RESTATED ARTICLES OF INCORPORATION
                                       OF
                         TEXAS-NEW MEXICO POWER COMPANY


      1.  Pursuant  to the  provisions  of  Article  4.07 of the Texas  Business
Corporation Act,  Texas-New Mexico Power Company hereby adopts Restated Articles
of  Incorporation,  which accurately state the Articles of Incorporation and all
amendments  thereto  that are in effect to date and such  Restated  Articles  of
Incorporation contain no change in any provision thereof.

      2. The  Articles  of  Incorporation  and all  amendments  and  supplements
thereto  are  hereby   superseded   by  the  following   Restated   Articles  of
Incorporation, which accurately state the text thereof:

                                   ARTICLE ONE

      The name of the corporation is TEXAS-NEW MEXICO POWER COMPANY.

                                   ARTICLE TWO

      The period of its duration is perpetual.

                                  ARTICLE THREE

      The purpose for which the  corporation is organized is the  transaction of
any or all lawful business for which  corporations may be incorporated under the
Texas Business Corporation Act.

                                  ARTICLE FOUR

      The total  number of shares of  Capital  Stock  which the  corporation  is
authorized  to issue is thirteen  million  (13,000,000),  of which Capital Stock
twelve million  (12,000,000)  shares of the par value of Ten Dollars (10.00) per
share shall be Common Stock and of which one million  (1,000,000)  shares of the
par value of One Hundred Dollars ($100.00) per share shall be Preferred Stock.

      The designations,  preferences, limitations and relative rights in respect
of the  shares  of each  class  of  Capital  Stock of the  corporation,  and the
authority  granted to the Board of Directors to fix by resolution or resolutions
any thereof which shall not be fixed herein, are as follows:

SECTION (1) - DEFINITIONS

     1.01.The term "Preferred  Stock" shall mean all or any shares of any series
of Preferred Stock described in Section (2) of this Article Four.

      1.02.The term "Parity  Stock" shall mean stock of any class other than the
Preferred  Stock with respect to which  dividends  and amounts  payable upon any
liquidation,  dissolution or winding up of the corporation shall be payable on a
parity with and in proportion to the  respective  amounts  payable in respect of
the Preferred Stock, notwithstanding that such Parity Stock may have other terms
and provisions varying from those of the Preferred Stock.

      1.03.The term "Junior  Stock" shall mean the Common Stock and stock of any
other class ranking junior to the Preferred Stock and Parity Stock in respect of
dividends and amounts payable upon any liquidation, dissolution or winding up of
the corporation.

      1.04.The term "accrued  dividends" shall mean, in respect of each share of
stock, that amount which shall be equal to simple interest upon the par value at
the annual  dividend  rate fixed for such share and no more,  from and including
the date upon which dividends on such share became  cumulative and (i) up to but
not including the date fixed for payment in liquidation,  dissolution or winding
up or for redemption, or (ii) up to and including the last day of any period for
which such accrued dividends are to be determined,  less the aggregate amount of
all dividends  theretofore  paid or declared and set apart for payment  thereon.
Computation  of  accrued  dividends  in respect  of any  portion of a  quarterly
dividend period shall be by the 360-day method of computing interest.

      1.05.The  term "gross income  available  for payment of interest  charges"
shall mean the total operating revenues and other income net of the corporation,
less all proper  deductions for operating  expenses,  taxes  (including  income,
excess  profits and other taxes based on or measured by income or  undistributed
earnings  or income),  and other  appropriate  items,  including  provision  for
maintenance,  and provision for retirements,  depreciation and obsolescence (but
in no event  less  than the  minimum  provisions  required  by the  terms of any
indenture  or   agreement   securing  any   outstanding   indebtedness   of  the
corporation),  but excluding any charges on account of interest on  indebtedness
outstanding  and any  credits  or  charges  for  amortization  of debt  premium,
discount and expense,  all to be determined in accordance with sound  accounting
practice.  In determining  such "gross income  available for payment of interest
charges," no  deduction,  credit or  adjustment  shall be made on account of (1)
profits or losses from sales of property carried in plant or investment accounts
of  the  corporation,  or  from  the  reacquisition  of  any  securities  of the
corporation, or (2) charges for the elimination or amortization of utility plant
adjustment or  acquisition  accounts or other  intangibles;  and income,  excess
profits and other taxes based on or measured by income or undistributed earnings
or income shall be appropriately adjusted to reflect the effect of the exclusion
of such items.

      1.06.The  term "net income of the  corporation  available  for  dividends"
shall mean the "gross  income  available  for payment of interest  charges,"  as
defined and  determined  above under Section  1.05,  less the sum of charges for
interest on  indebtedness  and less charges or plus credits for  amortization of
debt premium,  discount and expense, and other appropriate items,  determined in
accordance with sound accounting practice.

      In determining "net income of the corporation  available for dividends" no
deduction,  credit or  adjustment  shall be made on account of (1)  expenses  in
connection with the issuance (except charges or credits for amortization of debt
premium,  discount and expense),  redemption  or  retirement  of any  securities
issued by the corporation,  including any amount paid in excess of the principal
amount or par or stated  value of  securities  redeemed or  retired,  or, in the
event such redemption or retirement is effected with the proceeds of the sale of
other  securities of the  corporation,  interest or dividends on the  securities
redeemed  or  retired  from  the  date on  which  the  funds  required  for such
redemption  or  retirement  are  deposited  in trust for such purpose to date of
redemption  or  retirement,  (2)  profits or losses  from the sales of  property
carried  in  plant  or  investment  accounts  of the  corporation,  or from  the
reacquisition  of any  securities  of  the  corporation,  (3)  charges  for  the
elimination or amortization of utility plant adjustment or acquisition  accounts
or other  intangibles,  or (4) any  earned  surplus  adjustment  (including  tax
adjustments)  applicable  to  any  period  of  this  corporation's   predecessor
corporation,  Community Public Service Company, a Delaware corporation, prior to
January 1, 1963; and income, excess profits and other taxes based on or measured
by income or undistributed earnings or income shall be appropriately adjusted to
reflect the effect of the exclusion of such items.

