Item 1.01 Entry into a Material Definitive Agreement.
On May 1, 2019, Public Service Company of New Mexico (“PNM”), a wholly-owned utility subsidiary of the PNM Resources, Inc. (the “Company”), the New Mexico Renewable Energy Transmission Authority (“RETA”), and Western Spirit Transmission LLC, (“Western Spirit”, and together with RETA, the “Sellers”), entered into a Build Transfer Agreement (the “BTA”), for the purchase by PNM of an approximately 165 mile 345 kV transmission line and associated facilities (the “Project”) to be developed and constructed by Sellers. The purchase price for the Project is equal to the sum of the aggregate amount of the Project costs, subject to certain adjustments, up to a maximum of $400 million dollars. RETA is a New Mexico state authority. Western Spirit is an affiliate of Pattern Energy Group 2 LP (“Pattern Development”).
The BTA contains a number of customary representations and warranties and indemnification provisions as well as closing conditions, including regulatory and third-party approvals. The parties may terminate each of the agreements under certain circumstances. The purchase of the Project is subject to, among other conditions, receiving approval from Federal Energy Regulatory Commission (“FERC”), the New Mexico Public Regulation Commission, and, if necessary, anti-trust review under the Hart-Scott-Rodino Act.
PNM also has entered into Transmission Service Agreements (“TSAs”) and other ancillary agreements with Pattern Wind New Mexico Wind, LLC (“Pattern Wind”), an affiliate of Western Spirit and Pattern Development seeking firm transmission service for wind facilities it is developing. The TSAs are entered into pursuant to PNM’s FERC Open Access Transmission Tariff, and, along with certain ancillary agreements, set forth PNM’s obligations for providing transmission service to Pattern Wind. PNM will file for a new incremental FERC transmission tariff rate for transmission service that will provide for recovery of the revenue requirement for the Project and certain PNM built facilities with an estimated total cost of approximately $360 million. The tariff also reflects customer self-funding of up to $75 million provided by Pattern Wind, for a net investment of $285 million.
The above descriptions of the BTA is not complete and is qualified in its entirety by reference to the entire BTA, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this Current Report on Form 8-K that relate to future events or PNMR’s or PNM’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. Neither PNMR nor PNM assumes any obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR and PNM caution readers not to place undue reliance on these statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see PNMR’s and PNM’s Annual Report on Form 10-K for the year ended December 31, 2018, and Quarterly Reports on Form 10-Q filings filed with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.
Exhibit Number Description
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* Pursuant to Release No. 33-10618, the Registrant has omitted the schedules and exhibits to this Agreement because such schedules and exhibits are not material. If requested by the Commission or its Staff, the Registrant will provide an unredacted copy of this Exhibit on a supplemental basis.