Oct 29, 2010
Executives
Gina Jacobi – Director, IR Pat Vincent-Collawn – President and CEO Chuck Eldred – EVP and CFO Brian Hayduk – President, First Choice Power
Analysts
Emily Christy [ph] Brian Russo – Ladenburg Thalmann Ted Heyn [ph] Eric McCarthy [ph] Maurice May – Soleil-Power Insights John Ali [ph]
Operator
Good day, ladies and gentlemen, and welcome to your PNM Resources third quarter conference call. At this time, all participants are in a listen-only mode.
Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator instructions) As a reminder, today's call is being recorded.
At this time, I would now like to turn the conference over to our host, the Director of Investor Relations, Ms. Gina Jacobi.
You may begin.
Gina Jacobi
Thank you, everyone for joining us this morning for a discussion of the company's third quarter 2010 earnings. Please note that the presentation and accompanying materials for this conference call and supporting documents are available on PNM Resources' website at www.pnmresources.com.
Joining me today are PNM Resources' CEO, Pat Collawn; and Chuck Eldred, our Chief Financial Officer; as well as several members of our executive management team. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements, pursuant to the Private Securities Litigation Reform Act of 1995.
We caution you that all of the forward-looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update the information. For a detailed discussion of factors affecting PNM Resources' results, please refer to our current and future annual reports on Form 10-K and the quarterly reports on Form 10-Q, as well as other current and future reports on Form 8-K filed with the SEC.
And with that, I'll turn the call over to Pat.
Pat Vincent-Collawn
Thank you, Gina and good morning, everyone. This morning, we released our third quarter results of $0.63 per diluted share, which equaled quarterly results from 2009.
Year-to-date, our ongoing earnings are $0.90 compared with $0.94 this time last year. You may remember, however, that last year's results included $0.08 from our gas business, which we have since sold.
I know our quarterly and year-to-date results are above some street estimates and Chuck will walk you through the drivers that positively impacted our performance so far this year. As we stated in our news release, quarterly results were driven primarily by improvement from our utilities, PNM and TNMP, both of which benefited from weather-normalized load growth, increased demand as a result of warmer weather, and rate increases that were at effect for the full quarter.
As expected, we are seeing a downward trend in First Choice Power's earnings. Average retail margins continues to compress, albeit not as tightly as we had expected.
And First Choice continues to do a good job of reducing its bad debt expense, which I will discuss shortly in more detail. Optim Energy, along with other Texas generators, continues to manage through a very challenging market in ERCOT.
We are still seeing very low market prices, but strong operational performance at Optim's three power plants, and an increase in ancillary services has helped to mitigate the impact of low-price market for Optim. And finally, because of that warmer weather and better-than-expected performance by First Choice Power, we have increased our ongoing earnings guidance for 2010.
These are the highlights for the quarter. So if you turn to Slide 5, I'll provide an update to you on our regulatory activities.
We now have two rate cases ongoing for PNM. Regarding the current retail case, which is our forward test period case, the procedural schedule was reset and we now have a hearing date starting on January 31st.
On Wednesday, we filed a PNM FERC transmission case. We have asked for an $11.1 million increase in revenue, a 12.25% return on equity and for rates to be implemented on January 1st, 2011.
As this case's schedule becomes more firm, we will provide you with key dates of that proceeding. At TNMP, on August 26th, we filed a general rate case asking for $20.1 million and an ROE of 11.5%.
This docket is on a 185-day timeline. The Public Utilities Commission of Texas is focused on getting through cases within their established 185-day window and we are more than happy to comply with that.
So we expect for this case to be resolved and effective by February 28th, 2011. If you turn to Slide 6, I want to quickly recap the recent decisions by the New Mexico PRC regarding PNM's renewable energy plan.
A scaled-down version of our original plan was unanimously approved on August 30th. This plan calls for the construction of a total of 22 megawatt of utility-scale solar at five sites.