      1.07.The  term "net income of the  corporation  available for dividends on
Junior  Stock"  shall  mean  "net  income  of  the  corporation   available  for
dividends," as defined above,  less all accrued dividends and all dividends paid
on  outstanding  Preferred  Stock  and  Parity  Stock  and on any class of stock
ranking as to dividends prior to such Preferred Stock or Parity Stock.

      1.08 The term "sound accounting practice" shall mean recognized principles
of accounting practice followed by electric utility companies or required by any
applicable  rules,  regulations  or orders of any  public  regulatory  authority
having  Jurisdiction  over the accounts of the  corporation,  provided  that the
corporation  may, at the time,  contest or controvert in good faith the validity
or  applicability  to the corporation of any such rule,  regulation or order and
thereby  suspend the effect thereof until such contest or  controversy  has been
terminated.

SECTION (2) - PREFERRED STOCK

      2.01.Issue  in Series.  The shares of  Preferred  Stock may be divided and
issued  from  time  to  time in one or more  series,  with  such  distinguishing
characteristics,  including designations,  preferences, limitations and relative
rights,  as are  hereinafter  provided in this  Article  Four and  otherwise  as
permitted by law. All shares of Preferred  Stock of any particular  series shall
be identical  except as to the date or dates from which dividends  thereon shall
become  cumulative  as provided in Section  2.02.  The  authorized  but unissued
shares of  Preferred  Stock may be divided by number  from time to time into and
issued in designated series, and the shares of each series of Preferred Stock so
designated  shall provide for  dividends at such rates,  and shall be subject to
redemption  at such  price or  prices  and at such  time or  times,  as shall be
provided in the resolution or  resolutions  of the Board of Directors  providing
for the issuance of such stock, full authority for such purpose being granted to
and vested in the Board of Directors. The resolution or resolutions of the Board
of Directors of the corporation  dividing the number of shares of authorized but
unissued  Preferred  Stock,  and  designating the series and fixing the relative
rights and preferences thereof shall (a) designate the series to which Preferred
Stock shall  belong and fix the number of shares  thereof,  (b) fix the dividend
rate therefor and fix the date from which dividends on the shares of such series
initially  issued  shall be  cumulative,  (c) state at what times the  Preferred
Stock of such series  shall be  redeemable  and the  redemption  price or prices
payable  thereon  in  the  event  of  redemption;  and  may,  in  a  manner  not
inconsistent  with the  provisions of this Article Four and insofar as permitted
by applicable provisions of law, (i) provide for a sinking fund for the purchase
or  redemption  or a purchase fund for the purchase of shares of such series and
the terms and provisions  governing the operation of any such fund,  (ii) impose
conditions or restrictions  upon the creation of indebtedness of the corporation
or upon the issue of additional  Preferred  Stock or other stock ranking equally
therewith or prior thereto as to dividends or assets, (iii) impose conditions or
restrictions  upon  the  payment  of  dividends  upon,  or the  making  of other
distributions to, or the acquisition of, Junior Stock, (iv) grant to the holders
of the  Preferred  Stock of such  series  the right to  convert  such stock into
shares of Junior Stock,  and (v) grant such other  special  rights to, or impose
other  conditions or restrictions  upon, the holders of shares of such series as
the Board of  Directors  may  determine;  the term  "fixed for such  series" and
similar  terms shall mean stated and  expressed in this Article  Four, or in any
amendment to these  Restated  Articles of  Incorporation,  or in a resolution or
resolutions  adopted  by the  Board  of  Directors  providing  for the  issue of
Preferred Stock of the series referred to.

      2.02.Dividends. Out of the assets of the corporation legally available for
dividends the holders of the Preferred  Stock shall be entitled to receive,  but
only when and as declared by the Board of  Directors,  dividends at the rate per
annum fixed for each  series and no more.  Dividends  declared  shall be payable
quarterly on March 15, June 15,  September  15 and December 15 in each year,  to
Preferred stockholders of record on such date, not more than fifty (50) days and
not  less  than  ten  (10)  days  prior to each  such  payment  date,  as may be
determined by the Board of Directors. Dividends on the shares of Preferred Stock
of any series  initially  issued shall be  cumulative  from and including a date
fixed for such series at the time of the initial establishment or designation of
a series and on any additional  shares of the same series from and including the
first day of the quarterly dividend period in which such additional shares shall
be issued.

      Each share of Preferred Stock shall rank on a parity with each other share
of Preferred  Stock,  irrespective  of series,  with respect to dividends at the
respective  rates  fixed  for such  series,  and no  dividends  shall be paid or
declared on the Preferred Stock of any series or Parity Stock unless at the same
time a dividend in like  proportion,  ratably,  to the accrued  dividends on the
Preferred  Stock of each series  outstanding  shall be paid or declared  and set
apart for payment on each series of Preferred Stock then outstanding. The amount
of any  deficiency  for past dividend  periods may be paid or declared,  and set
apart at any time without reference to any quarterly dividend payment date.
Accrued dividends on Preferred Stock shall not bear interest.

