UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
___________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(X)   COMBINED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended DECEMBER 31, 2000

OR

(  )   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from  to

________________________________________________________________________________________________________

|                                                                 | TNP ENTERPRISES, INC.                                             |                
|---------------------------------------------------------------- | ----------------------------------------------------------------- | ---------------
|                                                                 | (Exact name of registrant as specified in its charter)            |                
|                                                                 |                                                                   |                
|Texas                                                            | 4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113 | Commission File
|(State of                                                        | (Address and zip code of principal executive offices)             | Number: 1-8847 
|incorporation)                                                   |                                                                   |                
|                                                                 | Telephone number, including area code: 817-731-0099               | 75-1907501     
|                                                                 |                                                                   |                
|                                                                 |                                                                   |                
|Securities registered pursuant to Section 12(b) of the Act: None |                                                                   |                
|Securities registered pursuant to Section 12(g) of the Act: None |                                                                   |                

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes \X\  No \  \

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. \X\

TNP Enterprises, Inc. has no publicly traded shares of common stock outstanding.

________________________________________________________________________________________________________

|                                                                 | TEXAS-NEW MEXICO POWER COMPANY                                    |                    
|---------------------------------------------------------------- | ----------------------------------------------------------------- | -------------------
|                                                                 | (Exact name of registrant as specified in its charter)            |                    
|                                                                 |                                                                   |                    
|Texas                                                            | 4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113 | Commission File    
|(State of                                                        | (Address and zip code of principal executive offices)             | Number: 2-97230    
|incorporation)                                                   |                                                                   |                    
|                                                                 | Telephone number, including area code: 817-731-0099               | 75-0204070         
|                                                                 |                                                                   |                    
|Securities registered pursuant to Section 12(b) of the Act: None |                                                                   | identification no.)
|                                                                 |                                                                   |                    
|Securities registered pursuant to Section 12(g) of the Act: None |                                                                   |                    

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes \X\  No \  \

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. \X\

TNP Enterprises, Inc. holds all 10,705 outstanding common shares of Texas-New Mexico Power Company.

________________________________________________________________________________________________________

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________________________________________________________________________________________________________

TNP ENTERPRISES INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIESCombined Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2000

This combined annual report on Form 10-K is filed separately by TNP Enterprises, Inc. and Texas-New Mexico Power Company. Information contained in this report relating to Texas-New Mexico Power Company is
filed by TNP Enterprises, Inc. and separately by Texas-New Mexico Power Company on its own behalf. Texas-New Mexico Power Company makes no representation as to information relating to TNP Enterprises, Inc. or to any other affiliate or subsidiary of TNP
Enterprises, Inc., except as it may relate to Texas-New Mexico Power Company.

|TABLE OF CONTENTS
|-----------------
|Glossary of Terms
|Part I           
|                 
|Item 1.          
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|                 
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|                 
|                 
|Item 2.          
|                 
|                 
|                 
|Item 3.          
|Item 4.          
|                 
|Part II          
|                 
|Item 5.          
|Item 6.          
|Item 7.          
|                 
|                 
|                 
|                 
|                 
|Item 7A.         
|Item 8.          
|                 
|                 
|                 
|                 
|Item 9.          
|                 
|Part III         
|                 
|Item 10.         
|                 
|                 
|                 
|                 
|                 
|Item 11.         
|                 
|                 

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|         | Joint Report on Executive Compensation of TNP and TNMP Compensation Committee | 54
|-------- | ----------------------------------------------------------------------------- | --
|Item 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                | 58
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                | 58
|         |                                                                               |   
|Part IV 
|         |                                                                               |   
|Item 14. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K               | 59

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________________________________________________________________________________________________________

TNP ENTERPRISES INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIESCombined Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2000

Glossary of Terms

As used in this combined report, the following abbreviations, acronyms, or capitalized terms have the meanings set forth below:

|Abbreviation, Acronym,
 or Capitalized Term | Meaning                                                                                                                    
|------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------
|                                            |                                                                                                                            
|AFUDC                                       | Allowance for funds used during construction                                                                               
|Clear Lake                                  | Clear Lake Cogeneration Limited Partnership                                                                                
|ECOM                                        | Economic Cost over Market                                                                                                  
|FWI                                         | Facility Works, Inc., a wholly owned subsidiary of TNP                                                                     
|FERC                                        | Federal Energy Regulatory Commission                                                                                       
|FASB                                        | Financial Accounting Standards Board                                                                                       
|First Choice Power                          | First Choice Power, Inc.                                                                                                   
|GWh                                         | Gigawatt-Hours                                                                                                             
|ITC                                         | Investment Tax Credits                                                                                                     
|kWh                                         | Kilowatt-Hours                                                                                                             
|Laurel Hill                                 | Laurel Hill Capital Partners, LLC                                                                                          
|LILCO                                       | Long Island Lighting Company                                                                                               
|Merger                                      | Merger of ST Corp. with and into TNP with TNP as surviving corporation                                                     
|Merger Agreement                            | Agreement and Plan of Merger, dated as of May 24, 1999, between TNP, SW Acquisition, and ST Corp.                          
|NMPRC                                       | New Mexico Public Regulation Commission                                                                                    
|ORA                                         | Office of Regulatory Affairs-PUCT                                                                                          
|PR Group                                    | Power Resource Group, Inc.                                                                                                 
|PUCT                                        | Public Utility Commission of Texas                                                                                         
|SEC                                         | Securities and Exchange Commission                                                                                         
|SFAS                                        | Statement of Financial Accounting Standards                                                                                
|ST Corp                                     | ST Acquisition Corp., a Texas corporation wholly owned by SW Acquisition                                                   
|SW Acquisition                              | SW Acquisition, L.P, a limited partnership organized and existing under the laws of Texas                                  
|TGC                                         | Texas Generating Company, a wholly owned subsidiary of TNMP                                                                
|TGC II                                      | Texas Generating Company II, a wholly owned subsidiary of TNMP                                                             
|TNP One                                     | A two-unit, lignite-fueled, circulating fluidized-bed generating plant located in Robertson County, Texas                  
|TNMP                                        | Texas-New Mexico Power Company, a wholly owned subsidiary of TNP                                                           
|TNP                                         | TNP Enterprises, Inc.                                                                                                      
|Transition Plan                             | TNMP's transition-to-competition plan in Texas that began January 1, 1998, and was superceded by legislation passed in 1999
|TXU                                         | TXU Electric Company                                                                                                       
|Unit 1                                      | The first electric generating unit of TNP One                                                                              
|Unit 2                                      | The second electric generating unit of TNP One                                                                             

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Statement Regarding Forward Looking Information

The discussions in this document that are not historical facts, including, but not limited to, future cash flows and the potential recovery of stranded costs are based upon current expectations. Actual
results may differ materially. Among the facts that could cause the results to differ materially from expectations are the following: our ability to adapt to open market competition enacted by our legislators and regulators or a delay in implementing
retail competition; the effects of accounting pronouncements that may be issued periodically; changes in regulations affecting TNP's and TNMP's businesses; decisions in connection with current regulatory proceedings; the sale of TNP One; insurance
coverage available for claims made in litigation; the effect of a Texas Supreme Court decision on the limitations of any actual damages awarded in currently ongoing litigation;

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________________________________________________________________________________________________________

PART I



Item 1.   BUSINESS.

Introduction

TNP was organized as a holding company in 1983 and transacts business through its subsidiaries. TNMP is a public utility engaged in transmitting, distributing, generating, purchasing and selling
electricity to customers in Texas and New Mexico. TNMP's predecessor was organized in 1925. First Choice Power, which was incorporated in 1997, is a wholly-owned subsidiary of TNP and was organized in 2000 to act as TNMP's affiliated retail electric
provider, as required by Texas' 1999 legislation establishing the framework for retail competition in Texas' electric utility industry.

TNMPhas two subsidiaries, TGC and TGC II. These subsidiaries were formed in 1988 and 1991, respectively, to facilitate the financing of the construction of the two units
of TNP One, TNMP's sole generating plant.

TNP, TNMP, TGC, TGC II and First Choice Power are all Texas corporations. The executive offices of TNP, TNMP, TGC, TGC II and First Choice Power are located at 4100 International Plaza, P.O. Box 2943, Fort Worth, Texas 76113
and the telephone number is (817) 731-0099. TNP also has executive offices located at 2 Robbins Lane, Suite 201, Jericho, NY 11753 and the telephone number is (516) 933-3100. Unless otherwise indicated, all financial information in this report is
presented on a consolidated basis.

Acquisition

On April 7, 2000, pursuant to an Agreement and Plan of Merger dated May 24, 1999, between TNP, ST Corp. and SW Acquisition, the parent of ST Corp., St Corp. merged with and into TNP, the parent of TNMP. TNP is the surviving
corporation in the Merger. SW Acquisition now holds all outstanding common stock of TNP. Upon closing, each share of TNP's common stock that was outstanding at the effective time of the merger was automatically converted into the right to receive $44.00
in cash. Prior to the Merger, TNP common stock was traded on the New York Stock Exchange. As a result of the Merger, TNP common stock is no longer publicly held. Additional information regarding the Merger can be found in Note 2.

TNMP's Service Areas

TNMP provides electric service to more than 238,000 customers in 85 Texas and New Mexico municipalities and adjacent rural areas. The company serves a market niche of smaller- to medium-sized
communities. Only two of the 85 communities in TNMP's service territory have populations exceeding 50,000. TNMP's service territory is organized into two operating areas: Texas and New Mexico.

Texas

TNMP's Texas territory consists of three non-contiguous areas. One portion of this territory extends from Lewisville, which is 10 miles north of DFW International airport, eastward to municipalities
near the Red River, and to communities south and west of Fort Worth. A second portion of its territory includes the area along the Texas Gulf Coast between Houston and Galveston, and a third includes areas of far west Texas between Midland and El Paso. In
Texas, TNMP provides electric service to a variety of entities, including customers engaged in the agricultural, food processing, oil and gas, petrochemical, and tourism industries.

New Mexico

This region includes areas in southwest and south central New Mexico. The economy depends primarily upon mining and agriculture, with copper mines as the major industrial customers



Franchises and Certificates of Public Convenience and Necessity

Texas law does not require an electric utility to execute a franchise agreement with a Texas municipality to be entitled to provide or continue to provide electrical service within the municipality. A
franchise agreement does, however, document the mutually agreeable terms under which the service will be provided within a municipality. TNMP holds 82 franchises with terms ranging from 20 to 50 years, one franchise with a five-year term, and two
franchises with indefinite terms from the 85 municipalities to which it provides electric service. These franchises will expire on various dates from 2001 to 2039. One Texas franchise, comprising 2% of total company revenues, is scheduled to expire in
2001. TNMP intends to negotiate and execute new or amended franchise agreements to be effective before existing franchises expire.

