The Company manages the scope of its various forms of market risk through a comprehensive set of policies and procedures with oversight by senior level management through the Risk Management Committee (“RMC”). The Board’s Finance Committee sets the risk limit parameters. The RMC has oversight over the risk control organization. The RMC is assigned responsibility for establishing and enforcing the policies, procedures, and limits and evaluating the risks inherent in proposed transactions on an enterprise-wide basis. The RMC’s responsibilities include: •Establishing policies regarding risk tolerance levels and activities in each of the business segments •Approving new types of derivatives entered into for marketing and hedging •Reviewing and approving hedging risk activities •Establishing policies regarding counterparty credit exposure and limits •Authorizing and delegating transaction limits •Reviewing and approving controls and procedures for derivative activities •Reviewing and approving models and assumptions used to calculate mark-to-market and market risk exposure •Proposing risk limits to the Board’s Finance Committee for its approval •Reporting to the Board’s Audit and Finance Committees on these activities To the extent an open position exists, fluctuating commodity prices, interest rates, equity prices, and economic conditions can impact financial results and financial position, either favorably or unfavorably. As a result, the Company cannot predict with certainty the impact that its risk management decisions may have on its businesses, operating results, or financial position. Commodity Risk Information concerning accounting for derivatives and the risks associated with commodity contracts is set forth in Note 7, including a summary of the fair values of mark-to-market energy related derivative contracts included in the Condensed 107 Table of Contents Consolidated Balance Sheets. During the six months ended June 30, 2026, and the year ended December 31, 2025, the Company had no commodity derivative instruments designated as cash flow hedging instruments. Commodity contracts that met the definition of a derivative were recorded at fair value on the Condensed Consolidated Balance Sheets. In the six months ended June 30, 2026 and 2025, the effects of mark-to-market commodity derivative instruments had no impact to PNM’s net earnings and zero and $3.2 million of fair value losses have been recorded as a regulatory asset. PNM may be exposed to changes in the market prices of electricity and natural gas for the positions in its wholesale portfolio not covered by the FPPAC. The Company manages risks associated with market fluctuations by utilizing various commodity instruments that may qualify as derivatives, including futures, forwards, options, and swaps. PNM uses such instruments to hedge its exposure to changes in the market prices of electricity and natural gas. PNM also uses such instruments under an NMPRC approved hedging plan, from time-to-time, to manage fuel and purchased power costs related to customers covered by its FPPAC. Credit Risk The Company is exposed to credit risk from its retail and wholesale customers, as well as the counterparties to derivative instruments. The Company conducts counterparty risk analysis across business segments and uses a credit management process to assess the financial conditions of counterparties. The following table provides information related to credit exposure by the credit worthiness (credit rating) and concentration of credit risk for wholesale counterparties, all of which will mature in less than two years. Schedule of Credit Risk Exposure June 30, 2026 Rating (1) Credit Risk Exposure(2) Number of Counter-parties >10% Net Exposure of Counter-parties >10% (Dollars in thousands) External ratings: Investment grade $ 3,895 2 $ 1,894 Non-investment grade — — — Split ratings — — — Internal ratings: Investment grade 1,029 — — Non-investment grade — — — Total $ 4,924 $ 1,894 (1)The rating “Investment Grade” is for counterparties, or a guarantor, with a minimum S&P rating of BBB- or Moody’s rating of Baa3. The category “Internal Ratings – Investment Grade” includes those counterparties that are internally rated as investment grade in accordance with the guidelines established in the Company’s credit policy. (2)The Credit Risk Exposure is the gross credit exposure, including long-term contracts, forward sales, and short-term sales. The gross exposure captures the amounts from receivables/payables for realized transactions, delivered and unbilled revenues, and mark-to-market gains/losses. Gross exposures can be offset according to legally enforceable netting arrangements but are not reduced by posted credit collateral. At June 30, 2026, TXNM held no cash collateral to offset its credit exposure. Net credit risk for the Company’s largest counterparty as of June 30, 2026, was $1.3 million. Other investments have no significant counterparty credit risk. Interest Rate Risk The majority of PNM’s and TNMP’s long-term debt is fixed-rate debt, which does not expose earnings to adverse changes in market interest rates. PNM and TNMP earnings are exposed to adverse changes in market interest rates when long-term debt must be refinanced, repriced or redeemed. TXNM’s debt and the revolving credit facilities of PNM and TNMP are exposed to interest rate risk to the extent variable interest rates continue to rise. The Company periodically makes plans to reduce its variable interest rate exposures through various instruments including fixed rate debt and equity and hedging arrangements and otherwise expects that it will be able to extend or replace variable rate debt under similar terms and conditions prior to their expirations. Variable interest rates under the TXNM, PNM, and TNMP revolving credit facilities, commercial paper notes, and term loans are based on SOFR. 108 Table of Contents At July 24, 2026, variable rate debt balances and weighted average interest rates were as follows: Variable Rate Debt Weighted Average Interest Rate Balance Outstanding Capacity (In thousands) Short-term Debt: TXNM Revolving Credit Facility 5.17 % $ 200,100 $ 300,000 PNM Revolving Credit Facility 4.93 180,000 400,000 PNM New Mexico Credit Facility 5.01 40,000 40,000 TNMP Revolving Credit Facility 4.55 107,000 300,000 $ 527,100 $ 1,040,000 Long-term Debt: TXNM 2026 Term Loan 5.02 % 400,000 PNM 2026 Term Loan 4.57 195,000 PNM November 2025 Term Loan 4.58 120,000 $ 715,000 The investments held by PNM in trusts for decommissioning and reclamation had an estimated fair value of $513.6 million at June 30, 2026, of which 7.9% were fixed-rate debt securities that subject PNM to risk of loss of fair value with increases in market interest rates. If interest rates were to increase by 50 basis points from their levels at June 30, 2026, the decrease in the fair value of the fixed-rate securities would be 0.36%, or $0.2 million. PNM does not directly recover or return through rates any losses or gains on the securities, including equity investments discussed below, in the trusts for decommissioning and reclamation. However, the overall performance of these trusts does enter into the periodic determinations of expense and funding levels, which are factored into the rate making process to the extent applicable to regulated operations. PNM is at risk for shortfalls in funding of obligations due to investment losses, including those from the equity market risks discussed below, to the extent not ultimately recovered through rates charged to customers. Equity Market Risk The investments held by PNM in trusts for decommissioning and reclamation include certain equity securities at June 30, 2026. These equity securities expose PNM to losses in fair value should the market values of the underlying securities decline. Equity securities comprised 85% of the securities held by the trusts as of June 30, 2026. A hypothetical 10% decrease in equity prices would reduce the fair values of these funds by $43.7 million.