The recovery is capped at $101.7 million, which is the estimated cost of this project. The Commission also approved a 500 kilowatt battery storage project with solar that is partially funded by a grant from the U.S.
Department of Energy. They also modified our residential and business solar incentive programs and expanded those programs to include solar electric thermal systems.
Cost of these solar programs will be recovered through a rider that will begin in 2012. And as we stated previously, we expect to increase the rate base to add $0.03 to $0.05 to our 2012 earnings per share.
If we move to Slide 7, we'll talk about our retail load. Today, we reported that the quarterly weather-normalized retail load growth for PNM was 2.1% and for TNMP, 0.7%.
On a year-to-date basis, PNM is at 2.1% load growth, while TNMP is a bit lower at 1.7%. While we are seeing some growth for PNM, keep in mind that PNM is still well below the yearly retail growth rates we saw prior to 2007.
Customer growth, which is that line on the chart, remains positive, but modest. PNM continues to experience about 0.5% customer growth, while TNMP's is even less at 0.3%.
Unfortunately, it seems here in New Mexico we are still muddling through the recession and as we've said many times, New Mexico's economy lags for better or for worse the United States. Earlier this month, Moody's Analytics and msnbc.com identified New Mexico as one of the seven states that still remains in recession that ended nationally in June 2009.
The Department of Workforce Solutions expects that we should report a net job gain by the end of next year. If you turn to the next slide, I'll briefly discuss our competitive businesses, First Choice Power and Optim Energy.
Starting with First Choice, bad debt expense is below 5% of total revenue for this quarter and since we have projected finishing the year at 6.5%, this is certainly good news. We are also seeing a payoff of First Choice Power's efforts to reduce customer risk through it offering prepaid products, tightening its credit threshold, and upgrading its system.
First Choice continues to develop a deeper commercial customer base. Generally speaking, commercial customers have higher retention rates, lower bad debt, and can provide First Choice with better earnings predictability.
And finally, First Choice has offered – opened customer service offices. The competitive market is maturing and customer service is beginning to be a key point for customers who are looking for more than just the lowest price.
Regarding Optim, operationally, Optim Energy continues to excel. As a fleet, Optim's power plants had near a 100% commercial availability last quarter.
Specifically, Twin Oaks had its best performance during three consecutive months in its history with an EAF of 99.6%. Altura Cogen had 99.7% availability for the quarter, while Cedar Bayou 4 finished the quarter at 94.3%, very impressive for those plants as well.
This strong operational performance led the higher ancillary revenues, which helped to offset the ongoing low energy price market in ERCOT. In addition, the burning of alternative fuels at Twin Oaks resulted in fuel savings of about $100,000 per month.
As the down market continues, Optim will continue to focus on cost control, getting the most out of its operations, and conserving its cash. I'll now turn the call over to Chuck Eldred, our Executive Vice President and Chief Financial Officer, to go through the financials.
Chuck Eldred
Thank you, Pat and good day, everyone. As Pat mentioned, on an ongoing basis, we earned $0.63 in the third quarter, the same as last year.
And even though earnings were flat, we are nevertheless pleased with our results as they exceeded our internal expectations. Weather certainly was a key driver this quarter, but lower bad debt at First Choice Power also helped us beat our expectations.
Year-to-date cash earnings of $285 million also came in above our original projections, reflecting our better-than-expected financial results. This increase in cash will be used to fund our capital spending plan, reduce our short-term debt, and support one of our key goals and that's the recovery of our investment-grade rating.
If you turn to Page 10, you will see our standard walk-across graph. Rate relief, weather, and some modest load growth were all positive drivers.
However, these gains were offset by lower margins at First Choice Power and reduced earnings from Optim Energy, both of which had been expected. Starting from left to right, the $0.09 gain associated with the rate relief reflects the implementation of new rates at both TNMP and PNM.