TNMP also holds PUCT certificates of public convenience and necessity covering all Texas areas that TNMP serves. These certificates include terms that are customary in the public utility industry. TNMP
generally has not been required to have certificates of public convenience and necessity to provide electric power in New Mexico.



-6-

________________________________________________________________________________________________________

Seasonality of Business

TNMP experiences increased sales and operating revenues during the summer months as a result of increased air conditioner usage in hot weather. In 2000, approximately 41% of annual revenues were
recorded in June, July, August, and September.

Sources and Cost of Energy

TNMP owns one 300-megawatt lignite-fueled generating facility, TNP One. During 2000, TNP One provided approximately 22% of TNMP's system-wide energy requirements. Power generated at TNP One is
transmitted over TNMP's own transmission lines to other utilities' transmission systems for delivery to TNMP's Texas service area systems. To maintain a reliable power supply for its customers and to coordinate interconnected operations, TNMP is a member
of the Electric Reliability Council of Texas and the Western Systems Coordinating Council.

TNMP purchases the remainder of its electricity from various suppliers with diversified fuel sources. The availability and cost of purchased power to TNMP is subject to changes in supplier costs, market forces, regulations
and laws, fuel costs, and other factors. For 2001, TNMP has adequate resources through its firm contracts to serve its entire customer load in Texas and the majority of its customer load in New Mexico. These contracts allow TNMP the option to purchase
amounts of power within a specified minimum and maximum range. Generally, TNMP makes purchases on the spot market in lieu of firm contract options primarily when the spot market price represents savings to TNMP's customers. In recent years TNMP has
reduced its reliance upon long-term power supply contracts in favor of contracts with shorter terms. This practice enhances TNMP's ability to achieve greater purchased power savings during periods of decreasing power costs, but exposes TNMP to greater
risk in periods of rising costs.

During 2000, TNMP's cost per kWh of purchased power increased 26 percent, from an average of 3.18 cents per kWh in 1999, to an average of 4.01 cents per kWh in 2000. The cost increases were caused by higher natural gas
prices in Texas and New Mexico and by effects of the volatility in the Western United States electricity market on purchased power prices in New Mexico.

The following table illustrates the composition of TNMP's sources of electric energy in 2000.



|                                     | Year ContractExpires | Percent ofEnergy Provided
|------------------------------------ | -------------------- | -------------------------
|Generation                           |                      |                          
|TNP One                              | -                    | 22%                      
|                                     |                      |                          
|Purchased Power                      |                      |                          
|Firm contracts expiring in 2001      | 2001                 | 14                       
|Firm contracts expiring in 2002-2005 |                      |                          
|Clear Lake Cogeneration L.P.         | 2004                 | 16                       
|TXU                                  | 2002                 | 7                        
|Others                               | Various              | 4                        
|Buy-sell agreements                  | -                    | 24                       
|Spot market purchases                | -                    | 13                       
|                                     |                      |                          
|Total                                |                      | 100%                     



Recovering Purchased Power and Fuel Costs

In Texas, fuel costs and the energy-related portion of purchased power costs are recovered from TNMP customers through the fuel adjustment clause authorized by the PUCT. The demand-related portion of purchased power costs is
recovered through base rates. At any point in time, TNMP may have recovered more or less from customers through the fuel adjustment clause than its allowable costs under the clause. PUCT rules require TNMP to reconcile its fuel costs at least every three
years. TNMP filed a fuel reconciliation in June 2000, and at the same time requested an increase in its fuel factor and authority to implement a surcharge to recover under-recovered fuel and energy related purchased power costs. In December 2000, TNMP
asked the PUCT to increase its fuel factor again and implement an additional surcharge. The status of those proceedings is discussed in Note 3. As a result of increased energy costs incurred in 2000, TNMP had an under-recovered balance of fuel and
energy-related purchased power costs in Texas of $37.3 million as of December 31, 2000.

In New Mexico, TNMP recovers all purchased power costs through the fuel and purchased power adjustment clause authorized by the NMPRC. The purchased power recovery factor changes monthly to reflect
over-collections or under-collections of purchased power costs. As of December 31, 2000, TNMP had an under-recovered balance of purchased power costs of $2.0 million.

-7-

________________________________________________________________________________________________________

Government Regulation

TNMP is subject to PUCT and NMPRC regulation. Some of its activities, such as issuing securities, are also subject to FERC regulation. Utility industry regulation continues to change both in reaction to, and as a primary
force behind, a more competitive industry. These changes are discussed in Item 7, "Competitive Conditions" and Note 3.

In addition to regulation as a utility, TNMP's facilities are regulated by the Environmental Protection Agency and Texas and New Mexico environmental agencies. TNP One uses environmentally superior circulating fluidized bed
technology that eliminates the need for expensive scrubbers. Phase II of the Clean Air Act of 1990 became effective January 1, 2000 and requires a 30% reduction in sulfur dioxide emissions. TNP One is able to comply with this requirement without capital
additions or a significant increase in operating costs. The Texas Natural Resources Conservation Commission (TNRCC) is proposing a rule change that would lower allowable nitrous oxide emissions beginning in 2003. TNMP is investigating the cost of
compliance at TNP One. TNMP expects that expenditures necessary to achieve these reductions would not have a material impact on TNMP's financial condition. During 2000, 1999, and 1998, TNMP incurred expenses related to air, water, and solid waste
pollution abatement (including ash removal) of approximately $4.7 million, $4.2 million, and $4.0 million, respectively.



Employees and Executive Officers



At December 31, 2000, TNP and TNMP had 836 employees. The employees are not represented by a union or covered by a collective bargaining agreement. Management believes relations with its employees are
excellent.

Executive officers of TNP and TNMP, who are elected annually by the respective boards of directors and serve at the discretion of the boards, are as follows:

|Name                   | Age | Position with TNP                                            
|---------------------- | --- | -------------------------------------------------------------
|                       |     |                                                              
|William J. Catacosinos | 70  | Chairman, President, & Chief Executive Officer               
|Theodore A. Babcock    | 46  | Chief Financial Officer                                      
|Manjit S. Cheema       | 46  | Treasurer                                                    
|Kathleen A. Marion     | 46  | Secretary                                                    
|                       |     |                                                              
|Name                   | Age | Position with TNMP                                           
|                       |     |                                                              
|Kevern R. Joyce        | 54  | Chairman, President, & Chief Executive Officer               
|Jack V. Chambers, Jr.  | 51  | Senior Vice President & Chief Operations Officer             
|Manjit S. Cheema       | 46  | Senior Vice President & Chief Financial Officer              
|W. Douglas Hobbs       | 57  | Vice President - Texas Transmission & Distribution Operations
|Dennis R. Cash         | 47  | Vice President - Texas Customer Operations                   
|Robert Castillo        | 47  | Vice President - New Mexico Operations                       
|Melissa D. Davis       | 43  | Vice President - Human Resources                             
|Larry W. Dillon        | 46  | Vice President - Power Resources                             
|R. Michael Matte       | 47  | Vice President - Business Development                        
|Michael D. Blanchard   | 50  | Vice President & General Counsel                             
|Patrick L. Bridges     | 42  | Vice President & Treasurer                                   
|Scott Forbes           | 43  | Vice President - Chief Accounting & Information Officer      
|Paul W. Talbot         | 44  | Secretary                                                    
|Michael J. Ricketts    | 42  | Assistant Controller                                         
|B. Jan Adkins          | 58  | Assistant Secretary                                          

William J. Catacosinosjoined TNP upon the closing of the Merger as Chairman, President & Chief Executive Officer. He also serves on TNMP's board of directors. Since 1998, Dr.
Catacosinos has served as Managing Partner of Laurel Hill. Dr. Catacosinos served as Chairman and Chief Executive Officer of LILCO from 1984 to 1998.

Kevern R. Joyce joined TNP and TNMP in April 1994 as President and Chief Executive Officer. He has served as Chairman of TNMP since April 1995, and was also Chairman, President & Chief Executive
Officer of TNP until the closing of the Merger.

Jack V. Chambers was named Senior Vice President & Chief Operations Officer of TNMP in October 2000. Prior to that time, Mr. Chambers had served as Senior Vice President and Chief Customer
Officer of TNMP since 1994. Mr. Chambers was Senior Vice President of TNP from April 1996 until the closing of the Merger.

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Theodore A. Babcock joined TNP upon the closing of the Merger as Chief Financial Officer. Since 1999, Mr. Babcock has been a Managing Director of Laurel Hill. From 1996 to 1998, Mr. Babcock
served as Vice President and Treasurer of LILCO. Mr. Babcock served as Treasurer of LILCO from 1994 to 1996.

Manjit S. Cheema has served as Senior Vice President & Chief Financial Officer of TNMP since July 1996 and was elected Treasurer of TNP in May 2000. Mr. Cheema was Senior Vice President &
Chief Financial Officer of TNP from May 1997 until the closing of the Merger. Prior to that, Mr. Cheema was Vice President & Chief Financial Officer of TNP and TNMP since December 1994.

W. Douglas Hobbswas appointed Vice President - Texas Transmission and Distribution Operations effective October 2000. He was Vice President and Regional Customer Officer of TNMP from March 1999 to
October 2000. He served as Vice President - Business Development of TNP from May 1997 until May 1999. He was Vice President - Business Development of TNMP from February 1997 to May 1997. He was TNMP Vice President and Regional Customer Officer from 1994
to February 1997.

Dennis R. Cashbecame Vice President - Texas Customer Operations in October 2000. He was Vice President and Regional Customer Officer of TNMP from March 1999 until October 2000. He served as Vice
President - Human Resources of TNMP from 1994 until March 1999.

Robert Castillobecame Vice President - New Mexico Operations in October 2000. Prior to that, he had served as Vice President and Regional Customer Officer of TNMP since September 1999. He served as
TNMP Assistant Vice President - New Mexico from January 1998 until September 1999. From 1991 until he joined TNP, he was executive vice president and general manager for the New Mexico Rural Electric Cooperative Association.

Melissa D. Daviswas appointed Vice President - Human Resources of TNMP effective March 1999. She served as TNMP Vice President and Regional Customer Officer from February 1997 until March 1999.
From September 1995 to February 1997 she was TNMP's Controller.

Larry W. Dillonbecame Vice President - Power Resources effective March 1999. He had served as TNMP Vice President and Regional Customer Officer from 1994 until March 1999.

R. Michael Mattewas named President of First Choice Power in December 2000. He was named Vice President - Business Development of TNMP upon closing of the Merger. Prior to the Merger, he had served
as President of FWI since May 1998 and Vice President - Business Development of TNP since November 1998. From January 1997 until joining FWI in May 1998, he was an independent management and utility services consultant in Atlanta, Georgia. From March 1996
to January 1997, he served as Regional Vice President Operations for ADT Security Services, an electronic services company, and from January 1991 to March 1996, he served as Regional General Manager of ADT.

