funds for both construction and operating expenditures. Depending on market and other conditions, the Company will periodically sell long-term debt, enter into term loan arrangements, or equity arrangements and use the proceeds to reduce borrowings under the revolving credit facilities or refinance other debt. Each of the Company’s revolving credit facilities, term loans, and other debt agreements contains a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the TXNM agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%. The Company’s revolving credit facilities, term loans, and other debt agreements generally also contain customary covenants, events of default, cross-default provisions, and change-of-control provisions. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC. Additional information concerning financing activities is contained in Note 7 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

On February 28, 2025, TXNM filed a shelf registration that provides for the issuance of various types of debt and equity securities. The TXNM shelf registration statement expires in February 2028.

Financing Activities

On July 31, 2025, PNM entered into an agreement (the “PNM July 2025 Note Purchase Agreement”) with institutional investors for the sale and issuance of $350.0 million aggregate principal amount of two series of SUNs (the “PNM July 2025 SUNs”) offered in private placement transactions. The PNM July 2025 SUNs were issued on July 31, 2025. PNM issued $200.0 million of the PNM July 2025 SUNs at 5.47%, due July 31, 2031, and another $150.0 million at 6.03%, due July 31, 2036. PNM used the proceeds from the PNM July 2025 SUNs to repay the PNM $250.0 million SUNs and for general corporate purposes. The PNM July 2025 Note Purchase Agreement includes the customary covenants discussed above. In the event of a change of control, PNM will be required to offer to prepay the PNM July 2025 SUNs at par. Although there are customary change of control provisions in the PNM debt agreements, the change of control provisions in the agreements, including the PNM July 2025 Note Purchase Agreement, will not be triggered by the closing of the Merger. PNM has the right to redeem any or all of the PNM July 2025 SUNs prior to their maturities, subject to payment of a customary make-whole premium. As PNM demonstrated the intent and ability to refinance the obligation due under the PNM $250.0 million SUNs prior to the issuance of this Form 10-Q, as of June 30, 2025 this has been presented as Long-term Debt on the Condensed Consolidated Balance Sheets.

On July 21, 2025, TNMP entered into an agreement (the “TNMP July 2025 Bond Purchase Agreement”) with institutional investors for the sale of $1,084.3 million aggregate principal amount of six series of TNMP first mortgage bonds (the “TNMP July 2025 FMBs”) offered in private placement transactions. TNMP issued the bonds on July 21, 2025 with the following terms:


Principal Amount		Interest Rate		Due Date
(in thousands)
$	245,000	4.83	%	July 31, 2030
245,000		5.12		July 31, 2032
240,000		5.44		July 31, 2035
100,000		5.54		July 31, 2037
154,300		5.93		July 31, 2045
100,000		6.02		July 31, 2055
$	1,084,300

The proceeds were used to repay borrowings under the TNMP Merger Backstop Term Loan (defined below). The TNMP July 2025 FMBs are subject to continuing compliance with the representations, warranties, and covenants set forth in the governing supplemental indentures. In the event of certain changes of control of TNMP, TNMP will be required to offer to prepay the TNMP July 2025 FMBs at par. Although there are customary change of control provisions in the TNMP July 2025 FMBs, the change of control provisions will not be triggered by the closing of the Merger. TNMP has the right to redeem any or all of the TNMP July 2025 FMBs prior to their maturity, subject to payment of a customary make-whole premium.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At June 30, 2025, TXNM had a series of treasury lock agreements, with terms ranging from 5 years to 30 years, aggregating a total notional amount of $730.0 million to reduce interest rate exposure on the TNMP July 2025 FMBs that were issued in July 2025. The treasury lock agreements had an average fixed rate of 4.18% and TXNM had designated them as cash flow hedges, measured at fair value, which was recorded as a loss of $2.5 million in Other current liabilities at June 30, 2025. Fair values, provided by an external pricing service, were determined using Level 2 inputs of quoted prices for similar agreements in active markets. On July 1, 2025, TXNM terminated all of the treasury lock agreements, realizing a pre-tax net loss of $1.6 million recorded in Accumulated other comprehensive income. The loss will be amortized through interest expense over a range of 5 to 30 years, in accordance with the terms of the TNMP July 2025 FMBs issued July 21, 2025.

On June 24, 2025, TXNM entered into an agreement (the “June 2025 Purchase Agreement”) whereby TXNM sold, in a private placement transaction, and the purchasers named therein agreed to purchase 3,615,003 shares of TXNM common stock for a purchase price of $55.325 per share (for an aggregate amount of approximately $200 million). The closing of the issuance occurred on June 27, 2025. TXNM used the proceeds to repay an equal amount under the TXNM 2023 Term Loan. TXNM has granted the purchasers customary registration rights with respect to the shares, pursuant to which TXNM is required to register such shares for resale with the SEC no later than five business days after TXNM files this Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2025 (this “Form 10-Q”).

The documents governing an aggregate $1,505.0 million of TNMP’s outstanding FMBs ("TNMP FMBs") obligated TNMP to offer (“the Offer”), within 30 business days following the signing of the Merger Agreement, to prepay all outstanding TNMP FMBs at 100% of the principal amount, plus accrued and unpaid interest thereon, but without any make-whole amount or other premium. On June 14, 2025, the Offer expired and $1,084.3 million in aggregate principal amount of the bonds were validly tendered. TNMP accepted for purchase all validly tendered bonds. On June 24, 2025, holders whose bonds were validly tendered and accepted for purchase received 100% of the aggregate principal amount of bonds prepaid plus accrued and unpaid interest using funds drawn under the TNMP Merger Backstop Term Loan, discussed below. The documents governing the TNMP FMBs currently require TNMP to make another offer, within 30 business days of closing of the Merger, to prepay the remaining outstanding TNMP FMBs, totaling $420.7 million, at par. TNMP will make such offer to prepay the TNMP FMBs in accordance with the terms of the TNMP FMBs; however, holders of the TNMP FMBs are not required to tender their TNMP FMBs and may accept or reject such offer to prepay.

The information in this Form 10-Q is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, subscribe for or buy any securities in any jurisdiction pursuant to the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Similar to the offer to prepay made after signing the Merger Agreement, the post-Merger closing offer to prepay the TNMP FMBs will be made only pursuant to an offer to prepay, which will set forth the terms and conditions of the offer to prepay.

On May 27, 2025, TXNM physically settled all shares under the TXNM 2024 ATM Program by issuing 1,104,641 shares to the forward purchasers, aggregating net proceeds of $49.6 million, including $0.5 million for equity issuance costs. TXNM used the proceeds from the settled shares to repay borrowings under the TXNM Revolving Credit Facility. Following this settlement, no additional shares of TXNM’s common stock remain subject to future settlement under the TXNM 2024 ATM Program.

On May 18, 2025, the execution of the Merger Agreement constituted a “Change of Control” under certain TXNM and TNMP debt agreements. Under each of the specified debt agreements, a “Change of Control” constitutes an “Event of Default,” pursuant to which the lender parties thereto had the right to accelerate the indebtedness under the debt agreements. The definition of Change of Control under the PNM debt agreements and PNM note purchase agreements are not triggered by the execution of the Merger Agreement.

On May 23, 2025, TXNM and TNMP entered into amendments in connection with the TXNM Revolving Credit Facility, TXNM 2023 Term Loan, WFB LOC Facility, and TNMP Revolving Credit Facility with the lender parties thereto (the “Lender Consents”) to (i) amend the definition of "Change of Control" in such agreements such that the entry into the Merger Agreement would not constitute a Change of Control and (ii) waive the Event of Default arising from entry into the Merger Agreement. The amended Change of Control definition under the TXNM and TNMP debt agreements will, however, be triggered again upon the closing of the Merger. Prior to the closing of the Merger, the Company intends to coordinate with the lenders to either (a) seek to amend the definition of Change of Control permitting the Merger; or (b) to refinance or enter into new debt agreements that would permit the Merger. The Change of Control provisions in the PNM debt agreements are not triggered by the close of the Merger.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

To ensure sufficient liquidity pending the Lender Consents, on May 18, 2025, TXNM entered into a $910.0 million 364-day revolving credit facility (the “TXNM Merger Backstop Revolving Facility") between TXNM, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. The TXNM Merger Backstop Revolving Facility was available to provide liquidity in the event the Company was unable to obtain the Lender Consents. On May 19, 2025, TXNM borrowed approximately $4.0 million under the TXNM Merger Backstop Revolving Facility and subsequently repaid the entire balance by May 21, 2025. The TXNM Merger Backstop Revolving Facility expired according to its terms as TXNM did not make any additional borrowings thereunder by the commitment termination date of May 23, 2025, and the Company was able to obtain the Lender Consents.

On May 18, 2025, concurrent with the execution of the TXNM Merger Backstop Revolving Facility, TNMP entered into a $1,505.0 million 364-day delayed-draw term loan (the “TNMP Merger Backstop Term Loan”) between TNMP, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. The TNMP Merger Backstop Term Loan was available to provide liquidity to repurchase TNMP’s FMBs that were tendered for prepayment pursuant to the Offer. Borrowings under the TNMP Merger Backstop Term Loan are short-term in nature, and bear interest at a variable rate, which was 5.42% at June 30, 2025. On July 21, 2025 TNMP issued the TNMP July 2025 FMBs and used the proceeds to repay the outstanding principal balance under the TNMP Merger Backstop Term Loan on July 22, 2025, terminating that agreement. As TNMP demonstrated the intent and ability to refinance this short-term obligation prior to the issuance of this Form 10-Q, the obligation that existed as of June 30, 2025 has been presented as Long-term Debt on the Condensed Consolidated Balance Sheets.

On May 18, 2025, concurrent with the execution of the Merger Agreement, TXNM entered into an agreement (the “May 2025 Stock Purchase Agreement”) whereby TXNM sold, in a private placement transaction, 8,000,000 shares of TXNM common stock for a purchase price of $50.00 per share (aggregating $400.0 million). The consummation of the May 2025 Stock Purchase Agreement occurred on June 2, 2025. TXNM used the proceeds to make a cash equity contribution of $160.0 million to TNMP, to repay borrowings under the TXNM Revolving Credit Facility, and for general corporate purposes.

On May 16, 2025, TXNM paid the remaining balance due under its TXNM 2021 Delayed Draw Term Loan in accordance with its terms.

On April 23, 2025, PNM entered into an agreement (the “PNM April 2025 Note Purchase Agreement”) with institutional investors for the sale and issuance of $300.0 million aggregate principal amount of two series of SUNs (the “PNM April 2025 SUNs”) offered in private placement transactions. The PNM April 2025 SUNs were issued on April 23, 2025. PNM issued $125.0 million of the PNM April 2025 SUNs at 5.75%, due June 1, 2032, and another $175.0 million at 6.13%, due June 1, 2037. PNM used proceeds from the PNM April 2025 SUNs for the repayment of existing indebtedness, funding of capital expenditures, and general corporate purposes. The PNM April 2025 Note Purchase Agreement includes the customary covenants discussed above. In the event of a change of control, PNM will be required to offer to prepay the PNM April 2025 SUNs at par. Although there are customary change of control provisions in the PNM debt agreements, the change of control provisions in the agreements, including the PNM April 2025 Note Purchase Agreement, are not triggered by the closing of the Merger. PNM has the right to redeem any or all of the PNM April 2025 SUNs prior to their maturities, subject to payment of a customary make-whole premium.

On February 14, 2025, TNMP entered into an agreement (the “TNMP February 2025 Bond Purchase Agreement”) with institutional investors for the sale and issuance of $140.0 million aggregate principal amount of first mortgage bonds (the “TNMP February 2025 Bonds”) offered in private placement transactions. TNMP issued all $140.0 million of the TNMP February 2025 Bonds on February 14, 2025 at a 5.19% interest rate, due April 1, 2031. The proceeds were used to repay borrowings under the TNMP Revolving Credit Facility, for funding of capital expenditures, and for other corporate purposes. The TNMP February 2025 Bonds are subject to continuing compliance with the representations, warranties, and covenants set forth in the supplemental indentures governing the TNMP February 2025 Bonds. The terms of the supplemental indentures governing the TNMP February 2025 Bonds include the customary covenants discussed above. In the event of a change of control, TNMP will be required to offer to prepay the TNMP February 2025 Bonds at par. The definition of change of control in the supplemental indentures governing the TNMP February 2025 Bonds were triggered by the execution of the Merger Agreement and the TNMP February 2025 Bonds were included in the Offer, with $40.0 million validly tendered by the bondholders and accepted for purchase by TNMP. The change of control for the remaining $100.0 million of TNMP February 2025 Bonds will again be triggered by the close of the Merger. TNMP has the right to redeem any or all of the TNMP February 2025 Bonds prior to their maturity, subject to payment of a customary make-whole premium.

Table of Contents

TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On January 21, 2025, PNM entered into a $195.0 million term loan agreement (the “PNM 2025 Term Loan”), among PNM, the lenders party thereto and Canadian Imperial Bank of Commerce, New York Branch, as administrative agent. PNM used the proceeds of the PNM 2025 Term Loan to repay borrowings under the PNM Revolving Credit Facility and the PNM New Mexico Credit Facility, and for general corporate purposes. The PNM 2025 Term Loan bears interest at a variable rate, which was 5.32% at June 30, 2025, and must be repaid on or before July 21, 2026.

On May 6, 2024, TXNM entered into a distribution agreement with BofA Securities, Inc., Citigroup Global Markets, Inc., MUFG Securities Americas Inc., RBC Capital Markets, LLC, Scotia Capital (USA) Inc., and Wells Fargo Securities, LLC, as sales agents and Bank of America, N.A., Citibank, N.A., MUFG Securities EMEA plc, Royal Bank of Canada, The Bank of Nova Scotia, and Wells Fargo Bank, N.A., as forward purchasers, pursuant to which the Company may sell, from time to time, up to an aggregate sales amount of $100.0 million of its common stock, no par value, through the sales agents (the “TXNM 2024 ATM Program”). On August 5, 2024, subsequent to approval by shareholders to increase TXNM’s authorized shares, the Company amended the distribution agreement increasing the aggregate sales amount from $100.0 million to $300.0 million of its common stock, no par value, that may be sold under the TXNM 2024 ATM Program. The Company did not initially receive any proceeds from the execution of the distribution agreement.

During the second quarter of 2024, TXNM entered into a forward sale agreement with a forward purchaser for the sale of 262,025 shares of common stock under the TXNM 2024 ATM Program (the “Q2 2024 Forward Sale Agreement”) with an initial forward sale price of $37.77 per share. TXNM physically settled these shares on December 30, 2024.

On May 10, 2024, PNM entered into a $200.0 million term loan agreement (the “PNM 2024 Term Loan”), among PNM, the lenders party thereto and U.S. Bank National Association, as administrative agent. PNM used the proceeds of the PNM 2024 Term Loan to repay borrowings under the PNM Revolving Credit Facility, the PNM New Mexico Credit Facility, and for general corporate purposes. The PNM 2024 Term Loan bears interest at a variable rate, which was 5.32% at June 30, 2025, and must be repaid on or before November 10, 2025.

On June 10, 2024, TXNM issued $500.0 million aggregate principal amount of junior subordinated convertible notes due 2054 (the “Convertible Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Convertible Notes are unsecured obligations of the Company and rank junior and subordinate in right of payment to the prior payment in full of the Company’s existing and future senior indebtedness. The Convertible Notes bear interest at a rate of 5.75% per year, payable semi-annually in arrears on June 1 and December 1, and mature on June 1, 2054, unless earlier converted, redeemed, or repurchased in accordance with their terms. On June 21, 2024, TXNM issued an additional $50.0 million aggregate principal amount of the Convertible Notes, pursuant to an overallotment option granted by TXNM to the initial purchasers of the $500.0 million Convertible Notes. Proceeds from the Convertible Notes were used to prepay $449.0 million of borrowings under the TXNM 2021 Delayed Draw Term Loan and $90.0 million of borrowings under the TXNM 2023 Term Loan, without penalty, and for other corporate purposes.

At December 31, 2023, PNM had outstanding $37.0 million of 3.00% PCRBs and $125.0 million of 1.15% PCRBs issued by the City of Farmington, New Mexico with a mandatory remarketing date of June 1, 2024 and final maturities of June 2040 and $36.0 million of 3.00% PCRBs issued by Maricopa County, Arizona with a mandatory remarketing date of June 1, 2024 and a final maturity of January 2038. On June 3, 2024, PNM remarketed these PCRBs aggregating $198.0 million to new investors at 3.875% with a mandatory tender date of June 1, 2029.

On March 28, 2024, TNMP entered into the TNMP 2024 Bond Purchase Agreement with institutional investors for the sale of $285.0 million aggregate principal amount of four series of the TNMP 2024 Bonds offered in private placement transactions. TNMP issued the first two series on March 28, 2024, consisting of $32.0 million at a 5.26% interest rate, due March 28, 2029, and $85.0 million at a 5.55% interest rate, due March 28, 2036. The third and fourth series were issued on July 1, 2024, consisting of $40.0 million at a 5.65% interest rate, due July 1, 2039, and $128.0 million at a 5.79% interest rate, due July 1, 2054. The proceeds were used to repay existing debt, including the $80.0 million of 4.03% TNMP FMBs that were due July 2024 and borrowings under the TNMP Revolving Credit Facility, for funding of capital expenditures, and for other corporate purposes. The TNMP 2024 Bonds are subject to continuing compliance with the representations, warranties, and covenants set forth in the supplemental indentures governing the TNMP 2024 Bonds. The terms of the supplemental indentures governing the TNMP 2024 Bonds include the customary covenants discussed above. In the event of certain changes of control of TXNM or TNMP, TNMP will be required to offer to prepay the TNMP 2024 Bonds at par. The definition of change of control in the supplemental indentures governing the TNMP 2024 Bonds were triggered by the execution of the Merger Agreement and the TNMP 2024 Bonds were included in the Offer, with $125.0 million validly tendered by the bondholders and accepted for purchase by TNMP. The change of control for the remaining $160.0 million of TNMP 2024 Bonds will again be

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triggered by the close of the Merger. TNMP has the right to redeem any or all of the TNMP 2024 Bonds prior to their maturity, subject to payment of a customary make-whole premium.

At June 30, 2025, variable interest rates were 5.78% on the TXNM 2023 Term Loan that matures in June 2026, 5.32% on the PNM 2024 Term Loan that matures in November 2025, and 5.32% on the PNM 2025 Term Loan that matures in July 2026.

Short-term Debt and Liquidity

As of June 30, 2025, the TXNM Revolving Credit Facility had a financing capacity of $300.0 million and the PNM Revolving Credit Facility had a financing capacity of $400.0 million. Each of these facilities matures on March 30, 2029 and contains two one-year extension options that, if exercised, would extend the maturity to March 2031, subject to approval by a majority of the lenders. PNM also has the $40.0 million PNM New Mexico Credit Facility with a maturity of May 20, 2026. On July 25, 2025, PNM amended its PNM New Mexico Credit Facility to, among other things, extend the maturity to May 31, 2030. As of June 30, 2025, the TNMP Revolving Credit Facility has a capacity of $200.0 million and is secured by $200.0 million aggregate principal amount of TNMP first mortgage bonds and has a maturity of March 30, 2029, with two one-year extension options that, if exercised, would extend the maturity to March 2031, subject to approval by a majority of the lenders. Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities are based on SOFR. Short-term debt outstanding consists of:


	June 30, 2025			December 31, 2024
	Balance Outstanding		Weighted Average Interest Rate	Balance Outstanding		Weighted Average Interest Rate
	(In thousands)			(In thousands)
PNM:
PNM Revolving Credit Facility	$	194,600	5.66%	$	323,800	5.73%
PNM New Mexico Credit Facility	40,000		5.67	40,000		5.81
	234,600			363,800

TNMP Revolving Credit Facility	—		—	151,600		5.37




TXNM Revolving Credit Facility	111,100		5.92	93,900		5.96



	$	345,700		$	609,300

In addition to the above borrowings, TXNM, PNM, and TNMP had letters of credit outstanding of $3.1 million, zero, and zero at June 30, 2025 that reduce the available capacity under their respective revolving credit facilities. TXNM also had $30.3 million of letters of credit outstanding under the WFB LOC Facility. The above table excludes intercompany debt. As of June 30, 2025 and December 31, 2024, PNM had no intercompany borrowings from TXNM. TNMP had no intercompany borrowings from TXNM as of June 30, 2025 and December 31, 2024. TXNM had $1.6 million and $1.5 million in short-term borrowings from PNMR Development at June 30, 2025 and December 31, 2024.

PNM has $3.5 million and $3.6 million in scheduled principal payments due for the ETBC I Securitized Bonds in August 2025 and February 2026. PNM also has $200.0 million under the PNM 2024 Term Loan due in November 2025 and $195.0 million under the PNM 2025 Term Loan due in July 2026. TXNM has $210.0 million under the TXNM 2023 Term Loan due in June 2026. The Company’s debt arrangements have various maturities and expiration dates. Additional information on debt maturities is contained in Note 7 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

(10) Pension and Other Postretirement Benefit Plans

TXNM and its subsidiaries maintain qualified defined benefit pension plans, postretirement benefit plans providing medical and dental benefits, and executive retirement programs (collectively, the “PNM Plans” and “TNMP Plans”). TXNM maintains the legal obligation for the benefits owed to participants under these plans. The periodic costs or income of the PNM Plans and TNMP Plans are included in regulated rates to the extent attributable to regulated operations. The Company presents the service cost component of its net periodic benefit costs in administrative and general expenses and the non-service costs components in other income (deductions), net of amounts capitalized or deferred to regulatory assets and liabilities, on the Condensed Consolidated Statements of Earnings. PNM and TNMP receive a regulated return on the amounts funded for

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pension and OPEB plans in excess of accumulated periodic cost or income to the extent included in retail rates (a “prepaid pension asset”).

Additional information concerning pension and OPEB plans is contained in Note 11 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K. Annual net periodic benefit cost for the plans is actuarially determined using the methods and assumptions set forth in that note and is recognized ratably throughout the year. Differences between TNMP’s annual net periodic costs (income) and amounts included in its regulated rates are deferred to regulatory assets or liabilities, for recovery or refund in future rate proceedings.

PNM Plans

The following table presents the components of the PNM Plans’ net periodic benefit cost:


	Three Months Ended June 30,
	Pension Plan				OPEB Plan				Executive Retirement Program
	2025		2024		2025		2024		2025		2024
	(In thousands)
Components of Net Periodic Benefit Cost
Service cost	$	—	$	—	$	—	$	—	$	—	$	—
Interest cost	5,385		5,428		566		597		122		124
Expected return on plan assets	(7,459)		(7,757)		(1,384)		(1,391)		—		—
Amortization of net loss	3,124		2,662		—		—		47		50
Amortization of prior service cost	—		—		—		—		—		—
Net Periodic Benefit Cost (Income)	$	1,050	$	333	$	(818)	$	(794)	$	169	$	174







	Six Months Ended June 30,
	Pension Plan				OPEB Plan				Executive Retirement Program
	2025		2024		2025		2024		2025		2024
	(In thousands)
Components of Net Periodic Benefit Cost
Service cost	$	—	$	—	$	—	$	—	$	—	$	—
Interest cost	10,770		10,855		1,133		1,194		244		248
Expected return on plan assets	(14,917)		(15,514)		(2,768)		(2,782)		—		—
Amortization of net loss	6,247		5,323		—		—		94		100
Amortization of prior service cost	—		—		—		—		—		—
Net Periodic Benefit Cost (Income)	$	2,100	$	664	$	(1,635)	$	(1,588)	$	338	$	348

PNM did not make any contributions to its pension plan trust in the three and six months ended June 30, 2025 and 2024 and does not anticipate making any contributions to the pension plan in 2025 through 2028, but PNM does expect to make a cash contribution of $7.9 million in 2029 based on current law, funding requirements, and estimates of portfolio performance. Funding assumptions were developed using a discount rate of 5.31% in 2025 declining to a rate of approximately 5.03% in 2027 and later years. Actual amounts to be funded in the future will be dependent on the actuarial assumptions at that time, including the appropriate discount rate. PNM may make additional contributions at its discretion. PNM did not make any cash contributions to the OPEB trust in the three and six months ended June 30, 2025 and 2024, however, a portion of the disbursements attributable to the OPEB trust is paid by PNM and are therefore considered to be contributions to the OPEB plan. Payments by PNM on behalf of the PNM OPEB plan were $0.1 million for the three and six months ended June 30, 2025 and less than 0.1 million and 0.1 million for the three and six months ended June 30, 2024. These payments are expected to total $2.0 million in 2025 and $11.1 million for 2026-2029. Disbursements under the executive retirement program, which are funded by PNM and considered to be contributions to the plan, were $0.2 million and $0.6 million in the three and six months ended June 30, 2025 and $0.3 million and $0.6 million in the three and six months ended June 30, 2024 and are expected to total $1.2 million during 2025 and $4.2 million for 2026-2029.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

TNMP Plans

The following table presents the components of the TNMP Plans’ net periodic benefit cost:


	Three Months Ended June 30,
	Pension Plan				OPEB Plan
	2025		2024		2025		2024
	(In thousands)
Components of Net Periodic Benefit Cost
Service cost	$	—	$	—	$	4	$	6
Interest cost	536		554		93		97
Expected return on plan assets	(733)		(687)		(120)		(128)
Amortization of net (gain) loss	168		139		(124)		(160)
Amortization of prior service cost	—		—		—		—
Net Periodic Benefit Cost (Income)	$	(29)	$	6	$	(147)	$	(185)









	Six Months Ended June 30,
	Pension Plan				OPEB Plan
	2025		2024		2025		2024
	(In thousands)
Components of Net Periodic Benefit Cost
Service cost	$	—	$	—	$	8	$	11
Interest cost	1,072		1,107		186		193
Expected return on plan assets	(1,466)		(1,374)		(240)		(257)
Amortization of net (gain) loss	336		278		(248)		(321)
Amortization of prior service cost	—		—		—		—
Net Periodic Benefit Cost (Income)	$	(58)	$	11	$	(294)	$	(374)

TNMP did not make any contributions to its pension plan trust in the three and six months ended June 30, 2025 and 2024 and does not anticipate making any contributions to the pension plan in 2025 through 2029 based on current law, funding requirements, and estimates of portfolio performance. Funding assumptions were developed using a discount rate of 5.32% in 2025 declining to a rate of approximately 5.05% in 2027 and later years. Actual amounts to be funded in the future will depend on the actuarial assumptions at that time, including the appropriate discount rate. TNMP may make additional contributions at its discretion. TNMP did not make any contributions to the OPEB trust in the three and six months ended June 30, 2025 and 2024 and does not expect to make contributions to the OPEB trust during the period 2025-2029.

(11) Commitments and Contingencies

Merger-Related Litigation

Counsel for TXNM has received a number of demand letters from certain law firms on behalf of individuals who are purported TXNM shareholders, accompanied by draft complaints naming TXNM and its directors as defendants and alleging that TXNM’s preliminary proxy statement with respect to the Merger omitted or misrepresented certain material information. Such draft complaints include a request for injunctive relief with respect to the TXNM shareholder vote to approve, and the closing of, the Merger, as well as other remedies, including counsel fees. TXNM believes that the allegations set forth in the demand letters and draft complaints are without merit and, if such complaints are actually filed, will defend such actions vigorously.

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(Unaudited)

Overview

There are various claims and lawsuits pending against the Company. In addition, the Company is subject to federal, state, and local environmental laws and regulations and periodically participates in the investigation and remediation of various sites. In addition, the Company periodically enters into financial commitments in connection with its business operations. Also, the Company is involved in various legal and regulatory proceedings in the normal course of its business. See Note 12. It is not possible at this time for the Company to determine fully the effect of all litigation and other legal and regulatory proceedings on its financial position, results of operations, or cash flows.

With respect to some of the items listed below, the Company has determined that a loss is not probable or that, to the extent probable, cannot be reasonably estimated. In some cases, the Company is not able to predict with any degree of certainty the range of possible loss that could be incurred. The Company assesses legal and regulatory matters based on current information and makes judgments concerning their potential outcome, giving due consideration to the nature of the claim, the amount and nature of any damages sought, and the probability of success. Such judgments are made with the understanding that the outcome of any litigation, investigation, or other legal proceeding is inherently uncertain. The Company records liabilities for matters where it is probable a loss has been incurred and the amount of loss is reasonably estimatable. The actual outcomes of the items listed below could ultimately differ from the judgments made and the differences could be material. The Company cannot make any assurances that the amount of reserves or potential insurance coverage will be sufficient to cover the cash obligations that might be incurred as a result of litigation or regulatory proceedings. Except as otherwise disclosed, the Company does not expect that any known lawsuits, environmental costs, or commitments will have a material effect on its financial condition, results of operations, or cash flows.

Additional information concerning commitments and contingencies is contained in Note 16 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Commitments and Contingencies Related to the Environment

Nuclear Spent Fuel and Waste Disposal

Nuclear power plant operators are required to enter into spent fuel disposal contracts with the DOE that require the DOE to accept and dispose of all spent nuclear fuel and other high-level radioactive wastes generated by domestic power reactors. Although the Nuclear Waste Policy Act required the DOE to develop a permanent repository for the storage and disposal of spent nuclear fuel by 1998, the DOE announced that it would not be able to open the repository by 1998 and sought to excuse its performance of these requirements. In November 1997, the DC Circuit issued a decision preventing the DOE from excusing its own delay but refused to order the DOE to begin accepting spent nuclear fuel. Based on this decision and the DOE’s delay, a number of utilities, including APS (on behalf of itself and the other PVNGS owners, including PNM), filed damages actions against the DOE in the Court of Federal Claims. The lawsuits filed by APS alleged that damages were incurred due to DOE’s continuing failure to remove spent nuclear fuel and high-level waste from PVNGS. APS and the DOE entered into a settlement agreement, subsequently extended, that established a process for the payment of claims for costs incurred through December 31, 2025. Under the settlement agreement, APS must submit claims annually for payment of allowable costs. PNM records estimated claims on a quarterly basis. The benefit from the claims is passed through to customers under the FPPAC.

PNM estimates that it will incur approximately $55.6 million (in 2023 dollars) for its share of the costs related to the on-site interim storage of spent nuclear fuel at PVNGS for the remaining term of the operating licenses. PNM accrues these costs as a component of fuel expense as the nuclear fuel is consumed. At June 30, 2025 and December 31, 2024, PNM had a liability for interim storage costs of $14.6 million and $13.4 million, which is included in other deferred credits.