      2.03.Liquidation  Rights.  In the  event of any  involuntary  liquidation,
dissolution  or winding up of the  corporation,  the  holders of each  series of
Preferred  Stock shall be entitled to receive,  for each share thereof,  the par
value thereof,  together with accrued  dividends,  or, in case such liquidation,
dissolution or winding up shall have been  voluntary,  an amount per share equal
to the then applicable  current  redemption price fixed for such series,  before
any  distribution  of the assets  shall be made to the  holders of shares of any
class of Junior Stock;  but the holders of Preferred  Stock of such series shall
be entitled to no further participation in such distribution.  In the event that
the assets of the corporation available for distribution to holders of Preferred
Stock shall not be sufficient  to make the full payment  herein  required,  such
assets shall be distributed to the holders of the shares of respective series of
Preferred  Stock  ratably in  proportion  to the  amounts  payable on each share
thereof,   including  accrued  dividends.  A  consolidation  or  merger  of  the
corporation  or sale,  conveyance,  exchange  or transfer  (for cash,  shares of
stock,  securities or other  consideration)  of all or substantially  all of the
property  or  assets  of the  corporation  shall  not be  deemed a  dissolution,
liquidation or winding up of the corporation  within the meaning of this Section
2.03.

      2.04.Redemption and Repurchase Provisions.

         (A) Preferred  Stock of each series shall be subject to redemption,  in
       whole or in part, at the redemption  prices fixed for such series in such
       amount, at such place and by such method,  which, if in part, shall be by
       lot, as shall from time to time be  determined by resolution of the Board
       of  Directors.  Notice of the  proposed  redemption  of any shares of any
       series of  Preferred  Stock shall be given the  corporation  by mailing a
       copy of such  notice,  at least  twenty (20) days but not more than fifty
       (50) days prior to the date fixed for such redemption,  to the holders of
       record of such shares to be redeemed,  at their respective addresses then
       appearing on the books of the corporation. On or after the date specified
       in such  notice,  each  holder of shares of  Preferred  Stock  called for
       redemption  as  aforesaid,  shall be  entitled  to receive  therefor  the
       redemption  price thereof,  upon  presentation and surrender at any place
       designated  in  such  notice  of the  certificates  for  such  shares  of
       Preferred  Stock held by him. On and after the date fixed for redemption,
       if  notice  is given as  aforesaid,  and  unless  default  is made by the
       corporation in providing moneys for payment of the redemption  price, alI
       dividends on the shares called for redemption shall cease to accrue,  and
       on and after such redemption  date,  unless default be made as aforesaid,
       or on and after the date of  earlier  deposit by the  corporation  with a
       bank or trust company doing business in the City of Fort Worth, Texas, or
       any bank or  trust  company  in the  City of New  York,  New  York,  duly
       appointed  and acting as transfer  agent for this  corporation  in either
       case having a capital and surplus of at least  $3,000,000.00 in trust for
       the benefit of the holders of the shares of the  Preferred  Stock of such
       series so called for redemption, of all funds necessary for redemption as
       aforesaid  (provided in the latter case that there shall have been mailed
       as aforesaid  to holders of record of shares to be redeemed,  a notice of
       the redemption  thereof or that the  corporation  shall have executed and
       delivered to the Transfer Agent for the Preferred Stock or to the bank or
       trust company with which such deposit is made an  instrument  irrevocably
       authorizing  it to mail such  notice at the  corporation's  expense)  all
       rights of the holders of the shares called for redemption as stockholders
       of the  corporation,  except  only the right to  receive  the  redemption
       price,  shall cease and  determine.  Any funds so  deposited  which shall
       remain unclaimed by the holders of such Preferred Stock at the end of six
       (6) years after the redemption  date,  together with any interest thereon
       which  shall have been  allowed by the bank or trust  company  with which
       such  deposit  shall  have  been  made,  shall  be  paid  by  it  to  the
       corporation,  free of any trust,  and thereafter  such holders shall look
       only to the corporation  therefor.  Shares of Preferred Stock redeemed as
       aforesaid  shall be restored  to the status of  authorized  but  unissued
       shares.

         (B) Except as  otherwise  herein  provided or  prohibited  by law,  the
       corporation may also from time to time purchase shares of Preferred Stock
       of any  series for any  sinking or  purchase  fund and  otherwise  at not
       exceeding the then current  redemption  prices  applicable to redemptions
       for the sinking  fund for such series or  otherwise,  as the case may be,
       including  accrued  dividends  thereon  to the  date  of  purchase,  plus
       customary brokerage commissions.  Shares of Preferred Stock of any series
       so purchased not used to satisfy sinking or purchase fund obligations may
       in the  discretion  of the Board of  Directors  be reissued or  otherwise
       disposed of from time to time to the extent permitted by law.

         C) If and so long as there are  dividends  in  arrears on any shares of
       Preferred  Stock of any series or Parity Stock or a default exists in any
       sinking or  purchase  fund  obligation  provided  for the  benefit of any
       series of Preferred Stock, the corporation shall not redeem any shares of
       any  series of  Preferred  Stock or Parity  Stock,  unless in  connection
       therewith all the outstanding  Preferred Stock of all series is redeemed,
       or purchase any shares of any series of  Preferred  Stock or Parity Stock
       unless an offer to purchase on a comparable  basis is made to the holders
       of all the Preferred Stock then outstanding.

         (D) The  corporation  will not permit  any  subsidiary  corporation  to
       purchase any shares of stock of any class of the corporation.

      2.05.Restrictions on Corporate Action.