At TNMP, new base rates went into effect in September last year and new transmission rates became effective in May of this year. And at PNM, we benefited from the implementation of the second phase of our 2009 rate increase, which went into effect on April 1 of this year.
Weather in both Texas and New Mexico also contributed to this year's earnings. Compared with last year, cooling-degree days were up an average of 5% in TNMP's service territory and 9% in New Mexico.
While weather in New Mexico during July and August was essentially normal, September was unusually hot. In fact, the month was the second warmest September we've experienced in over 60 years.
We also saw modest growth – load growth in both PNM and TNMP service territories. In total, the increase in load added another $0.02 to the third quarter earnings.
Offsetting the positive income drivers were lower margins at First Choice Power, which reduced earnings by $0.08 and a decline in our share of Optim Energy's earnings. Both of these trends have been expected, given the current price environment in ERCOT.
Other negative drivers also included higher pension and retiree medical costs, as well as increased property taxes, interest expense, and depreciation. Since I basically just covered the key drivers of our regulated business performance, I'm going to skip to the next page and move on to Page 12 to address our unregulated business results.
For those of you who want more detailed quarter-over-quarter drivers for PNM and TNMP, you will find them on Page 11. First Choice Power's EBITDA came in at $20.8 million and almost $9 million below last year.
And as I mentioned earlier, the decline was expected as unit margins continued to compress in ERCOT. However, despite lower unit margins, TNMP beat the internal expectations because of warmer weather, decreased bad debt expense, and continued growth in their commercial sale.
In the third quarter, First Choice's commercial sales were up almost 20% from last year, primarily reflecting an increase in the size of the company's average commercial customer. The business also benefited from improved products and market focus on these commercial customers.
Third quarter bad debt was down about $2 million from last year and was also considerably better than expected. First Choice had projected third quarter bad debt to come in at 8.5% of revenue.
However, actual bad debt ended up a little under 5% of revenue, as Pat mentioned, due to reduced customer departures and lower final bills. We now project bad debt to average about 5.5% of revenue for the year, which is down a whole percentage point from our previous estimate.
Now turning to Optim Energy, Optim generated EBITDA of $25.4 million in the third quarter. This is down about $3 million from last year.
The positive drivers included a $3 million increase in the sales on ancillary services associated with a favorable forward sale and lower O&M as Optim continues to focus on cost control and enhancing free cash flow. Offsetting these positive drivers were higher fuel prices, both gas and lignite, and lower realized power prices due to the roll-off of favorable hedges.
Now moving to the guidance for the year, given First Choice's better-than-expected performance in the third quarter, we are raising our consolidated earnings guidance range from the year from $0.65 to $0.75 to a range of $0.83 to $0.90. Our regulated earnings guidance remains unchanged from last quarter.
However, we do expect to come in on the high end of the range due to favorable weather and modest load growth. We could even exceed the range if our load growth continues at the rate we saw in third quarter.
We are raising our earnings guidance for First Choice from $0.27 to $0.33, to $0.40 to $0.43 to reflect their better-than-expected performance in the third quarter. And we are narrowing our guidance for Optim Energy from a loss of $0.07 to $0.10 to a loss between $0.09 to $0.10, due to the continued adverse price environment in ERCOT.
We are also increasing our outlook for First Choice Power's EBITDA. The company is now expected to come in between $59 million to $63 million due to better-than-expected third quarter results.
That's up from $40 million to $50 million we had presented last year. EBITDA guidance for Optim remains unchanged at $60 million to $65 million of EBITDA.
Our cash earnings outlook for the year is also up from last quarter's projection. We currently expect cash earnings to come in between $380 million to $395 million, which is up from a range of $305 million to $325 million or about $75 million.
The increase is primarily due to two factors, higher projected earning and lower tax payments, reflecting the extension of bonus depreciation in 2010 and additional tax benefits from the IRS approved change and method for determining repairs and relocation expenses for tax purposes. Amounts related to these adjustments are estimates and will be trued up in the fourth quarter.