PVNGS has sufficient capacity at its on-site Independent Spent Fuel Storage Installation (“ISFSI”) to store all of the nuclear fuel that will be irradiated during the initial operating license period, which ends in December 2027. Additionally, PVNGS has sufficient capacity at its on-site ISFSI to store a portion of the fuel that will be irradiated during the period of extended operation, which ends in November 2047. If uncertainties regarding the U.S. Government’s obligation to accept and store spent fuel are not favorably resolved, APS will evaluate alternative storage solutions that may obviate the need to expand the ISFSI to accommodate all of the fuel that will be irradiated during the period of extended operation.

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PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The New Mexico Energy Transition Act

The New Mexico Energy Transition Act (“ETA”) sets a statewide standard that requires investor-owned electric utilities to have specified percentages of their electric-generating portfolios be from renewable and zero-carbon generating resources. The ETA requires utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045. The ETA also allows 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 requires the NMPRC to review and approve utilities’ annual renewable portfolio plans to ensure compliance with the RPS. Also pursuant to the ETA, the NM Environmental Improvement Board adopted standards of performance that limit CO2 emissions to no more than 1,100 lbs. per MWh beginning January 1, 2023 for new and existing coal-fired EGUs with original installed capacities exceeding 300 MW.

The ETA provides for a transition from fossil-fuel generation resources to renewable and other carbon-free resources through certain provisions relating to the abandonment of coal-fired generating facilities. These provisions include the use of energy transition bonds to finance certain costs of abandoning coal-fired facilities that are retired prior to January 1, 2023 for facilities operated by a “qualifying utility,” or prior to January 1, 2032 for facilities that are not operated by a qualifying utility. The amount of energy transition bonds that can be issued to recover abandonment costs is limited to the lesser of $375.0 million or 150% of the undepreciated investment of the facility as of the abandonment date. Proceeds provided by energy transition bonds must be used only for purposes related to providing utility service to customers and to pay energy transition costs (as defined by the ETA). These costs may include plant decommissioning and coal mine reclamation costs provided those costs have not previously been recovered from customers or disallowed by the NMPRC or by a court order. Proceeds from energy transition bonds may also be used to fund severances for employees of the retired facility and related coal mine and to promote economic development, education and job training in areas impacted by the retirement of the coal-fired facilities. Energy transition bonds must be issued under a NMPRC-approved financing order, are secured by “energy transition property,” are non-recourse to the issuing utility, and are repaid by a non-bypassable charge paid by all customers of the issuing utility. These customer charges are subject to an adjustment mechanism designed to provide for timely and complete payment of principal and interest due under the energy transition bonds.

The ETA also provides that utilities must obtain NMPRC approval of competitively procured replacement resources that shall be evaluated based on their cost, economic development opportunity, ability to provide jobs with comparable pay and benefits to those lost upon retirement of the facility, and that do not exceed emissions thresholds specified in the ETA. In determining whether to approve replacement resources, the NMPRC must give preference to resources with the least environmental impacts, those with higher ratios of capital costs to fuel costs, and those located in the school district of the abandoned facility. The ETA also provides for the procurement of energy storage facilities and gives utilities discretion to maintain, control, and operate these systems to ensure reliable and efficient service.

The ETA has had and will have a significant impact on PNM’s future generation portfolio, including PNM’s retirement of SJGS in 2022. PNM cannot predict the full impact of the ETA with respect to Four Corners or the outcome of its future generating resource abandonment and replacement resource filings with the NMPRC.

The Clean Air Act

Regional Haze

Pursuant to the CAA, states are required to establish goals for improving visibility in national parks and wilderness areas (also known as Class I areas) and to develop long-term strategies for reducing emissions of air pollutants that cause visibility impairment in their own states and for preventing degradation in other states. States must establish a series of interim goals to ensure continued progress by adopting a new SIP every ten years. In the first SIP planning period, states were required to conduct best available retrofit technology determinations for certain covered facilities, including utility boilers, built between 1962 and 1977 that have the potential to emit more than 250 tons per year of visibility impairing pollution. For all future SIP planning periods, states must evaluate whether additional emissions reduction measures may be needed to continue making reasonable progress toward natural visibility conditions.

SIPs for the second planning period were due in July 2021, which deadline NMED was unable to meet. NMED is currently preparing its SIP for the second compliance period and has notified PNM that it will not be required to submit a regional haze four-factor analysis for SJGS since PNM retired its share of SJGS in 2022. On August 30, 2022, EPA published in the Federal Register an official “Finding of Failure to Submit” for states, including New Mexico, that have not yet submitted

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a round 2 regional haze SIP. This action by EPA started a two-year clock for it to issue a FIP, which deadline has now passed. NMED petitioned the NM Environmental Improvement Board to adopt a proposed SIP and submitted a final revised plan to the NM Environmental Improvement Board on March 3, 2025. PNM submitted comments on the proposed SIP in response to a request for comments by NMED. On March 12, 2025, as part of EPA’s list of 31 deregulatory actions, EPA announced it would restructure the Regional Haze Program. The NM Environmental Improvement Board held a public hearing from April 28 to April 30, 2025 and is expected to deliberate and deliver a final rule during its regular meeting on October 24, 2025.

Carbon Dioxide Emissions

In 2015, EPA established standards to limit CO2 emissions from power plants, including (1) Carbon Pollution Standards for new, modified, and reconstructed power plants; and (2) the Clean Power Plan for existing power plants. Challengers successfully petitioned the U.S. Supreme Court for a stay of the Clean Power Plan. In 2019, EPA repealed the Clean Power Plan, promulgated the ACE Rule, and revised the implementing regulations for all emission guidelines. The ACE Rule was also challenged, and on January 19, 2021, the DC Circuit issued an opinion in American Lung Association and American Public Health Association v. EPA, et al., vacating the ACE Rule.

Numerous parties sought review by the U.S. Supreme Court, and on June 30, 2022, the U.S. Supreme Court held that the “generation shifting” approach in the Clean Power Plan exceeded the powers granted to EPA by Congress. Of broader significance in administrative law, the Court’s opinion expressly invoked the “major question” doctrine, which requires rules involving issues of “vast economic or political significance” to be supported by clear statutory authorization. In cases where there is no clear statement of authority, courts need not defer to the agency’s statutory interpretation on “major questions.” The decision sets legal precedent for future rulemakings by EPA and other federal regulatory agencies whereby the agencies’ authority may be limited based upon similar reasoning.

The litigation over the Carbon Pollution Standards remains held in abeyance but could be reactivated by the parties upon a determination by the court that reconsideration of the rule has concluded.

In 2024, EPA adopted regulatory actions under CAA Sections 111(b) and (d) to replace the Clean Power Plan and the ACE Rule. The final rules include revised new source performance standards under Section 111(b) for all new natural gas-fired combustion turbines and emission guidelines under Section 111(d) requiring states to develop standards of performance for GHG emissions from existing fossil-fuel-fired electric steam generating units. In the final rules, EPA determined that the standards for existing coal- or gas-fired steam generating units must be based on the use of either CCS (long-term), natural gas co-firing (medium-term), or exempt from the rule via early retirement. The standards for new combustion turbines must be based on CCS (base load), efficient simple cycle design (intermediate load), or lower-emitting fuels (low load). Over a dozen states, several industry groups and some power companies and labor unions filed challenges to the rule at the DC Circuit, which heard oral arguments on December 6, 2024. However, President Trump issued several executive orders on January 20, 2025, directing his Administration to review all agency actions and suspend, revise, or rescind those identified as imposing an undue burden on domestic energy resources. On March 12, 2025, as part of EPA’s reconsideration of 31 environmental regulations, EPA announced the agency will reconsider the previous Administration’s regulations on GHG standards and guidelines for power plants. On June 17, 2025, EPA published a two-part proposed rule in the Federal Register to repeal and revise the GHG emission standards for EGUs. EPA primarily proposes to find that GHG emissions from fossil fuel-fired power plants “do not contribute significantly to dangerous air pollution” under the meaning of CAA Section 111, which would preclude EPA from regulating GHG emissions from those plants. As a result, EPA is proposing to repeal all GHG standards for the power sector promulgated under CAA Section 111 in both 2015 and 2024. EPA also proposed, in the alternative, to find that CCS is not adequately demonstrated and that neither CCS nor gas co-firing are the best system of emission reduction for GHG emissions from power plants, which findings also support repeal of those specific requirements from the rules adopted in 2024. Comments are due by August 7, 2025 and EPA has indicated it intends to finalize the proposed rule by the end of 2025.

Because the CAA 111 rule does not contain provisions for existing natural gas units, on March 26, 2024, EPA announced it was opening a non-regulatory docket and issued framing questions to gather input about ways to design a stronger, more durable approach to GHG regulation of existing gas combustion turbines. The docket was open for public comment from March 26, 2024 to May 28, 2024 and the agency held a policy forum to bring stakeholders together to share ideas with EPA and others. Under the Trump Administration, EPA is unlikely to propose a rule based on this non-regulatory docket.

In 2021, President Biden signed an extensive executive order aimed at addressing climate change concerns domestically and internationally. The order was intended to build on the initial climate-related actions the Biden Administration took on

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(Unaudited)

January 20, 2021. It addressed a wide range of issues, including establishing climate change concerns as an essential element of U.S. foreign and security policy, identifying a process to determine the U.S. INDC under the Paris Agreement, and establishing a Special Presidential Envoy for Climate that would sit on the National Security Council. On April 22, 2021, at the Earth Day Summit, as part of the U.S.’s re-entry into the Paris Agreement, President Biden unveiled the goal to cut U.S. emissions by 50% - 52% from 2005 levels by 2030, nearly double the GHG emissions reduction target set by the Obama Administration. The 2030 goal joined President Biden’s other climate goals which included a carbon pollution-free power sector by 2035 and a net-zero emissions economy by no later than 2050. In an executive order issued on January 20, 2025, President Trump ordered his Administration to withdraw the U.S. from the Paris Agreement and from any agreement, pact, accord, or similar commitment made under the United Nations Framework Convention on Climate Change.

PNM’s review of the GHG emission reductions standards that have or may occur as a result of legislation or regulation is ongoing. We are currently determining what impact, if any, the final rules will have on our business, results of operations, and financial condition.

National Ambient Air Quality Standards (“NAAQS”)

The CAA requires EPA to set NAAQS for pollutants reasonably anticipated to endanger public health or welfare. EPA has set NAAQS for certain pollutants, including NOx, SO2, ozone, and particulate matter.

NOx Standard – In 2018, EPA published the final rule to retain the current primary health-based NOx standards of which NO2 is the constituent of greatest concern and is the indicator for the primary NAAQS. EPA concluded that the current 1-hour and annual primary NO2 standards are requisite to protect public health with an adequate margin of safety. The rule became effective on May 18, 2018. The State of New Mexico has attained the current NOx NAAQS standards.

SO2 Standard – In 2019, EPA announced its final decision to retain, without changes, the primary health-based NAAQS for SO2. Specifically, EPA retained the current 1-hour standard for SO2, which is 75 parts per billion, based on the 3-year average of the 99th percentile of daily maximum 1-hour SO2 concentrations. In 2021, EPA published in the Federal Register the initial air quality designations for all remaining areas not yet designated under the 2010 SO2 Primary NAAQS. All areas of New Mexico have been designated attainment/unclassifiable through four rounds of designations by EPA.

Ozone Standard – In 2015, EPA finalized the new ozone NAAQS and lowered both the primary and secondary 8-hour standard from 75 to 70 parts per billion. With ozone standards becoming more stringent, fossil-fueled generation units will come under increasing pressure to reduce emissions of NOx and volatile organic compounds since these are the pollutants that form ground-level ozone. During 2017 and 2018, EPA released rules establishing area designations for ozone. In those rules, San Juan County, New Mexico, where Four Corners is located, is designated as attainment/unclassifiable and only a small area in Doña Ana County, New Mexico is designated as marginal non-attainment. Although Afton Generating Station is located in Doña Ana County, it is not located within the small area designated as non-attainment for the 2015 ozone standard.

PNM does not believe there will be material impacts to its facilities because of the non-attainment designation of the small area within Doña Ana County. Until EPA approves attainment designations for the Navajo Nation and releases a proposal to implement the revised ozone NAAQS, PNM is unable to predict what impact the adoption of these standards may have on Four Corners. On July 13, 2020, EPA proposed to retain the existing ozone NAAQS based on a review of the full body of currently available scientific evidence and exposure/risk information, but on August 21, 2023, EPA announced an entirely new review of the ozone standard. PNM cannot predict the outcome of this matter.

In 2019, EPA issued findings that several states, including New Mexico, had failed to submit interstate transport SIPs for the 2015 8-hour ozone NAAQS, triggering an obligation for EPA to issue a FIP within two years. In response, NMED submitted a Good Neighbor SIP on July 27, 2021 that demonstrates that there are no significant contributions from New Mexico to downwind problems in meeting the federal ozone standard. On March 15, 2023, EPA Administrator Regan signed a final action imposing a FIP on multiple states but did not include a FIP for New Mexico because the most updated modeling available at the time of the proposal confirmed the state did not contribute to downwind ozone nonattainment or maintenance areas. However, the updated modeling EPA used in the final rule indicated that New Mexico may be significantly contributing to one or more non-attainment or maintenance areas. In light of that modeling result, on February 16, 2024, the EPA published a proposed rule partially disapproving the SIPs for New Mexico and four other states (Arizona, Iowa, Kansas, and Tennessee) and expanding the Good Neighbor FIP to apply to these states. The FIP aspect of the proposed rule would have required fossil fuel-fired power plants in these five states to participate in an allowance-based ozone season NOx emissions trading program beginning in 2025, but the outgoing Biden Administration did not finalize the rule. On March 10, 2025, in the DC Circuit, the

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EPA filed a motion for voluntary remand of its ozone interstate transport FIP for the 2015 ozone NAAQS to reconsider the rule and anticipates completing a new rulemaking by Fall 2026. The FIP is listed for reconsideration under the EPA’s March 2025 list of deregulatory actions.

PM Standard – In 2023, EPA published, in the Federal Register, a proposal to lower the annual fine PM standard to between 9-10 µg/m3 but retain the rest of its PM standards, including the current daily fine PM standard, the daily coarse PM standard, and the secondary PM standards. The final rule was published on March 6, 2024, lowering the primary annual PM 2.5 NAAQS to 9 ug/m3, and became effective May 6, 2024. States will have until March 2032 to attain compliance with the new standard. During the multi-year implementation process, EPA will designate attainment/nonattainment areas by March 6, 2026, and states will submit a SIP to EPA by September 6, 2027. This implementation process also applies to the Albuquerque-Bernalillo County Environmental Health Department who may combine efforts with NMED. Bernalillo County does not currently meet the 9 ug/m3 standard which may impact future air permitting activities at Rio Bravo and Reeves Generating Stations if the county is designated as nonattainment. However, even before any designations are made, the new standard is effective for conducting required modeling for permit applications and revisions. The lower standard is expected to result in new nonattainment areas throughout the country and could prompt additional PM control requirements, but PNM cannot predict the impacts of the outcome of future rulemaking. The March 2024 rule is listed for reconsideration under EPA’s March 2025 list of deregulatory actions.

Cooling Water Intake Structures

In 2014, EPA issued a rule establishing national standards for certain cooling water intake structures at existing power plants and other facilities under the Clean Water Act to protect fish and other aquatic organisms by minimizing impingement mortality (the capture of aquatic wildlife on intake structures or against screens) and entrainment mortality (the capture of fish or shellfish in water flow entering and passing through intake structures).

To minimize impingement mortality, the rule provides operators of facilities, such as Four Corners, seven options for meeting Best Technology Available (“BTA”) standards for reducing impingement. The permitting authority must establish the BTA for entrainment on a site-specific basis, taking into consideration an array of factors, including endangered species and social costs and benefits. Affected sources must submit source water baseline characterization data to the permitting authority to assist in the BTA determination. Compliance deadlines under the rule are tied to permit renewals, including any subject to a schedule of compliance established by the permitting authority in the permit itself.

In 2018, several environmental groups sued EPA Region IX in the U.S. Court of Appeals for the Ninth Circuit over EPA’s failure to timely reissue the Four Corners NPDES permit. The petitioners asked the court to issue a writ of mandamus compelling EPA Region IX to take final action on the pending NPDES permit by a reasonable date. EPA subsequently reissued the NPDES permit. The permit did not contain conditions related to the cooling water intake structure rule, because EPA determined that the facility had achieved BTA for both impingement and entrainment by operating a closed-cycle recirculation system. Several environmental groups filed a petition for review with EPA’s Environmental Appeals Board (“EAB”) concerning the reissued permit. The environmental groups alleged that the permit was reissued in contravention of the Clean Water Act and did not contain limits or conditions required by EPA’s ELG applicable to Four Corners or EPA’s cooling water intake structures rule, among others. EPA withdrew the Four Corners NPDES permit in order to examine the issues raised by the environmental groups and then issued an updated NPDES permit in 2019. The permit was once again appealed to the EAB and was stayed before the effective date, but the EAB issued an order denying the petition for review on September 30, 2020. Thereafter, the Regional Administrator of the EPA signed a notice of final permit decision, and the NPDES permit was issued on November 9, 2020. The permit became effective December 1, 2020. On January 22, 2021, the environmental groups filed a petition for review of the EAB’s decision with the U.S. Court of Appeals for the Ninth Circuit. The September 2019 permit remained in effect pending the outcome of this appeal. On March 21, 2022, EPA provided notice in the Federal Register of a proposed settlement agreement with the environmental groups. The parties subsequently executed the settlement agreement as of May 2, 2022. Under the settlement, the lawsuit was administratively closed through September 6, 2023, during which time a third-party consultant spent 12 months sampling discharges from Four Corners and EPA spent three months completing an analysis. On December 1, 2023, EPA issued a modification, effective December 31, 2023, to the NPDES permit that had been issued on November 9, 2020. The modification applies to permit elements related to effluent discharge. PNM cannot predict whether the analysis required to be performed by EPA under the settlement agreement will result in further changes to the NPDES permit but does not anticipate that it will have a material impact on PNM’s financial position, results of operations, or cash flows.

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Effluent Limitation Guidelines

In 2013, EPA published proposed revised wastewater ELG establishing technology-based wastewater discharge limitations for fossil fuel-fired electric power plants. EPA signed the final Steam Electric ELG rule in 2015. The final rule, which became effective on January 4, 2016, phased in the new, more stringent requirements in the form of effluent limits for arsenic, mercury, selenium, and nitrogen for wastewater discharged from wet scrubber systems and zero discharge of pollutants in ash transport water that must be incorporated into plants’ NPDES permits. The 2015 rule required each plant to comply between 2018 and 2023 depending on when it needed a new or revised NPDES permit.

The Steam Electric ELG rule was challenged in the U.S. Court of Appeals for the Fifth Circuit by numerous parties. In 2017, EPA signed a notice indicating its intent to reconsider portions of the rule, and the Fifth Circuit issued an order severing the issues under reconsideration and holding the case in abeyance as to those issues. However, the court allowed challenges to other portions of the rule to proceed. In 2019, the Fifth Circuit granted those challenges and issued an opinion vacating several portions of the rule, specifically those related to legacy wastewater and leachate, for which the court deemed the standards selected by EPA arbitrary and capricious.

In 2017, EPA published a final rule for postponement of certain compliance dates. The rule postponed the earliest date on which compliance with the ELG for these waste streams would be required from November 1, 2018 until November 1, 2020. In 2019, EPA published a proposed rule revising the original ELG while maintaining the compliance dates. In 2020, EPA published in the Federal Register the final Steam Electric ELG and Standards for the Steam Electric Power Generating Point Source Category, revising the final 2015 guidelines for both flue gas desulfurization wastewater and bottom ash transport water. The 2020 rule required compliance with new limits as soon as possible on or after October 13, 2021, but no later than December 31, 2025.

In 2021, EPA published notice that it would undertake a supplemental rulemaking to revise the ELG after completing its review of the rules reconsidered in 2020. As part of this process, EPA committed to determine whether more stringent limitations and standards would be appropriate. On March 29, 2023, EPA published the proposed ELG Rule in the Federal Register. The proposed rule included stricter limitations for wastewater discharges for coal-fired facilities, but allowed for flexibilities for those coal-powered facilities that would soon decommission or repower. With this proposed rule EPA extended the date of decommissioning or repowering from December 31, 2028, to December 31, 2032.

On May 9, 2024, EPA published a final rule to further revise the ELG. This final supplemental rule updated the technology-based limitations applicable to flue gas desulfurization wastewater, bottom ash transport water, and legacy wastewater at existing sources, as well as combustion residual leachate at new and existing sources. The 2024 rule was challenged in the U.S. Court of Appeals for the Eighth Circuit, but the court denied motions for a stay, so the rule remains in effect. On March 12, 2025, EPA announced it would reconsider the ELGs for the steam electric power generating industry.

Reeves Station discharges cooling tower blowdown to a publicly owned treatment plant and no longer holds an NPDES permit; therefore, it is expected that no ELG requirements will be imposed.

See “Cooling Water Intake Structures” above for additional discussion of Four Corners’ current NPDES permit. Four Corners may be required to change equipment and operating practices affecting boilers and ash handling systems, as well as change its waste disposal techniques during the next NPDES permit renewal. PNM is unable to predict the outcome of these matters or a range of the potential costs of compliance.

Santa Fe Generating Station

PNM and NMED are parties to agreements under which PNM has installed a remediation system to treat water from a City of Santa Fe municipal supply well and an extraction well to address gasoline contamination in the groundwater at the site of PNM’s former Santa Fe Generating Station and service center. A 2008 NMED site inspection report states that neither the source nor extent of contamination at the site has been determined and that the source may not be the former Santa Fe Generating Station. During 2013 and 2014, PNM and NMED collected additional samples that showed elevated concentrations of nitrate and volatile organic compounds in some of the monitoring wells at the site. In addition, one monitoring well contained free-phase hydrocarbon products. PNM collected a sample of the product for “fingerprint” analysis. The results of this analysis indicated the product was a mixture of older and newer fuels. The presence of newer fuels in the sample suggests the hydrocarbon product likely originated from off-site sources. In 2015, PNM and NMED entered into a memorandum of understanding to address changing groundwater conditions at the site under which PNM agreed to continue hydrocarbon investigation under the supervision of NMED. Qualified costs are eligible for payment through the New Mexico Corrective

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Action Fund (“CAF”), which is administered by the NMED Petroleum Storage Tank Bureau. In 2019, PNM received notice from NMED that an abatement plan for the site is required to address concentrations of previously identified compounds, unrelated to those discussed above, found in the groundwater. NMED approved PNM’s abatement plan proposal, which covers field work and reporting.

Field work related to the investigation under both the CAF and abatement plan requirements was completed and activities and findings associated with the field work were presented in two separate reports and released to stakeholders in early 2020. Subsequent field work was completed in July 2020 and two reports were released supporting PNM’s contention that off-site sources have impacted, and are continuing to impact, the local groundwater in the vicinity of the former Santa Fe Generating Station.

In 2021, NMED approved both the field work plans required for site characterization and associated work activities which were completed by the end of 2022 and a report was submitted to NMED in 2023. Groundwater sampling for the abatement plan’s first semiannual work was completed in 2023, and the associated report was completed and submitted to NMED. In addition, the work plan for the 2023 CAF work was completed and submitted to NMED in July 2023. NMED approved this work plan in December 2023. The activities from the work plan include the installation of three monitoring wells which were completed in December 2024. A report summarizing the well installation is under preparation. Site wide sampling will take place in 2025, with reports provided to NMED.

The City of Santa Fe has stopped operating its well at the site, which is needed for PNM’s groundwater remediation system to operate. As a result, PNM has stopped performing remediation activities at the site. However, PNM’s monitoring and other abatement activities at the site are ongoing and will continue until the groundwater meets applicable federal and state standards or until NMED determines that remediation is not required, whichever is earlier. PNM is not able to assess the duration of this project or estimate the impact on its obligations if PNM is required to resume groundwater remediation activities at the site. PNM is unable to predict the outcome of these matters.

Coal Combustion Residuals Waste Disposal

CCRs consisting of fly ash, bottom ash, and gypsum generated from coal combustion and emission control equipment at SJGS have been disposed of in the surface mine pits adjacent to the plant. SJGS does not operate any onsite CCR impoundments or landfills. The NMMMD currently regulates mine reclamation activities at the San Juan mine, including placement of CCRs in the surface mine pits, with federal oversight by the OSM. APS disposes of CCRs in onsite ponds and dry storage areas at Four Corners. Ash management at Four Corners is regulated by EPA and the New Mexico State Engineer’s Office.

EPA’s 2015 coal ash rule included a non-hazardous waste determination for coal ash and sets minimum criteria for existing and new CCR landfills and surface impoundments. In 2016, the Water Infrastructure Improvements for the Nation Act (the “WIIN Act”) was signed into law to address critical water infrastructure needs in the U.S. and contained a number of provisions related to CCRs. Among other things, the WIIN Act allowed, but did not require, states to develop and submit CCR permit programs for EPA approval, provided flexibility for states to incorporate EPA’s 2015 rule for CCRs or develop other criteria that are at least as protective as EPA’s rule, and required EPA to approve state permit programs within 180 days of submission by the state. Because states are not required to implement their own CCR permit programs, EPA was required to develop a federal permit program in states that chose not to implement a program, subject to congressional funding. Until state or federal permit programs are in effect, the 2015 rule continues to be self-implementing in nature, subject to enforcement by EPA or citizen groups. For facilities located within the boundaries of Native American reservations, such as the Navajo Nation where Four Corners is located, EPA is required to develop a federal permit program regardless of appropriated funds.

In 2018, EPA published a rule that constitutes “Phase One, Part One” of its ongoing reconsideration and revision of the 2015 CCR rule. The final Phase One, Part One rule extended the deadline to allow EGUs with unlined impoundments or that fail to meet the uppermost aquifer requirement to continue to receive coal ash until October 31, 2020, which was again extended by subsequent amendments. The rule also authorized a “Participating State Director” or EPA to approve suspension of groundwater monitoring requirements and to issue certifications related to the location restrictions, design criteria, groundwater monitoring, remedy selection and implementation. The rule also modified groundwater protection standards for certain constituents, which include cobalt, molybdenum, lithium, and lead without a maximum contamination level.

In 2019, EPA published a second round of proposed revisions, which are commonly referred to as the “Phase Two” revisions, to address reporting and accessibility to public information, “CCR piles” and “beneficial use” definitions, and the

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requirements for management of CCR piles. EPA reopened and extended the Phase Two comment period several times. To date, EPA has not yet finalized provisions in Phase Two related to beneficial use of CCR and CCR piles.

Since its Phase Two proposal, EPA has finalized three other rules addressing various CCR rule provisions. In 2020, EPA promulgated its proposed Holistic Approach to Closure Part A (“Part A”), which proposed a new deadline of August 31, 2020, for companies to initiate closure of unlined CCR impoundments. In accordance with the DC Circuit’s vacatur of portions of the 2015 CCR Rule, Part A also changed the classification of compacted soil-lined or clay-lined surface impoundments from “lined” to “unlined”, triggering closure or retrofit requirements for those impoundments. In addition, Part A delineated a process for owners/operators to submit requests for alternative closure deadlines based on lack of alternate disposal capacity and gave operators of unlined impoundments until April 11, 2021 to cease receipt of waste at these units and initiate closure.

EPA also issued the Holistic Approach to Closure Part B (“Part B”) in 2020, which delineated the process for owners/operators to submit alternate liner demonstrations for clay-lined surface impoundments that could otherwise meet applicable requirements. This rule did not include beneficial use of CCR for closure, which EPA explained would be addressed in subsequent rulemaking actions. On May 18, 2023, EPA published a proposed rule on the regulatory requirements for inactive surface impoundments at inactive facilities and a new category of regulated unit called a CCR management unit (“CCRMU”), including groundwater monitoring, corrective action, closure, and post-closure care requirements for all CCR management units (regardless of how or when that CCR was placed), and several technical corrections to the existing regulations. Comments on the proposed rule were due July 17, 2023.

On May 8, 2024, EPA published a final rule that extended federal CCR regulatory requirements to (1) inactive CCR surface impoundments at inactive utilities and (2) CCRMU (Legacy Rule), including CCR impoundments and landfills that closed prior to the effective date of the 2015 CCR rule, inactive CCR landfills, and other areas where CCR was managed directly on the land. The rule became effective on November 8, 2024. EPA included deferral options for smaller CCRMU containing between one and 1,000 tons of CCR, CCRMU located beneath critical infrastructure or large buildings or structures vital to the continuation of current site activities, and CCRMU that closed prior to the effective date of the new rule (subject to certain eligibility conditions). EPA also codified the controversial definitions of infiltration and liquids that were litigated in the DC Circuit. Six petitions for review of the Legacy Rule were filed and were consolidated into one case by the DC Circuit. The Utility Solid Waste Activities Group, of which TXNM is a member, is a petitioner jointly with the National Rural Electric Cooperative Association, and American Public Power Association. The U.S. Supreme Court denied a requested stay of the rule by East Kentucky Power Cooperative. The DC Circuit has agreed to hold the case in abeyance until August 11, 2025. On July 17, 2025, EPA announced a direct final rule and companion proposal revising the compliance deadlines for CCRMU requirements under the Legacy Rule.

As of the effective date of the rule, one CCRMU was identified at SJGS. SJGS is required, at a minimum, to conduct a two-part evaluation of historic and current CCRMUs with reporting due dates of February 9, 2026, and February 8, 2027 (or not later than February 8, 2027 for both under EPA’s most recent regulatory actions), with each report posted to a company website by the due date.

At this time, PNM is still evaluating the financial impacts of this final regulation for Four Corners. Initial CCRMU site surveys and final site investigation reports expected to be finalized by February 2027. Based on the information available to the Company at this time, PNM cannot reasonably estimate the fair value of the entire CCRMU ARO. PNM cannot predict the outcome of the CCRMU site evaluations and investigations, or how these outcomes might affect the associated costs, which might have a material impact on PNM’s operations, financial position, or cash flows.