         (A) So long as any  Preferred  Stock is  outstanding,  the  corporation
       shall not,  (1) without the consent  (given by vote in person or by proxy
       at a  meeting  called  for  the  purpose)  of  the  holders  of at  least
       two-thirds,  or (2)  without  the  consent  (given in  writing  without a
       meeting) of all the  holders,  of the  aggregate  number of shares of all
       series of Preferred Stock (treated as one class) then outstanding -

                  (I) Create, authorize or increase the authorized amount of any
              shares of any class of stock other than  Preferred  Stock,  Parity
              Stock or Junior Stock or any  obligation  or security  convertible
              into stock  other than  Preferred  Stock,  Parity  Stock or Junior
              Stock, or

                  (ii) Amend,  change or repeal any of the express  terms of the
              Preferred  Stock  outstanding  in any  manner  prejudicial  to the
              holders thereof, except that, if such amendment,  change or repeal
              is prejudicial to the holders of less than all series of Preferred
              Stock,  the  consent  of only the  holders  of  two-thirds  of the
              aggregate number of shares of the series thereof so affected shall
              be required, or

                  (iii) Issue any shares of  Preferred  Stock in addition to the
              shares  issued or presently to be issued or issue any Parity Stock
              unless,  after  giving  effect  to the  issue  of such  additional
              shares,

                                    (a)  the  net  income  of  the   corporation
                    available  for  dividends  for the  period  of  twelve  (12)
                    consecutive calendar months within the fifteen (15) calendar
                    months immediately preceding the calendar month within which
                    such additional  shares of stock are to be issued shall have
                    been at least two and  one-half (2 1/2) times the  aggregate
                    annual  dividend  requirements  upon the entire amount to be
                    outstanding  (upon the issuance of such additional shares of
                    Preferred  Stock or such Parity Stock) of'  Preferred  Stock
                    and Parity Stock and of any stocks of the corporation of any
                    class ranking as to dividends  prior to the Preferred  Stock
                    or Parity Stock;

                                    (b) the gross income  available  for payment
                    of interest  charges for a period of twelve (12) consecutive
                    calendar  months  within the fifteen  (15)  calendar  months
                    immediately  preceding the calendar  month within which such
                    additional shares of stock are to be issued, shall have been
                    at least one and  one-half  (1 1/2) times the sum of (1) the
                    aggregate annual interest charges on all the indebtedness of
                    the  corporation  then  outstanding,  and (2) the  aggregate
                    annual  dividend  requirements  upon the entire amount to be
                    outstanding  of Preferred  Stock and Parity Stock and of any
                    stocks  of  the  corporation  of  any  class  ranking  as to
                    dividends prior to the Preferred Stock or Parity Stock; and

                                    (c)  the  aggregate  of the  capital  of the
                    corporation applicable to all Junior Stock, plus the capital
                    surplus   and  the  earned   surplus  of  the   corporation,
                    determined in  accordance  with sound  accounting  practice,
                    shall  be  not  less  than  the   aggregate   payable   upon
                    involuntary  liquidation,  dissolution  or winding up of the
                    corporation  to the  holders  of  the  entire  amount  to be
                    outstanding  of Preferred  Stock and Parity Stock and of any
                    stocks of the  corporation of any class ranking as to assets
                    prior to the Preferred Stock.

         In  the  foregoing  computations,  there  shall  be  excluded  (a)  all
       indebtedness and all shares of stock to be retired in connection with the
       issue of such  additional  shares,  and (b) all  interest  charges on all
       indebtedness  and  dividend  requirements  on all  shares  of stock to be
       retired in connection with the issue of such additional  shares.  The net
       earnings of any property acquired by the corporation  during or after the
       period for which  income is computed,  or of any property  which is to be
       acquired in connection with the issuance of any such  additional  shares,
       if capable of being separately  determined or estimated,  may be included
       on a pro forma basis  (including a pro forma  increase in income,  excess
       profits and other  taxes based on or measured by income or  undistributed
       earnings or income) in the foregoing computations; and if within or after
       the period for which  income is computed any  substantial  portion of the
       properties  of the  corporation  shall  have been  disposed  of,  the net
       earnings of such property,  if capable of being separately  determined or
       estimated,  shall be excluded on a pro forma basis (including a pro forma
       decrease in income,  excess  profits and other taxes based on or measured
       by  income,  or  undistributed  earnings  or  income)  in  the  foregoing
       computations for a period prior to the date of such disposition.

         (B) So long as any  Preferred  Stock is  outstanding,  the  corporation
       shall not, (1) without the consent (given by vote in person or proxy at a
       meeting  called for the  purpose)  of the  holders  of a majority  or (2)
       without  the  consent  (given in writing  without a  meeting)  of all the
       holders,  of the  aggregate  number of shares of all series of  Preferred
       Stock (treated as one class) then  outstanding,  issue,  assume or create
       unsecured  securities (the words "unsecured  securities," as used in this
       paragraph  being  deemed to mean notes,  debentures  or other  securities
       representing  unsecured  indebtedness other than indebtedness maturing by
       its  terms in one year or less  from  the  date of its  creation  and not
       renewable or extendible at the option of the  corporation for a period of
       more than one year from the date of its creation) for any purpose, except
       to refund outstanding unsecured securities of such character, theretofore
       issued or assumed,  if thereby  the  aggregate  principal  amount of such
       unsecured  securities would exceed twenty percent (20%) of the sum of (1)
       the total principal amount of all bonds or other securities  representing
       secured  indebtedness of the corporation then to be outstanding,  and (2)
       the capital  represented by stocks of the  corporation and the earned and
       capital surplus of the  corporation,  determined in accordance with sound
       accounting  practice;  provided,  however,  that any unsecured securities
       theretofore  issued under any authorization of holders of Preferred Stock
       given  pursuant  hereto (and any securities to refund the same) shall not
       be considered in  determining  the amount of other  unsecured  securities
       which may be  issued,  assumed or created  within  the  aforesaid  twenty
       percent (20%) limitation.

         (C) So long as any  Preferred  Stock is  outstanding,  the  corporation
       shall not,  (1) without the consent  (given by vote in person or by proxy
       at a  meeting  called  for  the  purpose)  of  the  holders  of at  least
       four-fifths,  or (2)  without  the  consent  (given in writing  without a
       meeting)  of all the  holders  of the  aggregate  number of shares of all
       series of Preferred Stock (treated as one class) then outstanding -

                  (I) merge or consolidate with or into any other corporation or
              corporations,  provided  that the  provisions  of this  clause (i)
              shall  not  apply  to a  purchase  or  other  acquisition  by  the
              corporation of franchises or assets of another  corporation in any
              manner which does not involve a merger or consolidation; or

     (ii) sell, lease or otherwise  dispose of all or  substantially  all of its
property.

