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In December, PNM filed its 2024 Rate Change as planned. Our last case was filed in 2016 with a 2018 test year. We deferred our plans to file earlier because it was not the right thing to do during the pandemic, and we remain committed to the stay out agreements we made with our parties during the merger negotiations. We moved forward with funding needed infrastructure projects and now in an environment of rising costs, we are able to propose a 2024 bill impact of less than 1% partially because of our exit from the San Juan Generating Station. Don will talk about more details of the case and the schedule leading up to an expected decision before the end of the year. In Texas, we made our first transmission cost of service filing for 2023 in January, reflecting another strong year of investments in Texas to support growing customer demand.

In a year of supply chain and labor challenges, our teams planned ahead and remained agile while expanding our system and interconnecting energy storage systems, chemical plants, crypto mines and datacenters. Before I turn it over to Don. I will cover our ESG highlights for the year, on Slide 5. The retirement of the San Juan Generating Station is our top environmental achievement in 2022. More than half of our resource portfolio is now carbon free with additional renewable and storage resources slated for 2023. However, our accomplishment stretch far beyond this plant. We continue to add more electric vehicles to our fleet, we continue to work to expand customer energy efficiency programs, collaborate with industry experts to address physical climate risks and partner with stakeholders to bring awareness to environmental concerns impacting our communities.

We developed a greenhouse gas emissions inventory for Scope 1, 2 and 3 emissions to address the evolving disclosure needs of investors and other stakeholders. We also implemented an environmental justice geographic mapping and screening tool to better identify and prioritize communities most in need of investments. We continue to work towards fostering a diverse workforce representative of the communities we serve. In 2022, our percentage of minorities and women increased to 53% and 28% respectively. Equity and inclusion are key to building and sustaining diversity at all levels of the organization and we are continuously monitoring our approach for our desired results. One of the biggest priorities for our teams was to support the employees at San Juan through the plant closure and to ensure these team members left with dignity, pride and resources for their future.

We've provided career counseling and transition training, benefit reviews and retirement planning. We are happy that approximately 20% of these plant employees are still working for the company in various roles. Ultimately, half the employees in the last years of the plant receive severance payment at around 75% of those were also retirement eligible. Through the Energy Transition Act, we also funded severance and job training for employees of the associated coal mine. It was a challenging year in the labor market and we took extra steps to take care of our team members and to ensure that our teams have the necessary resources to continue supporting customers. We also turned our eyes toward the future and created a statewide business coalition to expand internship programs offered through our local colleges.

We already have some of these interns joining the company full time or continuing their internships in 2023. These are students who recognize the challenges and opportunities created by the transition to clean energy in New Mexico and they want to be a part of our solution. At the same time, we continue to expand upon our educational support for the native American population in the state, funding and endowment specific to Pueblo students looking to continue their education at the next level. Both of these programs serve to strengthen New Mexico, those future workforce and then also provide a fresh perspective and contribute to the diversity of thought. We know that the future challenges in our industry will require new ways of thinking and look forward to what these students can contribute.

With that, I will turn it over to Don.

Photo by Andreas Gücklhorn on Unsplash

Don Tarry: Thank you, Pat, and good morning, everyone. I'll start on Slide 7 with our load growth by service area, with PNM first. Load grew at 2.9% in the fourth quarter compared to the prior year with growth coming from all customer classes. For most of 2022, we saw residential and commercial load growth above our expectations, while industrial customer expansions were delayed by supply chain and related market issues. We expect the growth we saw in the fourth quarter to continue into 2023 between 2% and 3%. We're still seeing the results of New Mexico's economic development efforts through our customer expansions. We also see government and tribal projects that are less impacted by market-wide economics. At TNMP load growth in 2022 exceeded expectations for both volumetric and demand based load plus the added growth from crypto mining customers entering the market.

These customers are mostly in our West Texas service territory providing some economic diversity to the region. Our operations in North Central Texas and the Gulf Coast, provides strong geographic and economic diversity to TNMP, and each of those areas support a mix of business operations and growing residential and commercial communities surrounding the nearby larger cities. For 2023, volumetric growth is expected at 2% to 3% consistent with the full-year results of 2022. Demand based growth is expected at 3.5% to 4.5% above the 2022 levels. Now turning to Slide 8. I'll cover the ways we've been taking care of business at PNM and making progress on our strategic objectives. The transformation of our generation portfolio has been front and center.