In 2020, EPA published a proposed rule establishing a federal permitting program for the handling of CCR within the boundaries of Native American reservations and in states without their own federally authorized state programs. Permits for units within the boundaries of Native American reservations would be due 18 months after the effective date of the rule. EPA projected finalizing the rule in October 2024 but still has not submitted a final version to the Office of Management and Budget (“OMB”). Given the change in administration, it is not clear whether or when EPA will finalize the rule. EPA has coordinated with the affected permits for the three facilities with CCR disposal units located on Native American lands. PNM cannot predict the outcome of EPA’s rulemaking activity or the outcome of any related litigation, and whether or how such a ruling would affect operations at Four Corners.

EPA’s CCR rule does not cover mine placement of coal ash. In the preamble to its 2015 rule, EPA explained that the OSM and, as necessary, EPA would address the management of CCR in mine fills in a separate regulatory action, recognizing OSM’s expertise in this area. EPA’s decision to defer to OSM was based on a recommendation from the National Academy of

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Sciences (“NAS”), which was commissioned by Congress in 2006 to investigate the health, safety and environmental risks associated with the use of CCR for mine reclamation. The NRC report recommended that enforceable federal standards be established for the disposal of CCR in mine fills to ensure that states have specific authority and that states implement adequate safeguards. In 2007, OSM published an advance notice of proposed rulemaking on the placement of CCR at mine sites. In that notice, OSM explained its intent to develop the proposed regulations based on its existing authority under the Surface Mining Control and Reclamation Act. Since 2007, however, OSM has not taken any further action to advance this rulemaking. PNM cannot predict the outcome of OSM’s proposed rulemaking regarding CCR regulation, including mine placement of CCRs, or whether OSM’s actions will have a material impact on PNM’s operations, financial position, or cash flows.

As noted above, SJGS does not operate any onsite CCR impoundments or landfills that are regulated under the 2015 CCR rule, and as of November 8, 2024, identified only one CCRMU that would be regulated under the Legacy Rule. That CCRMU has since been removed from that unit and PNM will conduct the requisite site investigation reports. PNM would seek recovery from its retail customers of all CCR costs for jurisdictional assets that are ultimately incurred.

Utilities that own or operate CCR disposal units, such as those at Four Corners, as indicated above, were required to collect sufficient groundwater sampling data to initiate a detection monitoring program. Four Corners completed the analysis for its CCR disposal units, which identified several units that needed corrective action or needed to cease operations and initiate closure by April 11, 2021. Work is ongoing. Four Corners continues to gather additional groundwater data and perform remedial evaluations and activities. At this time, PNM does not anticipate its share of the cost to complete these corrective actions to close the CCR disposal units, or to gather and perform remedial evaluations on groundwater at Four Corners, will have a significant impact on its operations, financial position, or cash flows.

Other Commitments and Contingencies

Coal Supply

Four Corners

APS purchases all of Four Corners’ coal requirements from NTEC, an entity owned by the Navajo Nation, under the Four Corners CSA that expires in 2031. The coal comes from reserves located within the Navajo Nation. The contract provides for pricing adjustments over its term based on economic indices and certain minimum payments that may be required if no deliveries of coal are taken. PNM’s share of the coal costs is being recovered through the FPPAC. See additional discussion of the Four Corners CSA in Note 17 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Coal Mine Reclamation

As indicated under Coal Combustion Residuals Waste Disposal above, SJGS disposed of CCRs in the surface mine pits adjacent to the plant and Four Corners disposes of CCRs in ponds and dry storage areas.

PNM and the other SJGS owners are obligated to compensate WSJ LLC for all reclamation costs associated with the supply of coal from the San Juan mine. PNM and Westmoreland have entered into an agreement under which mine reclamation services for SJGS would be provided. A mine reclamation cost study was completed in the first quarter of 2024 and PNM remeasured its liability, which resulted in an increase in overall reclamation costs of $20.9 million, due primarily to higher inflationary factors. As a result, PNM recorded the increase in the liability related to the underground mine of $17.0 million as a regulatory asset on the Condensed Consolidated Balance Sheets. Due to the NMPRC cap on the amount that can be collected from retail customers for final reclamation of the surface mines at $100.0 million, PNM was required to record $4.0 million of the increase related to the surface mine liability plus an additional $0.5 million, related to other costs, as a regulatory disallowance on the Condensed Consolidated Statements of Earnings for the six months ended June 30, 2024.

PNM’s estimate of the costs necessary to reclaim the mine that serves SJGS is subject to many assumptions, including the timing of reclamation, generally accepted practices at the time reclamation activities occur, and current inflation and discount rates. PNM cannot predict the ultimate cost to reclaim the mine that serves SJGS and would seek to recover all costs related to reclaiming the underground mine from its customers but could be exposed to additional loss related to surface mine reclamation. In connection with certain mining permits relating to the operation of the San Juan mine, Westmoreland was required to post reclamation bonds of $118.7 million with the NMMMD. In order to facilitate the posting of reclamation bonds by sureties on behalf of Westmoreland, TXNM entered into the WFB LOC Facility under which letters of credit aggregating $30.3 million have been issued.

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A coal mine reclamation study for the surface mine that serves Four Corners was completed in December 2024. The study reflected operation of the mine through 2031, the term of the Four Corners CSA. PNM remeasured its liability, which resulted in a decrease in overall reclamation costs of $1.6 million, due primarily to lower overhead costs, contractor management costs, and taxes and royalties. Due to the NMPRC cap on the amount that can be collected from retail customers for final reclamation of the surface mines at $100.0 million, PNM recorded the decrease related to the surface mine liability as a regulatory disallowance on the Consolidated Statements of Earnings for the year ended December 31, 2024.

Based on the most recent estimates, PNM’s remaining payments as of June 30, 2025 for mine reclamation, in future dollars, are estimated to be $41.1 million for the surface mines at both SJGS and Four Corners and $62.7 million for the underground mine at SJGS. At June 30, 2025 and December 31, 2024, liabilities, in current dollars, of $29.6 million and $38.3 million for surface mine reclamation and $54.1 million and $52.9 million for underground mine reclamation were recorded in other deferred credits.

The SJGS owners are parties to a reclamation trust funds agreement to provide financial assurance for post-term coal mine reclamation obligations. The trust funds agreement requires each owner to enter into an individual trust agreement with a financial institution as trustee, create an irrevocable reclamation trust, and meet year-end funding targets set by funding curves that are approved by the SJGS ownership. PNM began using its mine reclamation trust to pay for final mine reclamation costs in April 2023. Because the trust agreement requires meeting specific funding targets at year end, it may be necessary for PNM to make additional contributions to meet those targets. PNM funded $27.3 million in 2024. Based on PNM’s reclamation trust fund balance at June 30, 2025, current forecasts, and current funding curve targets, PNM anticipates contributing $1.6 million in 2025, $1.0 million in 2026, and $0.4 million in 2027.

Under the Four Corners CSA, PNM is required to fund its share of estimated final reclamation costs in annual installments into an irrevocable escrow account solely dedicated to the final reclamation cost of the surface mine at Four Corners. PNM contributed $3.2 million in 2024 and anticipates providing additional funding of $0.5 million per year for 2025, 2026 and 2027.

PNM recovers from retail customers reclamation costs associated with the underground mine. However, the NMPRC capped the amount collected from retail customers for final reclamation of the surface mines at $100.0 million for both SJGS and Four Corners. If future estimates increase the liability for surface mine reclamation, the excess would be expensed at that time. The impacts of changes in New Mexico state law as a result of the enactment of the ETA and regulatory determinations made by the NMPRC may also affect PNM’s financial position, results of operations, and cash flows. PNM is currently unable to determine the outcome of these matters or the range of possible impacts.

SJGS Decommissioning

On November 9, 2021, the San Juan County Commission approved the Coal-Fired Electricity Generating Facility Demolition and Remediation Ordinance (“Ordinance 121”), requiring the full demolition of SJGS upon its complete and permanent closure. Ordinance 121 required the SJGS owners to submit a proposed demolition and remediation plan no later than three months after SJGS was retired. The SJGS owners submitted the decommissioning and remediation plan on December 28, 2022. In connection with restructuring of the SJGS ownership on December 31, 2017, PNM and the other SJGS owners entered into the San Juan Decommissioning and Trust Funds Agreement, which requires PNM to fund its ownership share of final decommissioning costs into an irrevocable trust. Under the agreement, PNM made an initial funding of $14.7 million in December 2022 and made an additional contribution of $7.0 million in 2024. The amount and timing of additional trust funding is subject to revised decommissioning cost studies and agreement among the SJGS owners. PNM began using its decommissioning trust to pay for demolition and decommissioning costs in October 2023. PNM has posted a surety bond in the amount of $46.0 million in connection with certain environmental decommissioning obligations and must maintain the bond or other financial assurance until those obligations are satisfied. The surety bond only represents a liability if the SJGS owners fail to deliver on its contractual liability.

PNM records its share of the SJGS decommissioning obligation as an ARO on its Condensed Consolidated Balance Sheets. Studies on the decommissioning costs of SJGS are performed periodically and revisions to the ARO liability are recorded. In the third quarter of 2022, a new decommissioning cost study was completed, which required PNM to remeasure its SJGS decommissioning ARO. The new study resulted in an estimated decrease to PNM’s share of the decommissioning obligation of $21.1 million, which was recorded in September 2022.

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On July 29 2025, PNM received a letter from the NMED indicating that the NMED designated PNM as a responsible party and requiring a Stage 1 Abatement Plan (“S1AP”) proposal for SJGS for groundwater and soil contamination associated with former operations at SJGS. NMED has requested PNM to submit the S1AP within 60 days of July 29, 2025. PNM is currently assessing the letter and its response.

PVNGS Liability and Insurance Matters

Public liability for incidents at nuclear power plants is governed by the Price-Anderson Nuclear Industries Indemnity Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both commercial sources and an industry-wide retrospective payment plan. The insurance limit is subject to an adjustment every five years based upon the aggregate percentage change in the Consumer Price Index. The most recent adjustment took effect on January 1, 2024. As of that date, in accordance with this act, the PVNGS participants are insured against public liability exposure for a nuclear incident up to $16.3 billion per occurrence. PVNGS maintains the maximum available nuclear liability insurance in the amount of $500 million, which is provided by American Nuclear Insurers. The remaining $15.8 billion is provided through a mandatory industry-wide retrospective assessment program. If losses at any nuclear power plant covered by the program exceed the accumulated funds, PNM could be assessed retrospective premium adjustments. The maximum retrospective premium per reactor under the program for each nuclear liability incident is $165.9 million, subject to a maximum annual premium of $24.7 million per incident. Based on PNM’s ownership interest in the three units, PNM’s maximum retrospective premium per incident for all three units is $36.3 million, with a maximum annual payment limitation of $5.4 million, to be adjusted periodically for inflation.

The PVNGS participants maintain insurance for damage to, and decontamination of, property at PVNGS in the aggregate amount of $2.8 billion, a substantial portion of which must first be applied to stabilization and decontamination. These coverages are provided by Nuclear Electric Insurance Limited (“NEIL”). The primary policy offered by NEIL contains a sublimit of $2.25 billion for non-nuclear property damage. If NEIL’s losses in any policy year exceed accumulated funds, PNM is subject to retrospective premium adjustments of $5.3 million. The insurance coverages discussed in this and the previous paragraph are subject to certain policy conditions, sublimits, and exclusions.

(12) Regulatory and Rate Matters

The Company is involved in various regulatory matters, some of which contain contingencies that are subject to the same uncertainties as those described in Note 11. Additional information concerning regulatory and rate matters is contained in Note 17 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

PNM

New Mexico General Rate Case

2025 Rate Request

On June 14, 2024, PNM filed an application with the NMPRC for a general increase in retail electric rates. The proposed base rate changes would be implemented in two phases, with the first phase effective July 1, 2025 and the second phase effective January 1, 2026. Key aspects of PNM’s request include:

•Recovery on total rate base of $3.0 billion, based on a FTY with the 12 months ending June 30, 2026

•An increase of $174.3 million in retail revenues, comprised of a $92.2 million increase in base rates and a $82.1 million increase in revenues collected under PNM’s FPPAC

•Drivers of revenue deficiency:

◦Needed investments across distribution, transmission, and generation facilities to ensure safe, reliable delivery of electricity

◦Increased operations and maintenance expenses to meet operational needs, including wildfire risk mitigation

◦Costs associated with ESAs, previously approved by the NMPRC, necessary to serve our customers

◦ROE of 10.45%

◦Proposed capital structure of 52.5% equity

◦An increased cost of borrowing

◦Adjustments to Four Corners depreciation rates to recover remaining plant investments through July 2031, the expected abandonment date of the facility

•Proposed ratemaking treatment of ESAs to be recovered through PNM’s FPPAC beginning July 1, 2025

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

On November 26, 2024, PNM filed an unopposed comprehensive stipulation with the NMPRC. Key components agreed upon by the signatories are as follows:

•Overall revenue requirement increase of $105.0 million with the first phase effective July 1, 2025 and the second phase effective April 1, 2026

•ROE of 9.45%

•Capital structure of 51.0% equity

•Maintain currently approved depreciation rates for Four Corners as established in PNM’s 2024 Rate Change and PNM’s NM 2015 Rate Case

•Modification of PNM’s current amortization period through December 31, 2028 on the unprotected Excess Deferred Federal Income Taxes (“EDFIT”) regulatory liability to reflect amortization of remaining unprotected EDFIT through December 31, 2027

•Costs associated with ESAs shall be recovered through base rates

◦PNM will establish a regulatory asset or regulatory liability for the difference in actual ESA costs compared to the forecasted $82.1 million included in base rates in the test period and thereafter until new rates are effective from PNM’s next general rate case filing. The regulatory asset or regulatory liability will be subject to NMPRC approval in PNM’s next rate case

•PNM will establish a regulatory liability associated with investment tax credits for the Sandia energy storage system as proposed in its application

•PNM will establish a regulatory liability equal to the return on legacy meters currently included in rates, as the legacy meters are retired during PNM’s deployment of its approved Grid Modernization Plan

•PNM will make a one-time shareholder contribution of $1.5 million to the Good Neighbor Fund

A hearing was held on February 17 and 18, 2025. On April 8, 2025, the hearing examiners issued a certification of stipulation recommending approval of the unopposed stipulation and on May 15, 2025, the NMPRC issued a final order adopting the unopposed stipulation. This matter is now concluded.

2024 Rate Change

In December 2022, PNM filed an application with the NMPRC for a general increase in retail electric rates. On January 3, 2024, the NMPRC issued a final order authorizing PNM to implement an increase in non-fuel base rates of $15.3 million, effective for service beginning January 15, 2024. The final order included an ROE of 9.26% and a capital structure of 49.61% equity, 50.10% debt, and 0.29% preferred stock. As a result of the final order, PNM recorded a regulatory disallowance of $55.5 million and a corresponding reduction to Utility Plant in the year ended December 31, 2023, after accounting for previous impairments, to reflect the remedy adopted in the Final Order for Four Corners. In addition, PNM had recorded a reduction to electric operating revenues of $38.4 million with a corresponding increase to current regulatory liability of $19.2 million and deferred regulatory liability of $19.2 million for the PVNGS rate refunds that are being returned to customers over a two-year period ending March 2026. PNM had also recorded a regulatory disallowance of $8.2 million and a corresponding reduction to Utility Plant for the disallowance of construction work in progress (“CWIP”) from PVNGS.

In March 2024, notice of appeals were separately filed with the NM Supreme Court by NEE and PNM, and a joint notice of appeal was filed by the NM Department of Justice, Bernalillo County, and Albuquerque Bernalillo County Water Utility Authority (“ABCWUA”). NEE’s appeal was subsequently consolidated with the joint notice of appeal. In the statements of issues submitted in the parties’ appellate dockets, PNM took issue with the NMPRC’s ruling on capital structure; other appellants primarily challenged the NMPRC rulings related to Four Corners and Palo Verde cost recovery. On June 20, 2025, PNM filed an uncontested motion to dismiss its appeal. PNM cannot predict the outcome of this matter.

Renewable Energy Portfolio Standard

As discussed in Note 11, the ETA amends the REA including removal of diversity requirements and certain customer caps and exemptions relating to the application of the RPS under the REA. The REA provides for streamlined proceedings for approval of utilities’ renewable energy procurement plans, assures that utilities recover costs incurred consistent with approved procurement plans, and requires the NMPRC to establish a Reasonable Cost Threshold (“RCT”) for the procurement of renewable resources to prevent excessive costs being added to rates. The ETA sets a RCT of $60 per MWh, adjusted for inflation, using an average annual levelized resource cost basis. PNM makes renewable procurements consistent with the NMPRC approved plans and recovers certain renewable procurement costs from customers through the renewable energy rider billed on a KWh basis.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Included in PNM’s approved procurement plans are the following renewable energy resources:

•158 MW of PNM-owned solar-PV facilities

•A PPA through 2044 for the output of New Mexico Wind, having a current aggregate capacity of 200 MW, and a PPA through 2035 for the output of Red Mesa Wind, having an aggregate capacity of 102 MW

•A PPA through 2040 for 140 MW of output from La Joya Wind II

•A PPA through 2042 for the output of the Lightning Dock Geothermal facility with a capacity of 11 MW

•Solar distributed generation, aggregating 320.5 MW at June 30, 2025, owned by customers or third parties from whom PNM purchases any net excess output and RECs

The NMPRC has authorized PNM to recover certain renewable procurement costs through a rate rider billed on a per KWh basis. In its 2025 renewable energy procurement plan, which became effective on January 1, 2025, PNM proposed to collect $58.7 million for the year. PNM recorded revenues from the rider of $14.6 million and $31.6 million in the three and six months ended June 30, 2025 and $15.3 million and $30.6 million in the three and six months ended June 30, 2024.

Under the renewable rider, if PNM’s earned rate of return on jurisdictional equity in a calendar year, adjusted for items not representative of normal operations, exceeds the NMPRC-approved rate by 0.5%, PNM is required to refund the excess to customers during May through December of the following year. PNM did not exceed such limitation in 2024. On May 30, 2025, PNM filed its application for its 2026 renewable energy procurement plan, requesting to collect $54.3 million for the year.

Energy Efficiency and Load Management

Program Costs and Incentives/Disincentives

The EUEA requires public utilities to achieve specified levels of energy savings and to obtain NMPRC approval to implement energy efficiency and load management programs. The EUEA requires the NMPRC to remove utility disincentives to implementing energy efficiency and load management programs and to provide incentives for such programs. The NMPRC has adopted a rule to implement this act. PNM’s costs to implement approved programs and incentives are recovered through a rate rider. During the 2019 New Mexico legislative session, the EUEA was amended to, among other things, include a decoupling mechanism for disincentives, preclude a reduction to a utility’s ROE based on approval of disincentive or incentive mechanisms, establish energy savings targets for the period 2021 through 2025, and require that annual program funding be 3% to 5% of an electric utility’s annual customer bills excluding gross receipt taxes, franchise and right-of-way access fees, provided that a customer’s annual cost does not exceed seventy-five thousand dollars.

In 2023, PNM filed an application for energy efficiency and load management programs to be offered in 2024, 2025, and 2026 (the “2024 Plan”). The 2024 Plan proposed to continue ten existing energy efficiency programs with modification and a total annual budget of $34.5 million in 2024, $35.4 million in 2025, and $36.5 million in 2026. The application also sought approval of an annual base incentive of 7.1% of the portfolio budget and a sliding scale that provides additional incentive for additional energy saved as a percentage of program cost, up to the maximum allowed by the energy efficiency rule which for PNM is 8.82%. On January 26, 2024, the hearing examiners in the case issued a RD. The RD largely approved PNM’s 2024 Plan but with modifications that include the pursuit of demand response resources, additional analysis in future filings, adjustments to certain energy efficiency programs, and modification of the incentive sliding scale cap to reflect a new maximum. On March 7, 2024, the NMPRC approved the RD in its entirety.

Integrated Resource Plans

NMPRC rules require that investor-owned utilities file an IRP every three years and is required to cover a 20-year planning period and contain an action plan covering the first three years of that period. The IRP establishes a collaborative facilitated process for a utility and stakeholders to agree on a statement of need for potential new or additional resources, as well as an action plan to guide procurement or development of resources to meet the stated need. A most-cost-effective portfolio of resources shall be derived from the statement of need analysis. The statement of need and action plan must be accepted before the utility begins the resource solicitation process pursuant to the IRP Rule. Following acceptance of the statement of need and action plan, a utility will provide the NMPRC and intervenors drafts of the RFP and a timeline for issuing, receiving, evaluating, and ranking bids. The NMPRC will then appoint an Independent Monitor (“IM”) to oversee the RFP process, which allows for parties and the IM to comment on the RFP consistency with the IRP, after which the utility issues the RFP. Within 120 days of receiving bids the utility shall provide the IM with results including pricing and non-price

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

evaluation criteria, ranking of bids, chosen portfolio and alternatives that also meet the needs; the IM then rules on the fairness of the RFP execution. Acceptance of the statement of need and action plan will not constitute a finding of prudency or pre-approval of costs associated with the additional resources. Following the RFP and IM processes, the utility may apply for approvals, and any costs incurred to implement the action plan will be considered in a general rate case and/or resource acquisition proceeding.

2023 IRP

On December 15, 2023, PNM filed its 2023 IRP with a continued focus on a carbon-free energy system by 2040. The plan highlights the need for the significant sustained addition of resources over the next two decades, replacing retiring or expiring capacity, meeting concurrent load growth, while reducing the carbon intensity of PNM’s portfolio. On April 4, 2024, the NMPRC accepted PNM’s 2023 IRP.

On December 30, 2024, PNM issued its 2029-2032 RFP for at least 900 MW of new energy resources to come online between 2029 and 2032, with at least 500 MW needed by 2030. The RFP is consistent with the needs identified in PNM’s 2023 IRP, which identified a range of 900 to 2,900 MW of new capacity needed by 2032, depending on the type of resources selected. The 2029-2032 RFP is anticipated to identify potential replacement resources for PNM’s current natural gas generation capacity as well as PNM’s ownership interest in Four Corners.

2028 Resource Application

On November 22, 2024, PNM filed an application with the NMPRC seeking approval of ESAs, a PPA, and a CCN for system resources in 2028 to be available to meet summer 2028 customer needs. PNM’s request includes:

•Two 150 MW ESAs

•A 167 MW PPA for the Valencia power plant through 2039

•A CCN for a 100 MW solar facility and a 30 MW battery to be PNM-owned and located in San Juan County. The request provides the opportunity to increase the 30 MW battery by an additional 20 MW

On March 12, 2025, PNM and intervening parties filed an unopposed comprehensive stipulation with the NMPRC. The stipulation supports approval of PNM’s application, including the proposed option to increase the 30 MW battery by an additional 20 MW. On May 6, 2025, the hearing examiners issued a certification of stipulation recommending approval of the unopposed stipulation and on June 26, 2025, the NMPRC approved the unopposed stipulation. This matter is now concluded.

Grid Modernization Plan

In October 2022, in compliance with New Mexico Grid Modernization Statute, PNM filed its Grid Modernization Plan with the NMPRC. The projects included in the application improve customers’ ability to customize their use of energy and ensure that customers, including low-income customers, are a top priority and will benefit consistent with the Grid Modernization Statute. PNM’s proposal to modernize its electricity grid through infrastructure and technology improvements also increases the efficiency, reliability, resilience, and security of PNM’s electric system. PNM’s application included grid modernization investments of approximately $344 million for the first six years of a broader 11-year strategy. The approved rate rider will recover capital costs, operating expenses, and taxes associated with the investments included in the plan. On October 17, 2024, the NMPRC issued a final order which largely approved PNM’s application with minor modifications.

On June 20, 2025, PNM filed its first annual Grid Modernization Plan review to provide updates on year one implementation progress and outline planned activities for year two, in alignment with regulatory expectations. Additionally, PNM has updated key portions of the forecasted strategy including increasing investments from approximately $344 million to $367 million in the first six years, while decreasing projected operations and maintenance costs by approximately 18%.

Transportation and Electrification Program (TEP)

On June 1, 2023, PNM filed its 2024-2026 TEP with the NMPRC, requesting approval of a $37.1 million total three-year budget and continuation of the current TEP Rider. Approximately 22% of the budget, $8.0 million, will be dedicated to low-income customers. On February 2, 2024, the hearing examiners in the case issued a RD largely approving PNM’s 2024-2026 TEP but with certain modifications. On February 23, 2024, the NMPRC approved the RD with modifications that reduced the three-year budget by $4.0 million, for a total revised budget of $32.9 million. The TEP rider became effective on April 26, 2024.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Meta Platforms Inc. Data Center - Phase IV

PNM has a special service contract to provide service to Meta for a data center in PNM’s service area. Meta’s service requirements include the acquisition by PNM of a sufficient amount of new renewable energy resources and RECs to match the energy and capacity requirements of the data center. The cost of renewable energy procured is passed through to Meta under a rate rider. A special service rate is applied to Meta’s energy consumption in those hours of the month when their consumption exceeds the energy production from the renewable resources.

On June 13, 2025, PNM filed an application with the NMPRC for an amended special service contract, PPAs, ESAs, special service rate, and an amended rate rider to service a new phase of the data center, the Greater Kudo, LLC Data Center. This amended special service contract requests:

•three 20-year solar PPAs totaling 290 MW

•three 20-year ESAs totaling 268 MW of storage

•a third revised and restated special service contract with Greater Kudo, LLC Data Center; and

•updates to the special service rate - Renewable Energy Resources, the Green Energy Rider, and the Production Cost Allocation Rider.

On July 3, 2025 a procedural order was issued, with a hearing scheduled for October 27, 2025. PNM is unable to predict the outcome of this matter.

TNMP

On June 20, 2025, Texas House Bill 5247 (“HB 5247”) was signed into law by Governor Gregg Abbott. HB 5247, which took effect immediately, added Section 36.216 to the Public Regulatory Act (“PURA 36.216”), authorizing certain electric utilities with total capital expenditures that exceeded 300 percent of annual depreciation in a calendar year, to elect, in the following calendar year, to file a single, annual proceeding to adjust nonfuel rates on a system-wide basis to reflect changes in transmission and distribution rates previously authorized under certain other interim rate mechanisms. A utility seeking to make this election under PURA 36.216 is required to file a notice with the PUCT informing them of its intent and provide supporting documentation of the applicable capital expenditures at least 60 days before filing the single, annual proceeding and correspondingly must notify the PUCT if the utility determines that it no longer qualifies for continued use of the election. Management has evaluated the application of HB 5247 and PURA 36.216 and determined that TNMP qualifies as the type of electric utility that would be eligible for the election. Currently, TNMP expects to make its first comprehensive filing under Section 36.216 in 2026 with a view towards recovering costs associated with eligible transmission and distribution investments that were placed into service after December 31, 2024 and that are not currently reflected in rates. In the interim, TNMP plans to immediately begin to recognize a regulatory asset for depreciation associated with eligible capital investments placed into service after December 31, 2024. At June 30, 2025 the regulatory asset associated with these costs totals $0.6 million.

Sales and Use Tax Refund

On March 12, 2025, TNMP filed a refund claim with the Texas Comptroller’s office for overpaid sales and use taxes primarily related to asset purchases. The $33.6 million refund request covers periods from January 2022 to October 2024. Although the Company is unable to predict the outcome of the refund claim, the bulk of any refund amounts received, net of consultant fees, are expected to be applied to 2025 TNMP capital projects.

Transmission Cost of Service Rates

TNMP can update its TCOS rates twice per year to reflect changes in its invested capital although updates are not allowed while a general rate case is in process. Updated rates reflect the addition and retirement of transmission facilities, including appropriate depreciation, federal income tax and other associated taxes, and the approved rate of return on such facilities.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following sets forth TNMP’s recent interim transmission cost rate increases:


Effective Date	Approved Increase in Rate Base		Annual Increase in Revenue
	(In millions)


















September 6, 2023	$	21.4	$	4.2
March 15, 2024	97.4		13.1
September 20, 2024	20.6		3.9
March 25, 2025	83.5		11.5

On July 24. 2025, TNMP filed an application to further update its transmission rates to reflect an increase in total rate base of $87.4 million, which would increase revenues by $12.3 million annually. The application is pending before the PUCT.

Periodic Distribution Rate Adjustment

PUCT rules permit interim rate adjustments twice per year to reflect changes in investments in distribution assets. Additionally, a DCRF may be filed during a pending rate case proceeding as long as that DCRF request is not filed until the 185th day after the rate case proceeding was initiated. The following sets forth TNMP’s recent interim distribution rate increases:


Effective Date	Approved Increase in Rate Base		Annual Increase in Revenue
	(In millions)
















September 1, 2023	$	157.0	$	14.5
July 28, 2024	205.9		15.6
November 17, 2024	43.7		7.7
June 29, 2025	176.6		25.0

On July 31, 2025, TNMP filed its second 2025 DCRF that requested an increase in TNMP annual distribution revenues of $5.4 million based on an increase in rate base of $27.9 million. The case is pending review by the PUCT.

Energy Efficiency

TNMP recovers the costs of its energy efficiency programs through an energy efficiency cost recovery factor (“EECRF”), which includes projected program costs, under and over collected costs from prior years, rate case expenses, and performance bonuses (if programs exceed mandated savings goals). On May 31, 2024, TNMP filed its request to adjust the EECRF to reflect changes in costs for 2025. On October 24, 2024, the PUCT approved the total amount requested, authorizing recovery of $7.0 million, which includes a performance bonus of $1.3 million based on TNMP’s energy efficiency achievements in the 2023 plan year and became effective March 1, 2025. On May 30, 2025, TNMP filed its request to adjust the EECRF to reflect changes in costs for 2026. The total amount requested was $8.1 million, which includes a performance bonus of $2.5 million based on TNMP’s energy efficiency achievements in 2024. The case is pending review by the PUCT.

Hurricane Beryl

On July 8, 2024, Hurricane Beryl made landfall in the Texas Gulf Coast leaving approximately 116,000 customers in the TNMP service area without power. As of June 30, 2025, TNMP incurred $53.8 million of costs, of which $33.4 million has been recorded in Utility Plant and $20.4 million has been recorded as a Regulatory Asset on the Condensed Consolidated Balance Sheets. TNMP will seek collection of such costs in a future regulatory proceeding.