         No  consent of the  holders  of the  shares of any series of  Preferred
       Stock in respect of action  hereinabove set forth in  subparagraphs  (A),
       (B)  or   (C)   shall   be   required   if   irrevocable   provision   is
       contemporaneously made for the redemption of all shares of such series of
       Preferred  Stock at the time  outstanding,  or provision is made that the
       proposed action shall not be effective  unless  irrevocable  provision is
       made for the prompt  purchase,  redemption or retirement of all shares of
       such series of Preferred Stock at the time outstanding.

     2.06.Voting Rights. The holders of Preferred Stock shall not be entitled to
vote except:

           (a)  as provided above under Section 2.05;

           (b)  as may from time to time be required by the laws of Texas; and

         (c)  voting  separately  as a class for the  election  of the  smallest
       number of directors  necessary  to  constitute a majority of the Board of
       Directors  whenever  and as often as  dividends  payable on any series of
       Preferred Stock  outstanding  shall be in arrears in an amount equivalent
       to or exceeding six (6) quarterly dividends, which right may be exercised
       at any annual meeting and at any special meeting of  stockholders  called
       for the  purpose  of  electing  directors,  until such time as arrears in
       dividends on the Preferred Stock and the current  dividend  thereon shall
       have been paid or declared and a sum sufficient  for the payment  thereof
       set apart,  whereupon all voting rights given by this clause (c) shall be
       divested from the Preferred Stock (subject, however, to being at any time
       or from time to time similarly revived and divested).

      So long as holders of the  Preferred  Stock  shall have the right to elect
directors under the terms of the foregoing clause (c), the holders of the Common
Stock, voting separately as a class, shall,  subject to the voting rights of any
other class of stock, be entitled to elect the remaining directors.

      Whenever,  under the  provisions of the foregoing  clause (c) the right of
holders of the Preferred Stock, if any, to elect directors shall accrue or shall
terminate,  the Board of Directors shall, within ten (10) days after delivery to
the corporation at its principal  office of a request or requests to such effect
signed by the holders of at least five percent (5%) of the outstanding shares of
any class of stock entitled to vote, call a special meeting,  in accordance with
the Bylaws of the  corporation,  of the holders of the class or classes of stock
of the corporation  entitled to vote, to be held within sixty (60) days from the
delivery of such request,  for the purpose of electing a full Board of Directors
to serve until the next annual  meeting  and until their  respective  successors
shall be  elected  and shall  qualify;  provided,  however,  that if the  annual
meeting of  stockholders  for the  election  of  directors  is to be held within
eighty (80) days after the delivery of such request, the Board of Directors need
not act thereon. If, at any special meeting called as aforesaid or at any annual
meeting of stockholders  after accrual or termination of the right of holders of
the Preferred Stock to elect directors as in the foregoing  clause (c) provided,
any  director  shall not be  re-elected,  his term of office  shall end upon the
election and qualification of his successor,  notwithstanding  that the term for
which such director was originally elected shall not at the time have expired.

      If, during any interval  between annual meetings of  stockholders  for the
election of directors  while holders of the Preferred Stock shall be entitled to
elect any director pursuant to the foregoing clause (c), the number of directors
in office who have been elected by the holders of the Preferred Stock (voting as
a class) or by the holders of the Common Stock (voting as a class),  as the case
may be, shall become less than the total number of directors subject to election
by holders of shares of such class, whether by reason of the resignation,  death
or removal of any director or  directors,  or an increase in the total number of
directors,  the  vacancy  or  vacancies  shall be  filled  (1) by the  remaining
directors or director,  if any, then in office who either were or was elected by
the votes of shares of such class or succeeded to a vacancy originally filled by
the votes of shares of such class or (2) if there is no such director  remaining
in office, at a special meeting of holders of shares of such class called by the
President of the corporation to be held within sixty (60) days after there shall
have been  delivered to the  corporation  at its  principal  office a request or
requests  signed by the holders of at least five percent (5%) of the outstanding
shares of such class; provided,  however, that such request need not be so acted
upon if  delivered  less than  eighty  (80) days  before  the date fixed for the
annual meeting of stockholders for the election of directors.

      Any  director  may be removed from office for cause by vote of the holders
of a majority of the shares of the class of stock  which voted for his  election
(or for his  predecessor  in case such  director  was elected by  directors).  A
special  meeting  of  holders of shares of any class may be called by a majority
vote of the Board of Directors or by the President for the purpose of removing a
director in accordance with the provisions of the preceding sentence,  and shall
be  called to be held  within  sixty  (60)  days  after  there  shall  have been
delivered to the  corporation  at its principal  office a request or requests to
such effect  signed by holders of at least five percent (5%) of the  outstanding
shares of the class  entitled  to vote with  respect to the  removal of any such
director;  provided,  however,  that such  request  need not be so acted upon if
delivered  less than  eighty  (80) days  before  the date  fixed for the  annual
meeting of stockholders for the election of directors.

      The holders of a majority of the shares of a class of stock entitled under
this  Section  2.06 to vote for the  election  or  removal of  directors  or the
filling of any vacancy  however  created in the Board of  Directors,  present in
person or  represented by proxy at a meeting called for the purpose of voting on
any such action,  shall  constitute a quorum for such purpose  without regard to
the  presence  or absence at the  meeting of the  holders of any other  class of
stock not entitled under this Section 2.06 to vote in respect thereto.  A lesser
interest of the class entitled to vote from time to time may adjourn any meeting
for such  purpose,  and the  same  shall be held as  adjourned  without  further
notice.  When a quorum is present,  the vote of the holders of a majority of the
shares of such quorum shall govern each such  election,  removal or filling of a
vacancy in respect of which such class is entitled to vote.