So, all in all, we are very satisfied with our performance this quarter. However, we recognize that our regulated businesses are still underperforming and that's why we remain immensely focused on doing our utmost to earn our allowed return, further strengthening our financial position, and enhancing our credit profile.
And with that, I'll turn it back over to Pat for her concluding remarks.
Pat Vincent-Collawn
Thanks, Chuck. If you turn to Slide 14, we will end our presentation with our familiar checklist where we get to put some more checkmarks on some of our items.
As you can see from the slide, we continue to take the steps to help improve our allowed return for both PNM and TNMP, and we have filed the four rate cases that we told you we would file this year. Our focus remains steadfast on those regulated businesses.
And while our renewable resource plan was scaled down and therefore reduces our projected rate base growth, we expect to have prompt and full recovery, plus a return on equity on our new solar assets. And as we discussed, we updated First Choice Power's EBITDA and affirmed Optim Energy's EBITDA.
This concludes the presentation portion of the call. Operator, we can start the question-and-answer session if there are any questions.
Operator
Excellent. (Operator instructions) And let's allow just a few seconds for questions to queue up.
Our first question comes from Emily Christy [ph].
Emily Christy
Good morning.
Pat Vincent-Collawn
Good morning, Emily.
Emily Christy
With respect to First Choice Power, going forward, could we expect that your commercial growth efforts might offset some of that margin compression or is there still further compression to come?
Pat Vincent-Collawn
Our First Choice Power President, Brian Hayduk, is with us this morning. And I'm going to ask him to answer that question.
Brian Hayduk
Sure. Hi, Emily.
I think you would expect – with a greater commercial mix, you would expect margin compression anyway, because there is the natural lower margin with commercial customers than residential customers.
Emily Christy
Okay. And in terms of the load growth, so if it's 2% growth in New Mexico in a recession, does this mean that there is still more weakness to come maybe into next year or is this kind of the bottoming rate for New Mexico?
Pat Vincent-Collawn
Well, we are not going to forecast any load for 2011. But I can tell you, the Department of Workforce Solutions here in New Mexico, which tracks unemployment, says that they don't expect to be seeing a net gain in jobs before the end of next year and we are officially still in a recession here.
So I think 2011 is probably – if you read what the economists are saying, it's probably still – we are not going to experience a recovery in New Mexico that the general U.S. has.
Emily Christy
Okay, thanks.
Operator
Our next question comes from Brian Russo.
Brian Russo – Ladenburg Thalmann
Hi, good morning.
Pat Vincent-Collawn
Good morning, Brian.
Chuck Eldred
Hi, Brian.
Brian Russo – Ladenburg Thalmann
You mentioned earlier a revised procedural schedule for the PNM Electric rate case and a hearing is set now for January 31st. What was the motivation behind adjusting that schedule?
Pat Vincent-Collawn
Brian, I think what – as you remember, the last quarter, there had been some going back and forth about whether or not PNM had satisfied the requirements in terms of its documentation and we delivered to the Commission all the documentation we had delivered to the interrogatories. When they got that, the hearing examiner reset the schedule based on the delivery of those documents.
So it just kind of really, I think, restarted the schedule.
Brian Russo – Ladenburg Thalmann
I see, understood. And could you at all comment on the settlement conference that was held on October 14th and any upcoming settlement related meetings we should be aware of ahead of, I believe, intervener testimony in December?
Pat Vincent-Collawn
Yes, the settlement – the discussion that you are referring to was the one in front of the mediator. Parties came, but nothing was decided.
We continue to discuss with intervenors and we are encouraged that the discussions are ongoing, but we really can't say anything about the nature of those discussions right now.
Brian Russo – Ladenburg Thalmann
Okay. Thank you very much.
Operator
Our next question comes from Ted Heyn [ph].
Ted Heyn
Good morning.
Pat Vincent-Collawn
Good morning, Ted.
Chuck Eldred
Hi, Ted.