System Resiliency Plan (“SRP”)

In 2023, the Texas Legislature enacted House Bill No, 2555 (“HB 2555”), permitting an electric utility to seek approval of, and cost recovery for, a system resiliency plan. On August 28, 2024, TNMP filed its first SRP with the PUCT designed to benefit customers through enhanced resiliency of its distribution system, as intended under HB 2555. The SRP includes approximately $600 million of capital investments and approximately $151 million of other related costs over three

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

years and was developed using a comprehensive and data-driven approach which evaluated various types of resiliency events posing material risk to the safe and reliable operation of TNMP's distribution system. TNMP's service territory includes non-contiguous areas across different regions of Texas, ranging from small communities and rural areas to communities around large metropolitan areas, each with unique risks. Investments in the SRP are prioritized based on customer benefit, physical protection of infrastructure, foundational investments in operational and cybersecurity technologies, and wildfire risk reduction and are focused on lower-performing areas in the context of reliability. Eight different resiliency measures are outlined in the SRP with associated programs and infrastructure impacts to improve the system's ability to prevent, withstand, mitigate and/or more promptly recover from resiliency events: distribution system resiliency, distribution system protection modernization, vegetation management, wildfire mitigation, flood mitigation, enhanced operations system technology, cybersecurity, and physical security resiliency. Recovery of investments and costs are permissible primarily through semi-annual DCRF filings, with deferral of depreciation and other certain expenses until recovery begins.

On December 11, 2024, TNMP filed an unopposed settlement with the PUCT. The settlement includes $565.8 million of capital investments over 2025 through 2027, reflecting 94% of TNMP’s proposed plan investments. The settlement also encompasses $128.2 million of operations and maintenance expenses associated with several programs, including vegetation management and wildfire mitigation. On March 26, 2025, TNMP received the final order from the PUCT which included modifications reflecting capital investments of $545.8 million and $86.1 million of operating and maintenance costs.

(13) Lease Commitments

The Company leases office buildings, vehicles, energy storage facilities, and other equipment. In addition, certain rights-of-way agreements are classified as leases. All of the Company’s leases with terms in excess of one year are recorded on the balance sheet by recording a present value lease liability and a corresponding right-of-use asset. Operating lease expense is recognized within operating expenses according to the use of the asset on a straight-line basis. Financing lease costs, which are comprised primarily of fleet and office equipment leases commencing after January 1, 2019, are recognized by amortizing the right-of-use asset on a straight-line basis and by recording interest expense on the lease liability. Financing lease right-of-use assets amortization is reflected in depreciation and amortization and interest on financing lease liabilities is reflected as interest charges on the Company’s Condensed Consolidated Statements of Earnings. See additional discussion of the Company’s leasing activities in Note 8 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

PVNGS

In 1985 and 1986, PNM entered into leases for its interest in PVNGS Unit 1 and 2. The leases initially were scheduled to expire in January 2015 for four Unit 1 leases and January 2016 for four Unit 2 leases. Following procedures set forth in the PVNGS leases, PNM notified four of the lessors under the Unit 1 leases and one lessor under the Unit 2 lease that it would elect to renew those leases on the expiration date of the original leases. The four Unit 1 leases expired in January 2023 and the one Unit 2 lease expired in January 2024. PNM has no further lease payments related to PVNGS Unit 1 or 2.

On April 5, 2021, PNM and Salt River Project entered into an Asset Purchase and Sale Agreement, pursuant to which PNM agreed to sell to Salt River Project certain PNM-owned assets and nuclear fuel necessary to the ongoing operation and maintenance of leased capacity in PVNGS Unit 1 and Unit 2. In January 2023, the Unit 1 leases expired, and PNM closed on the associated sale to Salt River Project. In January 2024, the Unit 2 leases expired, and PNM closed on the associated sale to Salt River Project, receiving payments totaling $3.4 million, of which $2.8 million was recorded as a reduction to Net utility plant on the Condensed Consolidated Balance Sheets and was presented as cash flows from investing activities on the Condensed Consolidated Statement of Cash Flows. In addition, $0.6 million was recorded as a reduction to Materials, supplies and fuel stock on the Condensed Consolidated Balance Sheets and was presented as cash flows from operating activities on the Condensed Consolidated Statement of Cash Flows.

Land Easements and Rights-of-Way

Many of PNM’s electric transmission and distribution facilities are located on lands that require the grant of rights-of-way from governmental entities, Native American tribes, or private parties. PNM has completed several renewals of rights-of-way, the largest of which is a renewal with the Navajo Nation. PNM is obligated to pay the Navajo Nation annual payments of $6.0 million, subject to adjustment each year based on the Consumer Price Index, through 2029. PNM’s April 2025 payment for the amount due under the Navajo Nation right-of-way lease was $8.8 million, which included amounts due under the Consumer Price Index adjustment. Changes in the Consumer Price Index subsequent to January 1, 2019 are considered variable lease payments.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

PNM has other prepaid rights-of-way agreements that are not accounted for as leases or recognized as a component of plant in service. PNM reflects the unamortized balance of these prepayments in other deferred charges on the Condensed Consolidated Balance Sheets and recognizes amortization expense associated with these agreements in the Condensed Consolidated Statement of Earnings over their term. As of June 30, 2025 and December 31, 2024, the unamortized balance of these rights-of-ways was $61.3 million and $67.1 million. PNM recognized amortization expense associated with these agreements of $1.2 million and $2.2 million in the three and six months ended June 30, 2025 and $1.0 million and $2.1 million in the three and six months ended June 30, 2024.

Fleet Vehicles and Equipment

Fleet vehicle and equipment leases commencing on or after January 1, 2019 are classified as financing leases. Fleet vehicle and equipment leases existing as of December 31, 2018 are classified as operating leases. The Company’s fleet vehicle and equipment lease agreements include non-lease components for insignificant administrative and other costs that are billed over the life of the agreement. At June 30, 2025, residual value guarantees on fleet vehicle and equipment leases are $0.7 million, $0.7 million, and $1.4 million for PNM, TNMP, and TXNM Consolidated.

Energy Storage Agreements

The Company has ESAs with fixed payments over the life of the agreements, that are accounted for as operating leases, for which Company records the initial lease liabilities and corresponding right-of-use assets. The Company also has ESAs with monthly payments that vary, depending on the available capacity of the energy storage facility, that are also accounted for as operating leases. However, due to the variable nature of the consideration, these agreements do not require a lease liability or a right-of-use asset to be recorded upon inception. Expenses for this type of lease are reflected in variable lease expense in the tables below. In addition, the Company has elected to separate lease components from non-lease components for ESAs and accordingly, does not include non-lease components in the measurement of the lease liability or right-of-use asset. The non-lease components, which are not included in the measurement of the lease liability or the corresponding right-of-use asset, comprise 25.5% of the value of the agreements.

Information related to the Company’s operating leases recorded on the Condensed Consolidated Balance Sheets is presented below:


	June 30, 2025						December 31, 2024
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
	(In thousands)
Operating leases:
Operating lease assets, net of amortization	$	265,016	$	388	$	265,919	$	271,433	$	923	$	272,894
Current portion of operating lease liabilities	13,253		348		13,640		13,542		713		14,293
Long-term portion of operating lease liabilities	245,330		31		245,847		254,702		167		255,376

As discussed above, the Company classifies its fleet vehicle and equipment leases and its office equipment leases commencing on or after January 1, 2019 as financing leases. Information related to the Company’s financing leases recorded on the Condensed Consolidated Balance Sheets is presented below:


	June 30, 2025						December 31, 2024
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
	(In thousands)
Financing leases:
Non-utility property	$	25,717	$	27,843	$	54,912	$	24,548	$	24,420	$	50,144
Accumulated depreciation	(11,814)		(13,825)		(25,989)		(10,997)		(13,411)		(24,604)
Non-utility property, net	13,903		14,018		28,923		13,551		11,009		25,540

Other current liabilities	$	4,685	$	5,270	$	10,284	$	4,311	$	4,527	$	9,126
Other deferred credits	9,242		8,776		18,716		9,262		6,504		16,470

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Information concerning the weighted average remaining lease terms and the weighted average discount rates used to determine the Company’s lease liabilities is presented below:


	June 30, 2025						December 31, 2024
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
Weighted average remaining lease term (years):
Operating leases	17.30		0.67		17.26		17.52		1.10		17.45
Financing leases	3.31		3.16		3.23		3.51		2.80		3.20

Weighted average discount rate:
Operating leases	5.70	%	4.46	%	5.70	%	5.68	%	4.41	%	5.68	%
Financing leases	5.26	%	5.43	%	5.33	%	5.08	%	5.19	%	5.12	%

Information for the components of lease expense is as follows:


	Three Months Ended June 30, 2025						Six Months Ended June 30, 2025
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
	(In thousands)
Operating lease cost:
Energy storage leases	$	5,084	$	—	$	5,084	$	10,167	$	—	$	10,167
Other operating leases	1,863		131		2,012		3,726		285		4,048
Amounts capitalized	(11)		(106)		(117)		(22)		(236)		(258)
Total operating lease expense	6,936		25		6,979		13,871		49		13,957
Financing lease cost:
Amortization of right-of-use assets	1,230		1,549		2,864		2,431		2,843		5,452
Interest on lease liabilities	184		213		411		364		357		750
Amounts capitalized	(898)		(1,455)		(2,354)		(1,778)		(2,650)		(4,428)
Total financing lease expense	516		307		921		1,017		550		1,774

Variable lease expense	6,579		—		6,579		13,135		—		13,135
Short-term lease expense	178		8		198		369		12		423
Total lease expense for the period	$	14,209	$	340	$	14,677	$	28,392	$	611	$	29,289


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
	(In thousands)
Operating lease cost:
Energy storage leases	$	2,947	$	—	$	2,947	$	5,893	$	—	$	5,893
Other operating leases	1,908		237		2,157		3,967		507		4,486
Amounts capitalized	(28)		(209)		(237)		(63)		(442)		(505)
Total operating lease expense	4,827		28		4,867		9,797		65		9,874
Financing lease cost:
Amortization of right-of-use assets	1,120		1,315		2,463		2,337		2,631		5,005
Interest on lease liabilities	143		147		294		287		299		591
Amounts capitalized	(756)		(1,161)		(1,917)		(1,597)		(2,343)		(3,940)
Total financing lease expense	507		301		840		1,027		587		1,656

Variable lease expense	433		—		433		793		—		793
Short-term lease expense	148		7		165		352		12		381
Total lease expense for the period	$	5,915	$	336	$	6,305	$	11,969	$	664	$	12,704

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Supplemental cash flow information related to the Company’s leases is as follows:


	Six Months Ended						Six Months Ended
	June 30, 2025						June 30, 2024
	PNM		TNMP		TXNM		PNM		TNMP		TXNM
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	17,114	$	27	$	17,173	$	13,701	$	26	$	13,737
Operating cash flows from financing leases	131		97		256		94		53		152
Finance cash flows from financing leases	884		447		1,499		919		533		1,487

Non-cash information related to right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	49	$	9	$	58	$	27	$	69	$	663
Financing leases	2,789		5,855		8,848		831		1,736		2,885

Capitalized lease costs are reflected as investing activities on the Company’s Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024. Future expected lease payments are shown below:


	As of June 30, 2025
	PNM						TNMP				TXNM
			Operating										Operating
	Financing		Energy Storage		Other		Financing		Operating		Financing		Energy Storage		Other
	(In thousands)
Remainder of 2025	$	2,748	$	10,167	$	135	$	3,184	$	346	$	6,117	$	10,167	$	514
2026	5,045		20,333		7,045		5,122		16		10,537		20,333		7,130
2027	3,727		20,333		7,049		3,561		14		7,637		20,333		7,134
2028	2,307		20,333		7,052		2,090		11		4,564		20,333		7,135
2029	876		20,333		7,039		1,125		—		2,035		20,333		7,114
Later years	277		287,100		3,660		180		—		456		287,100		4,012
Total minimum lease payments	14,980		378,599		31,980		15,262		387		31,346		378,599		33,039
Less: Imputed interest	1,053		148,145		3,851		1,216		8		2,346		148,145		4,006
Lease liabilities	$	13,927	$	230,454	$	28,129	$	14,046	$	379	$	29,000	$	230,454	$	29,033

The above table includes $12.9 million, $12.2 million, and $25.2 million for PNM, TNMP, and TXNM at June 30, 2025 for expected future payments on fleet vehicle and equipment leases that could be avoided if the leased assets were returned and the lessor is able to recover estimated market value for the equipment from third parties.

At June 30, 2025, the Company has various lease arrangements that have been executed but have not yet commenced, which are primarily related to ESAs. The Company currently expects that certain leases with commencement dates in 2025 and 2029, that have lease terms expiring in 2045 and 2044, will be recognized as lease assets and liabilities upon the lease commencement. The expected total fixed consideration to be paid for these arrangements, which includes non-lease payments, is approximately $226.3 million over the 20-year terms of the agreements.

(14) Income Taxes

The Company makes an estimate of its anticipated effective tax rate for the year as of the end of each quarterly period within its fiscal year. In interim periods, income tax expense is calculated by applying the anticipated annual effective tax rate to year-to-date earnings before income taxes. Certain unusual or infrequently occurring items are excluded from the estimated annual rate calculation. Such items include regulatory disallowances, Merger-related costs, and excess tax benefits or deficiencies related to stock awards. At June 30, 2025, TXNM, PNM, and TNMP estimated their effective income tax rates for

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

the year ended December 31, 2025 would be 13.37%, 9.35%, and 20.52%. The primary difference between the statutory income tax rates and the effective tax rates is the effect of the reduction in income tax expense resulting from the amortization of excess deferred federal income taxes.

During the six months ended June 30, 2025, income tax expense calculated by applying the expected annual effective income tax rate to earnings before income taxes was further decreased by excess tax benefits related to stock awards of $0.4 million for TXNM, of which $0.3 million was allocated to PNM and $0.1 million was allocated to TNMP, and by tax benefits on Merger-related costs of $3.6 million for TXNM, with immaterial amounts allocated to PNM and TNMP.

Beginning February 2018, PNM’s NM 2016 Rate Case reflected the reduction in the federal corporate income tax rate resulting from enactment of legislation commonly known as the Tax Cuts and Jobs Act (the “TCJA”), including amortization of excess deferred federal income taxes. In accordance with the order in that case, PNM is returning the protected portion of excess deferred federal income taxes to customers over the average remaining life of plant in service as of December 31, 2017, and had been returning the unprotected portion of excess deferred federal income taxes to customers over a period of approximately twenty-three years. Pursuant to the final order in the 2024 Rate Change, the remaining balance of $62.7 million of unprotected excess deferred income taxes is being returned over a four-year period. The approved settlement in the TNMP 2018 Rate Case includes a reduction in customer rates to reflect the impacts of the TCJA beginning on January 1, 2019. TXNM, PNM, and TNMP will amortize federal excess deferred income taxes of $25.6 million, $22.9 million, and $2.7 million in 2025. See additional discussion of the impacts of the TCJA in Note 18 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

On July 4, 2025, changes in U.S. federal income tax laws were enacted through the OBBBA. The OBBBA generally extends and makes permanent the changes from the TCJA, including maintaining the 21% corporate tax rate, interest deductibility for regulated electric utilities, and state and local tax deductibility. The OBBBA also accelerates the phase-out of certain Inflation Reduction Act of 2022 energy tax credits and restricts the availability of credits for “foreign entities of concern.” TXNM is evaluating the full effects of the OBBBA on its estimated annual effective tax rate and cash tax position but does not expect the OBBBA to have a material impact on its financial statements. As the OBBBA was signed into law after the close of the second quarter of 2025, no impacts are included in TXNM’s operating results for the three and six months ended June 30, 2025.

(15) Related Party Transactions

TXNM, PNM, TNMP, and NMRD are considered related parties, as is PNMR Services Company, a wholly-owned subsidiary of TXNM that provides corporate services to TXNM and its subsidiaries in accordance with shared services agreements. These services are billed at cost on a monthly basis to the business units. In addition, prior to the sale of NMRD, PNM purchased renewable energy from certain NMRD-owned facilities at a fixed price per MWh of energy produced. On February 27, 2024, PNMR Development and AEP OnSite Partners sold their respective interests in NMRD and the table below reflects transactions with NMRD prior to the sale. The table below summarizes the nature and amount of related party transactions of TXNM, PNM, TNMP, and NMRD:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
	(In thousands)
Services billings:
TXNM to PNM	$	35,317	$	31,023	$	67,404	$	66,430
TXNM to TNMP	14,109		12,885		27,485		27,121
PNM to TNMP	86		109		165		190
TNMP to TXNM	28		—		56		10
TXNM to NMRD	—		—		—		66
Renewable energy purchases:
PNM from NMRD	—		—		—		1,523
Interest billings:
TXNM to PNM	76		25		84		39
PNM to TXNM	132		154		265		309
TXNM to TNMP	41		22		186		179

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(16) Goodwill

The excess purchase price over the fair value of the assets acquired and the liabilities assumed by TXNM for its 2005 acquisition of TNP Enterprises, Inc. and Subsidiaries (“TNP”) was recorded as goodwill and was pushed down to the businesses acquired. In 2007, the TNMP assets that were included in its New Mexico operations, including goodwill, were transferred to PNM. TXNM’s reporting units that currently have goodwill are PNM and TNMP.

The Company evaluates its goodwill for impairment annually at the reporting unit level or more frequently if circumstances indicate that the goodwill may be impaired. Application of the impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, and determination of the fair value of each reporting unit.

In certain circumstances an entity may perform a qualitative analysis to conclude that the goodwill of a reporting unit is not impaired. Under a qualitative assessment an entity considers macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events affecting a reporting unit, as well as whether a sustained decrease (both absolute and relative to its peers) in share price has occurred. An entity considers the extent to which each of the adverse events and circumstances identified could affect the comparison of a reporting unit’s fair value with its carrying amount. An entity places more weight on the events and circumstances that most affect a reporting unit’s fair value or the carrying amount of its net assets. An entity also considers positive and mitigating events and circumstances that may affect its determination of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity evaluates, on the basis of the weight of evidence, the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. A quantitative analysis is not required if, after assessing events and circumstances, an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount.

In other circumstances, an entity may perform a quantitative analysis to reach the conclusion regarding impairment with respect to a reporting unit. An entity may choose to perform a quantitative analysis without performing a qualitative analysis and may perform a qualitative analysis for certain reporting units, but a quantitative analysis for others. The first step of the quantitative impairment test requires an entity to compare the fair value of the reporting unit with its carrying value, including goodwill. If, as a result of this analysis, the entity concludes there is an indication of impairment in a reporting unit having goodwill, the entity is required to perform the second step of the impairment analysis, determining the amount of goodwill impairment to be recorded. The amount is calculated by comparing the implied fair value of the goodwill to its carrying amount. This exercise would require the entity to allocate the fair value determined in step one to the individual assets and liabilities of the reporting unit. Any remaining fair value would be the implied fair value of goodwill on the testing date. To the extent the recorded amount of goodwill of a reporting unit exceeds the implied fair value determined in step two, an impairment loss would be reflected in results of operations.

TXNM periodically updates its quantitative analysis for both PNM and TNMP. The use of a quantitative approach in a given period is not necessarily an indication that a potential impairment has been identified under a qualitative approach.

When TXNM performs a quantitative analysis for PNM or TNMP, a discounted cash flow methodology is primarily used to estimate the fair value of the reporting unit. This analysis requires significant judgments, including estimations of future cash flows, which is dependent on internal forecasts, estimations of long-term growth rates for the business, and determination of appropriate weighted average cost of capital for the reporting unit. Changes in these estimates and assumptions could materially affect the determination of fair value and the conclusion of impairment.

When TXNM performs a qualitative or quantitative analysis for PNM or TNMP, TXNM considers market and macroeconomic factors including changes in growth rates, changes in the WACC, and changes in discount rates. TXNM also evaluates its stock price relative to historical performance, industry peers, and to major market indices, including an evaluation of TXNM’s market capitalization relative to the carrying value of its reporting units.

For its annual evaluations performed as of April 1, 2025, TXNM performed a qualitative analysis for both the PNM and TNMP reporting units. In addition to the typical considerations discussed above, the qualitative analysis considered changes in the Company’s expectations of future financial performance since the April 1, 2024 quantitative analysis performed for PNM, as well as the April 1, 2020 quantitative analysis and the previous qualitative analyses through April 1, 2024 performed for TNMP. This analysis considered Company-specific events such as the Merger, potential impacts of legal and regulatory matters discussed in Note 11 and Note 12, including the outcomes in the 2025 Rate Request, PNM’s Grid Modernization Plan, and TNMP’s System Resiliency Plan. Based on an evaluation of these and other factors, the Company determined it was not more likely than not that the April 1, 2025 carrying values of PNM and TNMP exceeded their fair value.

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For its annual evaluations performed as of April 1, 2024, TXNM performed a quantitative analysis for the PNM reporting unit and a qualitative analysis for the TNMP reporting unit. The quantitative analysis, discussed above, indicated that the fair value of the PNM reporting unit, which has goodwill of $51.6 million, exceeded its carrying value by approximately 54%. The qualitative analysis, in addition to the typical considerations discussed above, considered changes in the Company’s expectations of future financial performance since the April 1, 2020 quantitative analysis and the previous qualitative analyses through April 1, 2023 performed for TNMP. The April 1, 2020 quantitative evaluations indicated the fair value of the TNMP reporting unit, which has goodwill of $226.7 million, exceeded its carrying value by approximately 38%. This analysis considered events specific to TNMP such as the potential impacts of legal and regulatory matters discussed in Note 11 and Note 12. Based on an evaluation of these and other factors, the Company determined it was not more likely than not that the April 1, 2024 carrying values of PNM and TNMP exceeded their fair value. Since the April 1, 2024 annual evaluation, there have been no events, including the Merger, or indications that the fair values of the reporting units with recorded goodwill have decreased below their carrying values.

(17) Merger

On May 18, 2025, TXNM, Parent, and Merger Sub, entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of Blackstone Infrastructure.

Pursuant to the Merger Agreement, each issued and outstanding share of the common stock of TXNM (other than (i) the issued shares of TXNM common stock that are owned by TXNM, Parent, Merger Sub, or any other wholly-owned subsidiaries of Parent or TXNM, in each case, not held on behalf of third parties, which will be automatically cancelled at the Effective Time and (ii) shares of TXNM 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 in accordance with applicable New Mexico law) will, at the Effective Time, be converted into the right to receive $61.25 in cash, without interest.

The proposed Merger has been unanimously approved by the Board. Consummation of the Merger is subject to the satisfaction or waiver of certain customary conditions, including, without limitation, the approval by at least a majority of the holders of outstanding shares of TXNM common stock entitled to vote thereon, the absence of any material adverse effect on TXNM, no legal prohibition on the consummation of the Merger (a “Legal Restraint”), and the receipt of certain required regulatory approvals (including PUCT, NMPRC, FERC, NRC and under the Hart-Scott-Rodino Antitrust Improvements Act of 1976). The Merger Agreement does not contain any financing condition. The Merger is currently expected to close in the second half of 2026.

The Merger Agreement provides that under limited specified circumstances, the Board may change its recommendation in respect of the Merger prior to the receipt of shareholder approval if it determines that an alternative acquisition proposal constitutes a Superior Proposal (as defined in the Merger Agreement) or if an event or circumstance (other than an acquisition proposal or an action taken pursuant to regulatory approval covenants) that is material, first becomes known to the Board after the execution of the Merger Agreement and affects or would reasonably be expected to affect the business of TXNM and its subsidiaries, taken as a whole, or the shareholders of TXNM (including the benefits of the Merger to the shareholders of TXNM), in which case Parent will have the right to terminate the Merger Agreement and receive the TXNM Termination Fee (as defined below).

The Merger Agreement may be terminated by each of TXNM and Parent under certain circumstances, including if the Merger is not consummated by the 15-month anniversary of the execution of the Merger Agreement (as extended, the “End Date”), so long as failure of the Merger to consummate on or before the End Date was not due to the breach of the Merger Agreement by such party, subject to an automatic extension of the End Date until December 31, 2026 and an additional three-month extension by mutual agreement of the parties, in each case if all of the conditions to the closing, other than the conditions related to obtaining regulatory approvals or the absence of a Legal Restraint, have been satisfied or waived. The Merger Agreement also provides for other customary termination rights for both Parent (including if the Board changes its recommendation in respect of the Merger) and TXNM. The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances (including if Parent terminates the Merger Agreement due to a change in recommendation of the Board or if TXNM terminates the Merger Agreement to accept a Superior Proposal), TXNM will be required to pay Parent a termination fee of $210.0 million plus costs and expenses (“TXNM Termination Fee”). In addition, the Merger Agreement provides that (i) if the Merger Agreement is terminated by either party as a result of a Legal Restraint (solely in connection with required regulatory approvals), (ii) if the Merger Agreement is terminated by either party as a result of the Merger not being consummated by the End Date, (iii) the Merger Agreement is terminated by TXNM as a result of a

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TXNM ENERGY, INC. AND SUBSIDIARIES

PUBLIC SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARIES

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

terminable breach by Parent, (iv) Parent fails to effect the closing when all closing conditions have been satisfied and it is otherwise obligated to do so under the Merger Agreement or (v) TXNM terminates the June 2025 Purchase Agreement (as defined below) as a result of Purchaser (as defined below) failing to timely consummate the Stock Purchase Closing (as defined below), then, in any such case, upon termination of the Merger Agreement, Parent will be required to pay TXNM a termination fee of $350.0 million plus costs and expenses as the sole and exclusive remedy (the “Parent Termination Fee”).

Parent and Merger Sub have obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement. Pursuant to an equity commitment letter dated May 18, 2025 (the “Equity Commitment Letter”), Blackstone Infrastructure committed to provide Parent, at the consummation of the Merger, with an equity contribution in the amount set forth therein. In addition, pursuant to debt commitment letters (“Debt Commitment Letters”) delivered to Merger Sub, Royal Bank of Canada, MUFG Bank, Ltd., BNP Paribas, Sumitomo Mitsui Banking Corporation and Canadian Imperial Bank of Commerce have agreed to provide debt financing to Merger Sub following the Closing on the terms and subject to the conditions set forth therein. The equity financing, when funded in accordance with the Equity Commitment Letter together with the debt financing when funded in accordance with the Debt Commitment Letters, will provide an amount that is sufficient to fund the payment of (i) the aggregate per share merger consideration, (ii) the repayment of certain TXNM debt to be satisfied at Closing and (iii) all related fees, costs and expenses. Additionally, following Closing, Parent and TXNM will have sufficient funds to repay, prepay or discharge certain other debt obligations of TXNM. In addition, Blackstone Infrastructure has entered into a limited guarantee with TXNM (the “Limited Guarantee”), pursuant to which Blackstone Infrastructure has guaranteed the obligations of Parent and Merger Sub to pay the Parent Termination Fee and certain costs and expenses reimbursement obligations of TXNM under the Merger Agreement. The Limited Guarantee is capped at $375.0 million.

Upon consummation of the Merger, the outstanding shares of TXNM common stock will be delisted from the New York Stock Exchange (“NYSE”) and deregistered under the Exchange Act.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations for TXNM 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 TXNM, 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 TXNM

EXECUTIVE SUMMARY

Overview

TXNM is a holding company with two regulated electric utilities, PNM and TNMP, serving approximately 839,000 residential, commercial, and industrial customers in New Mexico and Texas. TXNM strives to create a clean and bright energy future for customers, communities, and shareholders. TXNM’s strategy and decision-making are focused on safely providing reliable, affordable, and environmentally responsible power built on a foundation of sustainability.

Recent Developments

Merger

On May 18, 2025, TXNM, Parent, and Merger Sub (both Parent and Merger Sub are affiliates of Blackstone Infrastructure) entered into the Merger Agreement pursuant to which Merger Sub will merge with and into TXNM, with TXNM surviving the Merger as a direct, wholly-owned subsidiary of Parent. Pursuant to the Merger Agreement, each issued and outstanding share of the common stock of TXNM (other than those listed in Note 17) at the Effective Time will be converted into the right to receive $61.25 in cash, without interest.

The proposed Merger has been unanimously approved by the Board. However, consummation of the Merger remains subject to the satisfaction or waiver of certain customary conditions, including, without limitation, the approval by at least a majority of the holders of the common stock of TXNM, no Legal Restraint, and the receipt of certain required regulatory approvals (including the PUCT, the NMPRC, the FERC, the NRC and under the Hart-Scott-Rodino Antitrust Improvements Act of 1976). The Merger Agreement does not contain any financing condition and is currently expected to close in the second half of 2026.

2025 Rate Request

In June 2024, PNM filed an application with the NMPRC for a general increase in retail electric rates. The application proposed an increase of $174.3 million in retail revenues which is comprised of a $92.2 million increase in base rates and a $82.1 million increase in revenues collected under PNM’s FPPAC and reflected an ROE of 10.45%. The proposed base rate changes would be implemented in two phases, with the first phase effective July 1, 2025 and the second phase effective January 1, 2026. The requested changes reflect recovery of needed investments across distribution, transmission, and generation facilities to ensure safe reliable delivery of electricity, increased operations and maintenance expenses to meet operational needs including wildfire risk mitigation, necessary costs to service customers associated with ESAs previously approved by the NMPRC, and adjustments to Four Corners depreciation rates to recover remaining plant investments through July 2031, the expected abandonment date of the facility.

In November 2024, PNM filed its unopposed comprehensive stipulation with the NMPRC. Key components include an increase of $105.0 million in retail revenues with the first phase effective July 1, 2025, and the second phase effective April 1, 2026, reflecting an ROE of 9.45%. On April 8, 2025, the hearing examiners issued a certification of stipulation recommending approval of the unopposed stipulation and on May 15, 2025, the NMPRC issued a final order adopting the unopposed stipulation. This matter is now concluded.

Vision, Values, and Business Objectives

TXNM’s vision is to create a clean and bright energy future while fulfilling its purpose to work together with customers and communities to meet their energy needs. TXNM’s core values of Safety, Caring, and Integrity are the foundation for the Company’s business objectives focused on safety excellence and customer satisfaction, including reliability.

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To reach these objectives, the Company is committed to:

•Preparing our workforce with the knowledge and skills to thrive in a customer-focused world

•Purposefully delivering an intentional customer experience that exceeds our evolving customer and stakeholder expectations

•Enabling an environmentally sustainable future and deploying technologically advanced solutions that empower and benefit customers

•Demonstrating the relationship between customer excellence and our dedicated focus on financial strength

Meeting the business objectives above will drive key financial results, including:

•Earning authorized returns on regulated businesses

•Delivering at or above industry-average long-term earnings growth, with a dividend payout ratio between 50 and 60 percent of earnings

•Maintaining investment grade credit ratings

Business Focus

To achieve its business objectives, focus is directed in key areas: Safe, Reliable, and Affordable Power; Utility Plant Investments; Superior Customer Experience; Environmentally Responsible Power; and Stakeholder 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 TXNM’s utilities on customer satisfaction and community engagement.