      Preferred  Stockholders  shall not be  entitled  to receive  notice of any
meeting of holders of any class of stock at which they are not entitled to vote.

      Each holder of Preferred Stock, as to all matters in respect of which such
stock has voting power, is entitled to one vote for each share of stock standing
in his  name.  Cumulative  voting  shall  not be  allowed,  but each  holder  of
Preferred  Stock, at any election of directors at which such Preferred Stock has
voting power, shall be entitled to cast that number of votes equal to the number
of shares of Preferred  Stock owned by him for as many directors as there are to
be elected.

      2.07.Restriction  on Dividends.  So long as any shares of Preferred  Stock
shall be outstanding,  the corporation shall not declare or pay or set apart any
dividends on any shares of Junior Stock (other than dividends  payable in shares
of Junior Stock),  or make any other  distribution on shares of Junior Stock, or
make any  expenditures  for the purchase,  redemption or other  retirement for a
consideration of shares of Junior Stock (other than in exchange for other shares
of Junior  Stock),.unless  accrued  dividends  on all  shares  of all  series of
Preferred Stock  outstanding for all past quarterly  dividend periods shall have
been paid or declared  and set apart and the full  dividend for the then current
quarterly  dividend  period  shall  have been or  concurrently  shall be paid or
declared and set apart, or if the corporation shall be in default of the sinking
or purchase fund obligation provided for any series of Preferred Stock.

      2.08.Relative  Rights and  Preferences of Outstanding  Series of Preferred
Stock. The relative rights and preferences of each of the outstanding  series of
Preferred  Stock which are not set forth  elsewhere  in this Article Four are as
follows:

       (A) 4.65% Cumulative Preferred Stock, Series B (22,800 shares), and 4.75%
       Cumulative Preferred Stock, Series C (13,200 shares).

                  1.  The  Preferred  Stock  of  each of said  series  shall  be
              designated,   respectively,  "4.65%  Cumulative  Preferred  Stock,
              Series B" (herein called "Series B Preferred  Stock"),  and "4.75%
              Cumulative  Preferred  Stock,  Series C" (herein  called "Series C
              Preferred Stock").

                  2(a). Series B Preferred Stock. The fixed dividend rate of the
              shares  of Series B  Preferred  Stock is 4.65% per share per annum
              and such  dividends are  cumulative  from the date of issue of the
              shares  of such  series  initially  issued  and on any  additional
              shares of the same series from and  including the first day of the
              quarterly dividend period in which such additional shares shall be
              issued,  with the first quarterly  dividend payable  September 15,
              1963; the fixed redemption prices on the shares of such series are
              $106.50 per share if redeemed prior to September 15, 1966; $105.00
              per share if redeemed on  September  15,  1966 or  thereafter  and
              prior to  September  15,  1969;  $103.50  per share if redeemed on
              September 15, 1969 or thereafter and prior to September 15, 1972 ;
              $102.00 per share if redeemed on September  15, 1972 or thereafter
              and  prior  to  September  15,  1972 or  thereafter  and  prior to
              September 15, 1975; $101.00 per share if redeemed on September 15,
              1975 or thereafter  and prior to September  15, 1978;  and $100.00
              per  share  if  redeemed  on  September  15,  1978 or  thereafter;
              together  with all  accrued  dividends  thereon (as such phrase is
              defined for the purposes of Article Four of the Restated  Articles
              of Incorporation of the corporation).  The fixed liquidation price
              for the shares of such  series is One Hundred  Dollars  ($100) per
              share, together with all accrued dividends thereon (as such phrase
              is so defined),  in the event of involuntary  liquidation  and the
              applicable  current  redemption  price in the  event of  voluntary
              liquidation,  all as more fully  prescribed  by the  provisions of
              Paragraph  2.03  of  Article  Four  of the  Restated  Articles  of
              Incorporation of the corporation.

                  2(b). Series C Preferred Stock. The fixed dividend rate on the
              shares  of Series C  Preferred  Stock is 4.75% per share per annum
              and such  dividends are  cumulative  from the date of issue of the
              shares  of such  series  initially  issued  and on any  additional
              shares of the same series from and  including the first day of the
              quarterly dividend period in which such additional shares shall be
              issued,  with the first quarterly  dividend payable  September 15,
              1965; the fixed redemption prices on the shares of such series are
              $105.75 per share if redeemed prior to September 15, 1968; $104.60
              per share if redeemed on  September  15,  1968 or  thereafter  and
              prior to  September  15,  1971;  $103.45  per share if redeemed on
              September 15, 1971 or thereafter  and prior to September 15, 1974;
              $102.30 per share if redeemed on September  15, 1974 or thereafter
              and prior to September 15, 1977;  $101.15 per share if redeemed on
              September 15, 1977 or thereafter  and prior to September 15, 1980;
              and  $100.00  per  share if  redeemed  on  September  15,  1980 or
              thereafter;  together with all accrued  dividends thereon (as such
              phrase is defined for the purposes of Article Four of the Restated
              Articles  of   Incorporation  of  the   corporation).   The  fixed
              liquidation  price for the  shares of such  series is One  Hundred
              Dollars  ($100) per share,  together  with all  accrued  dividends
              thereon  (as  such  phrase  is  so  defined),   in  the  event  of
              involuntary  liquidation  and the  applicable  current  redemption
              price in the event of  voluntary  liquidation,  all as more  fully
              prescribed  by the  provisions  of Section 2.03 of Article Four of
              the Restated Articles of Incorporation of the corporation.