Michael D. Blanchard became Vice President & General Counsel of TNMP in February 1998. He also served as Vice President & General Counsel of TNP from February 1998 until the closing of the
Merger. He was Corporate Secretary and General Counsel of TNMP and TNP from 1987 to February 1998.

Patrick L. Bridges has served as Vice President & Treasurer of TNMP since November 1999. He also served as Vice President & Treasurer of TNP from November 1999 until the closing of the
Merger. He served as Treasurer of TNMP and TNP from September 1995 until November 1999. He served as TNMP's Director - Finance from 1994 to September 1995 and as Assistant Treasurer from 1993 to September 1995.

Scott Forbes became Vice President - Chief Accounting & Information Officer of TNMP in January 2001. Prior to that, he had served as Chief Accounting & Information Officer of TNMP since
April 2000. He was elected Chief Information Officer of TNMP in June 1998. He was Controller of TNMP from February 1997 to June 1998 and was Controller of TNP from May 1997 to June 1998. From September 1996 to February 1997, he was Manager - Financial
Systems and Reporting. From January 1994 to September 1996, he was Manager - financial Reporting and Accounting Policy with Entergy Services, Inc.

Kathleen A. Marion joined TNP upon the closing of the Merger as Secretary. Since 1999, Ms. Marion has been Executive Administrator of Laurel Hill. From 1994 to 1998, she served as Vice President of
Corporate Services and Corporate Secretary of LILCO.

Paul W. Talbotwas elected Corporate Secretary of TNMP in February 1998. He served as Corporate Secretary of TNP from February 1998 until the closing of the Merger. He has been Senior Counsel of
TNMP since August 1996. Before joining TNMP, he was in the private practice of law in Dallas, for more than ten years.

-9-

________________________________________________________________________________________________________

Michael J. Rickettswas named Assistant Controller of TNMP in April 2000. He served as Controller of TNMP and TNP from June 1998 to April 2000. From November 1996 to June 1998, he was
Manager - Accounting Projects and from 1994 to November 1996, he was Supervisor - Accounting Support of TNMP.

B. Jan Adkinsbecame Assistant Corporate Secretary of TNMP in August 1987. She also served as Assistant Corporate Secretary of TNP from August 1987 until the closing of the Merger.

Item 2.   PROPERTIES.

Generating Facilities

TNP One is a two-unit, lignite-fueled generating plant, located in Robertson County, Texas. TNP One generates power for TNMP's Texas service areas and operates as a base load facility.

Transmission and Distribution Facilities



Management believes that TNMP's transmission and distribution facilities have sufficient capacity to serve existing customers adequately and that those facilities can be extended and expanded to serve
customer growth for the foreseeable future. These facilities primarily consist of overhead and underground lines, substations, transformers, and meters. TNMP generally constructs its transmission and distribution facilities on easements or public rights
of way and not on real property held in fee simple.

Administrative and Service Facilities

TNP's and TNMP's corporate headquarters are located in an office building in Fort Worth, Texas. Space in this building is leased through 2003. TNP also has offices in Jericho, New York.

TNMP owns or leases local offices in 38 of the municipalities that it serves. TNMP owns 14 construction/service centers in Texas and New Mexico.

Item 3.  
 LEGAL PROCEEDINGS.

Phillips Petroleum Company.TNMP is the defendant in a suit styledPhillips Petroleum Company vs. Texas-New Mexico Power Company, filed on October 1, 1997 and
pending in the 149th State District Court of Brazoria County, Texas. In May 1999, TNMP filed a Third Party Petition naming Sweeny Cogeneration Limited Partnership, the operator of cogeneration and related facilities at the Phillips refinery, as a
defendant. The suits, which are in the discovery stage, are based on events surrounding an interruption of electricity to a petroleum refinery and related facilities that occurred in May 1997. Phillips Petroleum Company is seeking the recovery of damages
arising from the interruption and in May 1999 demanded payment in the amount of $47.1 million. TNMP's tariff approved by the PUCT contains limitations against recovery of the great majority of Phillips' alleged damages. The Texas Supreme Court, in another
matter, has upheld the enforceability of such tariff limitations in litigation of this type; TNMP believes the ruling will operate to substantially limit any recovery by Phillips to the cost of its electrical equipment, in the event that any are awarded
in this matter. Phillips has previously reported to the SEC that it incurred costs of approximately $2.0 million in this interruption. TNMP has previously charged to earnings the deductible amount of its insurance coverage, $500,000.

Power Resource Group.     On January 16, 2001, TNMP obtained a summary judgment in its favor in the suit styled Power Resource Group, Inc. v. Public Utility Commission of
Texas and Texas-New Mexico Power Company, pending in the 345th District Court of Travis County, Texas. The court also dismissed this lawsuit on that date. This lawsuit, which was originally filed on May 21, 1999, challenged the PUCT's dismissal of a regulatory case that PR Group had filed
against TNMP. PR Group is a developer of electric generating plants that are intended to be qualifying cogeneration facilities.

Information regarding additional regulatory and legal matters is provided in Notes 3 and 10.

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Item 4.  
 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders in the fourth quarter of 2000.

PART II

Item 5.  
 MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

TNP has no publicly traded shares of common stock outstanding.

TNP holds all 10,705 outstanding common shares of TNMP. During 2000 and 1999, TNMP declared common dividends to TNP as follows (in thousands):



|QUARTER | 2000      | 1999     
|------- | --------- | ---------
|First   | $       - | $       -
|Second  | 7,500     | -        
|Third   | 17,000    | 25,000   
|Fourth  | 7,000     | 4,000    
|Total   | $ 31,500  | $ 29,000 
|        |           |          



The $315 million credit facility restricts the payment of cash dividends by TNMP. Details regarding the restrictions are discussed in Note 9.

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Item 6.   SELECTED FINANCIAL DATA

|The following table sets forth selected financial data of TNP and TNMP for 1996 through 2000.
|---------------------------------------------------------------------------------------------
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|TNP ENTERPRISES, INC.                                                                        
|For the years ended December 31,                                                             
|Consolidated results                                                                         
|                                                                                             
|                                                                                             
|                                                                                             
|At December 31,                                                                              
|Total assets                                                                                 
|Capitalization                                                                               
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Capitalization ratios                                                                        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|TEXAS-NEW MEXICO POWER COMPANY                                                               
|For the years ended December 31,                                                             
|Consolidated results                                                                         
|                                                                                             
|                                                                                             
|At December 31,                                                                              
|Total assets                                                                                 
|Capitalization                                                                               
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Capitalization ratios                                                                        
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|12                                                                                           
|_____________________________________________________________________________________        
|                                                                                             

|TEXAS-NEW MEXICO POWER COMPANY                                                       
|-------------------------------------------------------------------------------------
|SELECTED OPERATING STATISTICS                                                        
|                                                                                     
|                                                                                     
|                                                                                     
|Operating revenues (in thousands):                                                   
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Sales (MWH):                                                                         
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Number of customers (at year end):                                                   
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Revenue statistics:                                                                  
|Average annual use per residential                                                   
|                                                                                     
|Average annual revenue per residential                                               
|                                                                                     
|Average revenue per KWH sold                                                         
|                                                                                     
|Average revenue per KWH sold                                                         
|                                                                                     
|                                                                                     
|Net generation and purchases (MWH):                                                  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Average cost per KWH purchased (cents)                                               
|                                                                                     
|Employees (year-end)                                                                 
|                                                                                     
|13                                                                                   
|_____________________________________________________________________________________
|                                                                                     



________________________________________________________________________________________________________

Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

SIGNIFICANT EVENTS AND KNOWN TRENDS AFFECTING TNP AND TNMP

Acquisition



On April 7, 2000, pursuant to an Agreement and Plan of Merger dated May 24, 1999, between TNP, ST Corp. and SW Acquisition, the parent of ST Corp., ST Corp. merged with and into TNP, the parent of TNMP.
TNP is the surviving corporation in the Merger. SW Acquisition now holds all outstanding common stock of TNP. Upon closing, each share of TNP's common stock that was outstanding at the effective time of the merger was automatically converted into the
right to receive $44.00 in cash. Prior to the merger, TNP common stock was traded on the New York Stock Exchange. As a result of the Merger, TNP is no longer publicly held. Further information regarding the Merger can be found in Note. 2.

CompetitiveConditions

Much of the electric utility industry continues to transition toward competition. During 1999, legislation was passed in both Texas and New Mexico that establishes retail competition for generation
operations. Retail competition is scheduled to begin in both New Mexico and Texas on January 1, 2002. The legislation in both states provides for recovery of "stranded costs", the difference between the regulatory value of TNMP's investments in generation
assets and purchased power contracts, and the market price for energy in a competitive market. The increasingly competitive environment presents opportunities to compete for new customers, as well as the risk of loss of existing customers. TNMP expects
the portions of operations pertaining to transmission and distribution to continue to be regulated.

The following discusses the effects of the legislation in Texas and New Mexico on TNMP's operations, and TNMP's ongoing efforts to prepare for the start of retail competition.

Texas

Excess Earnings.     The legislation established a cap on TNMP's earnings in 1999, 2000, and 2001. To the extent that TNMP's rate of return on rate base is greater than 10.53
percent, earnings in excess of the cap are used to reduce stranded costs. TNMP has recorded estimated excess earnings of $18.3 million for the year ended December 31, 2000.

Business Separation.     The legislation requires utilities to unbundle their operations into three distinct businesses on or before January 1, 2002. Utilities must create
businesses for their regulated transmission and distribution operations, unregulated generation operations, and their retail electric provider. Retail electric providers are entities that sell electricity to retail customers in Texas.

During 2000, TNMP made two filings with the PUCT regarding business separation. In January 2000, TNMP filed its plan for complying with the legislation. In March 2000, TNMP filed a rate case to set rates
for its regulated transmission and distribution company, from which TNMP's customers will purchase transmission and distribution services beginning January 1, 2002. The March filing also included a proposed Competition Transition Charge designed to
recover stranded costs. Details of these filings can be found in Note 3. The PUCT held hearings on various issues raised in the filings during 2000. In March 2001, TNMP and other parties to the March 2000 filing reached a settlement regarding the
transmission and distribution cost of service. The parties are preparing to present the settlement to the PUCT for its consideration. The current schedule for these cases contemplates issuance of a final order in August 2001.

In January 2001, the PUCT approved TGC's request to become a power generation company as specified in the legislation.

In February 2001, the PUCT certified TNMP's affiliated retail electric provider, First Choice Power, as a retail electric provider. Certification is needed to allow First Choice Power to compete when the
Texas electric market opens to competition on a partial basis in June 2001 and on a statewide basis in 2002.