Safe, Reliable, and Affordable Power

Safety is the first priority of our business and a core value of the Company. TXNM 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.”

TXNM measures reliability and benchmark performance of PNM and TNMP against other utilities using industry-standard metrics, including System Average Interruption Duration Index and System Average Interruption Frequency Index. PNM’s and TNMP’s investment plans include projects designed to support reliability and reduce the amount of time customers are without power.

TXNM 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.

PNM participates in the EIM, a real-time wholesale energy trading market operated by the 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 passes the cost savings achieved by participating in the EIM through to customers under PNM’s FPPAC. PNM also plans to join the Extended Day Ahead Market (“EDAM”), which is a voluntary day-ahead regional market that expands on CAISO’s EIM market, in the fall of 2027.

PNM joined the WRAP in April 2023 to bolster PNM’s preparations for times of critical need. WRAP is a first-of-its-kind program in the West that adds a region-wide coordination between power providers for assessing and addressing resource adequacy. This step helps ensure regional resource availability is visible and coordinated in the event PNM customers are critically impacted by a resource emergency. WRAP is currently in the non-binding phases of the program, which is expected to continue through the summer of 2027.

Utility Plant Investments

During the 2023 and 2024 periods, PNM and TNMP together invested $2.3 billion in utility plant, including transmission and distribution systems, substations, power plants, and nuclear fuel. Investment plans emphasize new investments in transmission and distribution infrastructure to support growing demand with grid reliability and resilience and to

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deliver clean energy. The Company has been improving the diversification of its rate base among regulatory jurisdictions, moving TNMP and FERC transmission rate base to over half of the consolidated rate base.

Investments at TNMP support the continued high growth across each region of its service territory. Economic growth across Texas continues to push the demands on TNMP’s system to new levels, including a new system peak in February 2025. Additionally, the Texas legislature in 2023 passed a series of bills aimed at encouraging investments to enhance grid reliability and resilience. The PUCT has developed, and continues to develop, rules associated with the new legislation. TNMP will continue to submit filings for investments and recovery in accordance with these new rules in addition to the existing rate recovery mechanisms. In June 2025, HB 5247 added Section 36.216 to PURA, which immediately authorized certain electric utilities, like TNMP to elect to defer depreciation expenses for qualifying investments to a regulatory asset until the following year in which they would file a single, annual proceeding upon notification to the PUCT.

Investments at PNM 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. New Mexico’s clean energy future depends on a reliable, resilient, secure grid to deliver an evolving mix of energy resources to customers. In addition, projects included in the Grid Modernization Plan will improve customers’ ability to customize their use of energy and modernize PNM’s electric grid through infrastructure and technology improvements.

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.

Superior Customer Experience

The Company strives to deliver a superior customer experience. 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. In 2024, TNMP made significant strides in improving customer satisfaction related to power outages by providing a more user-friendly experience on TNMP’s outage map information system, making it easier for customers to access real-time outage information. In addition, TNMP introduced a new system that allows customers to receive outage alerts through multiple communication channels to enhance transparency and to ensure customers stay informed during outages. In September 2024, TNMP sent employees to assist in restoring power to those communities impacted by Hurricane Helene and in January 2025 TNMP was announced as an EEI Emergency Response Award recipient. The EEI Emergency Response Awards recognize recovery and assistance efforts of electric companies following service disruptions caused by extreme weather or other natural events.

Throughout 2024 and into 2025, PNM continues to hold in-person engagements with residential and business customers through customer advisory councils. These engagements have helped PNM to build and improve customer relationships and have provided PNM with valuable customer insights to gauge customer interest levels towards programs and services to be highly customer centric. Additionally, PNM continues to focus its efforts to enhance the customer experience through customer service improvements, including enhanced digital payment options, strategic customer outreach, and improved communications. In 2025, PNM introduced a redesigned customer bill to make it easier for customers to understand their bill as a part of a broader commitment improving transparency and usability. While the electric utility industry continues to experience declines in customer satisfaction, as measured by J.D. Power, PNM’s ranking in 2025 remains stable, reflecting the Company’s sustained efforts to improve the customer journey through a more seamless and customer-friendly experience. PNM continues to focus on addressing energy affordability by promoting participation in utility programs among households with high energy burden to offset high bills. PNM has implemented efforts to increase participation in low-income energy efficiency programs, providing additional aid through the PNM Good Neighbor Fund, partnering with state agencies to make it easier to access funding, improving access to clean energy through expanded outreach and communication, and the implementation of low-income transportation electrification programs. As a result of these communication efforts, 2,859 families in need have received emergency assistance through the PNM Good Neighbor Fund in the six months ended June 30, 2025.

Environmentally Responsible Power

TXNM 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% carbon-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

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TXNM’s corporate website (www.txnmenergy.com) includes a dedicated section providing key environmental and other information related to PNM’s and TNMP’s operations, including information that collectively demonstrates the Company’s commitment to sustainability. This information highlights plans for PNM to be coal-free no later than 2031 and to achieve a carbon-free generating portfolio by 2040.

PNM’s Grid Modernization Plan is a major step forward to providing reliable, affordable and sustainable energy. As part of that plan, PNM will promote energy equity where technology like smart meters and distribution upgrades will be provided to low-income areas first in order to allow customers to gain insights into their energy usage in order to improve affordability and create fairer access to energy. In addition, PNM’s Time-of-Day pilot approved in the 2024 Rate Change final order incentivizes customers, through price signals, to use energy during the day when renewable generation is abundant.

The IRA provided benefits for TXNM and its customers by extending and enhancing clean energy incentives such as the investment tax credit and production tax credit. As the Company continues its transition away from carbon emitting sources, these credits reduce the cost of renewable investments. In addition, the IRA includes a new production tax credit for existing nuclear facilities that may create an added benefit for PNM’s ownership in the carbon-free PVNGS. Other IRA provisions encourage transportation electrification with new EV credits and added incentives for vehicle charging infrastructure. In July 2025, the newly enacted OBBBA began to accelerate the phase-out of certain IRA energy tax credits and restricts the availability of credits for “foreign entities of concern.”

Electric Vehicles

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

To demonstrate TXNM’s commitment to increase the electrification of vehicles in its service territory, PNM implemented its first TEP in 2022 and received approval of its 2024-2026 TEP in 2024. PNM has launched new transportation electrification offerings that support customer adoption of EVs by addressing barriers to adoption. PNM’s TEP program budget provides financial support to residential and non-residential customers towards the purchase of EV chargers and/or site make-ready costs, as well as customer education and outreach on EV-specific electricity rates to encourage charging during off-peak periods. More than 25% of the program budget is dedicated to low- and moderate-income customers to plan for an equitable transition to an electrified transportation sector.

PNM participates in the National Electric Highway Coalition, which plans to build fast-charging ports along major U.S. travel corridors. The coalition, with approximately 50 investor-owned electric companies, is committed to providing EV fast charging ports that will allow the public to drive EVs with confidence throughout the country’s major roadways. To support this initiative, PNM’s TEP program includes the installation of a charging network along major roadways in New Mexico.

Renewable Energy and Energy Storage

PNM’s utility-owned solar and energy storage capacity, as well as solar, energy storage, wind, and geothermal procurements in service as of June 30, 2025, have a total net generation capacity of 2,779 MW. In addition to PNM’s owned and third-party contracted solar facilities, PNM also has a customer distributed solar generation program that represented 320.5 MW at June 30, 2025. The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory. PNM’s approved resources have a generation capacity of 1,360 MW. This includes approximately 310 MW of capacity under the Community Solar Act which will allow PNM to provide customers the option of accessing solar energy.

PNM will continue to seek approval to procure renewable resources while balancing the impact to customers’ electricity costs in order to meet forecasted peak load requirements to serve its customers and 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 2024, incremental energy saved as a result of new participation in PNM’s portfolio of energy efficiency programs is estimated to be 86 GWh. This is equivalent to the annual consumption of approximately 11,891 homes in PNM’s service territory. PNM’s load management and annual energy efficiency programs also help lower peak demand requirements. In 2024, TNMP’s incremental energy saved as a result of new participation in TNMP’s energy efficiency programs is estimated to be approximately 16 GWh. This is equivalent to the annual consumption of approximately 2,211 homes’ electricity use in TNMP’s service territory using a national average avoided

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emissions rate. TNMP’s high-performance homes residential new construction energy efficiency program has earned the Energy Star Partner of the Year award for 8 years, including 6 years receiving the Sustained Excellence Award, recognizing long-term commitment to fighting climate change and protecting public health through energy efficiency.

Water Conservation and Solid Waste Reduction

PNM continues its efforts to reduce the amount of fresh water used to make electricity (about 45% more efficient than in 2005). Continued growth in PNM’s fleet of solar and wind energy sources, energy efficiency programs, and innovative uses of 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. 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. Shutting down SJGS in 2022 and Four Corners in 2031 will allow the Company to reach our goals for reduced freshwater use at 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 2024, 21 of the Company’s 22 facilities met or exceeded the solid waste diversion goal of a 65% diversion rate. The Company expects to continue to do well in this area in the future.

Stakeholder and Community Engagement

The Company is committed to fostering relationships with its customers, stakeholders, and communities. 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. 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.

The Company utilizes a number of communications channels and strategic content to serve and engage its many stakeholders. PNM’s website 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. TNMP’s website provides information on customized energy efficiency programs and TNMP rates, in addition to other community outreach information. 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 a carbon-free generating portfolio by 2040. PNM also leverages 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, TXNM’s corporate website includes a dedicated section providing additional information regarding the Company’s commitment to sustainability.

TXNM has a long tradition of supporting the communities that it serves in New Mexico and Texas and is committed to fostering positive relationships with stakeholders. During the three years ended December 31, 2024, corporate giving contributed $9.0 million to tribal communities and civic, educational, environmental, low income, and economic development organizations. Additionally, the PNM Resources Foundation (the “Foundation”) has provided an annual average of $1.3 million in grant funding over the past three years across New Mexico and Texas. Throughout 2024, the Foundation has focused on grants for nontraditional pathways to education and grants for the environment. These grants help nonprofits innovate or sustain programs to grow and develop their mission, develop and implement environmental programs, and provide educational opportunities. The Foundation continues to expand its matching and volunteer grant programs and the annual amount of matching donations available to each of its employees. The Foundation has also approved an increase to the amount awarded to employees, through the employee crisis management fund, who have been affected by the wildfires, floods, and hurricanes. In response to the South Fork and Salt wildfires that have caused devastation in the Ruidoso and Mescalero Apache Tribe communities, PNM and the Foundation have donated to the Ruidoso Fire Emergency Action Fund, hosted by the Community Foundation of Southern New Mexico, and to the Mescalero Apache Tribe Tribal Relief Fund. PNM is also collaborating with community foundations to help support the effort and direct funds where they are most needed. To support our team members impacted by Hurricane Beryl, the Foundation has increased the employee crisis fund, which is available to help our employees with financial support for catastrophic emergencies and basic living needs during times of crises.

TXNM 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 community needs, TXNM partners with other corporate funders to support nonprofits and small businesses. TXNM also collaborates on community projects, low-income customer assistance programs, and employee volunteerism.

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PNM stands out as one of the few investor-owned utilities dedicated to operating a tribal relations office, which is focused on serving and collaborating with 18 of the 23 sovereign nations in New Mexico and the Southwest. PNM created the Navajo Nation Workforce Training Scholarship Program to provide support for Navajo tribal members and to encourage the pursuit of education and training in existing and emerging jobs in the communities in which they live. PNM has invested in paid summer college engineering internship programs for American Indian students available in the greater Albuquerque area, established the PNM Pueblo Education Scholarship and Endowment to invest in higher education for Native American Indian students, and supported the development of an entrepreneur complex located in Albuquerque and operated by the Indian Pueblo Cultural Center. PNM continues to partner with the Navajo Nation in the Light up Navajo project, piloted in 2019 and modeled as a mutual aid project to connect Navajo homes without electricity to the power grid. PNM is one of 44 utilities across 16 states to participate in improving the quality of life for families by bringing electricity to over 700 homes since inception of the project. PNM has also partnered with New Mexico universities to enhance intern programs and developed a business coalition model to drive economic development through intern partnerships. PNM continues to partner with key nonprofit organizations to initiate funding and action for programs focused on diversity, equity and inclusion.

Employee volunteers are the lifeblood of a healthy corporate culture. Community giving through volunteers’ time and effort is at the heart of employee engagement. Throughout 2024, the Company held large-scale volunteer events, working alongside nonprofits, schools, and vulnerable communities throughout New Mexico and Texas. More than 600 employees in both states participated in the annual “Day of Service,” a workday event encouraging employee volunteerism and serving more than 50 organizations. Throughout the year, employees volunteer their time generously through independent volunteer activities and board participation. Employees strengthen community resilience by giving more than 6,000 volunteer hours each year to support the health, safety, and well-being of diverse communities.

Financial Focus

Earning Authorized Returns on Regulated Businesses

TXNM’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. The rates PNM and TNMP charge customers are subject to traditional rate regulation by the NMPRC, FERC, and the PUCT. Additional information about rate filings is provided in Note 17 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

Fair and timely rate treatment from regulators is crucial to PNM and TNMP in earning their allowed returns and critical for TXNM to achieve its financial objectives. TXNM 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.

State Regulation and Legislation

TNMP

In the 2023 and 2025 Texas Legislative sessions several bills were passed to support utility reliability and resiliency by encouraging and protecting utility infrastructure investments. Amongst the bills passed was DCRF legislation that adds a second filing per year and shortens the regulatory timeframe for the proceedings. Other bills include system resiliency and temporary mobile generation, which provide opportunities for added investment in TNMP’s service territory and reduce uncertainty around rate recovery. Another bill directs ERCOT to develop reliability plans for the Permian Basin which could result in the need for additional investments in the West Texas service territory. Additionally, the Damaging Critical Infrastructure Bill helps protect TNMP’s investments in response to criminal offenses damaging critical infrastructure facilities. HB 5247 incentivizes utilities who continue to invest in the Permian Basin territory by allowing for the deferral of depreciation expenses and carrying costs of investments in excess of 300 percent of annual depreciation, that are not currently reflected in rates, to a regulatory asset until such time a single, annual proceeding can be filed to adjust nonfuel rates. These pieces of legislation demonstrate that Texas continues to encourage utility investment and prioritizes timely rate recovery. TNMP will look to prioritize investments aligned with these measures that improve the quality of service for current and future customers.

The regulatory framework in Texas strongly encourages investments into the grid by providing timely recovery through rate mechanisms outside of general rate cases. 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 PUCT also approved rate riders that allow TNMP to recover amounts related to energy efficiency and third-party transmission costs. TNMP also has approximately 280,000 advanced meters across its service territory, the costs of which are being recovered through base rates.

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PNM

The 2025 New Mexico Legislative session included several bills that were passed to support economic development, clean energy, grid modernization, and wildfire preparedness. Amongst the bills passed were the Strategic Economic Development Site Readiness Bill (the “Site Readiness Bill”) and the New Mexico Finance Authority Definitions, Funds & Rates Bill (the “Power Readiness Bill”).

The Site Readiness Bill creates a dedicated funding mechanism and a structured process for identifying, assessing, and preparing strategic economic development sites across the state, positioning New Mexico to compete with other states actively investing in site readiness. It appropriates approximately $24 million for the site readiness fund for site-characterization studies of proposed economic development sites and site preparations of strategic economic development sites. The Site Readiness Bill also creates the Strategic Economic Development Site Advisory Committee to advise the New Mexico Development Department (“NMEDD”) in selecting sites and awarding funding.

The Power Readiness Bill reduces risk, lead times, and regulatory uncertainty in acquiring additional generation resources and in building large-scale infrastructure needed to competitively serve economic development customers that create jobs. It allows a public utility to annually increase generation capacity by up to 10% of the public utility’s total system peak load. The Power Readiness Bill also shortens the time for regulatory approval of CCN filings for new, major infrastructure and allows a public utility to defer costs of economic development projects, placing them into a regulatory asset until a customer signs a contract or begins taking service.

The New Mexico Energy Transition Act (“ETA”)

The ETA requires utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045. The ETA also allows 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 related to the retirement of certain coal-fired generating facilities to qualified investors. ETBC I issued the ETBC I Securitized Bonds in November 2023 under the provisions of the ETA.

Grid Modernization Plan

In October 2024, the NMPRC approved PNM’s Grid Modernization Plan which will improve customers’ ability to customize their use of energy and ensure that customers, including low-income customers, are a top priority and will benefit from the electricity grid consistent with the Grid Modernization Statute. PNM’s plan to modernize its electricity grid through infrastructure and technology improvements also increases the efficiency, reliability, resilience, and security of PNM’s electric system. The approved plan includes grid modernization investments of approximately $344 million for the first six years of a broader 11-year strategy. The approved rate rider will recover capital costs, operating expenses, and taxes associated with the investments included in the plan. In June 2025, the Grid Modernization Plan was updated to reflect an increase in investments from approximately $344 million to $367 million in the first six years and a decrease in projected operations and maintenance costs by approximately 18%.

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 three years of that period. PNM’s approved 2023 IRP maintains a continued focus on a carbon-free energy system by 2040. The plan highlights the need for the significant sustained addition of resources over the next two decades, replacing retiring or expiring capacity, meeting concurrent load growth, while reducing the carbon intensity of PNM’s portfolio.

In December 2024, PNM issued its 2029-2032 RFP for at least 900 MW of new energy resources to come online between 2029 and 2032, with at least 500 MW needed by 2030 and is anticipated to identify potential replacement resources for PNM’s current natural gas generation capacity as well as PNM’s ownership interest in Four Corners.

2028 Resource Application

On November 22, 2024, PNM filed an application with the NMPRC seeking approval of two 150 MW ESAs, a 167 MW PPA for the Valencia power plant, and a CCN for a 100 MW solar facility and a 30 MW battery, with a proposed additional 20 MW option, to be available to meet summer 2028 customer needs. On March 12, 2025, PNM and intervening parties filed an unopposed comprehensive stipulation with the NMPRC which supports approval of PNM’s application, including the proposed option to increase the 30 MW battery by an additional 20 MW. On May 6, 2025, the hearing examiners

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issued a certification of stipulation recommending approval of the unopposed stipulation and on June 26, 2025, the NMPRC approved the unopposed stipulation. This matter is now concluded.

PNM Rate Riders and other

The NMPRC has approved PNM recovering fuel costs through the FPPAC, as well as rate riders for renewable energy, energy efficiency, and the TEP. These mechanisms allow for more timely recovery of investments.

FERC Regulation

Rates PNM charges wholesale transmission customers are subject to traditional rate regulation by FERC. Rates charged to wholesale electric transmission customers, other than customers on the Western Spirit Line, 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.

Delivering At or Above Industry-Average Long-Term Earnings Growth

TXNM’s financial objective to deliver at or above industry-average long-term earnings 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. TXNM 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.

TXNM targets a dividend payout ratio in the 50% to 60% range of its ongoing earnings. The Board will continue to evaluate the dividend on an annual basis, considering sustainability and growth, capital planning, and industry standards.

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


Approval Date						Percent Increase











December 2023						5.4%
December 2024						5.2%

Under the terms of the Merger Agreement, TXNM 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 dividend or distribution in respect of any of its equity securities (except (i) TXNM may continue the declaration and payment of regular quarterly cash dividends on TXNM common stock for each quarterly period ending after the date of the Merger Agreement, in an amount not to exceed $0.4275 in 2025 or 2026, with usual record and payment dates for such quarterly dividends in accordance with past dividend practice, (ii) for any cash dividend or cash distribution by a wholly-owned subsidiary of TXNM to TXNM or another wholly-owned subsidiary of TXNM, and (iii) a “stub period” dividend to holders of record of TXNM common stock as of immediately prior to the Effective Time equal to the product of (1) the number of days from the record date for payment of the last quarterly dividend paid by TXNM prior to the Effective Time, multiplied by (2) a daily dividend rate determined by dividing the amount of the last quarterly dividend paid prior to the Effective Time by ninety-one ).

Maintaining Investment Grade Credit Ratings

The Company is committed to maintaining investment grade issuer credit ratings in order to reduce the cost of debt financing and to help ensure access to credit markets, when required. On January 15, 2024, S&P revised TXNM, PNM, and TNMP’s outlook to stable from positive. See the subheading Liquidity included in the full discussion of Liquidity and Capital Resources below for the specific credit ratings for TXNM, PNM, and TNMP. All of the credit ratings issued by both Moody’s and S&P on the Company’s senior debt continue to be investment grade.

Economic Factors

TNMP – In the three and six months ended June 30, 2025, TNMP experienced an increase in volumetric weather normalized retail load of 5.1% and 3.2% compared to 2024. Weather normalized demand-based load, excluding retail transmission and data center consumers, increased 2.6% and 6.1% in the three and six months ended June 30, 2025 compared to

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2024. Data center load, including distribution and transmission, has increased 71.7% and 86.8% in the three and six months ended June 30, 2025 compared to 2024.

PNM – In the three and six months ended June 30, 2025, PNM experienced a decrease of 2.2% and 0.6% in weather normalized residential load. Weather normalized commercial load experienced an increase of 2.9% and 2.3% in the three and six months ended June 30, 2025 compared to 2024. In addition, PNM experienced an increase in industrial load of 20.3% and 20.4% in the three and six months ended June 30, 2025 compared to 2024.

The Company is closely monitoring the impacts on the capital markets of other macroeconomic conditions, including actions by the Federal Reserve to address inflationary concerns or other market conditions, recently enacted federal legislation, and geopolitical activity, including the potential impacts of tariffs. The Company has not experienced, nor does it expect significant negative impacts to customer usage at PNM and TNMP resulting from these economic impacts. However, if current 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 attributable to TXNM were $30.5 million, or $0.32 per diluted share, in the six months ended June 30, 2025 compared to $95.2 million, or $1.05 per diluted share, in 2024. Among other things, earnings in the six months ended June 30, 2025 benefited from higher transmission and distribution rates at TNMP, higher demand-based load at TNMP, colder weather at TNMP, higher weather normalized retail load at PNM and TNMP, and increased performance by PNM’s NDT, coal mine reclamation, and SJGS decommissioning investment securities. These increases were partially offset by higher operating expenses at PNM and TNMP, increased depreciation at PNM and TNMP due to increased plant in service, lower transmission margin at PNM, capacity arrangements at PNM, milder weather at PNM, and higher interest charges at PNM, TNMP, and Corporate and Other. Additional information on factors impacting results of operations for each segment is discussed below under Results of Operations.

Liquidity and Capital Resources

As of June 30, 2025, TXNM, PNM, and TNMP had revolving credit facilities with capacities of $300.0 million, $440.0 million, and $200.0 million. Total availability for TXNM on a consolidated basis was $565.3 million at July 25, 2025. The Company utilizes these credit facilities and cash flows from operations to provide funds for both construction and operational expenditures. TXNM also has intercompany loan agreements with each of its subsidiaries.

TXNM projects that its consolidated capital requirements, consisting of construction expenditures and dividends, will total $8.6 billion for 2025 - 2029, including amounts expended through June 30, 2025. These construction expenditures include TNMP’s investments to support continued high growth in system demand across TNMP’s service territories and growing encouragement for infrastructure investments from the Texas legislature to support grid reliability and resilience. PNM’s capital initiatives include investments in transmission and distribution infrastructure to deliver clean energy, enhance customer satisfaction, and increase grid resilience. Construction expenditures also include investments proposed in PNM’s Grid Modernization Plan and TNMP’s SRP.

To fund capital spending requirements to meet growth that balances earnings goals, credit metrics, and liquidity needs, the Company has entered into a number of other financing arrangements. A complete listing of current financing arrangements is contained in Note 9 and Note 7 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K.

After considering the effects of these financings and the Company’s short-term liquidity position as of July 25, 2025, the Company has consolidated maturities of long-term and short-term debt aggregating approximately $983.7 million through July 2026. 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, including those provided for under the Merger Agreement, in order to fund its capital requirements during the 2025-2029 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. As of June 30, 2025 and July 25, 2025, the Company was in compliance with its debt covenants.

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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.

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions, except per share amounts)
Net earnings attributable to TXNM	$	21.6	$	48.0	$	(26.4)	$	30.5	$	95.2	$	(64.7)
Average diluted common and common equivalent shares	96.2		90.6		5.6		94.6		90.5		4.1
Net earnings attributable to TXNM per diluted share	$	0.22	$	0.53	$	(0.31)	$	0.32	$	1.05	$	(0.73)

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



	Three Months Ended		Six Months Ended
	June 30, 2025		June 30, 2025
	(In millions)
TNMP	$	(8.9)	$	(1.2)

PNM	(6.4)		(47.4)
Corporate and Other	(11.1)		(16.1)
Net change	$	(26.4)	$	(64.7)

Information regarding the factors impacting TXNM’s operating results by segment are set forth below.

Segment Information

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

TNMP

Non-GAAP Financial Measures

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. TNMP does not intend for utility margin to represent any financial measure as defined by GAAP however, the calculation of utility margin, as presented, most closely compares to gross margin as defined by GAAP. Reconciliations between utility margin and gross margin are presented below.


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions)

Gross margin	$	75.1	$	73.8	$	1.3	$	141.4	$	128.8	$	12.6


Transmission and distribution costs	10.7		9.7		1.0		20.4		18.1		2.3
Depreciation and amortization	34.9		31.0		3.9		70.1		61.4		8.7
Utility margin	$	120.8	$	114.5	$	6.3	$	231.9	$	208.4	$	23.5

Table of Contents

The following table summarizes the operating results for TNMP:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions)
Electric operating revenues	$	164.0	$	154.4	$	9.6	$	313.5	$	283.2	$	30.3
Cost of energy	43.3		39.9		3.4		81.5		74.8		6.7
Utility margin	120.8		114.5		6.3		231.9		208.4		23.5
Operating expenses	37.1		34.1		3.0		70.4		66.9		3.5
Depreciation and amortization	34.9		31.0		3.9		70.1		61.4		8.7
Operating income	48.7		49.3		(0.6)		91.4		80.1		11.3
Other income	1.7		2.8		(1.1)		4.1		3.9		0.2
Interest charges	(23.9)		(14.5)		(9.4)		(41.3)		(27.8)		(13.5)
Segment earnings before income taxes	26.4		37.7		(11.3)		54.3		56.1		(1.8)
Income (taxes)	(5.5)		(7.8)		2.3		(11.0)		(11.6)		0.6
Segment earnings	$	21.0	$	29.9	$	(8.9)	$	43.3	$	44.5	$	(1.2)

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


	Three Months Ended June 30,				Six Months Ended June 30,
			Percentage				Percentage
	2025	2024	Change		2025	2024	Change
Volumetric load (1) (GWh)
Residential	837.0	832.5	0.5	%	1,546.2	1,474.7	4.8	%
Commercial and other	11.5	11.5	—		23.6	23.5	0.4	%


Total volumetric load	848.5	844.0	0.5	%	1,569.8	1,498.2	4.8	%
Demand-based load (2) (MW)	9,435.8	8,114.9	16.3	%	18,831.6	15,523.9	21.3	%
Average retail consumers (thousands) (3)	281.4	276.5	1.8	%	280.9	275.8	1.8	%

(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 rate riders.

(3) TNMP provides transmission and distribution services to REPs that provide electric service to 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.