                  3.  The  corporation  (unless  prevented  from so doing by any
              applicable  restriction  of law) will in each year, so long as any
              shares  of  the  Series  B  or  Series  C   Preferred   Stock  are
              outstanding, make offers (hereinafter in this Paragraph 3 called a
              Purchase  Offer) to the  holders  of shares of the Series B and/or
              Series C  Preferred  Stock to  purchase  on October 1 in each such
              year,  at the  prices  at which  the same  may be  offered  to the
              corporation  up to but not exceeding a price of $100 per share and
              accrued  dividends,  a number of shares of said series equal to 2%
              of the maximum number of shares of each of the Series B and Series
              C Preferred  Stock  outstanding at any one time prior to August 15
              of such year, all as hereinafter provided in this Paragraph 3.

                  The  Transfer  Agent for the Series B and  Series C  Preferred
              Stock  shall,  at least 30 days  prior to  October  1 of each such
              year,  mail to the holders of record of shares of each of the said
              Series as at the day prior to the mailing  date, a notice,  in the
              name of the corporation, that the corporation will on October I of
              that year,  accept offers to sell the number of shares required to
              be covered by the  Purchase  Offers at the prices at which  shares
              are offered to the  corporation up to but not exceeding a price of
              $100 per share and accrued dividends thereon.

                  The  Transfer  Agent  shall on  October  1, on  behalf  of the
              corporation,  accept  offers to sell  shares  of the  Series B and
              Series C Preferred  Stock  received by it up to the full number of
              shares  covered  by the  Purchase  Offer  upon such  basis as will
              result in the lowest  aggregate cost to the  corporation.  To that
              end, the Transfer  Agent shall accept offers at the same prices on
              a pro rata basis with respect to each series, as nearly as may be.
              In case any person whose offer is accepted shall  thereafter  fail
              to make good such offer,  said Transfer Agent shall, to the extent
              practicable,  within  30 days  after  October  1,  accept  in lieu
              thereof,  the best offer or offers,  if any,  theretofore made and
              not theretofore accepted.

                  On or prior to October 1 in each year, the  corporation  shall
              deposit with said Transfer  Agent cash  sufficient to purchase the
              shares of each of said Series,  if any,  which have been  accepted
              for purchase  pursuant to the Purchase Offer made in such year and
              thereafter  shall deposit any  additional  funds required to carry
              out the Purchase  Offer for such year.  The  Transfer  Agent shall
              return  to the  corporation  any funds  deposited  with it and not
              applied  to the  purchase  of shares  of the  Series B or Series C
              Preferred Stock pursuant to the Purchase Offer for such year.

                  If in any year the full purchase obligation of the corporation
              shall not have been  satisfied  by the making and  carrying out of
              the Purchase  Offer,  any deficiency in the  satisfaction  of such
              purchase  obligation shall be made good, in the manner hereinafter
              in this  paragraph  set  forth,  before  any  dividends  shall  be
              declared or paid upon or set apart for any shares of Common  Stock
              or  any  shares  of any  class  of  stock  ranking  junior  to the
              Preferred Stock or any sums applied to the purchase, redemption or
              other retirement of the Common Stock or any shares of any class of
              stock ranking junior to the Preferred  Stock.  Any such deficiency
              may be made good at any time by the making and  carrying  out of a
              Special Purchase Offer covering the number of shares of the Series
              B or Series C Preferred Stock as to which such  deficiency  exists
              and, to that end,  the  corporation  shall file with the  Transfer
              Agent a certificate,  signed by the President or a Vice President,
              specifying a date,  not less than 45 days after the date of filing
              thereof,  on which offers to sell shares of the Series B or Series
              C Preferred  Stock will be accepted.  Such Special  Purchase Offer
              shall otherwise be made and carried out on thirty days' notice and
              in the same manner as hereinabove  provided for Purchase Offers to
              be carried out on October 1.

                  The  Purchase  Offer in any year  shall be deemed to have been
              completed  and  satisfied if the  corporation  shall have complied
              with the provisions of this Paragraph 3  notwithstanding  that the
              total  number of shares  purchased by it shall have been less than
              the total number of shares covered by the  corporation's  Purchase
              Offer for that year  because too few offers to sell were  received
              by it.

                  Shares of the Series B and Series C Preferred  Stock purchased
              pursuant to any Purchase Offer or Special  Purchase Offer shall be
              canceled and shall not be reissued as shares of the same Series.

                  The  provisions  of  this  Paragraph  3 in so far as the  same
              relate to purchases of outstanding  shares of each of said Series,
              are subject to the applicable provisions of Section (2) of Article
              Four of the Restated Articles of Incorporation of the corporation.

                    4. The shares of the Series B  Preferred  Stock and Series C
               Preferred Stock are not convertible.

                  5. So long as any shares of the Series B or Series C Preferred
              Stock shall be outstanding,  the corporation  shall not declare or
              pay or set  apart any  dividends  on any  shares  of Junior  Stock
              (other than  dividends  payable in shares of Junior Stock) or make
              any other  distribution on any shares of Junior Stock, or make any
              expenditures for the purchase,  redemption or other retirement for
              a consideration  of shares of Junior Stock (other than in exchange
              for other  shares of Junior Stock or from the proceeds of any sale
              of such stock  received not more than six (6) months prior to such
              retirement),  if  the  aggregate  amount  of all  such  dividends,
              distributions  and expenditures of the corporation  after December
              31, 1962,  would exceed the aggregate  amount of the net income of
              such   corporation   available   for  dividends  on  Junior  Stock
              accumulated  after December 31, 1962,  plus  $1,500,000,  and then
              only within the limits set forth in Section  3.01 of Article  Four
              of the Restated Articles of Incorporation of the corporation.  For
              the purposes of this  paragraph,  references to the  "corporation"
              shall mean both the  corporation  and its  predecessor,  Community
              Public Service Company, a Delaware corporation.