Pilot Program.     The legislation includes provisions for pilot programs that will allow the PUCT, utilities, and their customers to test the implementation of customer
choice. The legislation requires that each utility offer customer choice in its service area to five percent of the utility's combined load in all customer classes. The pilot programs begin June 1, 2001. During the pilot program, participating customers
may buy electric energy from any non-affiliated retail electric provider. In the case of TNMP, First Choice Power will participate in the statewide pilot program, but cannot offer services to TNMP's transmission and distribution customers participating in
the pilot program.

-14-

________________________________________________________________________________________________________

Fuel Recovery.     PUCT rules require TNMP to reconcile its fuel costs at least every three years. During 2000, TNMP made filings at the PUCT in June and December
seeking (i) increases in its fuel factor to recover projected fuel and energy-related purchased power costs and (ii) authority to implement surcharges to recover under-recovered fuel and energy-related purchased power costs accumulated as of March 31 and
September 30, 2000, respectively. The June filing also included a request to reconcile TNMP's eligible fuel and energy-related purchased power expenses for the three year-period ended December 31, 1999.

As a result of a settlement hearing on the June 2000 filing, TNMP implemented a new fuel factor in July 2000 that was approximately 20 percent higher than its previous factor. In September 2000, TNMP
implemented the permanent fuel factor resulting from the settlement, and an interim surcharge to begin collecting $23.7 million of under-recovered fuel and energy-related purchased power costs. TNMP settled the December filing in January 2001 and
implemented an interim fuel factor that is approximately 30 percent higher than the factor it implemented in September 2000. More details of these filings can be found in Note 3.

At December 31, 2000, TNMP had an under-recovered balance of fuel and the energy-related portion of purchased power costs of $37.3 million. Under the legislation, TNMP may request changes in its fuel
factor until December 31, 2001.

The surcharge implemented in September 2000 is effective through December 31, 2001. The surcharge resulting from the December 2000 filing is effective through December 31, 2002. Any over-recovered or
under-recovered balance of fuel and energy-related purchased power costs as of December 31, 2001 will be included in the final quantification of stranded costs under the legislation. The legislation specifies that the PUCT will make the final
quantification of stranded costs in 2004.

New Mexico

The New Mexico Legislature opened the state's electric power market to consumer choice with the passage of the Electric Utility Industry Restructuring Act of 1999 (the Act) in April 1999. The Act
allows recovery of at least 50 percent of a utility's stranded costs over a five-year period, and provided for the phase-in of retail choice, which was originally scheduled to begin January 1, 2001. On May 17, 2000, the NMPRC delayed the date for retail
electric competition for residential, school, and small commercial customers by one year to January 1, 2002. At the same time the NMPRC moved the date for open access for large commercial and industrial customers back six months, from January 1, 2002 to
July 1, 2002. During March 2001, a proposal to delay the start of competition by five years passed the New Mexico Legislature and awaits the Governor's signature.

Impact of Competition on TNMP

TNMP is currently pursuing strategies to retain existing customers and attract new customers. With the onset of competition in Texas, First Choice Power will assume primary responsibility for customer
growth and retention. Management believes TNMP's revenue growth opportunities are through an increased customer base. However, increased competition could result in losses of existing customers.

As noted in "Recovering Purchased Power and Fuel Costs," TNMP recovers the demand component of purchased power in base rates. As such, TNMP is exposed to the risk of increases in the demand
component of purchased power. At the same time, TNMP has the opportunity to retain the benefit of savings realized from reductions in these costs. TNMP is actively managing its resources to minimize the risks in its power supply portfolio.

The legislation establishing competition in both states provides for recovery of stranded costs. The actual amount of stranded cost recovery is subject to regulatory review and approval.

Results of Operations



The Merger was accounted for under the purchase method of accounting; accordingly, purchase accounting adjustments have been reflected in the financial statements of TNP for all periods subsequent to March
31, 2000. Financial statements for periods prior to that date were prepared using TNP's historical basis of accounting and are designated as "predecessor." For purposes of the discussion of 2000 annual operating results provided herein, the pre-merger
financial information of the predecessor has been combined with the post-merger financial information. The business operations of TNP were not significantly changed as a result of the Merger and post-merger and pre-merger operating results, except as
noted in the discussion, are comparable.

Amounts shown in the consolidated financial statements of TNMP continue to present the financial position and results of operations based on historical cost.

-15-

________________________________________________________________________________________________________

Overall Results

TNP

TNP had a loss applicable to common stock of $5.9 million in 2000 as compared to earnings of $30.2 million in 1999. TNP's reduced earnings reflect goodwill amortization, interest expense, preferred
dividends, and one-time charges related to the Merger.

As noted above, TNP had earnings applicable to common stock of $30.2 million for 1999, compared to $19.3 million in 1998. TNP's 1999 results included the effect of a $2.8 million charge to write off
certain nonregulated business ventures, and legal and outside consultant fees of $4.1 million associated with the Merger. TNP's 1998 results included a $12.7 million loss associated with FWI's discontinued operations. In late 1997, management discontinued
the construction segment of FWI. In 1998, TNP elected to discontinue all remaining operations of FWI. See Note 4 for additional information regarding the discontinued operations.

TNMP

TNMP's earnings applicable to common stock were $41.9 million in 2000, as compared to $39.5 million in 1999 and $34.2 million in 1998.

Under legislation passed in 1999, TNMP's earnings on its Texas operations are capped at a 10.53 percent return on rate base adjusted for discounted rates to industrial customers, which were approximately
$2.8 million in 2000. TNMP will apply Texas earnings in excess of the cap to recover its stranded costs. TNMP recorded pre-tax excess earnings of $18.3 million ($11.3 million after tax) for the year ended December 31, 2000. Those amounts included an
adjustment to the excess earnings recorded in 1998 and 1999 due to the resolution of a purchased power dispute and the resolution of a contest to TNMP's 1999 excess earnings calculation. These adjustments are discussed in Note 3 - 1998 Excess Earnings and 1999 Excess Earnings,respectively.

The changes in TNP's and TNMP's earnings for 2000 compared to 1999 and 1999 compared to 1998 are attributable to the factors listed below (in millions):

|                        |                                                             |                                                                                   | Earnings Increase (Decrease)
|----------------------- | ----------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------
|                        |                                                             |                                                                                   | 2000 v. 1999                
|Factors affecting TNMP: |                                                             |                                                                                  
|                        | Changes in base revenues                                    | $        4.7                                                                      | $       (4.7)               
|                        | Non-pass through purchased power and fuel expenses          | (5.6)                                                                             | 31.3                        
|                        | Transmission expenses                                       | 6.7                                                                               | (7.0)                       
|                        | Other operating expenses                                    | (4.8)                                                                             | (0.7)                       
|                        | Interest expense                                            | 2.6                                                                               | 10.6                        
|                        | All other (including income tax effects on the items above) | (4.3)                                                                             | (9.7)                       
|                        |                                                             | TNMP earnings increase (decrease) before charge for
   recovery of stranded plant |                             
|                        | Charge for recovery of stranded plant (net of tax)          | 3.1                                                                               | (14.5)                      
|                        |                                                             | TNMP earnings increase                                                            | 2.4                         
|Factors affecting TNP:  |                                                             |                                                                                  
|                        | Other operating expenses                                    | (2.8)                                                                             | (3.2)                       
|                        | Depreciation and goodwill amortization                      | (8.5)                                                                             | -                           
|                        | Interest expense                                            | (32.7)                                                                            | (0.5)                       
|                        | Other income and deductions (net)                           | 3.2                                                                               | (3.0)                       
|                        | Dividends on preferred stock                                | (11.0)                                                                            | -                           
|                        | All other (including income tax effects on the items above) | 3.3                                                                               | (0.4)                       
|                        |                                                             | TNP earnings decrease from continuing operations                                  | (38.5)                      
|                        | Discontinued operations of FWI                              | -                                                                                 | 12.7                        
|                        |                                                             | TNP earnings increase (decrease)                                                  | (38.5)                      
|                        |                                                             |                                                                                   |                             
|                        |                                                             | Consolidated earnings increase (decrease)                                         | $       (36.1)              
|                        |                                                             |                                                                                   |                             

-16-

________________________________________________________________________________________________________

TNMP Operating Revenues

The following table summarizes the components of revenues (in thousands).



|                      |           |           |           | Increase (Decrease)
|--------------------- | --------- | --------- | --------- | -------------------
|                      | 2000      | 1999      | 1998      | '00 v. '99         
|Operating revenues    | $ 644,035 | $ 576,093 | $ 585,892 | $  67,942          
|                      |           |           |           |                    
|Pass-through expenses | 274,101   | 210,850   | 215,950   | 63,251             
|                      |           |           |           |                    
|Base revenues         | $ 369,934 | $ 365,243 | $ 369,942 | $   4,691          
|                      |           |           |           |                    

Pass-through expenses in Texas include fuel and the energy-related portion of purchased power. In New Mexico, pass-through expenses include all purchased power costs. Details of pass-through
expenses are discussed under "Results of Operations - Operating Expenses."

The following table summarizes the components of the changes in base revenues from 2000 to 1999 and from 1999 to 1998 (in thousands).

|                                  | '00 v. '99 | '99 v. '98
|--------------------------------- | ---------- | ----------
|Base revenues                     |            |           
|Weather related                   | $  13,622  | $  (3,979)
|Customer growth                   | 8,051      | 5,064     
|Transmission Revenue              | 2,955      | 1,225     
|Industrial sales                  | (7,736)    | (4,395)   
|Texas base rate reduction         | (7,061)    | -         
|New Mexico base rate reduction    | (826)      | (434)     
|Clear Lake standby revenue        | -          | (2,453)   
|Price/sales mix and other         | (4,314)    | 273       
|                                  |            |           
|Base revenues increase (decrease) | $   4,691  | $  (4,699)
|                                  |            |           

Base revenues increased in 2000 over 1999 by $4.7 million, or 1.3 percent. The increase is attributable to higher weather-related sales in residential and commercial classes, growth in the
number of residential and commercial customers, and higher transmission revenues. The increases were partially offset by a rate reduction in Texas as discussed below, a rate reduction in New Mexico as discussed in Note 3, reduced sales to industrial
customers and a contract renegotiation with a large industrial customer in New Mexico. The renegotiated contract will reduce base revenues by approximately $2.0 million annually and the reduction was retroactive to October 1999.

Transmission revenues increased due to a change in the method of allocating Texas transmission costs that the PUCT approved as of September 1, 1999. The PUCT adopted the new method to comply with the
restructuring legislation passed in 1999.