We have plans to exit coal and reach carbon free electricity by 2040 five years ahead of the New Mexico mandate. The closure of San Juan Generating Station this year was a significant step in achieving these goals, reducing the amount of coal in our portfolio and advancing us to 55% carbon free capacity. Our next big step is exit of our ownership stake in Four Corners Power Plant and completely eliminate coal generation from our portfolio, which we are still pursuing for the end of 2024. As you can see in the pie charts, we are replacing these resources with renewable and batteries storage after working through the 2022 delays for PPA developers, we expect 350 megawatts of solar and 170 megawatts of battery storage coming online in 2023. At that point, over half of our resource portfolio will be renewables and storage.

And with our continued ownership of Palo Verde, we will hit 61% carbon free capacity. These changes provide significant benefits for the environment and our communities and also financial benefits for customers, which I'll cover in a minute. Another key to successful transition towards a carbon free portfolio is T&D infrastructure. Investments in our grid provide the foundation for serving the growing demand on PNM system and maintaining reliability. The peak demand on our system has been growing at a faster rate than our total load and we hit a new system peak in 2022, our first since 2013. Our focus has been on strengthening the infrastructure that directly serves customers, substations in lines are being reconfigured to accommodate new customers along with customer owned resources.

We are building the system to be more resilient and reduce outage restoration time. Other T&D investments at PNM relate to grid modernization projects. We filed our comprehensive grid modernization plan to implement smart meters and other projects that will lay the groundwork for future improvements and provide our customers with more resilient grid. When we look ahead, we see the need for expansion of our system, our change in generation resources, means that transmission capacity tied to existing plants can be used for the replacement options. But as the resource needs grow beyond these replacements, new transmission capacity will be needed to facilitate additional resources across the state. Now turning to Slide 9. I'll walk you through the key regulatory proceedings tied to these investments.

As Pat mentioned, in December, we filed our first PNM rate review in six years. PNM customers already benefit from having lower bills and much of the country and we worked to balance the need for investments in our system with the impacts on customers, The Energy Transition Act was designed to facilitate the transition to clean energy while reducing cost to customers and this rate filing showed that it is working as intended. The filing in -- the filing is a 2024 future test year, so it rolls forward our rate base for the full six years and incorporates current cost trends. The retirement of San Juan and the return of the Palo Verde leases reduces the requested recovery in base rates and also reduces the cost recovered through our fuel cost, as replacement resources come online.

Securitization provides for lower financing costs as we make this transition all in the proposed bill impact in 2024 is limited to 0.9% or $0.75 per month for the average residential customer. The procedural schedule in this case calls for intervener testimony, seller settlement filing by May 12 and hearings scheduled in June. The schedule for our grid modernization filing includes hearings scheduled in March. Remember that we have asked for approval of our project plan by July 1 of this year, but we delayed our requested implementation date of the rate rider until September 1, so that it would not be added to summer bills this summer, when the usage is typically higher. We also prioritized low income customers and communities in our filing, these are the customers most in need of tools to manage their usage and bills and it also makes sense to bring improvements to these areas first.

Also in March, the New Mexico Supreme Court has scheduled oral arguments and our proposed exit from Four Corners Power Plant in December of 2021, the commission rejected our filing to exit our ownership share of the plant and securitize our undepreciated investments. The briefing schedule was completed in 2022 and we are looking forward to the oral arguments for further opportunities to present our case. Now turning our attention to TNMP on Slide 10. Our focus has been to maintain investment levels to keep up with the pace of growth. The rate base doubled over the course of five years with another strong year of investments planned for 2023. The needs range from serving new residential subdivision to connecting new chemical plants. The regulatory environment in Texas continues to support these investment levels.

We have made use of semiannual transmission recovery filings along with annual distribution recovery filings. In January, we made our first transmission filing for 2023 requesting over 150 million of project cleared by December of last year, We would expect to recovery to be approved and implemented by March of this year. With that I will turn it over to Lisa to cover the numbers in more depth.

Lisa Eden: Thank you, Don, and good morning, everyone. I'll start on Slide 12, with a summary of the changes in 2022 earnings compared to 2021. Earnings per share grew $2.45 in 2021 to $2.69 in 2022, as we have also been taking care of business on the financial side. The key drivers are consistent with the items we've discussed throughout the year. Usage was up at both PNM and TNMP due to both load growth and weather, particularly as TNMP as crypto currency mining enter the market in West Texas. Recovery of investments through the TCOS and DCOS mechanism was also significant increased the EPS at TNMP. At PNM higher transmission demand and market prices increased earnings along with the addition of the Western Spirit contract.

