Table of Contents The following table and accompanying explanations show the primary factors affecting the after-tax change in income between the calendar years ended December 31, 2019 and 2018, 2018 and 2017, and 2017 and 2016 (in thousands): 29 (j) Strategic transaction costs increased due to costs incurred in connection with the pending Merger. (i) Palo Verde performance rewards, associated with the 2013 to 2015 performance periods, net of disallowed fuel and purchased power costs related to the resolution for the Texas fuel reconciliation proceeding designated as PUCT Docket No. 46308 for the period from April 2013 through March 2016, were recorded in June 2017, with no comparable amounts in 2018. (h) Income tax expense-other TCJA impact decreased primarily due to the TCJA that reduced the federal corporate income tax rate from 35% to 21%, excluding the tax impact of other items in the table above. (g) O&M expenses at our fossil-fuel generating plants increased primarily due to outage costs at Rio Grande Unit 8 in 2018. (f) O&M expenses at our fossil-fuel generating plants decreased primarily due to decreased outage costs at Newman Units 1 & 2 and Rio Grande Unit 8. These decreases were partially offset by increased outage costs at Newman Unit 4 and increased maintenance costs at MPS and Rio Grande. (a) Investment and interest income, NDT increased in 2019 and decreased in 2018, primarily due to net realized and unrealized gains and losses, respectively, on securities held in the NDT. Beginning on January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments, and began recording unrealized gains and losses on equity securities held in the NDT directly in earnings. Refer to "Use of Non-GAAP Financial Measures" for further details. (b) Investment and interest income, NDT increased in 2017, primarily due to changes in realized gains on securities sold from the NDT. Sales of such securities were primarily the result of the Company's efforts to re-balance and further diversify the NDT investments. (c) Retail non-fuel base revenues increased primarily due to (i) a $3.8 million increase related to the 1% increase in the City of El Paso franchise fee on gross revenues for services within the City of El Paso applicable to customer billings issued on or after October 1, 2018, (ii) $3.0 million of revenues in Texas for the period of July 30, 2019 through December 31, 2019, related to the Transmission Cost Recovery Factor ("TCRF") settlement agreement approved by the PUCT in Docket No. 49148 on December 16, 2019, and (iii) a $2.0 million increase related to the Distribution Cost Recovery Factor ("DCRF") settlement agreement approved by the PUCT in Docket No. 49395 on September 27, 2019 applicable to customer billings issued on or after October 1, 2019. Excluding the impact of rate changes, retail non-fuel base revenues in 2019 increased $1.0 million primarily due to an increase in the average number of residential customers served. (d) Retail non-fuel base revenues decreased primarily due to refunds of approximately $28.2 million for the reduction in the federal corporate income tax rate due to the TCJA, partially offset by a $7.7 million base rate increase compared to 2017 base rate increase related to the 2017 PUCT Final Order. Excluding the impact of rate changes, retail non-fuel base revenues in 2018 increased $19.8 million primarily due to an increase in kWh sales that resulted from favorable weather and an increase in the average number of customers served. (e) Retail non-fuel base revenues increased primarily due to the non-fuel base rate increase approved in the 2017 PUCT Final Order. 2017 included approximately $8.8 million of retail non-fuel base revenues for the period from July 18, 2017 through December 31, 2017, which was recognized when the 2017 PUCT Final Order was approved in December 2017. Excluding the $8.8 million 2017 PUCT Final Order impact, retail non-fuel base revenues increased $4.5 million, or 0.7%, in 2017 compared to 2016. Footnotes reflect pre-tax amounts 2019 2018 2017 Prior year December 31 net income $ 84,315 $ 98,261 $ 96,768 Change in (net of tax): Increased (decreased) investment and interest income, NDT 41,365 (a) (18,419 ) (a) 2,508 (b) Increased (decreased) retail non-fuel base revenues 7,547 (c) (520) (d) 8,651 (e) Decreased (increased) operations and maintenance expenses at fossil-fuel generating plants 2,393 (f) (2,518 ) (g) (482 ) Decreased income tax expense-other TCJA impact — 16,643 (h) — Palo Verde performance rewards, net — (3,954 ) (i) 3,253 (i) Increased strategic transaction costs (10,214) (j) — — Increased depreciation and amortization (4,495 ) (k) (4,377 ) (k) (4,242 ) (l) (Decreased) increased allowance for funds used during construction (589) 931 (5,303) (m) Other 2,715 (1,732 ) (2,892 ) Current year December 31 net income $ 123,037 $ 84,315 $ 98,261