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Exhibit 10.3

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as
of December 20, 2006 among PNM RESOURCES, INC., a New Mexico corporation (the
“Company”), FIRST CHOICE POWER, L.P., a Texas limited partnership (“FCP”),
TEXAS-NEW MEXICO POWER COMPANY, a Texas corporation (“TNMP”, collectively with
the Company and FCP, the “Borrowers”), the Lenders party hereto, and BANK OF
AMERICA, N.A., as Administrative Agent for the Lenders (in such capacity, the
“Administrative Agent”). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in the Credit Agreement (as defined
below).

R E C I T A L S

WHEREAS, the Borrowers, the Lenders party thereto and the Administrative Agent
are parties to that certain Amended and Restated Credit Agreement, dated as of
August  15, 2005 (as amended or modified from time to time, the “Credit
Agreement”); and

WHEREAS, the Borrowers have requested that the Administrative Agent and Lenders
agree to certain changes to the Credit Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

A G R E E M E N T

1. Amendments.

(a)  Section 1.1. The definition of "Affiliate" appearing in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to read as
follows:

"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and officers
of such Person), controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
other Person or (b) to direct or cause direction of the management and policies
of such other Person, whether through the ownership of voting securities, by
contract or otherwise.

 
 
 

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(b)  Section 8.3. Section 8.3 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

8.3 Sale or Lease of Assets.

Such Borrower will not (nor will it permit its Subsidiaries to) sell, lease,
transfer or otherwise dispose of, any of its assets (including, without
limitation, all or substantially all of its assets, whether in one transaction
or a series of related transactions) except (a) with respect to the Company,
sales of accounts receivable and energy services contract revenues by PSNM in
connection with the PSNM Accounts Receivable Securitization and other sales of
accounts receivable and energy services contract revenues so long as such other
sales are non-recourse to the Company and are otherwise on customary market
terms; (b) with respect to First Choice, the sales of accounts receivable in
connection with the First Choice Securitization, (c) with respect to the
Company, transfers of assets to PNMR Services Company, a wholly-owned
operational services company, in the ordinary course of business, (d) sales or
other transfers of assets (excluding those permitted in clauses (a), (b) and (c)
hereof) for fair value, if the aggregate value of all such transactions in any
calendar year, does not exceed 25% of the book value of Total Assets of such
Borrower, as calculated as of the end of the most recent Fiscal Quarter, and
(e) sale, lease, transfer or other disposition, at less than fair value, of any
other assets of such Borrower and its Subsidiaries, provided that the aggregate
book value of such assets shall not exceed $10,000,000 in any calendar year.
 
2. Conditions Precedent. This Amendment shall be effective upon receipt by the
Administrative Agent of copies of this Amendment duly executed by each Borrower
and the Required Lenders.

3. Ratification of Credit Agreement. The term “Credit Agreement” as used in each
of the Credit Documents shall hereafter mean the Credit Agreement as amended by
this Amendment. Except as herein specifically agreed, the Credit Agreement is
hereby ratified and confirmed and shall remain in full force and effect
according to its terms.

4. Authority/Enforceability. Each Borrower represents and warrants as follows:

(a) It has taken all necessary action to authorize the execution, delivery and
performance of this Amendment.

(b) This Amendment has been duly executed and delivered by such Person and
constitutes such Person’s legal, valid and binding obligations, enforceable in
accordance with its terms, except as such enforceability may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).

(c) No consent, approval, authorization or order of, or filing, registration or
qualification with, any court or governmental authority or third party is
required in connection with the execution, delivery or performance by such
Person of this Amendment.

5. Representations and Warranties. Each Borrower represents and warrants to the
Lenders that (a) the representations and warranties of such Borrower set forth
in Section 6 of the Credit Agreement are true and correct as of the date hereof,
unless they specifically refer to an earlier date, (b) no event has occurred and
is continuing which constitutes a Default or an Event of Default, and (c) it has
no claims, counterclaims, offsets, credits or defenses to its obligations under
the Credit Documents or to the extent it has any they are hereby released in
consideration of the Lenders entering into this Amendment.

 
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6. No Conflicts. Neither the execution and delivery of this Amendment, nor the
consummation of the transactions contemplated herein, nor performance of and
compliance with the terms and provisions hereof by any Borrower will
(a) violate, contravene or conflict with any provision of its respective
articles or certificate of incorporation, bylaws or other organizational or
governing document, (b) violate, contravene or conflict with any law, rule,
regulation, order, writ, judgment, injunction, decree or permit applicable to a
Borrower, (c) violate, contravene or conflict with contractual provisions of, or
cause an event of default under, any indenture, loan agreement, mortgage, deed
of trust, contract or other agreement or instrument to which a Borrower is a
party or by which it or its properties may be bound or (d) result in or require
the creation of any Lien upon or with respect to a Borrower’s properties.