Operating Results – Three Months Ended June 30, 2025, compared to 2024

The following table summarizes the significant changes to gross margin:


		Three Months Ended June 30, 2025
		Change
Gross margin:		(In millions)


	Utility margin (see below)	$	6.3
	Depreciation and amortization (see below)	(3.9)
	Higher vegetation management, outside services and employee related expenses, excluding administrative costs	(1.0)
	Other	(0.1)
	Net Change	$	1.3

Table of Contents

The following table summarizes the significant changes to utility margin:


		Three Months Ended June 30, 2025
		Change
Utility margin:		(In millions)

	Transmission rate relief/load – Transmission cost of service rate increases in September 2024 and March 2025 more than offset by a decrease in ERCOT approved demand	$	(0.8)
	Distribution rate relief – Distribution cost of service rate increases in July 2024, November 2024, and June 2025	6.3
	Volumetric-based consumer usage/load – Weather normalized KWh sales increased 5.1%; the number of volumetric consumers increased 1.8%	1.3
	Demand-based consumer usage/load – Weather normalized demand-based MW sales for large commercial and industrial consumers excluding retail transmission consumers increased 2.3%	0.6
	Weather – Milder weather in Q2 2025	(1.1)

	Deferral of excess deferred income tax benefits refunded through base rates	(0.3)
	Rate Riders and other – Impacts of rate riders, including transmission cost recovery factor and energy efficiency rider which are partially offset in operating expenses	0.3
	Net Change	$	6.3

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 June 30, 2025
		Change
Operating expenses:		(In millions)


	Higher vegetation management expenses, outside services and employee related expenses	$	2.4

	Higher capitalization of administrative and general expenses due to higher construction expenditures	(0.9)
	Higher allocated depreciation and amortization expense from Corporate and Other	0.3
	Higher property tax due to increased utility plant in service	0.7
	Higher insurance premiums primarily related to wildfire risk	0.8

	Other	(0.3)
	Net Change	$	3.0





Depreciation and amortization:

	Increased utility plant in service	$	4.5
	Deferred depreciation related to HB 5247 (Note 12)	(0.6)

	Net Change	$	3.9





Other income (deductions):


	Higher equity AFUDC	$	0.2
	Lower CIAC	(1.6)
	Other	0.3

	Net Change	$	(1.1)

Table of Contents


		Three Months Ended June 30, 2025
		Change
Interest charges:		(In millions)


	TNMP Merger Backstop Term Loan (Note 9)	$	(1.3)
	Loss on reacquired debt	(5.3)
	Issuance of FMBs	(4.1)
	Repayment of FMBs	1.5
	Higher interest on revolving short-term borrowings	(0.8)

	Higher debt AFUDC	0.8
	Other	(0.2)
	Net Change	$	(9.4)





Income (taxes) benefits:

	Lower segment earnings before income taxes	$	2.4
	Lower amortization of excess deferred income taxes	(0.3)
	Other	0.2
	Net Change	$	2.3

Operating Results – Six Months Ended June 30, 2025 compared to 2024

The following table summarizes the significant changes to gross margin:


		Six Months Ended June 30, 2025
		Change
Gross margin:		(In millions)


	Utility margin (see below)	$	23.5
	Depreciation and amortization (see below)	(8.7)
	Higher employee related, outside services, and vegetation management expenses, excluding administrative costs	(2.1)
	Other	(0.1)
	Net Change	$	12.6

The following table summarizes the significant changes to utility margin:


		Six Months Ended June 30, 2025
		Change
Utility margin:		(In millions)


	Transmission rate relief/load – Transmission cost of service rate increases in March 2024, September 2024, and March 2025 partially offset by a decrease in ERCOT approved demand	$	3.6
	Distribution rate relief – Distribution cost of service rate increase in July 2024, November 2024, and June 2025	12.6
	Volumetric-based consumer usage/load – Weather normalized KWh sales increased 3.2%; the number of volumetric consumers increased 1.8%	1.1
	Demand-based consumer usage/load – Weather normalized demand-based MW sales for large commercial and industrial consumers excluding retail transmission consumers increased 6.4%	3.9
	Leap Year - Decrease in revenue due to additional day in 2024	(0.3)
	Weather – Colder weather in the first quarter of 2025 was partially offset by milder weather in the second quarter of 2025	1.3

	Deferral of excess deferred income tax benefits refunded through base rates	(0.2)
	Rate Riders and other – Impacts of rate riders, including transmission cost recovery factor and energy efficiency rider which are partially offset in operating expenses	1.5


	Net Change	$	23.5

Table of Contents

The following tables summarize the primary drivers for changes in operating expenses, depreciation and amortization, other income (deductions), interest charges, and income taxes:


		Six Months Ended June 30, 2025
		Change
Operating expenses:		(In millions)


	Higher employee related, outside services, and vegetation management expenses	$	2.8
	Higher property taxes due to increased utility plant in service	1.3
	Higher capitalization of administrative and general expenses due to higher construction expenditures	(3.7)
	Higher allocated depreciation and amortization expense from Corporate and Other	0.6
	Higher insurance premiums primarily related to wildfire risk	2.3

	Other	0.2
	Net Change	$	3.5





Depreciation and amortization:

	Increased utility plant in service	$	9.3



	Deferred depreciation related to HB 5247 (Note 12)	(0.6)
	Net Change	$	8.7





Other income (deductions):



	Lower CIAC	$	(0.6)

	Higher equity AFUDC	0.5
	Other	0.3
	Net Change	$	0.2





Interest charges:

	TNMP Merger Backstop Term Loan (Note 9)	$	(1.3)
	Loss on reacquired debt	(5.3)
	Issuance of FMBs	(9.0)
	Repayment of FMBs	2.3
	Higher interest on revolving short-term borrowings	(1.5)
	Higher debt AFUDC	1.7
	Other	(0.4)
	Net Change	$	(13.5)





Income (taxes) benefits:

	Lower segment earnings before income taxes	$	0.4
	Lower amortization of excess deferred federal income taxes	(0.2)

	Other	0.4
	Net Change	$	0.6

PNM

Non-GAAP Financial Measures

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. PNM does not intend for utility margin to represent any financial measure as defined by GAAP however, the calculation of utility margin, as presented, most closely compares to gross margin as defined by GAAP.

Table of Contents

Reconciliations between utility margin and gross margin are presented below.


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions)

Gross margin	$	111.4	$	124.7	$	(13.3)	$	213.7	$	245.6	$	(31.9)

Energy production costs	26.1		24.6		1.5		50.6		46.8		3.8
Transmission and distribution costs	15.8		15.4		0.4		31.6		29.7		1.9
Depreciation and amortization	60.8		54.2		6.6		120.6		107.5		13.1
Utility margin	$	214.0	$	218.9	$	(4.9)	$	416.5	$	429.6	$	(13.1)

The following table summarizes the operating results for PNM:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions)
Electric operating revenues	$	338.4	$	333.7	$	4.7	$	671.8	$	641.8	$	30.0
Cost of energy	124.3		114.8		9.5		255.3		212.2		43.1
Utility margin	214.0		218.9		(4.9)		416.5		429.6		(13.1)
Operating expenses	116.6		106.6		10.0		227.9		213.0		14.9
Depreciation and amortization	60.8		54.2		6.6		120.6		107.5		13.1
Operating income	36.6		58.1		(21.5)		68.0		109.0		(41.0)
Other income (deductions)	26.5		8.3		18.2		29.8		33.4		(3.6)
Interest charges	(32.0)		(25.9)		(6.1)		(61.8)		(51.0)		(10.8)
Segment earnings before income taxes	31.2		40.5		(9.3)		36.0		91.4		(55.4)
Income (taxes) benefit	(2.4)		(5.8)		3.4		(2.4)		(11.6)		9.3
Valencia non-controlling interest	(4.3)		(3.8)		(0.5)		(8.0)		(6.8)		(1.2)
Preferred stock dividend requirements	(0.1)		(0.1)		—		(0.3)		(0.3)		—
Segment earnings	$	24.4	$	30.8	$	(6.4)	$	25.3	$	72.7	$	(47.4)

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


	Three Months Ended June 30,				Six Months Ended June 30,
			Percentage				Percentage
	2025	2024	Change		2025	2024	Change
	(Gigawatt hours, except customers)
Residential	772.1	794.2	(2.8)	%	1,544.8	1,570.7	(1.6)	%
Commercial	899.6	878.5	2.4		1,752.6	1,726.6	1.5
Industrial (1)	599.2	500.6	19.7		1,183.7	985.4	20.1
Public authority	56.5	50.2	12.5		104.2	93.7	11.2
Economy energy service (2)	99.1	121.4	(18.4)		248.8	285.7	(12.9)

Other sales for resale (3)	1,111.6	1,219.5	(8.8)		2,008.8	1,973.7	1.8
	3,538.1	3,564.4	(0.7)	%	6,842.9	6,635.8	3.1	%
Average retail customers (thousands)	556.3	552.5	0.7	%	555.9	551.8	0.7	%

(1) Includes energy provided by PNM for renewable energy resources to match the energy and capacity requirements of Meta data center. PNM purchases renewable energy which is passed through to Meta under a rate rider. A special service rate is applied to Meta’s energy consumption in those hours of the month when their consumption exceeds the energy production from the renewable resources.

(2) 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.

(3) Includes sales for resale activity resulting from PNM’s participation in the EIM.

Table of Contents

Operating Results – Three Months Ended June 30, 2025, compared to 2024

The following table summarizes the significant changes to gross margin:


		Three Months Ended June 30, 2025
		Change
Gross margin:		(In millions)


	Utility margin (see below)	$	(4.9)
	Depreciation and amortization (see below)	(6.6)
	Higher plant maintenance costs at Four Corners and gas fired plants, partially offset by lower costs at PVNGS	(0.9)
	Higher employee related and outside services expenses partially offset by lower vegetation management expenses, excluding administrative costs	(0.2)
	Other	(0.7)
	Net Change	$	(13.3)

The following table summarizes the significant changes to utility margin:


		Three Months Ended June 30, 2025
		Change
Utility margin:		(In millions)


	Retail customer usage/load – Weather normalized retail KWh sales increased 2.9% for commercial customers and 20.3% for industrial customers, partially offset by decreased sales to residential customers of 2.2%	$	1.1
	Weather – Milder weather in 2025	(0.9)


	Transmission – Increase in revenues primarily due to higher market prices in the second quarter of 2025, partially offset by lower volumes	0.8

	Capacity arrangements – Additional energy storage agreements starting in the fourth quarter of 2024 partially offset with sales agreement in 2025	(10.1)

	Rate riders and other – Includes renewable energy, FPPAC, energy efficiency, energy transition charge, and transportation electrification riders which are partially offset in operating expenses, depreciation and amortization, other income (deductions), and interest charges	4.2
	Net Change	$	(4.9)

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 June 30, 2025
		Change
Operating expenses:		(In millions)

	Higher costs at Four Corners and gas fired plants partially offset with lower costs at PVNGS	$	1.2
	Higher employee related and outside services expenses partially offset by lower vegetation management expenses	0.5
	Higher insurance premiums primarily related to wildfire risk	1.9
	Higher property taxes associated with increased utility plant in service	3.3
	Higher allocated depreciation and amortization expense from Corporate and Other	0.7
	Higher allocated charitable contributions from Corporate and Other related to the 2025 Rate Request	1.5


	Higher costs associated with rate riders included in utility margin	0.6
	Other	0.3

	Net Change	$	10.0

Table of Contents


		Three Months Ended June 30, 2025
		Change
Depreciation and amortization:		(In millions)


	Increased utility plant in service	$	5.7

	Amortization related to ETBC I Securitized Costs, offset in utility margin	0.9

	Net Change	$	6.6





Other income (deductions):

	Increased performance on investment securities in the NDT and coal mine reclamation trusts	$	23.0
	Lower interest income and higher trust expenses related to investment securities in the NDT and coal mine reclamation trust	(2.3)
	Lower equity AFUDC	(1.3)
	Higher non-service post-retirement benefit costs	(0.7)
	Other	(0.5)
	Net Change	$	18.2





Interest charges:

	Higher interest on term loans	$	(3.6)
	Higher interest related to remarketed PCRBs in June 2024	(0.7)
	Issuance of SUNs in 2025	(3.4)
	Repayment of SUNs in 2025	0.5
	Higher interest on revolving short-term borrowings	(0.9)
	Lower interest on transmission interconnection and security deposit arrangements	0.8
	Higher debt AFUDC	1.1
	Other	0.1
	Net Change	$	(6.1)





Income (taxes) benefits:

	Lower segment earnings before income taxes	$	2.5
	Higher amortization of federal excess deferred income taxes	0.9



	Net Change	$	3.4

Operating Results – Six Months Ended June 30, 2025 compared to 2024

The following table summarizes the significant changes to gross margin:


		Six Months Ended June 30, 2025
		Change
Gross margin:		(In millions)


	Utility margin (see below)	$	(13.1)
	Depreciation and amortization (see below)	(13.1)
	Higher plant maintenance costs at Four Corners and gas fired plants, partially offset by lower costs at PVNGS	(2.6)
	Higher employee related and outside services expenses partially offset by lower vegetation management expenses, excluding administrative costs	(1.9)


	Other	(1.2)
	Net Change	$	(31.9)

Table of Contents

The following table summarizes the significant changes to utility margin:


		Six Months Ended June 30, 2025
		Change
Utility margin:		(In millions)


	Retail customer usage/load – Weather normalized retail KWh sales increased 2.3% for commercial customers and 20.4% for industrial customers, partially offset by decreased sales to residential customers of 0.6%	$	5.4
	Weather – Milder weather in 2025	(1.1)

	Leap Year – Decrease in revenue due to additional day in 2024	(1.9)
	Transmission – Decrease in revenues primarily due to lower market prices and lower volumes in 2025	(1.7)
	Capacity arrangements – Additional energy storage agreements starting in the fourth quarter of 2024 partially offset with sales agreement in 2025	(20.1)

	Rate riders and other – Includes renewable energy, FPPAC, energy efficiency, energy transition charge, and transportation electrification riders which are partially offset in operating expenses, depreciation and amortization, other income (deductions), and interest charges	6.3
	Net Change	$	(13.1)

The following tables summarize the primary drivers for changes in operating expenses, depreciation and amortization, other income (deductions), interest charges, and income taxes:


		Six Months Ended June 30, 2025
		Change
Operating expenses:		(In millions)

	Higher costs at Four Corners and gas fired plants partially offset with lower costs at PVNGS	$	4.8
	Higher employee related and outside services expenses offset by lower vegetation management expenses	0.3
	Higher insurance premiums primarily related to wildfire risk	5.0
	Higher property taxes associated with increased utility plant in service	2.8
	Higher allocated depreciation and amortization expense from Corporate and Other	1.3
	Higher allocated charitable contributions from Corporate and Other related to the 2025 Rate Request	1.5
	Unrecoverable portion of San Juan Coal Mine reclamation remeasurement related to the capped surface mine liability in 2024	(4.5)
	Higher costs associated with rate riders included in utility margin	3.2
	Other	0.5
	Net Change	$	14.9





Depreciation and amortization:

	Increased utility plant in service	$	11.1
	Amortization related to ETBC I Securitized Costs, offset in utility margin	1.8
	Other	0.2
	Net Change	$	13.1





Other income (deductions):

	Increased performance on investment securities in the NDT and coal mine reclamation trusts	$	3.7
	Lower interest income and higher trust expenses related to investment securities in the NDT and coal mine reclamation trust	(2.4)
	Lower equity AFUDC	(3.4)
	Higher non-service post-retirement benefit costs	(1.5)
	Net Change	$	(3.6)

Table of Contents


		Six Months Ended June 30, 2025
		Change
Interest charges:		(In millions)


	Higher interest on term loans	$	(8.3)
	Higher interest related to remarketed PCRBs in June 2024	(1.6)
	Issuance of SUNs in 2025	(3.4)
	Repayment of SUNs in 2025	0.5
	Higher interest on revolving short-term borrowings	(2.4)
	Lower interest on transmission interconnection and security deposit arrangements	2.2
	Higher debt AFUDC	2.0
	Other	0.2
	Net Change	$	(10.8)





Income (taxes) benefits:

	Lower segment earnings before income taxes	$	14.4
	Lower amortization of federal excess deferred income taxes	(4.2)
	Other	(0.9)



	Net Change	$	9.3

Corporate and Other

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2025		2024		Change		2025		2024		Change
	(In millions)
Electric operating revenues	$	—	$	—	$	—	$	—	$	—	$	—
Cost of energy	—		—		—		—		—		—
Utility margin	—		—		—		—		—		—
Operating expenses	3.1		(7.4)		10.5		(4.2)		(15.8)		11.6
Depreciation and amortization	9.5		9.2		0.3		19.1		18.7		0.4
Operating (loss)	(12.6)		(1.7)		(10.9)		(14.8)		(2.8)		(12.0)
Other income (deductions)	(1.6)		(0.1)		(1.5)		(1.8)		(15.2)		13.4
Interest charges	(16.1)		(15.5)		(0.6)		(32.5)		(30.8)		(1.7)
Segment (loss) before income taxes	(30.3)		(17.3)		(13.0)		(49.1)		(48.8)		(0.3)
Income (taxes) benefit	6.6		4.6		2.0		11.0		26.9		(15.9)
Segment (loss)	$	(23.8)	$	(12.7)	$	(11.1)	$	(38.1)	$	(22.0)	$	(16.1)

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 and six months ended June 30, 2025 includes increases of $11.9 million and $12.7 million in costs related to the Merger. Substantially all depreciation and amortization expense is offset in operating expenses as a result of allocation of these costs to other business segments.

Table of Contents

Operating Results – Three Months Ended June 30, 2025 compared to 2024

The following tables summarize the primary drivers for changes in other income (deductions), interest charges, and income taxes:


		Three Months Ended June 30, 2025
		Change
Other income (deductions):		(In millions)


	Higher charitable contributions allocated to PNM	$	(1.5)

	Net Change	$	(1.5)





Interest charges:


	Issuance of $550.0 million Convertible Notes in June 2024	$	(6.2)
	Higher interest on short-term borrowings	(0.2)
	Lower interest on term loans	5.7
	Other	0.1
	Net Change	$	(0.6)





Income (taxes) benefits:

	Higher segment loss before income taxes	$	3.3
	Impact of difference in effective tax rates used by TXNM and its subsidiaries in the calculation of income taxes in interim periods	(1.3)
	Net Change	$	2.0

Operating Results – Six Months Ended June 30, 2025 compared to 2024

The following tables summarize the primary drivers for changes in other income (deductions), interest charges, and income taxes:


		Six Months Ended June 30, 2025
		Change
Other income (deductions):		(In millions)


	Sale of NMRD equity method investment in 2024	$	15.1


	Higher charitable contributions allocated to PNM	(1.5)
	Other	(0.2)
	Net Change	$	13.4





Interest charges:

	Issuance of $550.0 million Convertible Notes	$	(14.1)
	Higher interest on short-term borrowings	(0.7)
	Lower interest on term loans	13.1







	Net Change	$	(1.7)





Income (taxes) benefits:


	Higher segment loss before income taxes	$	0.1
	Impact of difference in effective tax rates used by TXNM and its subsidiaries in the calculation of income taxes in interim periods	(0.2)
	Investment Tax Credits related to the sale of NMRD in 2024	(15.7)
	Other	(0.1)


	Net Change	$	(15.9)

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LIQUIDITY AND CAPITAL RESOURCES

Statements of Cash Flows

The changes in TXNM’s cash flows for the six months ended June 30, 2025, compared to June 30, 2024, are summarized as follows:


	Six Months Ended June 30,
	2025		2024		Change
	(In millions)
Net cash flows from (used in):
Operating activities	$	144.8	$	169.5	$	(24.7)
Investing activities	(611.3)		(479.5)		(131.8)
Financing activities	481.9		326.4		155.5
Net change in cash, cash equivalents, and restricted cash	$	15.4	$	16.4	$	(1.0)

Cash Flows from Operating Activities

Changes in TXNM’s cash flow from operating activities result from net earnings, adjusted for items impacting earnings that do not provide or use cash. See Results of Operations above. Certain changes in assets and liabilities resulting from normal operations, including the effects of the seasonal nature of the Company’s operations, also impact operating cash flows.

Cash Flows from Investing Activities

The changes in TXNM’s cash flows used in investing activities relate primarily to changes in utility plant additions. Cash flows from investing activities include purchases and sales of investment securities in the NDT, SJGS decommissioning trust, and coal mine reclamation trusts as well as the sale of NMRD on February 27, 2024.

Major components of TXNM’s cash inflows and (outflows) from investing activities are shown below:


	Six Months Ended June 30,
	2025		2024		Change
Cash (Outflows) for Utility Plant Additions	(In millions)
PNM:
Generation	$	(60.5)	$	(54.6)	$	(5.9)

Transmission and distribution	(200.5)		(246.0)		45.5

Nuclear fuel	(11.7)		(10.9)		(0.8)
	(272.7)		(311.5)		38.8

TNMP:
Transmission	(144.1)		(79.8)		(64.3)
Distribution	(173.6)		(173.7)		0.1

	(317.7)		(253.5)		(64.2)

Corporate and Other:
Computer hardware, software, general services, and other	(18.4)		(16.8)		(1.6)


	(608.8)		(581.8)		(27.0)

Other Cash Flows from Investing Activities
Proceeds from sale of plant assets	$	—	$	2.8	$	(2.8)
Proceeds from sales of investment securities	198.7		412.8		(214.1)
Purchases of investment securities	(201.2)		(417.6)		216.4
Proceeds from sale of NMRD	—		116.9		(116.9)



Investments in NMRD	—		(12.6)		12.6


	(2.5)		102.3		(104.8)
Net cash flows used in investing activities	$	(611.3)	$	(479.5)	$	(131.8)

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Cash Flows from Financing Activities

The changes in TXNM’s cash flows from financing activities include:

•Short-term borrowings decreased $263.6 million in 2025 compared to an increase of $64.5 million in 2024, resulting in a net decrease in cash flows from financing activities of $328.1 million

•In 2025, TNMP issued $140.0 million aggregate principal amount of TNMP 2025A Bonds and used the proceeds to repay borrowings under the TNMP Revolving Credit Facility, to fund capital expenditures, and for other corporate purposes

•In 2025, TNMP offered to prepay an aggregate $1,505.0 million of outstanding TNMP FMBs as a result of the signing of the Merger Agreement. TNMP drew $1,084.3 million on the TNMP Merger Backstop Term Loan to fund the prepayment of the validly-tendered bonds

•In 2025, PNM entered into the PNM 2025 Term Loan for $195.0 million and used the proceeds to repay borrowings under the PNM Revolving Credit Facility, the PNM New Mexico Credit Facility, and for other corporate purposes

•In 2025, PNM issued $300.0 million aggregate principal amount of PNM 2025A SUNs and used the proceeds to repay existing indebtedness, including the $104.0 million of SUNs that were due in May 2025, to fund capital expenditures, and for other corporate purposes

•In 2025, TXNM physically settled all remaining shares under the TXNM 2024 ATM by issuing 1.1 million shares of TXNM common stock aggregating net proceeds of $49.6 million that were used to repay borrowings under the TXNM Revolving Credit Facility

•In 2025, TXNM repaid $51.0 million in borrowings under the TXNM 2021 Delayed Draw Term Loan

•In 2025, TXNM sold 8,000,000 shares of TXNM common stock in a private placement transaction aggregating $400.0 million and used the proceeds to make a cash equity contribution of $160.0 million to TNMP, to repay borrowings under the TXNM Revolving Credit Facility, and for general corporate purposes

•In 2025, TXNM sold 3,615,003 shares of TXNM common stock in a private placement transaction aggregating $200.0 million and used the proceeds to repay an equal amount of the TXNM 2023 Term Loan

Financing Activities

See Note 7 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K and Note 9 for additional information concerning the Company’s financing activities. PNM must obtain NMPRC approval for any financing transaction having a maturity of more than 18 months. In addition, PNM files its annual informational financing filing and short-term financing plan with the NMPRC.

The Company’s ability to access the credit and capital markets at a reasonable cost is largely dependent upon its:

•Ability to earn a fair return on equity

•Results of operations

•Ability to obtain required regulatory approvals

•Conditions in the financial markets

•Credit ratings

The Company is closely monitoring the impacts on the capital markets of other macroeconomic conditions, including actions by the Federal Reserve to address inflationary concerns or other market conditions, and geopolitical activity, including the potential impacts of tariffs. The Company currently believes it has adequate liquidity but cannot predict the effects of any of these macroeconomic conditions on the global, national, or local economy, including the Company’s ability to access capital in the financial markets, or on the Company’s financial position, results of operations, and cash flows.

Each of the Company’s revolving credit facilities and term loans contain a single financial covenant that requires the maintenance of a debt-to-capitalization ratio. For the TXNM agreements, this ratio must be maintained at less than or equal to 70%, and for the PNM and TNMP agreements, this ratio must be maintained at less than or equal to 65%. The Company’s revolving credit facilities, term loans, and other debt agreements generally also contain customary covenants, events of default, cross-default provisions, and change-of-control provisions. The Company is in compliance with its debt covenants.

In January 2025, PNM entered into the PNM 2025 Term Loan. PNM used the proceeds of the PNM 2025 Term Loan to repay borrowings under the PNM Revolving Credit Facility, the PNM New Mexico Credit Facility, and for general corporate purposes. The PNM 2025 Term Loan bears interest at a variable rate, which was 5.32% at June 30, 2025, and must be repaid on or before July 21, 2026.

In February 2025, TNMP entered into the TNMP February 2025 Bond Purchase Agreement for the sale of $140.0 million aggregate principal amount of the TNMP February 2025 Bonds. TNMP issued all $140.0 million at a 5.19%

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interest rate, due April 1, 2031. The proceeds were used to repay borrowings under the TNMP Revolving Credit Facility, for funding of capital expenditures, and for other corporate purposes.

In April 2025, PNM entered into the PNM April 2025 Note Purchase Agreement with institutional investors for the sale and issuance of $300.0 million aggregate principal amount of the PNM April 2025 SUNs, offered in private placement transactions. The PNM April 2025 SUNs were issued on April 23, 2025 in two series. PNM issued $125.0 million of the PNM April 2025 SUNs at 5.75%, due June 1, 2032, and another $175.0 million at 6.13%, due June 1, 2037. Proceeds from the PNM April 2025 SUNs were used for the repayment of existing indebtedness, funding of capital expenditures, and general corporate purposes.

In May 2025, TXNM paid the remaining balance due under its TXNM 2021 Delayed Draw Term Loan in accordance with its terms.

In May 2025, TXNM physically settled all shares under the TXNM 2024 ATM Program by issuing 1,104,641 shares to the forward purchasers, aggregating net proceeds of $49.6 million, including $0.5 million for equity issuance costs. TXNM used the proceeds from the settled shares to repay borrowings under the TXNM Revolving Credit Facility. Following this settlement, no additional shares of TXNM’s common stock remain subject to future settlement under the TXNM 2024 ATM Program.

In May 2025, the execution of the Merger Agreement constituted a “Change of Control” under certain TXNM and TNMP debt agreements. Under each of the specified debt agreements, a “Change of Control” constitutes an “Event of Default,” pursuant to which the lender parties thereto had the right to accelerate the indebtedness under the debt agreements. The definition of Change of Control under the PNM debt agreements and PNM note purchase agreements are not triggered by the execution of the Merger Agreement.

In May 2025, TXNM entered the May 2025 Stock Purchase Agreement whereby TXNM sold, in a private placement transaction, 8,000,000 shares of TXNM common stock for a purchase price of $50.00 per share (aggregating $400.0 million). The consummation of the May 2025 Stock Purchase Agreement occurred on June 2, 2025. TXNM used the proceeds to make a cash equity contribution of $160.0 million to TNMP, to repay borrowings under the TXNM Revolving Credit Facility, and for general corporate purposes.

To ensure sufficient liquidity, TXNM entered into the TXNM Merger Backstop Revolving Facility to provide liquidity in the event TXNM was unable to obtain the Lender Consents. The TXNM Merger Backstop Revolving Facility expired according to its terms as TXNM did not make any additional borrowings thereunder by the commitment termination date of May 23, 2025, and TXNM was able to obtain the necessary Lender Consents.

Concurrent with the execution of the TXNM Merger Backstop Revolving Facility, TNMP entered into the TNMP Merger Backstop Term Loan to provide liquidity to repurchase TNMP’s FMBs that were tendered for prepayment pursuant to the Offer (defined below). Borrowings under the TNMP Merger Backstop Term Loan were short-term in nature and bore interest at a variable rate, which was 5.42% at June 30, 2025. On July 21, 2025 TNMP issued the TNMP July 2025 FMBs and used the proceeds to repay the outstanding principal balance under the TNMP Merger Backstop Term Loan on July 22, 2025, terminating that agreement. As TNMP demonstrated the intent and ability to refinance this short-term obligation prior to the issuance of this Form 10-Q, the obligation that existed as of June 30, 2025 has been presented as long-term debt on the Condensed Consolidated Balance Sheets.

The documents governing an aggregate $1,505.0 million of TNMP’s outstanding FMBs obligated TNMP to offer (the “Offer”), within 30 business days following the signing of the Merger Agreement, to prepay all outstanding TNMP FMBs at 100% of the principal amount, plus accrued and unpaid interest thereon, but without any make-whole amount or other premium. On June 14, 2025, the Offer expired and $1,084.3 million in aggregate principal amount of the bonds were validly tendered. On June 24, 2025, holders whose bonds were validly tendered and accepted for purchase received 100% of the aggregate principal amount of bonds prepaid plus accrued and unpaid interest using funds drawn under the TNMP Merger Backstop Term Loan. The documents governing the TNMP FMBs currently require TNMP to make another offer, within 30 business days of closing of the Merger, to prepay all the remaining outstanding TNMP FMBs at par. TNMP will make such offer to prepay the TNMP FMBs in accordance with the terms of the TNMP FMBs; however, holders of the TNMP FMBs are not required to tender their TNMP FMBs and may accept or reject such offer to prepay.

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In June 2025, TXNM entered into the June 2025 Stock Purchase Agreement whereby TXNM sold and the purchasers named therein agreed to purchase 3,615,003 shares of TXNM common stock for a purchase price of $55.325 per share (for an aggregate amount of approximately $200 million). The closing of the issuance occurred on June 27, 2025. TXNM used the proceeds to repay an equal amount due under the TXNM 2023 Term Loan. TXNM has granted the purchasers customary registration rights with respect to the shares, pursuant to which TXNM is required to register such shares for resale with the SEC no later than five business days after TXNM files this Form 10-Q for the quarterly period ending June 30, 2025.

On July 21, 2025, TNMP entered into the TNMP July 2025 Bond Purchase Agreement with institutional investors for the sale of $1,084.3 million aggregate principal amount of six series of TNMP July 2025 FMBs offered in private placement transactions. The proceeds were used to repay borrowings under the TNMP Merger Backstop Term Loan. See Note 9 for the terms of the TNMP July 2025 FMBs.

On July 31, 2025, PNM entered into the PNM July 2025 Note Purchase Agreement with institutional investors for the sale and issuance of $350.0 million aggregate principal amount of two series of the PNM July 2025 SUNs offered in private placement transactions. PNM used the proceeds from the PNM July 2025 SUNs to repay the PNM $250.0 million SUNs and for general corporate purposes. See Note 9 for the terms of the PNM July 2025 SUNs. As PNM demonstrated the intent and ability to refinance the obligation due under the PNM $250.0 million SUNs prior to the issuance of this Form 10-Q, as of June 30, 2025 this has been presented as Long-term Debt on the Condensed Consolidated Balance Sheets.

Capital Requirements

TXNM’s total capital requirements consist of construction expenditures and cash dividend requirements for TXNM common stock and PNM preferred stock.

Key activities in TXNM’s current construction program include:

•Investing in transmission and distribution infrastructure

•Upgrading generation resources and delivering clean energy

•Purchasing nuclear fuel

Projected capital requirements, including amounts expended through June 30, 2025, are:


	2025		2026-2029		Total
	(In millions)
Construction expenditures	$	1,321.3	$	6,513.0	$	7,834.3

Dividends on TXNM common stock	151.0		611.3		762.3
Dividends on PNM preferred stock	0.5		2.1		2.6
Total capital requirements	$	1,472.8	$	7,126.4	$	8,599.2

The construction expenditure estimates are under continuing review and subject to ongoing adjustment, as well as to Board review and approval. The construction expenditures above include TNMP’s investments to support continued high growth in system demand across TNMP’s service territories and growing encouragement for infrastructure investments from the Texas legislature to support grid reliability and resilience. PNM’s capital initiative that includes investments in transmission and distribution infrastructure to deliver clean energy, enhance customer satisfaction, and increase grid resilience. Construction expenditures also include investments in PNM’s Grid Modernization Plan and TNMP’s SRP. These investments provide for a more resilient, reliable, efficient, and decarbonized electric system. Not included in the table above are incremental expenditures for new customer growth in New Mexico and Texas, and other transmission and renewable energy expansion in New Mexico. The ability of TXNM to pay dividends on its common stock is dependent upon the ability of PNM and TNMP to pay dividends to TXNM and the Merger (See Note 17). See Note 6 of the Notes to the Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K for a discussion of regulatory and contractual restrictions on the payment of dividends by PNM and TNMP.