Effective January 1, 2000, TNMP implemented base rate reductions of 3 percent and 1 percent for residential and commercial customers, respectively, under the terms of a Declaratory Order issued by the PUCT
on December 6, 1999. Similar rate reductions took effect January 1, 2001. The 2001 rate reduction will reduce base revenues by an estimated $14.1 million dollars compared to 1999 levels.

Base revenues decreased $4.7 million, or 1.3 percent, in 1999 compared to 1998. Factors contributing to the base revenue decrease were a renegotiated contract with a large industrial customer and the
absence of standby revenue payments resulting from the settlement of litigation between Clear Lake and TNMP regarding purchases of cogenerated electricity. These factors were partially offset by increased base revenues from residential and commercial
customers due to growth in these customer classes, which overcame lower weather-related sales in residential and commercial classes brought about by milder weather in 1999 as compared to 1998.

-17-

________________________________________________________________________________________________________

The components of GWh sales for 2000 and 1999 are summarized in the following table:



|                                                | 2000  | 1999  | Variance | %    
|----------------------------------------------- | ----- | ----- | -------- | -----
|Residential                                     | 2,582 | 2,420 | 162      | 6.7  
|Commercial                                      | 2,069 | 1,922 | 147      | 7.6  
|Industrial:                                     |       |       |          |      
|Firm                                            | 550   | 516   | 34       | 6.6  
|Economy                                         | 4,060 | 4,283 | (223)    | (5.2)
|Sales for resale (includes power
     marketing | 281   | 121   | 160      | 132.2
|Other                                           | 102   | 107   | (5)      | (4.7)
|Total GWh sales                                 | 9,644 | 9,369 | 275      | 2.9  
|                                                |       |       |          |      

2000 sales increased 275 GWHs (or 2.9 percent) as compared to 1999. The increase resulted primarily from higher weather-related sales to residential and commercial customers, growth in the
number of residential and commercial customers, and higher off-system sales. This was partially offset by reduced sales to a significant industrial customer under an economy sales arrangement.

Operating Expenses

Factors Affecting TNMP

TNMP incurred operating expenses of $562.6 million for the year ended December 31, 2000, an increase of $66.9 million over the amount incurred during 1999. The increase reflects higher costs for
purchased power and fuel partially offset by lower transmission expenses.

For the year ended December 31, 1999, TNMP incurred operating expenses of $495.7 million, a decrease of $3.1 million from 1998 levels, due primarily to lower purchased power expenses, offset by the charge
for recovery of stranded plant and higher transmission expenses.

Purchased Power and Fuel Expenses

The following table summarizes the components of TNMP's purchased power and fuel expenses (in thousands).

|                                   |            |            |            | Increase (Decrease)
|---------------------------------- | ---------- | ---------- | ---------- | -------------------
|                                   | 2000       | 1999       | 1998       | '00 v. '99         
|Purchased power and fuel expenses: |            |            |            |                    
|Pass-through expenses              |            |            |            |                    
|Purchased power                    | $  235,355 | $  178,548 | $  181,264 | $   56,807         
|Fuel                               | 38,746     | 32,302     | 34,686     | 6,444              
|                                   | 274,101    | 210,850    | 215,950    | 63,251             
|Non pass-through expenses:         |            |            |            |                    
|Purchased power                    | 72,857     | 67,132     | 98,353     | 5,725              
|Fuel                               | 1,503      | 1,605      | 1,646      | (102)              
|                                   | 74,360     | 68,737     | 99,999     | 5,623              
|                                   |            |            |            |                    
|Total purchased power and fuel     | $  348,461 | $  279,587 | $  315,949 | $   68,874         
|                                   |            |            |            |                    

In 2000, purchased power and fuel expenses increased $68.9 million from the level incurred in 1999. Pass-through expenses increased $63.3 million, reflecting increased purchases caused by
higher sales overall and price increases in Texas and New Mexico. Non pass-through expenses increased $5.6 million due to higher costs incurred on sales to an industrial customer under a replacement power contract and increased prices for demand purchased
power in Texas, partially offset by the deferral of a $2.4 million payment made in 1998 to resolve a billing dispute as described in Note 3 - 1998 Excess Earnings.

In 1999, purchased power and fuel expenses decreased $36.4 million from the level incurred during 1998. Non pass-through expenses decreased $31.3 million, reflecting lower demand costs resulting from the
replacement of purchases from TXU with purchases from lower cost providers, and significant reductions of the rate under which TNMP purchases capacity from Clear Lake. Pass-through expenses decreased $5.1 million from 1998 levels, reflecting lower sales.

-18-

________________________________________________________________________________________________________

Transmission Expenses

Transmission expenses decreased by $6.7 million for the year ended December 31, 2000, compared to 1999, due to the change in cost allocation described in "TNMP Operating Revenues," above.

Transmission expenses increased $7.0 million in 1999, from the same period in 1998. The higher expenses were due to discontinued reimbursements in accordance with the Clear Lake settlement, and a new
allocation of transmission costs that the PUCT approved in July 1999. The increased transmission expense approved by the PUCT resulted from the termination of the majority of the TXU purchased power contract at the beginning of 1999. While terminating the
contract has produced purchased power savings, these savings have been partially offset by these higher transmission payments. The change in cost allocation described in "TNMP Operating Revenues," above partially offsets these increases.

Other Operating Expenses

In 2000, other operating expenses were $4.8 million higher than in 1999. This increase is primarily due to higher payroll costs, an increase in the proportion of total payroll charged to operating
expenses, and increased medical costs.

Other operating expenses in 1999 increased slightly, by $0.7 million, compared to 1998.

Interest Charges

Interest charges decreased by $2.6 million for the year ended December 31, 2000, compared to 1999, due to lower interest rates on the Backstop Facility and the $315 Million Credit Facility used to
refinance TNMP debt, as discussed in Note 8, and lower debt balances.

During 1999, interest charges decreased $10.6 million from 1998 levels due to the issuance of $175 million of 6.25% senior notes, which replaced $130 million of 12.5% secured debentures and borrowings
against the credit facilities.

Charge for Recovery of Stranded Plant

Charge for recovery of stranded plant was $18.3 million for the year ended December 31, 2000, a decrease of $5.1 million as compared to 1999. As noted in "Overall Results," TNMP's earnings are
capped at a 10.53 percent return on rate base. During 2000, TNMP has reduced its overall cost of debt, thereby increasing the allowed return on equity used in calculating excess earnings. This increase in allowed equity return is primarily responsible for
the decreases in charges for recovery of stranded plant. The decrease also reflects adjustments to 1998 and 1999 excess earnings discussed earlier in Overall Results - TNMP.

TNMP recorded a charge for recovery of stranded plant of $23.4 million in 1999.

Factors Affecting TNP

Other Operating Expenses

Other operating expenses for 2000 increased $2.8 million compared to 1999. This increase is primarily due to a one-time charge of approximately $5.6 million for severance and retirement benefits due to
the change in control resulting from the Merger. The increase was partially offset by a reduction in ongoing activity following the closing of the Merger.

Other operating expenses in 1999 increased $3.2 million from 1998 levels, due primarily to legal and outside consultant fees related to the Merger.

Depreciation and Amortization

Beginning in the second quarter of 2000, TNP began amortizing goodwill associated with the Merger over 25 years. Goodwill amortization was $8.5 million for the year ended December 31, 2000.

Interest Charges

TNP incurred interest expense of $33.4 million for the year ended December 31, 2000, on the debt issued in connection with the Merger. That amount was $32.7 million higher than the pre-merger interest
expense incurred in 1999.

-19-

________________________________________________________________________________________________________

Other Income and Deductions (net)

Other income and deductions increased by $3.2 million in 2000 over 1999. The increase reflects a 1999 charge of $2.8 million to write off certain nonregulated business ventures. The 1999 charge is also
primarily responsible for the $3.0 million decrease in other income and deductions (net) in 1999 from 1998.

Dividends on Preferred Stock

As discussed in Note 9, TNP issued preferred stock to finance the Merger. Dividends on preferred stock were $11.0 million in 2000.

Discontinued Operations

Operating results in 1998 included a $12.7 million loss associated with FWI's discontinued operations as discussed in Note 4.

Liquidity and Capital Resources

TNMP Liquidity

The main sources of liquidity for TNMP are cash flow from operations and borrowings from its $315 Million Credit Facility. TNMP's cash flow from operations in 2000 of $90.4 million was $13.6
million higher than cash flow from operations in 1999 due primarily to higher receipts from customers and lower income tax payments partially offset by higher payments for fuel, purchased power and interest. Cash flow from operations in 1999 was $76.8
million, $22.5 million lower than in 1998. The lower cash flows from operations are attributable to refunds under the Transition Plan and higher tax payments.

As discussed in Note 8, TNMP repurchased all

As discussed in Note 3, TNMP has an under-recovered balance of fuel and energy-related purchased power costs in Texas of $37.3 million as of December 31, 2000. Note 3 also discusses changes to TNMP's fuel
factor resulting from its December 2000 request to increase its fuel factor above the level requested in its June 2000 filing and implement a surcharge to recover its under-recovered balance of fuel and energy-related purchased power costs incurred in
April through September 2000. TNMP may request changes in its fuel factor until December 31, 2001.

TNMP has sufficient liquidity to satisfy the possibility of any known contingencies. Management believes cash flow from operations and periodic borrowings under the $315 Million Credit
Facility should be sufficient to meet working capital requirements at least through 2001.

TNP Liquidity

TNP's main sources of liquidity, and its ability to service the debt issued to finance the Merger, depend primarily on the earnings of TNMP and the distribution of those earnings in the form of
cash dividends, as well as tax payments from TNMP due under a tax sharing agreement between TNP and TNMP. TNP has a $25 million revolving credit facility that may be used to provide working capital and meet other requirements. The revolving credit
facility was put in place at the time of the Merger. As of December 31, 2000, TNP had no borrowings against the revolving credit facility, and the entire $25 million was available to TNP.

Cash dividends from TNMP to TNP are limited by restrictions included in TNMP's debt indentures and bank agreements. In addition, the regulatory orders from the PUCT and the NMPRC approving the Merger
contain additional restrictions on TNMP's ability to pay cash dividends to TNP. For the year ended December 31, 2000, TNMP paid dividends of $27.5 million to TNP.

During 2000, TNMP made tax sharing payments to TNP of $10.1 million.

During 2000, TNP's cash flow from operations was $9.4 million lower than in 1999 due to interest payments on debt to finance the Merger, partially offset by TNMP's increased cash flow described above.
TNP's cash flow from operations in 1999 was $1.7 million higher than in 1998 due to reduced expenditures for nonregulated activities.

Management believes that dividends from TNMP, payments from TNMP under the tax sharing agreement, and periodic borrowings under its revolving credit facility should be sufficient to meet TNP's working
capital requirements at least through 2001.