7. Counterparts/Telecopy. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall constitute one and the same instrument. Delivery of
executed counterparts by telecopy shall be effective as an original and shall
constitute a representation that an original will be delivered if requested.

8. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

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Each of the parties hereto has caused a counterpart of this Amendment to be duly
executed and delivered as of the date first above written.

BORROWERS:     PNM RESOURCES, INC.,
    a New Mexico corporation

By: /s/ Wendy A. Carlson   
Name:Wendy A. Carlson____________________
Title: Vice President and Treasurer___________

FIRST CHOICE POWER, L.P.,
a Texas limited partnership
By: First Choice Power GP, LLC,
its general partner

By: /s/ Wendy A. Carlson   
Name: Wendy A. Carlson   
Title: Vice President and Treasurer  

TEXAS-NEW MEXICO POWER COMPANY,
a Texas corporation

By: /s/ Tom Sategna    
Name: Thomas G. Sategna___________________
Title: Vice President, Controller and Treasurer 

ADMINISTRATIVE
AGENT:      BANK OF AMERICA, N.A.,
   as Administrative Agent

By: /s/ Maria A. McClain   
Name: Maria A. McClain   
Title: Vice President    

 
 
 
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LENDERS:      BANK OF AMERICA, N.A.,
        as a Lender and L/C Issuer

By: /s/Kevin Bertelsen   
Name: Kevin Bertelsen    
Title: Senior Vice President   

WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Lender and L/C Issuer

By: /s/ Frederick W. Price   
Name: Frederick W. Price   
Title: Managing Director   

UNION BANK OF CALIFORNIA, N.A.

By: /s/ Efrain Soto    
Name: Efrain Soto    
Title: Vice President    

JPMORGAN CHASE BANK, N.A.

By: /s/Michael DeForge   
Name: Michael DeForge    
Title: Vice President    

CITIBANK, N.A.

By: /s/Scott Hancock   
Name: Scott Hancock    
Title: Vice President    

WELLS FARGO BANK, N.A.

By: /s/ Daniel A. Conklin   
Name: Daniel A. Conklin   
Title: V.P.     

 
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MERRILL LYNCH BANK USA

By: /s/Louis Alder    
Name: Louis Alder    
Title: Director     

MORGAN STANLEY BANK

By: /s/Daniel Twenge   
Name: Daniel Twenge    
Title: Authorized Signatory   
Morgan Stanley Bank   

UBS LOAN FINANCE LLC

By: /s/Irja R. Otsa  /s/Marie Haddad  
Name: Irja R. Otsa  Marie A. Haddad 
Title: Associate Director Associate Director 
Banking Products Banking Products 
Services, US  Services, U.S.  

LEHMAN BROTHERS BANK, FSB

By: /s/Janine M. Shugan   
Name: Janine M. Shugan   
Title: Authorized Signatory   

WILLIAM STREET COMMITMENT CORPORATION

By: /s/Mark Walton    
Name: Mark Walton    
Title: Assistant Vice President   

CREDIT SUISSE, CAYMAN ISLANDS BRANCH

By: /s/Sarah Wu    
Name: Sarah Wu    
Title: Director     

 
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By: /s/Shaheen Malik   
Name: Shaheen Malik    
Title: Associate    

U S BANK NATIONAL ASSOCIATION

By: /s/James W. Henken   
Name: James W. Henken   
Title: Vice President    

HSBC BANK USA, NATIONAL ASSOCIATION

By: /s/Richard J. Ward   
Name: Richard J. Ward    
Title: First Vice President   

MELLON BANK, N.A.

By: /s/Mark W. Rogers   
Name: Mark W. Rogers    
Title: Vice President    

ROYAL BANK OF CANADA

By: /s/David A. McCluskey   
Name: David A. McCluskey   
Title: Authorized Signatory   

COMPASS BANK

By: /s/     
Name:      
Title:      

 
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SOUTHWEST SECURITIES BANK; FSB
formerly Southwest Securities Bank

By: /s/Lonnie Warren   
Name: Lonnie Warren    
Title: President, North Arlington  
Banking Center   

BANK OF ALBUQUERQUE, N.A.

By: /s/Myka C. Gentry   
Name: Myka C. Gentry    
Title: Vice President    

BANK HAPOALIM BM

By:/s/Helen H. Gateson  /s/Charles McLaughlin
Name: Helen H. Gateson Charles McLaughlin 
Title: President  Senior Vice President 

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