During the six months ended June 30, 2025, TXNM met its capital requirements and construction expenditures through cash generated from operations, as well as its liquidity arrangements and the borrowings discussed in Financing Activities above.

In addition to the capital requirements for construction expenditures and dividends, the Company has long-term debt and term loans that must be paid or refinanced at maturity. PNM has $3.5 million and $3.6 million in scheduled principal payments due for the ETBC I Securitized Bonds in August 2025 and February 2026. PNM also has $200.0 million under the PNM 2024 Term Loan due in November 2025 and $195.0 million under the PNM 2025 Term Loan due in July 2026. TXNM has $210.0 million under the TXNM 2023 Term Loan due in June 2026. See Note 9 and Note 7 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K for additional information about the Company’s long-term debt

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and equity arrangements. The Company may also enter into new arrangements similar to the existing agreements, borrow under the revolving credit facilities, or issue new long-term debt or equity in the public or private capital markets, or a combination of these sources. The Company has from time to time refinanced or repurchased portions of its outstanding debt before scheduled maturity. Depending on market conditions, the Company may refinance other debt issuances or make additional debt repurchases in the future.

Liquidity

TXNM’s liquidity arrangements include the $300.0 million TXNM Revolving Credit Facility, the $400.0 million PNM Revolving Credit Facility, and the $200.0 million TNMP Revolving Credit Facility. Each of these facilities matures on March 30, 2029 and contains two one-year extension options that, if exercised, would extend the maturity to March 2031, subject to approval by a majority of the lenders. PNM also has the $40.0 million PNM New Mexico Credit Facility with a maturity of May 20, 2026. On July 25, 2025, PNM amended its PNM New Mexico Credit Facility to, among other things, extend the maturity to May 31, 2030. Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities are based on SOFR. The Company believes the terms and conditions of these facilities are consistent with those of other investment grade revolving credit facilities in the utility industry. The Company expects that it will be able to extend or replace these credit facilities under similar terms and conditions prior to their expirations.

The revolving credit facilities and the PNM New Mexico Credit Facility provide short-term borrowing capacity. The revolving credit facilities also allow letters of credit to be issued. Letters of credit reduce the available capacity under the facilities. The Company utilizes these credit facilities and cash flows from operations to provide funds for both construction and operational expenditures. The Company’s business is seasonal with more revenues and cash flows from operations being generated in the summer months. In general, the Company relies on the credit facilities to be the initial funding source for construction expenditures. Accordingly, borrowings under the facilities may increase over time. Depending on market and other conditions, the Company will periodically issue long-term debt and use the proceeds to reduce the borrowings under the credit facilities or refinance other debt. Information regarding the range of borrowings for each facility is as follows:


	Three Months Ended June 30, 2025				Six Months Ended June 30, 2025
Range of Borrowings	Low		High		Low		High
	(In millions)
PNM:
PNM Revolving Credit Facility	$	—	$	293.7	$	—	$	325.2
PNM New Mexico Credit Facility	20.0		40.0		20.0		40.0
TNMP Revolving Credit Facility	—		199.4		—		200.0
TXNM Revolving Credit Facility	—		258.0		—		258.0

At June 30, 2025, the weighted average interest rates were 5.66% for the PNM Revolving Credit Facility, 5.67% for the PNM New Mexico Credit Facility, and 5.92% for the TXNM Revolving Credit Facility. There were no outstanding borrowings under the TNMP Revolving Credit Facility.

The Company currently believes that its capital requirements for at least the next twelve months can be met through internal cash generation, existing, extended, or new credit arrangements, and access to public and private capital markets as discussed above and in Note 9. The Company anticipates that additional long-term financing, in the form of debt and/or equity issuances, will be necessary to fund its capital requirements and to balance its capital structure during the 2025-2029 period. To cover the difference in the amounts and timing of internal cash generation and cash requirements, the Company intends to use short-term borrowings under its current and future liquidity arrangements or other short-term loans. Market conditions, such as rising interest rates, may raise the cost of borrowing under the Company’s current and future liquidity arrangements or other variable debt. In addition, if market conditions worsen, the Company may not be able to access the capital markets or renew credit facilities when they expire. Should that occur, the Company would seek to improve cash flows by reducing capital expenditures and exploring other available alternatives.

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As of July 25, 2025, ratings on the Company’s securities were as follows:

TXNM

PNM

TNMP

S&P

Issuer rating

BBB

BBB+

Senior secured debt

Senior unsecured debt

BBB-

BBB

Junior subordinated debt

BB+

Preferred stock

BB+

Moody’s

Issuer rating

Baa3

Baa2

Baa1

Senior secured debt

Senior unsecured debt

Baa3

Baa2

Junior subordinated debt

Ba1

* Not applicable

In its June 2025 credit opinion, Moody’s commented that the announced terms of the proposed Merger are not expected to adversely affect the ratings or outlooks of TXNM or its two utility subsidiaries. Investors are cautioned that a security rating is not a recommendation to buy, sell, or hold securities, that each rating is subject to revision or withdrawal at any time by the rating organization, and that each rating should be evaluated independently of any other rating.

A summary of liquidity arrangements as of July 25, 2025, is as follows:


	PNM		TNMP		TXNM Separate		TXNM
	(In millions)
Financing capacity:
Revolving Credit Facility	$	400.0	$	200.0	$	300.0	$	900.0
PNM New Mexico Credit Facility	40.0		—		—		40.0

Total financing capacity	440.0		200.0		300.0		940.0


Amounts outstanding as of July 25, 2025:
Revolving Credit Facility	231.8		14.3		85.5		331.6
PNM New Mexico Credit Facility	40.0		—		—		40.0

Letters of credit	—		—		3.1		3.1

Total short-term debt and letters of credit	271.8		14.3		88.6		374.7

Remaining availability as of July 25, 2025	$	168.2	$	185.7	$	211.4	$	565.3
Invested cash as of July 25, 2025	$	—	$	—	$	0.9	$	0.9

In addition to the above, TXNM has $30.3 million of letters of credit issued under the WFB LOC Facility. See Note 9. The above table excludes intercompany debt. As of July 25, 2025, neither PNM or TNMP had any borrowings from TXNM under their respective intercompany loan agreements. TXNM had $1.7 million of intercompany borrowings from PNMR Development as of July 25, 2025. The remaining availability under the revolving credit facilities at any point in time varies based on a number of factors, including the timing of collections of accounts receivables and payments for construction and operating expenditures.

TXNM has an automatic shelf registration that provides for the issuance of various types of debt and equity securities that expires February 2028. PNM has a shelf registration statement for up to $650.0 million of SUNs that expires in May 2026.

Other Material Cash Requirements

TXNM, PNM, and TNMP have contractual obligations for long-term debt, minimum lease payments, coal contracts, coal mine reclamation, nuclear decommissioning, SJGS plant decommissioning, pension and retiree medical contributions, and other long-term obligations. See MD&A – Other Material Cash Requirements in the 2024 Annual Reports on Form 10-K.

Contingent Provisions of Certain Obligations

As discussed in the 2024 Annual Reports on Form 10-K, TXNM, PNM, and TNMP have a number of debt obligations and other contractual commitments that contain contingent provisions. Some of these, if triggered, could affect the liquidity of

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the Company. In the unlikely event that the contingent requirements were to be triggered, TXNM, PNM, or TNMP could be required to provide security, immediately pay outstanding obligations, or be prevented from drawing on unused capacity under certain credit agreements. The contingent provisions also include contractual increases in the interest rate charged on certain of the Company’s short-term debt obligations in the event of a downgrade in credit ratings. The Company believes its financing arrangements are sufficient to meet the requirements of the contingent provisions. No conditions have occurred that would result in any of the above contingent provisions being implemented.

Capital Structure

The capitalization tables below include the current maturities of long-term debt but does not include short-term debt or lease obligations as debt.


	June 30, 2025		December 31, 2024
TXNM
TXNM common equity	37.9	%	33.9	%
Preferred stock of subsidiary	0.1		0.2
Long-term debt 1	62.0		65.9
Total capitalization	100.0	%	100.0	%
PNM
PNM common equity	43.1	%	46.4	%
Preferred stock	0.2		0.2
Long-term debt	56.7		53.4
Total capitalization	100.0	%	100.0	%
TNMP
Common equity	50.8	%	48.3	%
Long-term debt	49.2		51.7
Total capitalization	100.0	%	100.0	%

1 TXNM’s long-term debt as of June 30, 2025 includes Convertible Notes (Note 9), which receive 50% equity credit from ratings organizations.

OTHER ISSUES FACING THE COMPANY

Climate Change Issues

Background

For the past several years, management has identified multiple risks and opportunities related to climate change, including the impacts of severe weather events, potential environmental regulation, technological innovation, and availability of fuel and water for operations, as among the most significant risks facing the Company. Accordingly, these risks are overseen by the Board in order to facilitate more integrated risk and strategy oversight and planning. Board oversight includes understanding the various challenges and opportunities presented by these risks, including the financial consequences that might result from enacted and potential federal and/or state regulation of GHG; plans to mitigate these risks; and the impacts these risks may have on the Company’s strategy. In addition, the Board approves certain procurements of grid modernization technologies and replacement resources.

Management is also responsible for assessing significant risks, developing and executing appropriate responses, and reporting to the Board on the status of risk activities. For example, management periodically updates the Board on the implementation of corporate environmental policy, and the Company’s environmental management systems, including the promotion of energy efficiency programs, and the use of renewable resources. The Board is also informed of the Company’s practices and procedures to assess the impacts of operations on the environment. The Board considers issues associated with climate change, the Company’s GHG exposures, and the financial consequences that might result from enacted and potential federal and/or state regulation of GHG. Management has published, with Board oversight, a Climate Change Report available at https://www.txnmenergy.com/sustainability/environment/climate_change_report that details the Company’s efforts to transition to a carbon-free generating portfolio by 2040.

As part of management’s continuing effort to monitor climate-related risks and assess opportunities, the Company has advanced its understanding of climate change by participating in the “2 Degree Scenario” planning by participating in the Electric Power Research Institute (“EPRI”) Understanding Climate Scenarios & Goal Setting Activities program. The program focused on characterizing and analyzing the relationship of individual electric utility company’s carbon emissions and global temperature goals. Activities included analyzing the scientific understanding of global emissions pathways that are consistent with limiting global warming and providing insight to assist companies in developing approaches to climate scenario planning. As PNM expands its sustainability efforts, EPRI’s environmental and climate analysis programs have also been useful in

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gaining a better understanding of energy and environmental policy and regulations, advanced clean energy technologies, decarbonization trends and climate impacts. In 2022, PNM joined EPRI’s Climate READi program which is a strategic initiative convening a global collaborative of electric utilities, thought leaders, scientific researchers and other key stakeholders to strengthen the power sector’s collective approach to managing climate risk to the power system. The program is a three-year initiative, through work across three concurrent workstreams, and PNM will benefit from the development of a first-of-its-kind comprehensive framework for managing physical climate risk and investment prioritization that is scheduled to launch in May 2025.

The Company cannot anticipate or predict the potential long-term effects of climate change or climate change related regulation on its results of operations, financial position, or cash flows.

Greenhouse Gas Emissions Exposures

In 2024, GHG emissions associated with PNM’s interests in its fossil-fueled generating plants included approximately 1.5 million metric tons of CO2, which comprises the vast majority of PNM’s GHG emissions.

As of June 30, 2025, approximately 28% of PNM’s generating capacity, including resources owned, leased, under PPAs or ESAs, all of which is located within the U.S., consisted of coal or gas-fired generation that produces GHG emissions. As PNM shifts its generation to cleaner energy resources, the Company’s output of GHG emissions continues to decrease. Many factors affect the amount of GHG emitted, including total electricity sales, plant performance, economic dispatch, and the availability of renewable resources. For example, wind generation performance from PNM’s largest single renewable energy resource, New Mexico Wind, varies each year as a result of highly seasonal wind patterns and annual wind resource variability. Similarly, if PVNGS experienced prolonged outages or if PNM’s entitlement from PVNGS were reduced, PNM might be required to utilize other power supply resources such as gas-fired generation, which could increase GHG emissions.

PNM has several programs underway to reduce or offset GHG emissions from its generation resource portfolio, thereby reducing its exposure to climate change regulation. PNM shut down SJGS Units 2 and 3 as part of its strategy to address the regional haze requirements of the CAA. The shutdown of SJGS Units 2 and 3 resulted in a reduction of GHG emissions for the entire station of approximately 54% for 2018, reflecting a reduction of 32% of GHG emissions from the Company’s owned interests in SJGS, below 2005 levels. PNM shut down the remaining SJGS Units 1 and 4 on June 30, 2022 and September 30, 2022, respectively, resulting in additional reductions GHG emissions. Retiring PNM’s share of SJGS in 2022 resulted in a GHG emissions reduction from 2021 levels of 67% of PNM’s GHG emissions based upon 2021 GHG emissions from generation.

PNM’s utility-owned solar and energy storage capacity, as well as solar, energy storage, wind, and geothermal procurements in service as of June 30, 2025 have a total net generation capacity of 2,779 MW. The NMPRC has approved plans for PNM to procure energy and RECs from additional resources to serve retail customers and a data center located in PNM’s service territory. PNM’s approved resource plans have a generation capacity of 1,360 MW. This includes approximately 310 MW of capacity under the Community Solar Act which will allow PNM to provide customers the option of accessing solar energy. PNM will continue to seek approval to procure renewable resources while balancing the impact to customers’ electricity costs in order to meet forecasted peak load requirements to serve its customers and New Mexico’s escalating RPS and carbon-free resource requirements.

PNM also has a customer distributed solar generation program that represented 320.5 MW at June 30, 2025. PNM’s distributed solar programs will generate an estimated 641.0 GWh of emission-free solar energy available this year to offset PNM’s annual production from fossil-fueled electricity generation. PNM has offered its customers a comprehensive portfolio of energy efficiency and load management programs since 2007. PNM’s cumulative savings from these programs were an estimated 8,227 GWh of electricity through 2024. PNM projects energy efficiency and load management programs between 2025 and 2039 will provide the equivalent of approximately 11,900 GWh of electricity savings, which will avoid approximately 1.2 million tons of CO2 based upon projected emissions from PNM’s portfolio of resources. These estimates are subject to change because of the uncertainty of many of the underlying variables, including changes in PNM’s generation portfolio, demand for electricity, energy efficiency, and complex relationships between those variables.

Because of PNM’s dependence on fossil-fueled generation, legislation or regulation that imposes a limit or cost on GHG could impact the cost at which electricity is produced. While PNM expects to recover any such costs through rates, the timing and outcome of proceedings for cost recovery are uncertain. In addition, to the extent that any additional costs are recovered through rates, customers may reduce their usage, relocate facilities to other areas with lower energy costs, or take other actions that ultimately could adversely impact PNM.

Other Climate Change Risks

PNM’s generating stations are located in the arid southwest. Access to water for cooling for some of these facilities is critical to continued operations. Forecasts for the impacts of climate change on water supply in the southwest range from reduced precipitation to changes in the timing of precipitation. In either case, PNM’s generating facilities requiring water for

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cooling will need to mitigate the impacts of climate change through adaptive measures. Current measures employed by PNM generating stations include the use of sustainable, less variable groundwater supplies, and investments in technologies such as air cooling and cooling water recycling. These types of actions will continue to be important to sustain operations.

PNM’s service areas occasionally experience periodic high winds and severe thunderstorms. TNMP has operations in the Gulf Coast area of Texas, which experiences periodic hurricanes and other extreme weather conditions. In addition to potentially causing physical damage to Company-owned facilities, which disrupts the ability to transmit and/or distribute energy, weather and other events of nature can temporarily reduce customers’ usage and demand for energy. In addition, other events influenced by climate change, such as wildfires, could disrupt Company operations or result in third-party claims against the Company. PNM has enhanced its wildfire prevention efforts and maintains a wildfire mitigation plan and a public safety power shutoff plan. TNMP has also developed a wildfire mitigation plan. However, both PNM and TNMP remain at risk for wildfires outside of their control and the resulting damages in their service areas.

EPA Regulation

In 2007, the U.S. Supreme Court held that EPA has the authority to regulate GHG emissions under the CAA, and in 2009, EPA released its endangerment finding for GHG from new motor vehicles, stating that the atmospheric concentrations of six key greenhouse gases (CO2, methane, nitrous oxides, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) endanger the public health and welfare. These actions triggered new GHG permitting requirements for stationary sources, including the energy industry, under the Prevention of Significant Deterioration (“PSD”) and Title V program, although the U.S. Supreme Court held the CAA does not authorize EPA to require a source to obtain a PSD permit solely on the basis of its potential GHG emissions.

EPA also determined that its finding of endangerment requires it to issue performance standards under Section 111 of the CAA to regulate GHG emissions from new and existing stationary sources, including fossil fuel fired EGUs. Accordingly, in 2015, EPA issued Carbon Pollution Standards for new, modified, and reconstructed power plants (under Section 111(b)) and the Clean Power Plan for existing power plants (under Section 111(d)).

Multiple states, utilities, and trade groups challenged both the Carbon Pollution Standards for new sources and the Clean Power Plan for existing sources in separate cases, and the challengers successfully petitioned the U.S. Supreme Court for a stay of the Clean Power Plan.

In 2019, EPA repealed the Clean Power Plan, promulgated the ACE Rule, and revised the implementing regulations for all emission guidelines issued under CAA Section 111(d). The ACE Rule was also challenged, and on January 19, 2021, the DC Circuit issued an opinion in American Lung Association and American Public Health Association v. EPA, et al. vacating the ACE Rule.

Numerous parties sought review by the U.S. Supreme Court and on June 30, 2022, the Court held that the “generation shifting” approach in the Clean Power Plan exceeded the powers granted to EPA by Congress, though the Court did not address the related issue of whether Section 111 of the CAA only authorizes EPA to require measures that can be implemented entirely within the fence line at an individual source. Of broader significance in administrative law, the Court’s opinion expressly invoked the major questions doctrine, which requires rules involving issues of “vast economic or political significance,” to be supported by clear statutory authorization. In cases where there is no clear statement of authority, courts need not defer to the agency’s statutory interpretation on “major questions.” The decision sets legal precedent for future rulemakings by EPA and other federal regulatory agencies whereby the agency’s authority may be limited based upon similar reasoning.

The litigation over the Carbon Pollution Standards remains held in abeyance but could be reactivated by the parties upon a determination by the court that reconsideration of the rule has concluded.

On January 20, 2025, President Trump signed an executive order entitled “Unleashing American Energy” directing all agencies, including EPA, to review all agency actions and suspend, revise, or rescind those identified as imposing an undue burden on domestic energy resources. The order also disbands the Interagency Working Group on the Social Cost of Greenhouse Gases, eliminates the “social cost of carbon” from consideration in any Federal permitting or regulatory decision,

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and expressly directs EPA to submit joint recommendations on the legality and continuing applicability of the 2009 endangerment finding for greenhouse gases that currently provides the legal basis for EPA to regulate greenhouse gases under the CAA. On March 12, 2025, EPA announced it will formally reconsider the 2009 endangerment finding in collaboration with the OMB and other relevant agencies. On June 17, 2025, EPA published a two-part proposed rule in the Federal Register to repeal and revise the GHG emission standards for EGUs. EPA primarily proposes to find that GHG emissions from fossil fuel-fired power plants “do not contribute significantly to dangerous air pollution” under the meaning of CAA Section 111, which would preclude EPA from regulating GHG emissions from those plants. As a result, EPA is proposing to repeal all GHG standards for the power sector promulgated under CAA Section 111 in both 2015 and 2024. EPA also proposed in the alternative to find that CCS is not adequately demonstrated and that neither CCS nor gas co-firing are the best system of emission reduction for GHG emissions from power plants, which findings also support repeal of those specific requirements from the rules adopted in 2024. Comments are due by August 7, 2025 and EPA intends to finalize the proposed rule by the end of 2025.

Federal Legislation

In July 2025, President Trump signed the OBBBA, significantly altering the landscape of climate action and clean energy initiatives in the United States. The legislation revises and, in some cases, phases out tax credits established under the IRA and also includes restrictions on the availability of credits for “foreign entities of concern.” It is uncertain under the new Trump Administration, given the control of both houses of Congress by the Republican Party, what additional Federal legislation on climate change is expected during this Congress.

State and Regional Activity

Pursuant to New Mexico law, each utility must submit an IRP to the NMPRC every three years to evaluate renewable energy, energy efficiency, load management, distributed generation, and conventional supply-side resources on a consistent and comparable basis. The IRP is required to take into consideration risk and uncertainty of fuel supply, price volatility, and costs of anticipated environmental regulations when evaluating resource options to meet supply needs of the utility’s customers. The NMPRC requires that New Mexico utilities factor a standardized cost of carbon emissions into their IRPs using prices ranging between $8 and $40 per metric ton of CO2 emitted and escalating these costs by 2.5% per year. Under the NMPRC order, each utility must analyze these standardized prices as projected operating costs. Reflecting the evolving nature of this issue, the NMPRC order states that these prices may be changed in the future to account for additional information or changed circumstances. Although these prices may not reflect the costs that ultimately will be incurred, PNM is required to use these prices for purposes of its IRP. PNM’s 2023 filing has a continued focus on a carbon-free energy system by 2040. The plan highlights the need for the significant sustained addition of resources over the next two decades, replacing retiring or expiring capacity, meeting concurrent load growth, while reducing the carbon intensity of PNM’s portfolio.

The ETA, among other things, requires that investor-owned utilities obtain specified percentages of their energy from renewable and carbon-free resources. The ETA requires utilities operating in New Mexico to have renewable portfolios equal to 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon energy by 2045. Under the ETA provisions, PNM will also be required to meet a generation emission standard of no more than 400 lbs. of CO2 per MWh beginning in 2023 and not more than 200 lbs. per MWh beginning in 2032. PNM takes this requirement into account in its resource planning and will manage compliance with the standards based upon existing generation resources and approved resource retirements and replacements. The ETA provides for a transition from fossil-fuel generating resources to renewable and other carbon-free resources by allowing investor-owned utilities to issue securitized bonds related to the retirement of coal-fired generating facilities to qualified investors.

The ETA has a significant impact on PNM’s future generation portfolio. In 2022, in compliance with the ETA, the NMED announced a new rulemaking, Carbon Dioxide Emission Standards for Electric Generating Facilities, to develop carbon emission standards for new and existing electric coal-fired generating facilities. In 2022, the rule was passed which adopts new carbon emission standards for new and existing coal-fired power plants. In compliance with the ETA, PNM filed its first CO2 Emissions Measurement and Compliance Annual Report on March 14, 2025.

In 2020, the NMPRC approved PNM’s San Juan abandonment application and for the issuance of securitized bonds consistent with the requirements of the ETA and in 2023 PNM issued the ETBC I Securitized Bonds. PNM cannot predict the full impact of the ETA with respect to Four Corners.

The State of California has enacted comprehensive climate-related disclosure laws that will require large entities doing business in the state to measure and disclose Scope 1 and Scope 2 GHG emissions beginning in 2026, Scope 3 GHG emissions beginning in 2027, and to publish biennial reports detailing climate-related financial risk beginning in January 2026. The State of California has yet to issue implementing regulations for its laws, and we are closely monitoring developments to determine if any TXNM entity would be required to make disclosures under California law and for the nature of any such required disclosures.

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International Accords

The United Nations Framework Convention on Climate Change (“UNFCCC”) is an international environmental treaty that was negotiated at the 1992 United Nations Conference on Environment and Development (informally known as the Earth Summit) and entered into force in March 1994. The objective of the treaty is to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.” Parties to the UNFCCC, including the U.S., have been meeting annually in Conferences of the Parties (“COP”) to assess progress in meeting the objectives of the UNFCCC.

In 2015, the Paris Agreement was finalized during the 2015 COP. The aim of the Paris Agreement is to limit global temperature rise to two degrees Celsius above pre-industrial levels. The agreement, which was agreed to by approximately 200 parties, requires that countries submit INDCs. INDCs reflect national targets and actions that arise out of national policies and elements relating to oversight, guidance and coordination of actions to reduce emissions by all countries. In November 2014, then President Obama announced the United States’ commitment to reduce GHG, on an economy-wide basis, by 26%-28% from 2005 levels by the year 2025. The U.S. INDC was part of an overall effort by the former administration to have the U.S. achieve economy-wide reductions of around 80% by 2050. The former administration’s GHG reduction target for the electric utility industry was a key element of its INDC and was based on EPA’s GHG regulations for new, existing, and modified and reconstructed sources at that time. Thresholds for the number of countries necessary to ratify or accede to the Paris Agreement and total global GHG percentage were achieved on October 5, 2016 and the Paris Agreement entered into force on November 4, 2016. In 2017, President Trump announced that the U.S. would withdraw from the Paris Agreement. As a result of the President’s notice to the United Nations, the U.S. officially withdrew from the Paris Agreement on November 4, 2020. On January 20, 2021, President Biden signed an instrument that will allow the U.S. to rejoin the Paris Agreement. The instrument was deposited with the United Nations on January 21, 2021, and the U.S. officially became a party to the Paris Agreement on February 19, 2021. On January 20, 2025, President Trump signed an executive order entitled “Putting America First in International Environmental Agreements,” directing the United States Ambassador to the United Nations to immediately submit formal written notification of the United States’ withdrawal from the Paris Agreement and any other agreement, pact, accord, or similar commitment made under the United Nations Framework Convention on Climate Change.

PNM calculated GHG reductions that resulted from scenarios that captured PNM’s retirement of its share of the SJGS in 2022 and assumed exiting Four Corners in 2031. With that PNM set a goal to have a 100% carbon-free generating portfolio by 2040. While the Company has not conducted an independent 2 Degree Scenario analysis, our commitment to becoming 100% carbon-free by 2040 produces a carbon emissions reduction pathway that tracks within the ranges of climate scenario pathways that are consistent with limiting the global warming average to less than 2 degrees Celsius. In addition, as an investor-owned utility operating in the state of New Mexico, PNM is required to comply with the ETA, which requires utilities’ generating portfolio be 100% carbon-free by 2045. The requirements of the ETA and the Company’s goal compare favorably to the U.S. INDC of 50% to 52% carbon emissions reduction by 2030 and the Biden Administration’s goal of net-zero carbon emissions economy-wide by 2050.

PNM will continue to monitor the United States’ move to withdraw from the Paris Agreement and other parties’ involvement in these types of international accords, but the potential impact that such accords may have on the Company cannot be determined at this time.

Assessment of Legislative/Regulatory Impacts

The Company has assessed, and continues to assess, the impacts of climate change legislation and regulation on its business. This assessment is ongoing and future changes arising out of the legislative or regulatory process could impact the assessment significantly. PNM’s assessment includes assumptions regarding specific GHG limits; the timing of implementation of these limits; the possibility of a market-based trading program, including the associated costs and the availability of emission credits or allowances; the development of emission reduction and/or renewable energy technologies; and provisions for cost containment. Moreover, the assessment assumes various market reactions such as the price of coal and gas and regional plant economics. These assumptions are, at best, preliminary and speculative. However, based upon these assumptions, the enactment of climate change legislation or regulation could, among other things, result in significant compliance costs, including large capital expenditures by PNM, and could jeopardize the Company’s reputation as well as the economic viability of certain generating facilities. The ultimate consequences of increased stakeholder scrutiny related to climate change and environmental regulation could lead to increased costs to customers and affect results of operations, cash flows, and financial condition if the incurred costs are not fully recovered through regulated rates. Higher rates could also contribute to reduced usage of electricity. PNM’s assessment process is evolving and is too speculative at this time for a meaningful prediction of the long-term financial impact.

Transmission Issues

At any given time, FERC has various notices of inquiry and rulemaking dockets related to transmission issues pending. Such actions may lead to changes in FERC administrative rules or ratemaking policy but have no time frame in which action must be taken or a docket closed with no further action. Further, such notices and rulemaking dockets do not apply strictly to

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PNM but will have industry-wide effects in that they will apply to all FERC-regulated entities. PNM monitors and often submits comments taking a position in such notices and rulemaking dockets or may join in larger group responses. PNM often cannot determine the full impact of a proposed rule and policy change until the final determination is made by FERC and PNM is unable to predict the outcome of these matters.

Other Matters

See Notes 11 and 12 herein and Notes 16 and 17 of the Notes to Consolidated Financial Statements in the 2024 Annual Reports on Form 10-K for a discussion of commitments and contingencies and rate and regulatory matters.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP requires Company management to select and apply accounting policies that best provide the framework to report the results of operations and financial position for TXNM, PNM, and TNMP. The selection and application of those policies requires management to make difficult, subjective, and/or complex judgments concerning reported amounts of revenue and expenses during the reporting period and the reported amounts of assets and liabilities at the date of the financial statements. As a result, there exists the likelihood that materially different amounts would be reported under different conditions or using different assumptions.

As of June 30, 2025, there have been no significant changes with regard to the critical accounting policies disclosed in TXNM’s, PNM’s, and TNMP’s 2024 Annual Reports on Forms 10-K. The policies disclosed included regulatory accounting, impairments, decommissioning and reclamation costs, pension and other postretirement benefits, accounting for contingencies, and income taxes.

MD&A FOR TNMP

RESULTS OF OPERATIONS

TNMP operates in only one reportable segment, as presented above in Results of Operations for TXNM.

MD&A FOR PNM

RESULTS OF OPERATIONS

PNM operates in only one reportable segment, as presented above in Results of Operations for TXNM.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

Statements made in this filing that relate to future events or TXNM’s, PNM’s, or TNMP’s expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and apply only as of the date of this report. TXNM, PNM, and TNMP assume no obligation to update this information.

Because actual results may differ materially from those expressed or implied by these forward-looking statements, TXNM, PNM, and TNMP caution readers not to place undue reliance on these statements. TXNM’s, PNM’s, and TNMP’s business, financial condition, cash flows, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements.

