PNM reports another substantial drop in earnings

PNM Resources reported $3.5 million in "ongoing earnings" for the first quarter of 2008 -- a monumental slide from the $29.8 million it earned in the same quarter last year.

Ongoing earnings per diluted share came to $0.5 in the first quarter, compared to $0.38 in the same period in 2007.

Ongoing earnings exclude one-time gains and charges.

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Public Service Co. of New Mexico performed particularly poorly during the quarter, with ongoing losses of $14.4 million, or $0.19 per diluted share. That's nearly the inverse of first-quarter 2007, when the utility earned $12.3 million, or $0.16 per diluted share.

PNM's losses came largely from flat rates as the utility continued to argue its case for rate hikes before the New Mexico Public Regulation Commission. Regulatory authorities finally approved a $35 million rate increase in late April, but that was less than half the amount the state's largest utility company had originally requested.

The company sustained higher operating costs as prices for purchased power and fuel for generation increased. It also suffered losses from planned outages for environmental upgrades at the company's San Juan and Four Corners generating plants.

"We expected reduced availability at our base load facilities, particularly the San Juan Generating Station, where we continued the installation of environmental and plant upgrades, and the Four Corners Plant, where a major overhaul was started," said Jeff Sterba, PNM Resources chairman, president and CEO. "While the cost of those planned outages and subsequent power purchases affected our earnings, the work completed at San Juan has resulted in much-improved availability in March and April. Unfortunately, our unique situation of not having a fuel and purchased-power adjustment clause has kept us from recovering the increasing and fluctuating energy costs of providing service to PNM's 494,000 customers."

Speculative trading also caused substantial one-time losses at EnergyCo. -- a joint venture with Cascade Investment LLC. -- and at Texas-based First Choice Power.

On the other hand, PNM's natural gas operation had ongoing earnings of $19.3 million, or $0.25 per diluted share, up from $14.6 million, or $0.19 per diluted share, in the first quarter of 2007.

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque. Through its utility and energy subsidiaries, PNM Resources serves electricity to approximately 845,000 homes and businesses in New Mexico and Texas, and natural gas to nearly 492,000 customers in New Mexico.