These increases served to offset expenses at the utilities for depreciation, property tax and interest associated with our rate base investments along with increases to our planned O&M spending. Market losses on our decommissioning trust dampened our earnings at -- earnings growth at PNM. We took actions in 2022 with fund managers to ensure alignment with our portfolio objectives. To be clear, the decommissioning trust along with our pension plans remain well funded, despite the challenging market conditions in 2022 and we don't anticipate making any cash contributions to these trust in the near future. Earnings at our corporate segment are driven by the whole -- by holding company debt and in 2022 higher interest rates reduced EPS. Turning to Slide 13.

I'll cover our expectations and key drivers for 2023 guidance. As Pat mentioned, we have narrowed our guidance range to $2.65 to $2.75 per share. Given the growth we've seen in Texas and New Mexico in 2022, we brought up the bottom end of the range to $2.65. In terms of our load, our guidance assumes a return to more normal weather conditions, which is partially offset by load growth at both PNM and TNMP. At PNM cost reductions from the retirement of the San Juan Generating Station and return of the Palo Verde leases, net of replacement power costs offsets depreciation, property tax and interest expenses associated with new investments. At TNMP, rate recovery through the TCOS and DCOS riders cover cost increases associated with new investments as we continue to expand our system for increasing demand and economic growth.

At PNM, we don't expect the realized market losses on our decommissioning and reclamation trust to repeat in 2023. And at corporate, we have assumed higher interest expense to reflect the current interest rate environment, including $850 million of swaps we entered into last year to mitigate our exposure until we reduce our variable debt levels, either through successful merger or putting more permanent financing in place. We continue to assume we add up to $200 million of equity in 2023, which would have a dilution impact on EPS at each of our segments, shown in the appendix slides. Our full guidance range accounts for various timing assumptions with the potential impact of up to $0.08 for the year, translating into a $0.04 impact to the guidance midpoint.

Slide 14 shows our continued plans for capital spending through 2025 and the associated rate base growth. This investment plan continues to be focused on T&D infrastructure and meeting the growing needs of customers across New Mexico and Texas and includes our proposed grid modernization plan at PNM. Rate base growth at 8% from 2020 to 2025 with strong growth coming from both PNM FERC and TNMP. At PNM, investments and infrastructure support retail customer growth and replace the rate base that is removed as we transition out of coal. We've been able to defer rate increases for our customers, while continuing to earn our authorized returns. FERC investments have grown rapidly with the addition of the Western Spirit project at the end of 2021.

Our other transmission investments are recovered timely through the annual formula rate update. TNMP grows at 17% over the period as infrastructure is added to support reliability in our growing service territory. The transmission and distribution riders provide timely recovery of these investments without the general rate case. The details of our spending beyond 2025 will be provided later this year, but we're comfortable we can continue our growth target of 5%. Slide 15, shows our growth target and historical achievements. The midpoint of our 2023 guidance achieves our previous targets for growth and reaches a 10 year growth rate of 6.7%. We are on track to meet our current target of 5% growth for 2020 through 2025. Growth isn't linear every year because of factors like weather, timing of regulatory filings or market conditions, but we remain focused on the long-term view.

Our 8% rate base growth over the period is partially offset by the assumed equity in 2023 (ph). This maintains our investment grade credit metrics and places us in a good position moving forward and we are confident in our ability to continue targeting 5% growth. I'll wrap up on Slide 16 with our dividend. We look to grow dividend consistent with earnings targeting the midpoint of 50% to 60% payout ratio. In December the Board of Directors raised our annual dividend to $1.47, a 5% -- 5.8% increase, with a payout ratio of 54% of our 2023 guidance midpoint. Our Board typically addresses the annual dividend in December when finalizing our financial plan for the following year. Meanwhile, we will continue to pay dividends until the close of our merger.

With that, I'll turn it back over to Pat.

Pat Vincent-Collawn: Thank you, Lisa. Before I open it up for questions, I would like to thank our team members in New Mexico and Texas for the great work they did in 2022 and continue to do in 2023 to take care of each other, our customers, our communities and the environment. With that, Joe. Let's open it up for questions.

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