SECTION (3) THE COMMON STOCK

      3.01.Dividends. Out of any assets of the corporation legally available for
dividends remaining after full cumulative dividends upon any shares of Preferred
Stock or of any other class of stock ranking as to dividends ahead of the Common
Stock of the corporation then  outstanding  shall have been paid or declared and
set apart for all past quarterly  dividend periods and for the current quarterly
dividend period,  then and not otherwise,  dividends may be paid upon the Common
Stock to the  exclusion  of the  Preferred  Stock and of any such other class of
stock.

      3.02.Distribution of Assets. In the event of any liquidation,  dissolution
or winding up of the  corporation,  after  there  shall have been paid to or set
aside for the holders of all series of Preferred Stock and of any other class of
stock  ranking  as to assets  ahead of the  Common  Stock the full  preferential
amounts,  including accrued dividends,  to which they are respectively entitled,
the holders of the Common Stock shall be entitled to receive,  pro rata, all the
remaining   assets  of  the  corporation   available  for  distribution  to  its
stockholders.  The Board of  Directors,  by vote of a  majority  of the  members
thereof,  may  distribute  in kind  to the  holders  of the  Common  Stock  such
remaining assets of the corporation or may sell,  transfer or otherwise  dispose
of all or any of the  remaining  property and assets of the  corporation  to any
other  corporation and receive payment  therefor wholly or partly in cash and/or
in stock and/or in obligations of such corporation, and may sell all or any part
of the consideration received therefor or distribute the same and/or the balance
thereof in kind to the holders of the Common Stock.

      3.03.Voting Rights.  Subject to the votinq riqhts expressly conferred upon
the  Preferred  Stock by  Section  (2) of this  Article  Four and by law and the
voting rights of any other class of stock, the holders of the Common Stock shall
exclusively  possess full voting power for the election of directors and for all
other  purposes and shall be entitled to one vote for each share of Common Stock
held of record.  Cumulative  voting  shall not be  allowed,  but each  holder of
Common Stock, at any election of directors at which such Common Stock has voting
power,  shall be  entitled  to cast that  number of votes equal to the number of
shares of Common  Stock  owned by him for as many  directors  as there are to be
elected.

SECTION (4) - MISCELLANEOUS

      4.01.Preemptive Rights. No holder of stock of any class of the corporation
shall have any right, as such holder,  to purchase or subscribe for any stock of
any class of the  corporation  now or  hereafter  authorized  or any  securities
convertible  into,  or carrying or  evidencing  any right or option to purchase,
stock of any class now or hereafter  authorized which the corporation may at any
time issue, but any and all such stock, securities, rights and/or options may be
issued and  disposed of by the Board of  Directors  to such persons and for such
lawful  consideration  and on  such  terms  as the  Board  of  Directors  in its
discretion may determine,  without first offering the same or any thereof to the
stockholders of the corporation.

      4.02.Stock  Fully Paid.  All shares of capital stock,  whether  heretofore
issued or  hereafter  issued  for a lawful  consideration  fixed by the Board of
Directors,  including,  without limitation,  issuance of stock dividends, shall,
when the full  lawfuI  consideration  fixed by the Board of  Directors  has been
paid, or when so issued as a stock dividend,  be deemed fully paid stock and not
liable to any further call or assessment thereon, and the holders of such shares
shall not be liable for any further payment thereon.

      4.03.Unissued  Shares.  Any of the unissued shares of capital stock of the
corporation  may be  issued  from  time  to  time in  such  amount  and  manner,
including,  without limitation, in distribution as stock dividends, and for such
lawful consideration as the Board of Directors may determine.

                                  ARTICLE FIVE

      The Bylaws of the corporation  may be altered,  amended or repealed at any
regular or special  meeting of the directors at which a quorum is present by the
affirmative vote of a majority of those present at such meeting, provided notice
of the  proposed  alteration,  amendment or repeal is contained in the notice of
such meeting.

                                   ARTICLE SIX

      The corporation has heretofore complied with the requirements of law as to
the initial  minimum  capital  requirements  without which it could not commence
business under the Texas Business Corporation Act.

                                  ARTICLE SEVEN

      The post office  address of its  registered  office is 4100  International
Plaza,  P.O. Box 2943, Fort Worth,  Texas 76113,  and the name of its registered
agent at such address is M.D. Blanchard.

                                  ARTICLE EIGHT

      The number of directors  presently  constituting the Board of Directors of
the  corporation is nine, and the names and addresses of the persons now serving
as directors are as follows:

                                 R. Denny Alexander       Fort Worth, Texas
                                 Cass O. Edwards II       Fort Worth, Texas
                                 John A. Fanning          Fort Worth, Texas
                                 Sidney M. Gutierrez      Corrales, New Mexico
                                 Harris L. Kempner, Jr.   Galveston, Texas
                                 Kevern R. Joyce          Fort Worth, Texas
                                 Dwight R. Spurlock       Texas City, Texas
                                 Dr. Carol D. Surles      Denton, Texas
                                 Dennis H. Withers        Mansfield, Texas

                                  ARTICLE NINE

      To the full extent allowed pursuant to the Texas Miscellaneous Corporation
Laws Act as it now  exists or as it may be amended  or  recodified  from time to
time,  directors  shall  not be  personally  liable  to the  Corporation  or its
shareholders  for  monetary  damages for any act or  omission in the  director's
capacity as a director except for liability for:

1.   a breach  of the  director's  duty of  loyalty  to the  corporation  or its
     shareholders or members;

2.   an  act  or  omission  not in  good  faith  or  that  involves  intentional
     misconduct or a knowing violation of the law;

3.   a transaction from which a director received an improper  benefit,  whether
     or not the benefit  resulted  from an action  taken within the scope of the
     director's office;

4.   an act or  omission  for which the  liability  of a director  is  expressly
     provided for by statute;

5.   an act related to an unlawful stock repurchase or payment of a dividend.


                         TEXAS-NEW   MEXICO   POWER
                                     COMPANY



Date:  March, 15, 1996                  By:_________________________________
                                            Michael D. Blanchard, Secretary