Ted Heyn
Just a follow-up on Brian's question on the settlement, I guess, first. If there were to be some sort of settlement, what would be the timing of that?
Would that be coming out probably before a staff recommendation?
Pat Vincent-Collawn
Ted, we really don't know when it would come out. You can settle, as you know, at any point in time in a case.
So, no predictions on that.
Ted Heyn
Okay. Fair enough.
And then on the First Choice margins, can you – what were the actual margins – dollar per megawatt margins for the quarter?
Pat Vincent-Collawn
We don't disclose that, Ted.
Ted Heyn
Okay. But it – is it – I mean, I guess my bigger question is kind of when I'm thinking about 2011, I know that – I think in the past you guys have talked about a kind of a normalized run rate and it appears that it's been taking you unfortunately a longer time to get back to that normalized run rate.
Is there thought that maybe that run rate is – was maybe too conservative as you gave out?
Chuck Eldred
Yes, look – as Pat mentioned, we – Ted, I think the best way is we talked about a long-term run rate, but we really don't know the timing of that and what the actual – there are so many variables in the market and conditions in ERCOT that it's really hard to pin that down. So I think it's best just to say that we do think that's a reasonable range to think about in the business, but we just don't know the right timing for that.
Ted Heyn
Okay. And then – I'm sorry?
Pat Vincent-Collawn
So you've got nodal coming on in December and while we don't think that has an impact at First Choice or Optim – when you start up a new system, you never know exactly what's going to happen.
Ted Heyn
Okay, got you. And then just to remind – can you remind me what do you think long-term run rate is for retail?
Is it – was it high-20s? Is that right?
Chuck Eldred
Yes, we talked about it in the range of 25 to 35.
Ted Heyn
Okay. But it's – so embedded in your – and what's embedded – have you disclosed what's embedded in your guidance for this year?
Chuck Eldred
No.
Ted Heyn
On the revised range – okay.
Chuck Eldred
No.
Pat Vincent-Collawn
No.
Ted Heyn
Okay. Oh and the last – the last question I had was just on when you guys came to New York back in, gosh, June, you laid out some of the kind of the plus and minus drivers for longer-term earnings power related to the New Mexico rate case.
What you excluded from that were the Texas rate case and the FERC rate case, because you hadn’t filed those yet. Can you give us a sense to kind of what the potential earnings upside of that piece that was kind of left out of the June conference – what's the potential upside in '11 and '12?
Pat Vincent-Collawn
Well, what we've put in for the Texas – well, let me start with the FERC rate case. The FERC rate case that we just filed was on our transmission rate base.
It was $11 million increase with a 12.25% ROE. The transmission rate base is $171 million.
So, you can figure that in. And then the Texas rate case that we filed should go into effect at the end of February next year and that was a $20.1 million – that was a 10.9% increase on an ROE of 11.5%.
So, you can figure that in.
Ted Heyn
Okay. And then within those revenue requirements, is there any kind of – most of that – I mean, if you were to get the whole thing, would most of that flow to the bottom line or are there kind of depreciation or accounting adjustments that don't that kind of overstate the impact from a revenue perspective?
Pat Vincent-Collawn
There are some minuscule depreciation adjustments in Texas, but most of it flows through to the bottom line. As you know, the big issues in Texas are the consolidated taxes which would flow through to the bottom line and then the cap structure change.
And again, a little bit of depreciation change in the FERC rate case, but most of it flows through to the bottom line.
Ted Heyn
Okay, great. Thanks a lot.
Congrats on the good quarter.
Pat Vincent-Collawn
Thank you.
Operator
Our next question comes from Eric McCarthy [ph].
Eric McCarthy
Hi, good morning.
Pat Vincent-Collawn
Good morning, Eric.
Chuck Eldred
Hi, Eric.
Eric McCarthy
My questions were actually based on Ted's, on margins. And if you can disclose what those margins are on an absolute basis?