-20-

________________________________________________________________________________________________________

TNP Capital Resources

With the closing of the Merger, TNP's capital structure became highly leveraged. As of December 31, 2000, TNP's common equity, preferred equity and long-term debt ratios were 8.3 percent, 9.9
percent and 81.8 percent, respectively, compared to common equity, preferred equity and long-term debt ratios of 42.5 percent, 0.2 percent and 57.3 percent as of December 31, 1999, respectively.

TNP's capital requirements through 2005 are projected to be as follows (amounts in millions):

|                                               | 2001 | 2002 | 2003 | 2004 | 2005 
|---------------------------------------------- | ---- | ---- | ---- | ---- | -----
|Senior credit facility maturities (see Note 8) | $1.6 | $1.6 | $1.6 | $1.6 | $76.8

TNMP Capital Resources

During 2000, TNMP reduced debt levels, resulting in improvement of its capital ratios. As of December 31, 2000, TNMP's common equity and long-term debt ratios were 43.1 percent and 56.9 percent,
respectively, compared to common equity and long-term debt ratios of 41.4 percent and 58.4 percent as of December 31, 1999, respectively.

TNMP's capital requirements through 2005 are projected to be as follows (amounts in millions):

|                                                   | 2001   | 2002   | 2003    | 2004   | 2005  
|-------------------------------------------------- | ------ | ------ | ------- | ------ | ------
|$315 million credit facility maturity (see Note 8) | $    - | $    - | $ 252.0 | $    - | $    -
|Capital expenditures                               | 44.0   | 44.0   | 44.0    | 44.0   | 44.0  
|Total capital requirements                         | $ 44.0 | $ 44.0 | $ 296.0 | $ 44.0 | $ 44.0
|                                                   |        |        |         |        |       

Other Matters

Year 2000

TNMP actively addressed the Year 2000 issue (Y2K) throughout its operating and office environments. As a result of its Y2K planning and preparation, TNMP experienced no disruption of service or any
other material effect in any of its computer systems that serve critical business areas - generation, transmission, distribution, energy management and corporate information systems.

Changes in Accounting Standards

TNP and TNMP adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as extended and amended, effective January 1, 2001. SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires the recognition of derivatives as either assets or liabilities in the balance sheet and the measurement of
those instruments at fair value. Management does not expect the adoption of SFAS 133 to have a significant impact on the financial position, results of operations, or cash flows of TNP or TNMP.

Ongoing implementation issues currently being addressed by the Derivatives Implementation Group (DIG) may affect the application of SFAS 133. In its normal course of business, TNMP enters into electricity
contracts that include "swing" components for additional purchases or sales of electricity. TNMP and its customers use these contracts to meet electricity requirements. TNMP evaluated these contracts and determined that they qualify for the normal
purchases and sales exception as provided by SFAS 133. In October 2000, the DIG reached a tentative conclusion that option contracts, which could potentially include these commodity "swing" contracts, do not qualify for such exception. If the FASB
approves this tentative conclusion, TNMP would be required to account for these contracts as derivatives. TNMP is not required to apply DIG conclusions until after FASB approves such conclusions.

TNMP is unable to determine the precise impact related to the electricity contracts discussed above until such time as the FASB has approved the tentative conclusion and TNMP has had time to evaluate the
effect. There are a number of other issues pending before the DIG that may have an impact on the application of this statement. TNMP is unable to predict the outcome of these issues.

-21-

________________________________________________________________________________________________________

Item 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

TNP's and TNMP's involvement in the trading of market risk sensitive instruments is minimal and does not have a material impact to either company's financial condition or results of operations. As
noted in Item 1, "Sources and Cost of Energy," TNMP's exposure to changes in the prevailing market price of power has increased. This exposure is due to TNMP's greater reliance on shorter term contracts and, as also discussed in Item 1, "Sources and Cost
of Energy," the fact that TNMP no longer passes the demand component of purchased power costs directly through to its customers. As a result, TNMP is exposed to the risk of executing new purchased power contracts at future market prices. Conversely, TNMP
has the opportunity to benefit from a favorable market for purchased power. During 2000, the market price of natural gas increased significantly, and TNMP's costs of purchased power increased in concert with the changes in natural gas prices.

TNP and TNMP manage their exposure to interest rate risk through the proportion of fixed rate debt to variable rate debt in their total debt portfolio. To manage this mix, TNP or TNMP may enter into
interest rate collars that allow interest rates on variable rate debt to move only within specified floor and ceiling levels. TNP's ratio of fixed rate debt to total debt was 52 percent and 94 percent at December 31, 2000 and 1999, respectively. TNMP's
ratio of fixed rate debt to total debt was 41 percent and 94 percent at December 31, 2000 and 1999, respectively. The changes in the ratios reflect issuance of variable rate debt by TNP to finance the Merger, and the refinancing of fixed rate debt at TNMP
with variable rate debt, primarily in connection with the Merger. Neither TNP nor TNMP had interest rate collars outstanding at December 31, 2000.

-22-

________________________________________________________________________________________________________

Item 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



INDEPENDENT AUDITORS' REPORT

To the Shareholder and Board of Directors of TNP Enterprises, Inc.:

We have audited the accompanying consolidated balance sheet and consolidated statement of capitalization of TNP Enterprises, Inc. and subsidiaries (the Company) as of December 31, 2000, and the related consolidated statements of income
(loss), cash flows and common shareholders' equity for the nine-month period ended December 31, 2000, and the three-month period ended March 31, 2000 (Predecessor Company Operations). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TNP Enterprises, Inc. and subsidiaries at December 31, 2000, and the results of their
operations and their cash flows for the nine-month period ended December 31, 2000 and the three-month period ended March 31, 2000 in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Dallas, Texas

February 28, 2001

-23-

________________________________________________________________________________________________________

INDEPENDENT AUDITORS' REPORT

To the Shareholder and Board of Directors of Texas-New Mexico Power Company:

We have audited the accompanying consolidated balance sheet and consolidated statement of capitalization of Texas-New Mexico Power Company and subsidiaries (the Company) as of December 31, 2000, and the related consolidated statements
of income, cash flows and common shareholder's equity for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Texas-New Mexico Power Company and subsidiaries at December 31, 2000, and the results of their
operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.



DELOITTE & TOUCHE LLP

Dallas, Texas

February 28, 2001

-24-

________________________________________________________________________________________________________

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of TNP Enterprises, Inc.:

We have audited the accompanying consolidated balance sheet and consolidated statement of capitalization of TNP Enterprises, Inc. (a Texas corporation) (the "Company") as of December 31, 1999, and the related consolidated statements of
income, common shareholders' equity and cash flows for the years ended December 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1999, and the results of its operations and its cash flows for
the years ended December 31, 1999 and 1998 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP



Fort Worth, Texas

February 16, 2000

-25-

________________________________________________________________________________________________________

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholder and Board of Directors of Texas-New Mexico Power Company:

We have audited the accompanying consolidated balance sheet and consolidated statement of capitalization of Texas-New Mexico Power Company (a Texas corporation) (the "Company") as of December 31, 1999, and the related consolidated statements of
income, common shareholder's equity and cash flows for the years ended December 1999 and 1998. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1999, and the results of its operations and its cash flows for the years ended
December 31, 1999 and 1998 in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Fort Worth, Texas
February 16, 2000

-26-

________________________________________________________________________________________________________



|TNP ENTERPRISES, INC. AND SUBSIDIARIES                                                 
|---------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF INCOME (LOSS)                                               
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|OPERATING REVENUES                                                                     
|                                                                                       
|OPERATING EXPENSES:                                                                    
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET OPERATING INCOME                                                                   
|                                                                                       
|OTHER INCOME (LOSS):                                                                   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|INCOME BEFORE INTEREST CHARGES                                                         
|                                                                                       
|INTEREST CHARGES:                                                                      
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|INCOME FROM CONTINUING OPERATIONS                                                      
|                                                                                       
|Loss from discontinued nonregulated operations, net of taxes (Note 4)                  
|                                                                                       
|NET INCOME                                                                             
|Dividends on preferred stock and other                                                 
|                                                                                       
|INCOME (LOSS) APPLICABLE TO COMMON STOCK                                               
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|-27-                                                                                   
|_____________________________________________________________________________________  
|                                                                                       

|TNP ENTERPRISES, INC. AND SUBSIDIARIES                                                 
|---------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                    
|                                                                                       
|                                                                                       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH USED IN INVESTING ACTIVITIES                                                  
|                                                                                       
|                                                                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                    
|                                                                                       
|                                                                                       
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       
|                                                                                       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             
|                                                                                       
|                                                                                       
|                                                                                       
|RECONCILIATION OF NET INCOME TO NET                                                    
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                    
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|28                                                                                     
|_____________________________________________________________________________________  
|                                                                                       
|                                                                                       

|TNP ENTERPRISES, INC. AND SUBSIDIARIES                                                 
|---------------------------------------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                                                            
|December 31,                                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|ASSETS                                                                                 
|UTILITY PLANT:                                                                         
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|OTHER PROPERTY AND INVESTMENTS, at cost                                                
|                                                                                       
|CURRENT ASSETS:                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM AND OTHER ASSETS:                                                            
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CAPITALIZATION AND LIABILITIES                                                         
|CAPITALIZATION:                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CURRENT LIABILITIES:                                                                   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM AND OTHER LIABILITIES:                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|COMMITMENTS AND CONTINGENCIES (Note 10)                                                
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|                                                                                       
|                                                                                       

|TNP ENTERPRISES, INC. AND SUBSIDIARIES                                                 
|---------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF CAPITALIZATION                                              
|December 31,                                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|COMMON SHAREHOLDERS' EQUITY                                                            
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|PREFERRED STOCK                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM DEBT                                                                         
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|TOTAL CAPITALIZATION                                                                   
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|30                                                                                     
|_____________________________________________________________________________________  
|                                                                                       

|TNP ENTERPRISES, INC. AND SUBSIDIARIES                                                 
|---------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY                                 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|PREDECESSOR                                                                            
|YEAR ENDED DECEMBER 31, 1998                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|YEAR ENDED DECEMBER 31, 1999                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|THREE MONTHS ENDED MARCH 31, 2000                                                      
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|SUCCESSOR                                                                              
|                                                                                       
|                                                                                       
|                                                                                       
|NINE MONTHS ENDED DECEMBER 31, 2000                                                    
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|31                                                                                     
|_____________________________________________________________________________________  
|                                                                                       

|TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES                                         |                                                      
|--------------------------------------------------------------------------------------- | -----------------------------------------------------
|(a wholly owned subsidiary of TNP Enterprises, Inc.)                                    |                                                      
|CONSOLIDATED STATEMENTS OF INCOME                                                       |                                                      
|For the Years Ended December 31,                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|OPERATING REVENUES                                                                      | $                           644,035                  
|                                                                                        |                                                      
|OPERATING EXPENSES:                                                                     |                                                      
|                                                                                        | Purchased power and fuel                             
|                                                                                        | Other operating and maintenance                      
|                                                                                        | Depreciation of utility plant                        
|                                                                                        | Charge for recovery of stranded plant                
|                                                                                        | Taxes other than income taxes                        
|                                                                                        | Income taxes                                         
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|NET OPERATING INCOME                                                                    |                                                      
|                                                                                        |                                                      
|OTHER INCOME:                                                                           |                                                      
|                                                                                        | Other income and deductions, net                     
|                                                                                        | Income taxes                                         
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|INCOME BEFORE INTEREST CHARGES                                                          |                                                      
|                                                                                        |                                                      
|INTEREST CHARGES:                                                                       |                                                      
|                                                                                        | Interest on long-term debt                           
|                                                                                        | Other interest and amortization of debt-related costs
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|NET INCOME                                                                              |                                                      
|Dividends on preferred stock and other                                                  |                                                      
|                                                                                        |                                                      
|INCOME APPLICABLE TO COMMON STOCK                                                       |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|                                                                                        |                                                      
|The accompanying notes are an integral part of these consolidated financial statements. |                                                      
|                                                                                        |                                                      
|32                                                                                     
|_____________________________________________________________________________________  
|                                                                                        |                                                      

|TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES                                        
|---------------------------------------------------------------------------------------
|(a wholly owned subsidiary of TNP Enterprises, Inc.)                                   
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                  
|For the Years Ended December 31,                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                              
|                                                                                       
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CASH FLOWS USED IN INVESTING ACTIVITIES                                                
|                                                                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                  
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH USED IN FINANCING ACTIVITIES                                                  
|                                                                                       
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                       
|                                                                                       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             
|                                                                                       
|                                                                                       
|RECONCILIATION OF NET INCOME TO NET                                                    
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                              
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|33                                                                                     
|_____________________________________________________________________________________  
|                                                                                       

|TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES                                        
|---------------------------------------------------------------------------------------
|(a wholly owned subsidiary of TNP Enterprises, Inc.)                                   
|CONSOLIDATED BALANCE SHEETS                                                            
|December 31,                                                                           
|                                                                                       
|                                                                                       
|ASSETS                                                                                 
|UTILITY PLANT:                                                                         
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|OTHER PROPERTY AND INVESTMENTS, at cost                                                
|                                                                                       
|CURRENT ASSETS:                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM AND OTHER ASSETS:                                                            
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CAPITALIZATION AND LIABILITIES                                                         
|                                                                                       
|CAPITALIZATION:                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|CURRENT LIABILITIES:                                                                   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM AND OTHER LIABILITIES:                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|COMMITMENTS AND CONTINGENCIES (Note 10)                                                
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|34                                                                                     
|_____________________________________________________________________________________  
|                                                                                       

|TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES                                        
|---------------------------------------------------------------------------------------
|(a wholly owned subsidiary of TNP Enterprises, Inc.)                                   
|CONSOLIDATED STATEMENTS OF CAPITALIZATION                                              
|December 31,                                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|COMMON SHAREHOLDER'S EQUITY                                                            
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|PREFERRED STOCK                                                                        
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|LONG-TERM DEBT                                                                         
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|TOTAL CAPITALIZATION                                                                   
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|35                                                                                     
|_____________________________________________________________________________________  
|                                                                                       

|TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES                                        
|---------------------------------------------------------------------------------------
|(a wholly owned subsidiary of TNP Enterprises, Inc.)                                   
|CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY                                 
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|YEAR ENDED DECEMBER 31, 1998                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|YEAR ENDED DECEMBER 31, 1999                                                           
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
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|YEAR ENDED DECEMBER 31, 2000                                                           
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|The accompanying notes are an integral part of these consolidated financial statements.
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TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The notes to the consolidated financial statements pertain to both TNP and TNMP, except in instances where the note indicates that it applies only to TNP or TNMP.

Note 1.   Summary of Significant Accounting Policies

General Information.  The consolidated financial statements of TNP and subsidiaries include the accounts of TNP and its wholly owned subsidiaries, TNMP, FWI, and TNP Operating Company.
The consolidated financial statements of TNMP and subsidiaries include the accounts of TNMP and its wholly owned subsidiaries, TGC and TGC II. All intercompany transactions and balances have been eliminated in consolidation.

TNMP is TNP's principal operating subsidiary. TNMP is a public utility engaged in generating, purchasing, transmitting, distributing, and selling electricity in Texas and New Mexico. TNMP is subject to
PUCT and NMPRC regulation. Some of TNMP's activities, including the issuance of securities, are subject to FERC regulation, and its accounting records are maintained in accordance with FERC's Uniform System of Accounts. TNMP has one reportable segment.

The use of estimates is required to prepare TNP's and TNMP's consolidated financial statements in conformity with generally accepted accounting principles. Management believes that estimates are essential
and will not materially differ from actual results. However, adjustments may be necessary in the future to the extent that future estimates or actual results are different from the estimates used in the 2000 financial statements.

Accounting for the Effects of Regulation.As discussed in Note 3, legislation that establishes competition was enacted during 1999 in Texas and New Mexico. As a result, TNMP discontinued
the application of SFAS 71, "Accounting for the Effects of Certain Types of Regulation," to the generation/power supply portion of its operations in Texas and New Mexico. Since the legislation affirmed the regulated nature of TNMP's transmission and
distribution operations in both states, TNMP continues to apply SFAS 71 to its transmission and distribution operations.

The legislation in both states provides for recovery of "stranded costs," the difference between the regulatory value of TNMP's investments in generation assets and purchased power contracts and the market
price for energy in a competitive market. Any such stranded costs would be recoverable from TNMP's transmission and distribution customers.

As a result of discontinuing SFAS 71 to the generation/power supply operations in Texas, the following accounting policy changes became effective:

- AFUDC is no longer accrued to generation-related construction projects. Interest is capitalized to these projects in accordance with SFAS 34, "Capitalization of Interest Cost."
- Under SFAS 71, TNMP deferred the gains or losses that arose when long-term debt was redeemed prior to maturity, and amortized those costs over the life of the new debt. Accordingly, gains or losses incurred for the early retirement
of debt attributable to TNMP's generation/power supply operations are recorded in accordance with SFAS 4, "Reporting Gains and Losses from Extinguishment of Debt."

Utility Plant. TNMP's utility plant is stated at the historical cost of construction, which includes labor, materials, indirect charges for such items as engineering and administrative costs,
and AFUDC or capitalized interest. Property repairs and replacement of minor items are charged to operating expenses; major replacements and improvements are capitalized to utility plant.

As discussed in Note 2, TNP allocated its purchase price to the acquired assets (including utility plant) and liabilities based on fair values at the time of the acquisition.

AFUDC is a non-cash item designed to enable a utility to capitalize financing costs during periods of construction of property subject to rate regulation. Established regulatory practices enable TNMP to
recover these costs from customers. The composite rate used for AFUDC was 9.6 percent in 2000, 10.6 percent in 1999 and 6 percent in 1998.

The costs of depreciable units of plant retired or disposed of in the normal course of business are eliminated from utility plant accounts and such costs plus removal expenses less salvage are charged to
accumulated depreciation. When complete operating units are disposed of, appropriate adjustments are made to accumulated depreciation, and the resulting gains or losses, if any, are recognized.

Depreciation is provided on a straight-line method based on the estimated lives of the properties as indicated by periodic depreciation studies. A portion of depreciation of transportation equipment used
in construction is charged to utility plant accounts in accordance with the equipment's use. Depreciation as a percentage of average depreciable cost was 3.2 percent, 3.1 percent, and 3.2 percent in 2000, 1999, and 1998, respectively.

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Cash Equivalents. All highly liquid debt instruments with maturities of three months or less when purchased are considered cash equivalents.

Customer Receivables and Operating Revenues. TNMP accrues estimated revenues for electricity delivered from the latest billing date to the end of the accounting period. TNMP, under a factoring
arrangement with an unaffiliated company, sells its customer receivables on a nonrecourse basis. Amounts estimated to have been delivered, but remaining unbilled, are also sold in connection with this agreement.

Purchased Power and Fuel Costs. In Texas, fuel and the energy-related portion of purchased power costs are recovered from customers through the fuel adjustment clause authorized by the PUCT. The
demand-related portion of purchased power is recovered through base rates and is not subject to adjustment or future reconciliation. Therefore, any difference between the amount of demand-related purchased power recovered through TNMP's rates and the
actual cost of such affects operating income.

In New Mexico, TNMP recovers all purchased power costs through the fuel and purchased power adjustment clause authorized by the NMPRC. The purchased power recovery factor changes monthly to reflect
over-collections or under-collections of purchased power costs.

Deferred Charges. Costs incurred in issuing long-term debt and related discount and premium are deferred and amortized on a straight-line basis over the lives of the respective issues.

Included in deferred charges are other assets that are expected to benefit future periods and certain costs that are deferred for ratemaking purposes and amortized over periods allowed by regulatory
authorities.

Income Taxes. TNP files a consolidated federal income tax return that includes its subsidiaries and the consolidated operations of TNMP. The amounts of income taxes recognized in TNMP's accompanying
consolidated financial statements were computed as if TNMP and its subsidiaries filed a separate consolidated federal income tax return.

ITC amounts utilized in the federal income tax return are generally deferred and amortized to earnings ratably over the estimated service lives of the related assets.

Fair Values of Financial Instruments. Fair values of cash equivalents, temporary investments, and customer receivables approximated the carrying amounts because of the short maturities of those
instruments.

The estimated fair values of long-term debt and preferred stock were based on quoted market prices of the same or similar issues. The estimated fair values of TNP's financial instruments are as follows:

|                               |                       | December 31, 2000 | December 31, 1999
|------------------------------ | --------------------- | ----------------- | -----------------
|                               |                       | Carrying Amount   | Fair Values      
|                               |                       |                   | (In thousands)   
|Assets                         |                       |                   |                  
|                               | Interest rate collars | $         -       | $         -      
|                               |                       |                   |                  
|Capitalization and Liabilities |                       |                   |                  
|                               | Long-term debt        | 860,127           | 858,738          
|                               | Preferred stock       | 104,393           | 105,075          

Reclassification. Certain items in 1998 and 1999 were reclassified to conform to the 2000 presentation.

Changes in Accounting Standards

TNP and TNMP adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as extended and amended effective January 1, 2001. SFAS 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires the recognition of derivatives as either assets or liabilities in the balance sheet and the measurement of those
instruments at fair value. Management does not expect the adoption of SFAS 133 to have a significant impact on the financial position, results of operations, or cash flows of TNP or TNMP.