These factors, which are neither presented in order of importance nor weighted, include:

•The failure of Parent to obtain any equity, debt, or other financing necessary to complete the Merger

•The expected timing and likelihood of completion of the pending Merger, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the pending Merger that could reduce anticipated benefits or cause the parties to abandon the transaction

•The occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, including in circumstances requiring TXNM to pay a termination fee

•The possibility that TXNM’s shareholders may not approve the Merger Agreement

•The receipt of an unsolicited offer from another party to acquire our assets or capital stock that could interfere with the Merger

•The outcome of any legal proceedings, regulatory proceedings, or enforcement matters that may be instituted relating to the Merger

•Risks related to disruption of management time from ongoing business operations due to the proposed Merger

•The risk that the proposed transaction and its announcement could have an adverse effect on the ability of TXNM to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally

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•The announcement and pendency of the Merger, during which TXNM is subject to certain operating restrictions, could have an adverse effect on TXNM’s businesses, results of operations, financial condition or cash flows

•The costs incurred to consummate the Merger

•The risk that the price of TXNM’s common stock may fluctuate during the pendency of the proposed transaction and may decline significantly if the proposed transaction is not completed

•The ability of PNM and TNMP to recover costs and earn allowed returns in regulated jurisdictions and the impact on service levels for PNM customers if the ultimate outcomes do not provide for the recovery of costs and operating and capital expenditures, as well as other impacts of federal or state regulatory and judicial actions

•The ability of the Company to successfully forecast and manage its operating and capital expenditures, including aligning expenditures with the revenue levels resulting from the ultimate outcomes of regulatory proceedings

•Uncertainty surrounding the status of PNM’s participation in jointly-owned generation projects

•Uncertainty regarding the requirements and related costs of decommissioning power plants and reclamation of coal mines, as well as the ability to recover those costs from customers, including the potential impacts of current and future regulatory proceedings

•The impacts on the electricity usage of customers and consumers due to performance of state, regional, and national economies, energy efficiency measures, weather, seasonality, alternative sources of power, advances in technology, and other changes in supply and demand

•Uncertainty related to the potential for regulatory orders, legislation or rulemakings that provide for municipalization of utility assets or public ownership of utility assets, including generation resources, or which would delay or otherwise impact the procurement of necessary resources in a timely manner

•The Company’s ability to maintain its debt, including convertible debt, and access the financial markets in order to repay or refinance debt as it comes due and for ongoing operations and construction expenditures due to disruptions in the capital or credit markets, actions by ratings agencies, and fluctuations in interest rates resulting from any negative impacts from regulatory proceedings, actions by the Federal Reserve, entry into the Merger Agreement, geopolitical activity, including tariffs, or the risk of wildfires and storms

•The risks associated with the cost and completion of generation, transmission, distribution, and other projects, including uncertainty related to regulatory approvals and cost recovery, the ability of counterparties to meet their obligations under certain arrangements (including renewable energy resources, approved PPAs and ESAs), and supply chain or other outside support services that may be disrupted

•The potential unavailability of cash from TXNM’s subsidiaries due to regulatory, statutory, or contractual restrictions or subsidiary earnings or cash flows

•The performance of generating units, transmission systems, and distribution systems, which could be negatively affected by operational issues, fuel quality and supply chain issues (disruptions), unplanned outages, extreme weather conditions, wildfires, storms, terrorism, cybersecurity breaches, and other catastrophic events, including the costs the Company may incur to repair its facilities and/or the liabilities the Company may incur to third parties in connection with such issues beyond the extent of insurance coverage

•State and federal regulation or legislation relating to environmental matters and renewable energy requirements, the resultant costs of compliance, and other impacts on the operations and economic viability of PNM’s generating plants

•State and federal regulatory, legislative, executive, and judicial decisions and actions on ratemaking, tariffs, and taxes, including guidance related to the interpretation of changes in tax laws, the Inflation Reduction Act, the Infrastructure Investment and Jobs Act of 2021, the OBBBA, and other matters

•Risks related to climate change, including potential financial and reputational risks resulting from increased stakeholder scrutiny related to climate change, litigation, legislative and regulatory efforts to limit GHG, including the impacts of the ETA

•Employee workforce factors, including cost control efforts and issues arising out of collective bargaining agreements and labor negotiations with union employees

•Variability of prices and volatility and liquidity in the wholesale power and natural gas markets, including the impacts to transmission margins

•Changes in price and availability of fuel and water supplies, including the ability of the mine supplying coal to Four Corners and the companies involved in supplying nuclear fuel to provide adequate quantities of fuel

•Regulatory, financial, and operational risks inherent in the operation of nuclear facilities, including spent fuel disposal uncertainties

•The impacts of decreases in the values of marketable securities maintained in trusts to provide for decommissioning, reclamation, pension benefits, and other postretirement benefits, including potential increased volatility resulting from actions by the Federal Reserve to address inflationary concerns, and international developments

•Uncertainty surrounding counterparty performance and credit risk, including the ability of counterparties to supply fuel and perform reclamation activities and impacts to financial support provided to facilitate reclamation and decommissioning at SJGS

•The effectiveness of risk management regarding commodity transactions and counterparty risk

•The outcome of legal proceedings, including the extent of insurance coverage

•Changes in applicable accounting principles or policies

Any material changes to risk factors occurring after the filing of TXNM’s, PNM’s, and TNMP’s 2024 Annual Reports on Form 10-K are disclosed in Item 1A, Risk Factors, in Part II of this Form 10-Q.

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For information about the risks associated with the use of derivative financial instruments, see Item 3. “Quantitative and Qualitative Disclosures About Market Risk.”

SECURITIES ACT DISCLAIMER

Certain securities described or cross-referenced in this report have not been registered under the Securities Act, or any state securities laws and may not be reoffered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This Form 10-Q does not constitute an offer to sell or the solicitation of an offer to buy any securities.

WEBSITES

The TXNM website, www.txnmenergy.com, is an important source of Company information. New or updated information for public access is routinely posted. TXNM encourages analysts, investors, and other interested parties to register on the website to automatically receive Company information by e-mail. This information includes news releases, notices of webcasts, and filings with the SEC. Participants will not receive information that was not requested and can unsubscribe at any time.

Our corporate internet addresses are:

•TXNM: www.txnmenergy.com

•PNM: www.pnm.com

•TNMP: www.tnmp.com

TXNM’s corporate website includes a dedicated section providing key environmental and other information related to PNM’s and TNMP’s operations, including information that collectively demonstrates the Company’s commitment to sustainability. This information highlights plans for PNM to be coal-free no later than 2031 and to have a carbon-free generating portfolio by 2040.

The contents of these websites are not a part of this Form 10-Q. The SEC filings of TXNM, PNM, and TNMP, including annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are accessible free of charge on the TXNM website as soon as reasonably practicable after they are filed with, or furnished to, the SEC. Reports filed with the SEC are available on its website, www.sec.gov. These reports are also available in print upon request from TXNM free of charge.

Also available on the Company’s website at https://www.txnmenergy.com/sustainability/governance/governance-documents.aspx and in print upon request from any shareholder are TXNM’s:

•Corporate Governance Principles

•Code of Ethics (Do the Right Thing – Principles of Business Conduct; Supplier Code of Conduct)

•Charters of the Audit and Ethics Committee, Nominating and Governance Committee, Compensation and Human Resources Committee, and Finance Committee

•Restated Articles of Incorporation and Bylaws

The Company will post amendments to or waivers from its code of ethics (to the extent applicable to the Company’s executive officers and directors) on its website.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company manages the scope of its various forms of market risk through a comprehensive set of policies and procedures with oversight by senior level management through the Risk Management Committee (“RMC”). The Board’s Finance Committee sets the risk limit parameters. The RMC has oversight over the risk control organization. The RMC is assigned responsibility for establishing and enforcing the policies, procedures, and limits and evaluating the risks inherent in proposed transactions on an enterprise-wide basis.

The RMC’s responsibilities include:

•Establishing policies regarding risk tolerance levels and activities in each of the business segments

•Approving new types of derivatives entered into for marketing and hedging

•Reviewing and approving hedging risk activities

•Establishing policies regarding counterparty credit exposure and limits

•Authorizing and delegating transaction limits

•Reviewing and approving controls and procedures for derivative activities

•Reviewing and approving models and assumptions used to calculate mark-to-market and market risk exposure

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•Proposing risk limits to the Board’s Finance Committee for its approval

•Reporting to the Board’s Audit and Finance Committees on these activities

To the extent an open position exists, fluctuating commodity prices, interest rates, equity prices, and economic conditions can impact financial results and financial position, either favorably or unfavorably. As a result, the Company cannot predict with certainty the impact that its risk management decisions may have on its businesses, operating results, or financial position.

Commodity Risk

Information concerning accounting for derivatives and the risks associated with commodity contracts is set forth in Note 7, including a summary of the fair values of mark-to-market energy related derivative contracts included in the Condensed Consolidated Balance Sheets. During the six months ended June 30, 2025, and the year ended December 31, 2024, the Company had no commodity derivative instruments designated as cash flow hedging instruments.

Commodity contracts that meet the definition of a derivative are recorded at fair value on the Condensed Consolidated Balance Sheets. In the six months ended June 30, 2025 and 2024, the effects of mark-to-market commodity derivative instruments had no impact to PNM’s net earnings and $3.2 million and $4.5 million of fair value losses have been recorded as a regulatory asset. All of the fair values as of June 30, 2025 and December 31, 2024, were determined based on prices provided by external sources other than actively quoted market prices. The net mark-to-market amounts will settle by the end of 2025.

PNM may be exposed to changes in the market prices of electricity and natural gas for the positions in its wholesale portfolio not covered by the FPPAC. The Company manages risks associated with market fluctuations by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options, and swaps. PNM uses such instruments to hedge its exposure to changes in the market prices of electricity and natural gas. PNM also uses such instruments under an NMPRC approved hedging plan to manage fuel and purchased power costs related to customers covered by its FPPAC.

Credit Risk

The Company is exposed to credit risk from its retail and wholesale customers, as well as the counterparties to derivative instruments. The Company conducts counterparty risk analysis across business segments and uses a credit management process to assess the financial conditions of counterparties. The following table provides information related to credit exposure by the credit worthiness (credit rating) and concentration of credit risk for wholesale counterparties, all of which will mature in less than two years.


Schedule of Credit Risk Exposure
June 30, 2025
Rating (1)	Credit Risk Exposure(2)		Number of Counter-parties >10%	Net Exposure of Counter-parties >10%
	(Dollars in thousands)
External ratings:
Investment grade	$	1,837	2	$	1,519
Non-investment grade	—		—	—
Split ratings	—		—	—
Internal ratings:
Investment grade	230		—	—
Non-investment grade	—		—	—
Total	$	2,067		$	1,519

(1)The rating “Investment Grade” is for counterparties, or a guarantor, with a minimum S&P rating of BBB- or Moody’s rating of Baa3. The category “Internal Ratings – Investment Grade” includes those counterparties that are internally rated as investment grade in accordance with the guidelines established in the Company’s credit policy.

(2)The Credit Risk Exposure is the gross credit exposure, including long-term contracts, forward sales, and short-term sales. The gross exposure captures the amounts from receivables/payables for realized transactions, delivered and unbilled revenues, and mark-to-market gains/losses. Gross exposures can be offset according to legally enforceable netting arrangements but are not reduced by posted credit collateral. At June 30, 2025, TXNM held no cash collateral to offset its credit exposure.

Net credit risk for the Company’s largest counterparty as of June 30, 2025, was $1.1 million.

Other investments have no significant counterparty credit risk.

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Interest Rate Risk

The majority of PNM’s and TNMP’s long-term debt is fixed-rate debt, which does not expose earnings to adverse changes in market interest rates. PNM and TNMP earnings are exposed to adverse changes in market interest rates when long-term debt must be refinanced, repriced or redeemed. TXNM’s debt and the revolving credit facilities of PNM and TNMP are exposed to interest rate risk to the extent variable interest rates continue to rise. The Company periodically makes plans to reduce its variable interest rate exposures through various instruments including fixed rate debt and equity and hedging arrangements and otherwise expects that it will be able to extend or replace variable rate debt under similar terms and conditions prior to their expirations. Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities and term loans are based on SOFR.

At July 25, 2025, variable rate debt balances and weighted average interest rates were as follows:


Variable Rate Debt	Weighted Average Interest Rate		Balance Outstanding		Capacity
			(In thousands)
Short-term Debt:
TXNM Revolving Credit Facility	5.93	%	$	85,500	$	300,000
PNM Revolving Credit Facility	5.69		231,800		400,000
PNM New Mexico Credit Facility	5.70		40,000		40,000
TNMP Revolving Credit Facility	5.28		14,300		200,000
			$	371,600	$	940,000
Long-term Debt:
TXNM 2023 Term Loan	5.78		210,000
PNM 2024 Term Loan	5.35		200,000
PNM 2025 Term Loan	5.35		195,000
			$	605,000

The investments held by PNM in trusts for decommissioning and reclamation had an estimated fair value of $487.0 million at June 30, 2025, of which 10.4% were fixed-rate debt securities that subject PNM to risk of loss of fair value with increases in market interest rates. If interest rates were to increase by 50 basis points from their levels at June 30, 2025, the decrease in the fair value of the fixed-rate securities would be 0.3%, or $0.2 million.

PNM does not directly recover or return through rates any losses or gains on the securities, including equity investments discussed below, in the trusts for decommissioning and reclamation. However, the overall performance of these trusts does enter into the periodic determinations of expense and funding levels, which are factored into the rate making process to the extent applicable to regulated operations. PNM is at risk for shortfalls in funding of obligations due to investment losses, including those from the equity market risks discussed below, to the extent not ultimately recovered through rates charged to customers.

Equity Market Risk

The investments held by PNM in trusts for decommissioning and reclamation include certain equity securities at June 30, 2025. These equity securities expose PNM to losses in fair value should the market values of the underlying securities decline. Equity securities comprised 82.7% of the securities held by the trusts as of June 30, 2025. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $40.3 million.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

As of the end of the period covered by this quarterly report, each of TXNM, PNM, and TNMP conducted an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer of each of TXNM, PNM, and TNMP concluded that the disclosure controls and procedures are effective.

Changes in internal controls over financial reporting

There have been no changes in each of TXNM’s, PNM’s, and TNMP’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the quarter ended June 30,

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2025, that have materially affected, or are reasonably likely to materially affect, each of TXNM’s, PNM’s, and TNMP’s internal control over financial reporting.

PART II. OTHER INFORMATION

[None]

ITEM 1. LEGAL PROCEEDINGS

See Notes 11 and 12 for information related to the following matters, for TXNM, PNM, and TNMP, incorporated in this item by reference.

Note 11

•TXNM – Merger Related Litigation

Note 12

•PNM – 2024 Rate Change

•PNM – Integrated Resource Plans

•PNM – Grid Modernization Plan

•TNMP – Transmission Cost of Service Rates

•TNMP – Periodic Distribution Rate Adjustment

ITEM 1A. RISK FACTORS

As of the date of this report, there have been no material changes with regard to the Risk Factors disclosed in TXNM’s, PNM’s, and TNMP’s Annual Reports on Form 10-K for the year ended December 31, 2024, except as set forth below.

Risks Relating to the Proposed Merger with Blackstone Infrastructure

There is no assurance when or if the proposed Merger will be completed.

Completion of the proposed Merger is subject to the satisfaction or waiver of a number of conditions as set forth in the Merger Agreement, including approval by the holders of at least a majority of outstanding shares of TXNM common stock entitled to vote thereon, regulatory approvals and other customary closing conditions. There can be no assurance that the conditions to completion of the proposed Merger will be satisfied or waived or that other events will not intervene to delay or result in the failure to close the proposed Merger. In addition, each of Blackstone Infrastructure and TXNM may unilaterally terminate the Merger Agreement under certain circumstances, and Blackstone Infrastructure and TXNM may agree at any time to terminate the Merger Agreement, even if TXNM shareholders have already approved the Merger Agreement and thereby approved the Merger and the other transactions contemplated by the Merger Agreement.

Blackstone Infrastructure and TXNM may be unable to obtain the regulatory approvals required to complete the proposed Merger.

In addition to other conditions set forth in the Merger Agreement, completion of the proposed Merger is conditioned upon the receipt of various state and U.S. federal regulatory approvals, including, but not limited to, expiration or termination of the applicable waiting period under HSR and approval by NMPRC, PUCT, FERC, and NRC. Blackstone Infrastructure and TXNM will make various filings and submissions and will pursue all required consents, orders and approvals in accordance with the Merger Agreement. These consents, orders and approvals may impose requirements, limitations or costs or place restrictions, and if such consents, orders and approvals require an extended period of time to be obtained, such extended period of time could increase the chance that an event occurs that constitutes a material adverse effect with respect to TXNM and thereby may allow Blackstone Infrastructure not to complete the proposed Merger. Such extended period of time also may increase the chance that other adverse effects with respect to TXNM could occur, such as the loss of key personnel. Further, no assurance can be given that the required consents, orders and approvals will be obtained or that the required conditions to closing will be satisfied.

The announcement and pendency of the proposed Merger, during which TXNM is subject to certain operating restrictions, could have an adverse effect on TXNM’s businesses, results of operations, financial condition, or cash flows.

The announcement and pendency of the proposed Merger could disrupt TXNM’s businesses, and uncertainty about the effect of the Merger may have an adverse effect on TXNM. These uncertainties could disrupt the business of TXNM and cause suppliers, vendors, partners, and others that deal with TXNM to defer entering into contracts with TXNM or making other decisions concerning TXNM or seek to change or cancel existing business relationships with TXNM. In addition, TXNM’s employees may experience uncertainty regarding their roles after the Merger; for example, employees may depart either before

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the completion of the Merger because of such uncertainty and issues relating to the difficulty of coordination or a desire not to remain following the Merger; and the pendency of the Merger may adversely affect TXNM’s ability to retain, recruit, and motivate key personnel. Additionally, the attention of TXNM’s management may be directed towards the completion of the Merger including obtaining regulatory approvals and other transaction-related considerations and may be diverted from the day-to-day business operations of TXNM and matters related to the Merger may require commitments of time and resources that could otherwise have been devoted to other opportunities that might have been beneficial to TXNM. Additionally, the Merger requires TXNM to obtain Blackstone Infrastructure’s consent prior to taking certain specified actions while the Merger is pending. These restrictions may prevent TXNM from pursuing otherwise attractive business opportunities or other capital structure alternatives and making other changes to its business or executing certain of its business strategies prior to the completion of the Merger. Further, the Merger may give rise to potential liabilities, including as a result of pending and future shareholder lawsuits relating to the Merger. Any of these matters could adversely affect the businesses of, or harm the results of operations, financial condition or cash flows of TXNM.

TXNM will incur substantial transaction fees and costs in connection with the proposed Merger.

TXNM has incurred and expects to incur additional material non-recurring expenses in connection with the proposed Merger and completion of the transactions contemplated by the Merger Agreement. Further, even if the proposed Merger is not completed, TXNM will need to pay certain costs relating to the proposed Merger incurred prior to the date the proposed Merger was abandoned, such as legal, accounting, financial advisory, filing, and printing fees.

The termination of the Merger Agreement could negatively impact TXNM.

If the Merger is not completed for any reason, the ongoing business of TXNM may be adversely affected and, without realizing any of the anticipated benefits of having completed the Merger, TXNM would be subject to a number of risks, including the following:

•TXNM may experience negative reactions from the financial markets, including a decline of its stock price (which may reflect a market assumption that the Merger will be completed);

•TXNM may experience negative reactions from its customers, regulators and employees;

•TXNM may be required to pay certain costs relating to the Merger, whether or not the Merger is completed; and

•Matters relating to the Merger will have required substantial commitments of time and resources by TXNM management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to TXNM as an independent company.

If the Merger Agreement is terminated and the Board seeks another merger, business combination or other transaction, TXNM shareholders cannot be certain that TXNM will be able to find a party willing to offer equivalent or more attractive consideration than the consideration TXNM shareholders would receive in the Merger. If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement (including if Blackstone Infrastructure terminates the Merger Agreement due to a change in recommendation of the Board or if TXNM terminates the Merger Agreement to accept a Superior Proposal), TXNM will be required to pay Blackstone Infrastructure a termination fee of $210.0 million, plus costs and expenses.

Litigation may be instituted against TXNM and members of the Board challenging the proposed Merger, and adverse judgments in these lawsuits may prevent the proposed Merger from becoming effective within the expected timeframe or at all.

TXNM and members of the Board may be named as defendants in putative class action lawsuits or other proceedings that may be brought by TXNM shareholders challenging the proposed Merger. If the plaintiffs in any of these actions seek a preliminary or permanent injunction and are successful in obtaining one, the parties may be prevented from completing the proposed Merger in the expected timeframe, if at all. Even if the plaintiffs in these potential actions are not successful in obtaining an injunction, they may nevertheless continue the action and seek damages after the transaction has closed. In addition, the costs of defending against such claims could adversely affect the financial condition of TXNM and such actions could adversely affect the reputation of TXNM and members of its Board or management.

Counsel for TXNM received a number of demand letters from law firms on behalf of individuals who are purported TXNM shareholders, accompanied by draft complaints naming TXNM and its directors as defendants and alleging that TXNM’s preliminary proxy statement with respect to the Merger, omitted or misrepresented certain material information. Such draft complaints include a request for injunctive relief with respect to the TXNM shareholder vote to approve, and the closing of, the Merger, as well as other remedies, including counsel fees. TXNM believes that the allegations set forth in the demand letters and draft complaints are without merit and, if such complaints are actually filed, will defend such actions vigorously.

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The Merger Agreement contains provisions that could discourage a potential alternative acquirer that might be willing to pay more to acquire TXNM.

The Merger Agreement contains customary “no shop” provisions which state that we will not solicit or facilitate proposals regarding a merger or similar transaction with another party except in certain limited circumstances. While the Board may withdraw or change its recommendation regarding the Merger Agreement in response to an unsolicited third-party proposal to acquire TXNM that the Board determines to be superior to the Merger, there are restrictions on its ability to do so, and in certain circumstances, TXNM may also be required to pay Blackstone Infrastructure a termination fee. These provisions could discourage a potential third-party acquirer from considering or proposing an alternative acquisition, even if it were prepared to pay consideration with a higher value than that proposed to be paid in the Merger.

ITEM 5. OTHER INFORMATION

During the three months ended June 30, 2025, no director or officer (as defined by Rule 16a-1(f) of the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

PNM July 2025 SUNs

On July 31, 2025, PNM, entered into the PNM July 2025 Note Purchase Agreement with the institutional investor parties thereto for the sale of $350.0 million aggregate principal amount of senior unsecured notes in the following series and denominations: (i) $200.0 million aggregate principal amount of its 5.47% Senior Unsecured Notes, Series C, due July 31, 2031, and (ii) $150.0 million aggregate principal amount of its 6.03% Senior Unsecured Notes, Series D, due July 31, 2036 (the “PNM July 2025 SUNs”). The PNM July 2025 SUNs were issued on July 31, 2025 in a private placement transaction in reliance on an exemption from registration under the Securities Act. Interest on the PNM July 2025 SUNs is payable semiannually on January 31 and July 31 of each year, commencing on January 31, 2026.

PNM will use the gross proceeds from the PNM July 2025 SUNs for the repayment of existing indebtedness, funding of capital expenditures, and general corporate purposes.

The terms of the PNM July 2025 Note Purchase Agreement, which continue to apply so long as any of the PNM July 2025 SUNs are outstanding, include customary covenants, including a covenant that requires PNM to maintain a debt-to-capitalization ratio of less than or equal to 65%, customary events of default, including a cross-default provision, and covenants regarding parity of financial covenants, liens and guarantees with respect to PNM’s material credit facilities. In the event of a change of control (as defined in the PNM July 2025 Note Purchase Agreement), PNM will be required to offer to prepay the PNM July 2025 SUNs at par. The proposed transaction between TXNM and Blackstone Infrastructure would not constitute a change in control under the PNM July 2025 SUNs. PNM has the right to redeem any or all of the PNM July 2025 SUNs prior to their maturities, subject to payment of a customary make-whole premium.

The foregoing description is qualified in its entirety by the PNM July 2025 Note Purchase Agreement, which is filed as Exhibit 10.12 to this Form 10-Q and is incorporated herein by reference.

The PNM July 2025 SUNs are not registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements and applicable state laws. This Form 10-Q does not constitute an offer to sell nor a solicitation of an offer to purchase the PNM July 2025 SUNs or any other securities, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

ITEM 6. EXHIBITS


2.1	TXNM	A greement and Plan of Merger, dated as of May 18, 2025, by and among TXNM Energy, Inc., Tr oy ParentCo LLC and Troy Merger Sub Inc. (incorporated by referen ce to Exhibit 2.1 to TXNM ’s Current Re port on Form 8-K filed May 19, 202 5)

3.1	TXNM	Restated Articles of Incorporation of TXNM, as amended to date (incorporated by reference to Exhibit 3.1 to TXNM’s Current Report on Form 8-K filed August 5, 2024)

3.2	PNM	Restated Articles of Incorporation of PNM, as amended through May 31, 2002 (incorporated by reference to Exhibit 3.1.1 to PNM’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002)

3.3	TNMP	Articles of Incorporation of TNMP, as amended through July 7, 2005 (incorporated by reference to Exhibit 3.1.2 to TNMP’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005)

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3.4	TXNM	Bylaws of TXNM, with all amendments to and including August 2, 2024 (incorporated by reference to Exhibit 3.2 to TXNM’s Current Report on Form 8-K filed August 5, 2024)

3.5	PNM	Bylaws of PNM, with all amendments to and including July 1, 2022 (incorporated by reference to Exhibit 3.5 to PNM’s Current Report on Form 8-K filed July 1, 2022)

3.6	TNMP	Bylaws of TNMP, with all amendments to and including June 18, 2013 (incorporated by reference to Exhibit 3.6 to TNMP’s Current Report on Form 8-K filed June 20, 2013)

4.1	TNMP	Twenty-Fourth Supplemental Indenture, dated as of July 21, 2025, between Texas-New Mexico Power Company and U.S. Bank Trust Company, National Association, as Trustee. (incorporated by reference to Exhibit 4.1 to TNMP’s Current Report on Form 8-K filed July 22, 2025)

10.1	TXNM	T XNM Merger Back stop Revolving Facility, dated as of May 18, 2025, by and among TXNM Energy, Inc., the lenders party thereto and Wells Fargo Bank , National Association, as administrati ve agent. (incorporated by referen ce to Exhibit 10 .1 to TXNM’s Current Report on Form 8-K filed May 19, 2025 )

10.2	TXNM	Stock Purchase Agreement, dated as of May 18, 2025 by and between TXNM Energy, Inc. and Troy TopC o LP . (incorporated by reference to Exhibit 10.3 to TXNM’s Current Report on Form 8-K filed May 19, 2025)

10.3	TXNM	F ourtee nth Amendment to Credit Agreement, dated as of May 23, 2025, among TXNM Energy, Inc., the lenders party thereto, and Wells Fargo Bank, Nat ional Association, as administrative agent. (incorporated by reference to Exhibit 10.1 to TXNM’s Current Report on Form 8-K filed May 27 , 2025)

10.4	TXNM	First Amendment to Term Loan Agreement, dated as of May 23, 2025, among TXNM Energy, Inc., the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent. (incorporated by reference to Exhibit 10.2 to TXNM’s Current Report on Form 8-K filed May 27, 2025)

10.5	TXNM	Consent and Waiver to Standby Letter of Credit , dated May 18 , 2025, bet ween TXNM Energy, Inc., and Wells Fargo Bank, National Association . (incorporated by reference to Exhibit 10.3 to TXNM’s Current Report on Form 8-K filed May 27, 2025)

10.6	TXNM	Stock Purchase Agreement, dated as of June 24 , 2025 by and among TXNM Energy, Inc., Zimmer Partners, LP and the Purchasers set forth on S c hedule I thereto . (incorporated by reference to Exhibit 10.1 to TXNM’s Current Report on Form 8-K filed June 24 , 2025)

10.7	TXNM	F irst Amend ment dated July 29, 2025 to TXNM 2025 Officer Annual Incentive Plan

10.8	TXNM	First Amendment dated July 29, 2025 to TXNM 2025 Long-Term Incentive Plan

10.9	TXNM	Fourth Amendment dated July 29, 2025 to TXNM 202 4 Long-Term Incentive Plan

10.10	TXNM	Fifth Amendment dated July 29, 2025 to TXNM 202 3 Long-Term Incentive Plan

10.11	PNM	N ot e Purchase Agreement, dated April 23, 2025, between Public Service Company of New Mexico and the purchaser s named therein (incorporated by reference to Exhibit 10.1 to PN M’s Current Report on Form 8-K filed April 23 , 2025)

10.12	PNM	Note Purchase Agreement, dated July 31 , 2025, between Public Service Company of New Mexico and the purchasers named therein

10.13	TNMP	TNMP Merger Backstop Term Loan , dated as of May 18, 2025, by and among Texas-New Mexico power Company , the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. (incorporated by reference to Exhibit 10.2 to TNMP ’s Current Report on Form 8-K filed May 19, 2025)

10.14	TNMP	First Amendment to Credit Agreement, dated May 23, 2025, between Texas-New Mexico power Company , the lenders party thereto, and Wells Fargo Bank, National Association . (incorporated by reference to Exhibit 10.4 to TNMP ’s Current Report on Form 8-K filed May 27, 2025)

10.15	TNMP	Bond Purchase Agreement , dated July 21, 2025, between Texas-New Mexico Power Company and the purchasers named therein . (incorporated by reference to Exhibit 10 .1 to TNMP’s Current Report on Form 8-K filed July 22, 2025)

31.1	TXNM	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	TXNM	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3	PNM	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.4	PNM	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.5	TNMP	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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31.6	TNMP	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	TXNM	Chief Executive Officer and Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	PNM	Chief Executive Officer and Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.3	TNMP	Chief Executive Officer and Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	TXNM, PNM, and TNMP	XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the Inline XBRL document

101.SCH	TXNM, PNM, and TNMP	Inline XBRL Taxonomy Extension Schema Document

101.CAL	TXNM, PNM, and TNMP	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	TXNM, PNM, and TNMP	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	TXNM, PNM, and TNMP	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	TXNM, PNM, and TNMP	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	TXNM, PNM, and TNMP	Cover Page Inline XBRL File (included in Exhibits 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.


		TXNM ENERGY, INC. PUBLIC SERVICE COMPANY OF NEW MEXICO TEXAS-NEW MEXICO POWER COMPANY
		(Registrants)


Date:	August 1, 2025	/s/ Gerald R. Bischoff
		Gerald R. Bischoff
		Vice President and Corporate Controller
		(Officer duly authorized to sign this report)

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