Can you give us a picture of what the market looks in ERCOT right now with the decline in gas and the similar move in ERCOT market prices?
Pat Vincent-Collawn
Sure. I'll have – Eric, I'll have Brian give you a little color on the market and ERCOT.
Brian Hayduk
Sure. And I can probably do two things, Eric.
One is, give you a sense for how we've seen compression, at least historically. If you look quarter-over-quarter there is about a 20% reduction in our margins.
Year-to-date, it's about a 13% reduction in the margin. So you do see that compression, the speed of compression slowing.
Generally, in the marketplace – and this is true, whenever you have persistent sort of low prices as we do now, you are going to see margin compression. Competitive pressure will push it there.
The more volatility there is, the less you typically see of that and we just haven’t seen much volatility lately.
Eric McCarthy
Okay. And I'd highlight something that you mentioned.
The competitive pressure that – it looks like were very disappointing this quarter, and then – in that we are not competing for customers on the basis on price. Is that accurate?
Brian Hayduk
Sure. I think that's – no one likes to compete on the basis of price.
I mean, we go where the market allows us to go with the skill set that we believe we are bringing to the market, the value that we are bringing to the marketplace. So, to the extent that that's in some cases on the commercial side versus residential, because we don't chase uneconomic customers that will happen.
So we really let the market dictate a little bit of that, depending on again where we feel like we are adding value to the customer.
Eric McCarthy
Okay. And a bigger picture, competition.
Are we seeing more competition come into the market? Are there others that are coming in seeing somewhat rich markets and trying to compete on price?
Brian Hayduk
You know, I don't (Multiple Speakers) – I don't think it's – sorry, Eric. I don't think it's too much new entrants.
I think a lot of where you see the new entrants is up in the Northeast where you have Pennsylvania and markets opening up. There is a lot more new activity in those areas.
I think for Texas, it's really the same players, it's what they are doing on price in that market.
Eric McCarthy
Okay, great. Well, thank you guys.
I appreciate it.
Pat Vincent-Collawn
Thanks, Eric.
Operator
(Operator instructions) Our next question comes from Maurice May.
Maurice May – Soleil-Power Insights
Yes. Good morning, folks.
Pat Vincent-Collawn
Good morning, Maury.
Chuck Eldred
Hi, Maury.
Maurice May – Soleil-Power Insights
A couple of questions this morning. First of all, on the pending rate case, I know you filed for a forecast test year.
But it is controversial in the state and I was just wondering if you could remind us what is the difference between the forecast rate base for 2011 and the historic rate base for 2009. How big is the difference?
Pat Vincent-Collawn
Well, we didn't file the historic rate base, because we didn't want this to be perceived as a historic rate case or a forward-looking test year with a historic rate base option. And I think as we've always said, I don't think it's the forward-looking year that's so controversial, Maury.
I think it's the amount that's controversial and that's what is – what people are talking about more than the fact whether it's historical or forward-looking.
Maurice May – Soleil-Power Insights
Okay. All right.
But the forecast test year in 2011 is not that much more than the historic test year in 2009. I mean, the big difference really is between December '09 and your previous rate case – the previous rate base and the previous rate case.
Is that correct? Is that where the big lump of investment takes place?
Pat Vincent-Collawn
Yes, Maury. That's where the big lump takes place.
Maurice May – Soleil-Power Insights
Okay. Okay, and then second question on the load growth.
In New Mexico, you are experiencing 2% load growth on 5% customer growth and this indicates higher usage and I was wondering whether you could give us some color on that.
Pat Vincent-Collawn
We have seen higher usage per customer more on the residential side than on the other side. Despite the fact that the economy is down, customers are not really dialing down their electric usage.
We saw them when the economy was really bad, I think they weren’t feeling really comfortable. But – and (inaudible) what's happening is the people that are employed feel better about their job, so they are not actively conserving.
Maurice May – Soleil-Power Insights
Okay. All right, thank you very much.
