SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 2, 1999
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(August 25, 1999)
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PUBLIC SERVICE COMPANY OF NEW MEXICO
(Exact Name of Registrant as Specified in its Charter)
Commission
New Mexico File Number 1-6986 85-0019030
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
Alvarado Square, Albuquerque, New Mexico 87158
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(Address of Principal Executive Offices) (Zip Code)
(505) 241-2700
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(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address if Changed, Since Last Report)
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Item 5. Other Events
Electric Rate Case
As previously reported, in May 1999, the Company and the major parties to the
Company's electric rate case filed a stipulated rate agreement with the New
Mexico Public Regulation Commission ("PRC") that would reduce the Company's
annual revenues by approximately $37 million. On August 5, 1999, the hearing
examiner recommended that the PRC approve the stipulation. (See "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
Deregulation - Preparation for Retail Electric Competition" in the quarterly
report on Form 10-Q for the quarter ended June 30, 1999.)
On August 25, 1999, the PRC issued an order approving the rate case settlement.
The PRC ordered the Company to reduce its electric rates retroactive to July 30,
1999. In addition, the order includes a rate freeze until retail electric
competition is fully implemented in New Mexico or until January 1, 2003.
Upgrades of the Company's Securities Ratings to Investment Grade
On August 26, 1999, two major credit rating agencies, Moody's Investors
Services, Inc. ("Moody's") and Standard and Poor's Corp. ("S&P") upgraded the
Company's securities following the rate order by the PRC (see above). The
Company's rating outlook by both rating agencies is "stable". Moody's upgrades
include the Company's senior unsecured notes and senior unsecured pollution
control revenue bonds to "Baa3" from "Ba1"; and preferred stock to "ba1" from
"b1". The EIP lease obligation bonds were also upgraded to "Ba1" from "Ba2". S&P
also upgraded, among other things, the Company's credit rating, senior unsecured
debt and bank loan rating to BBB- from BB+. Investors are cautioned that a
security rating is not a recommendation to buy, sell or hold securities, that it
may be subject to revision or withdrawal at any time by the assigning rating
organization, and that each rating should be evaluated independently of any
other rating.
These rating actions reflect the resolution of a litigious rate case that began
in 1997 and a recently enacted state law that allows utilities to recover no
less than fifty percent of their stranded costs. If certain conditions
identified in the state law are met, utilities may be allowed recovery of up to
one hundred percent of stranded costs. The rating agencies believe that the
combination of these two events reduces a large component of regulatory and
legislative uncertainty, which collectively help to support the Company's
long-term prospects for maintaining cash flow and earning stability. Future
rating actions for the Company's securities will depend in large part on the
filing with the PRC relating to numerous restructuring issues, including the
Company's plan to separate the utility into a generation business and a
distribution and transmission business as required by the recently enacted state
law. The state law requires the Company to file its transition plan with the PRC
by March 1, 2000.
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Disclosure Regarding Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for forward-looking statements to encourage companies to provide
prospective information about their companies without fear of litigation so long
as those statements are identified as forward-looking and are accompanied by
meaningful, cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the statement. Words
such as "estimates," "expects," "anticipates," "plans," "believes," "projects,"
and similar expressions identify forward-looking statements. Accordingly, the
Company hereby identifies the following important factors which could cause the
Company's actual financial results to differ materially from any such results
which might be projected, forecasted, estimated or budgeted by the Company in
forward-looking statements: (i) adverse actions of utility regulatory
commissions; (ii) utility industry restructuring; (iii) failure to recover
stranded costs; (iv) the inability of the Company to successfully compete
outside its traditional regulated market; (v) regional economic conditions,
which could affect customer growth; (vi) adverse impacts resulting from
environmental regulations; (vii) loss of favorable fuel supply contracts; (viii)
failure to obtain water rights and rights-of-way; (ix) operational and
environmental problems at generating stations; (x) the cost of debt and equity
capital; (xi) weather conditions; and (xii) technical developments in the
utility industry.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Public Service Company of New Mexico
(Registrant)
Date: September 2, 1999 /s/ John R. Loyack
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John R. Loyack
Vice President, Corporate Controller
and Chief Accounting Officer
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