On May 14, 1996 you were offered the position of Senior  Vice-President for
Texas-New  Mexico Power Company.  The offer letter from Kevern Joyce commits "to
work out a retirement  benefit using the Excess  Benefit Plan, to credit you for
years of experience from which you gained no vested benefits,  assuming you work
until age 65." Since you were employed, the company has revised the Pension Plan
to a Cash Balance Plan.  The Cash Balance Plan  determines  retirement in a much
different  manner  than  the plan  that  was in place at the time of your  offer
letter and has affected the Company's  prior efforts to honor its  commitment in
the May 14 letter. In order to continue the benefit as it existed at the time of
the May 14 offer the Company will use the use the then existing  pension formula
as the basis to  determine  your  supplemental  retirement  benefits  previously
discussed. This formula is being added to the pension formula as Supplement A, a
copy of which is attached hereto.

     The  Company  therefore  offers to you the  following  benefit  in full and
complete  satisfaction  of its  commitment to you in its offer letter of May 14,
1996:

               In the event you are still  employed  by the  Company  at age 65,
          your retirement  benefits payable from TNMP's Excess Benefit Plan will
          be calculated using the Supplement A formula.
              
               In the  case of a  "Change-in-Control",  you  will  become  fully
          vested in this  supplemental  pension  benefit.  The  benefit  will be
          accrued and vested as of the date of the change-in-control or the date
          at which the executive  would have been age 62,  whichever  benefit is
          greater. "Change of Control" is defined as that term is defined in the
          Executive  Severance  Compensation  Agreement  which you have executed
          previously with the Company .

If you agree with the foregoing please sign in the space provided below.



     /s/ Kevern R. Joyce                              Dated February 16, 1998
Kevern Joyce, Chairman, President & CEO
Texas-New Mexico Power Company



I agree with the foregoing:



         /s/ John Edwards                             Dated February 16, 1998

John Edwards, Sr. Vice President


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                                  SUPPLEMENT A

 
     In the event the  executive  is still  employed  by the  Company at age 65,
their  retirement  benefits payable from Texas-New Mexico Power Company's Excess
Benefit Plan will be calculated using the Supplement A formula.


FORMULA:

          1.3% of career average  compensation  times 30 years of service,  plus
          0.4% of the excess of career average compensation over one-half of the
          Social Security  maximum wage base in the year of retirement  times 30
          years of service.


     If the executive retires prior to age 65 (but not earlier than age 55 and 5
years of service) the 30 years of service used in the formula will be reduced by
one year for each year that the  retirement  precedes  age 65. If the  executive
retires before age 65 and requests a monthly benefit payment,  the amount of the
monthly  payment will be the actuarial  equivalent of the benefit payable at age
65. If the executive retires prior to age 55 and 5 years of service,  no benefit
would be provided under the terms of the employment contract (except in the case
of a change-in-control).

     This  benefit  will be reduced by the  benefits  that are  provided  by the
Texas-New  Mexico Power Company Pension Plan (qualified plan) and the retirement
benefits provided by previous  employers under their qualified and non-qualified
plans.