Pat Vincent-Collawn
Thank you, Maury.
Operator
Our next question comes from John Ali [ph].
John Ali
Hi guys, good quarter.
Pat Vincent-Collawn
Good morning, John. Thank you.
John Ali
I apologize if I missed this, but there is a few calls going on. The schedule for the FERC rate case?
Pat Vincent-Collawn
The schedule for the FERC rate case is, we filed it on Wednesday. We have asked for the rates to be implemented on January 1st, 2011.
As you know, FERC usually suspends those rates so we could put them into effect on June 1, subject to refund. But we haven’t set a procedural schedule yet.
So, as soon as we get that out, we will get that to you.
John Ali
What's your expectation, just ballpark of how long the rate case will take?
Pat Vincent-Collawn
I'd say third quarter.
John Ali
Okay. So, faster than New Mexico?
Pat Vincent-Collawn
Yes.
John Ali
Thanks, guys.
Pat Vincent-Collawn
Thanks.
Operator
Our next question is a follow-up from Brian Russo.
Brian Russo – Ladenburg Thalmann
Yes. Thanks for taking my follow-up question.
Just on First Choice Power, the 5.5% bad debt as a percent of revenue run rate for 2010, is that a good run rate to use post-2010 or do you think that might still come down as a percent of revenues?
Brian Hayduk
Hi Brian, it's Brian here. I think it's – we are certainly not giving guidance for 2011.
We would hope that the trend that we are on in terms of benefits from the initiatives that we've been taking over the last couple of years will continue to press that down. But I don't think we have any specific guidance for that today.
Brian Russo – Ladenburg Thalmann
All right. Thanks.
Operator
Our next question is from Ted Heyn.
Ted Heyn
Hi, thanks for letting me ask another one.
Pat Vincent-Collawn
Sure, Ted.
Ted Heyn
Just – could you remind us – I guess Tuesday is Election Day. Can you give us a refresher on kind of what seats are open and everything for – so while we are out in Palm Springs, we might be able to ascertain what the direction of the Commission is going?
Pat Vincent-Collawn
Sure. I mean, the first seat that's obviously open here is the Governor and New Mexico will have its first female Governor.
The Attorney General is up for reelection and the polls show now that he is – Gary King is the current Attorney General, has a comfortable lead over his opponent Matt Chandler. In the PRC, District 2 is open and that is where Pat Lyons, who is current State land commissioner, is running against the Democrat Stephanie DuBois.
In District 4, that is up in the Northwest corner of the state, that was Carol Sloan's seat. Theresa Becenti-Aguilar, the Democrat, was appointed to fill that seat by Governor Richardson, but she is running against the gentlemen by the name of Gary Montoya, who is the Republican.
And then in Sandy Jones' current seat, since he is not seeking reelection, the Democrat Bill McCamley there is running over the Republican Ben Hall. So, those are the five election seats I'd watch in New Mexico.
Ted Heyn
Okay. And is there – I would assume the poll – do they do polling for the PRC or is it just not as global an issue for the State where you can get a sense of whether the Democrats, the Republicans are going to potentially take those seats?
Pat Vincent-Collawn
No, they don't do any polling on those down ballot elections. They do Governor, Attorney General, and then the Congressional seats and that's about it for the polling.
Ted Heyn
Okay. Fair enough, okay.
I appreciate it. Thanks.
Pat Vincent-Collawn
No problem
Operator
There appear to be no further questions on the phones.
Pat Vincent-Collawn
Thank you. And we know that many of you have a busy day today.
So, we would like to thank you for joining us on the call to continue to hear about the progress we are making in our journey of restoring PNM Resources' financial health. I'll see many of you at EEI.
Chuck; Brian Hayduk, our First Choice Power President; Terry Horn, our Treasurer; and part of the IR team will all be there and we look forward to meeting with you all. So, travel safely and see you next week.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect.
Everyone have a great day.