Ongoing implementation issues currently being addressed by the Derivatives Implementation Group (DIG) may affect the application of SFAS 133. In its normal course of business, TNMP enters into electricity
contracts that include "swing" components for additional purchases or sales of electricity. TNMP and its customers use these contracts to meet electricity requirements. TNMP evaluated these contracts and determined that they qualify for the normal
purchases and sales exception as provided by SFAS 133. In October 2000, the DIG reached a tentative conclusion that option contracts, which could potentially include these commodity "swing" contracts, do not qualify for such exception. If the FASB
approves this tentative conclusion, TNMP would be required to account for these contracts as derivatives. TNMP is not required to apply DIG conclusions until after FASB approves such conclusions.

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TNMP is unable to determine the precise impact related to the electricity contracts discussed above until such time as the FASB has approved the tentative conclusion and TNMP has had time to
evaluate the effect. There are a number of other issues pending before the DIG that may have an impact on the application of this statement. TNMP is unable to predict the outcome of these issues.

Note 2.   Acquisition and Basis of Accounting for TNP

On April 7, 2000, pursuant to an Agreement and Plan of Merger dated May 24, 1999, between TNP, ST Corp. and SW Acquisition, the parent of ST Corp., ST Corp. merged with and into TNP, the parent of
TNMP. TNP is the surviving corporation in the Merger. SW Acquisition now holds all outstanding common stock of TNP. Upon closing, each share of TNP's common stock that was outstanding at the effective time of the merger was automatically converted into
the right to receive $44.00 in cash. Prior to the merger, TNP common stock was traded on the New York Stock Exchange. As a result of the Merger, TNP common stock is no longer publicly held.

SW Acquisition and ST Corp. funded the merger using a combination of debt and equity financing. SW Acquisition contributed $100 million in equity funding to ST Corp. ST Corp. secured financing for the
merger through sales of debt and equity securities as discussed in Notes 8 and 9.

The Merger was accounted for under the purchase method of accounting, as prescribed in Accounting Principles Board Opinion No. 16, "Business Combinations" (APB 16). Accordingly, TNP allocated the purchase
price of approximately $616.9 million to the acquired assets and assumed liabilities based on their estimated fair values and recorded the excess purchase consideration of approximately $290.4 million as goodwill. For convenience, purchase accounting has
been applied as of April 1, 2000. The consolidated financial statements of TNP for the periods ended before April 1, 2000, were prepared using TNP's historical basis of accounting and are designated as "predecessor." Predecessor TNP's Consolidated
Statement of Income for the three months ended March 31, 2000, includes a net-of-tax charge of approximately $3.4 million for pre-merger severance and retirement benefits recorded between April 1, 2000, and April 7, 2000. The comparability of the
financial position and operating results of the predecessor and the periods subsequent to the Merger are affected by the purchase accounting adjustments including the revaluation of TNP One (discussed below) and amortization of goodwill over a period of
twenty-five years. As of December 31, 2000, accumulated amortization of goodwill was $8.5 million.

If the Merger had occurred at the beginning of the years ended December 31, 2000 and 1999, the unaudited pro forma loss applicable to common stock would have been approximately $(17.8) million and $(20.3)
million, respectively, as compared to TNP's reported income (loss) applicable to common stock of $(5.9) million and $30.2 million for the years ended December 31, 2000 and 1999, respectively. However, these results are not necessarily indicative of the
results which would have been obtained had the Merger actually taken place on the dates indicated.

The assets of TNP, with the exception of TNP One, its sole generating plant, are accounted for under the provisions of SFAS 71, "Accounting for the Effects of Certain Types of Regulation." Due to the
regulated nature of the business in which these assets are employed, TNP recorded these assets at their historical cost.

In 2000, TNP, with the assistance of an independent third party, estimated the fair market value of TNP One to be approximately $309.7 million, at the time of the Merger. The difference between the fair
market value of TNP One and its book value of approximately $431.9 million will be recoverable from TNMP's transmission and distribution customers under the provisions of Texas Senate Bill 7, which established retail competition for generation operations.
Accordingly, TNP recorded a regulatory asset for recoverable stranded costs associated with TNP One of approximately $122.2 million, at the time of the Merger. The actual amount of recoverable stranded costs will be determined through one of the four
market-based mechanisms included in Texas Senate Bill 7, and may differ from TNP's estimate.

The estimate of TNP One's fair market value is dependent on a number of assumptions, including the future price of energy, and the future supply and demand for electricity. The evaluation of TNP's assets
and liabilities is complete, and there are expected to be no other purchase accounting adjustments recorded to the financial statements.

As conditions for approval of the Merger, TNMP made a number of commitments to both the NMPRC and PUCT. The commitments cover a wide range of financial, operational, electric reliability, and other
standards that TNMP agreed to honor. TNMP made 55 commitments in New Mexico and Texas, of which 50 are currently in effect. TNMP monitors compliance on a monthly basis and could be subject to financial penalties for non-compliance with certain
commitments. As of December 31, 2000, TNMP was in compliance with all commitments subject to penalties.

Note 3.   Regulatory Matters

During 1999, legislation was passed in both Texas and New Mexico that establishes retail competition for generation operations. Retail competition is scheduled to begin in both New Mexico and Texas on
January 1, 2002. The legislation in both states contains provisions that affect TNMP's operations, as discussed below.

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Texas

Legislative Provisions. The 1999 legislation created the framework for Texas utilities' transition to retail competition. The legislation requires that electric service through December 31, 2001 be
provided according to base rate tariffs in effect at September 1, 1999, but allows changes in the fixed fuel factor between September 1, 1999, and December 31, 2001. The legislation allows a utility to recover 100 percent of its verifiable stranded costs
using a number of methods, including excess earnings, securitization and assessment of a competition transition charge. The legislation also established methods for first estimating and then quantifying stranded costs. The legislation requires utilities
to unbundle their operations into three distinct businesses by January 1, 2002, consisting of regulated transmission and distribution operations, unregulated generation operations, and retail electric providers. Retail electric providers are entities that
sell electricity to retail customers in Texas. Finally, the legislation established the price at which TNMP's affiliated retail electric provider must offer electricity to TNMP customers beginning January 1, 2002. That price, commonly called the
"price-to-beat", is 6 percent lower than the rate in effect on January 1, 1999, adjusted to reflect a fuel factor that the PUCT will put into effect as of December 31, 2001.

1998 Transition Plan. Prior to the legislation, TNMP had been operating under a voluntary Transition Plan approved by the PUCT in 1998. The Transition Plan covered a five-year period, and had
provided for rate reductions, sharing of earnings in excess of 11.25 percent return on equity and recovery of stranded costs. It also included a provision requiring that TNMP conform the Plan to any legislation enacting competition in the electric utility
industry.

As part of the process of conforming the Transition Plan to the legislation, the PUCT issued a Declaratory Order in December 1999 stating that TNMP was required "to give effect to base rate reductions
reflected in" the Transition Plan. Accordingly, TNMP reduced base rates for residential and commercial customers by 3 percent and 1 percent, respectively, effective January 1, 2000 and 2001. As a result, operating revenues decreased by $7.1 million in
2000. Operating revenues are estimated to decrease by $14.1 million in 2001 relative to 1999. The order also established that the 2000 and 2001 base rate reductions would offset the 6 percent rate reduction required by the "price-to-beat" provisions of
the legislation, as previously described in the section "Texas - Legislative Provisions."TNMP will file information with the PUCT in May 2001 regarding its position with respect to all remaining conflicting provisions between the legislation and the Transition Plan.

Excess Earnings.     As discussed above, TNMP has operated with an earnings cap since 1998. During 1998, TNMP's Transition Plan specified that earnings in excess of the
earnings cap would be applied toward customer refunds and stranded cost recovery. In 1999 and 2000, the legislation discussed above provides excess earnings are to be applied solely for stranded cost recovery.

1998 Excess Earnings.     In its original 1998 earnings report filing, TNMP reported that it had not earned in excess of the 11.25 percent return on equity established in
the Transition Plan. On May 3, 2000, the PUCT issued a final order resolving two issues raised by ORA on August 16, 1999. The PUCT held in favor of TNMP that the effects of a 1999 refinancing should not be retroactively applied to 1998, but should be
applied starting with the 1999 earnings report. However, the PUCT ordered TNMP to defer a $4.8 million purchased power dispute payment it made in 1998, and to amortize it over a four-year period, beginning in 1998 and ending in 2001. Accordingly, in March
2000 TNMP recorded a regulatory asset of $2.4 million, the unamortized balance of the $4.8 million payment and a corresponding reduction to purchased power expense.

Based on the adjustment discussed above, TNMP earned $1.2 million more than the earnings cap for 1998. In accordance with the Transition Plan, the excess earnings will be shared equally between customer
refunds and stranded cost recovery.

1999 Excess Earnings.     On March 30, 2000, TNMP filed its Annual Report pursuant to Section 39.257 of the Public Utility Regulatory Act. The Annual Report details TNMP's
calculation of excess earnings under the provisions of the legislation passed in 1999. The Annual Report showed that TNMP earned $22.0 million in excess of the 10.53 percent return on rate base established in the legislation. That amount is $1.4 million
lower than the $23.4 million TNMP had accrued for excess earnings as of December 31, 1999. The difference is attributable to the amortization of the 1998 purchased power settlement described above. On September 26, 2000, ORA filed a notice with the PUCT
that it disagreed with TNMP's calculation of excess earnings in the 1999 Annual Report by $0.6 million. Representatives of TNMP and ORA met to discuss the Annual Report on October 24, 2000. In a filing on December 20, 2000, ORA withdrew one of its
disagreements with TNMP. In February 2001, the PUCT approved a settlement of the remaining contested issue between TNMP and ORA. As a result, TNMP has reduced its 2000 excess earnings accrual by $1.4 million to reflect the settlement.

2000 Excess Earnings.     TNMP has recorded estimated excess earnings of $18.3 million for the year ended December 31, 2000, including adjustments recorded in 2000 to
reflect changes to 1998 and 1999 excess earnings as discussed above. TNMP is required to file its 2000 Annual Report to the PUCT no later than March 31, 2001.

Unbundled Cost of Service Filing.     The legislation required TNMP to file a rate case that will set rates for the transmission and distribution company that will provide
regulated services once competition begins in 2002. On March 31, 2000, TNMP filed its Unbundled Cost of Service Filing (UCOS) with the PUCT. The filing proposed the rates at which TNMP's customers would purchase transmission and distribution services
after December 31, 2001, in TNMP's service area. The proposed rates were based upon a projected cost of service of $150.3 million. The cost of service included TNMP's projected reasonable and necessary expenses, and return on its transmission and
distribution rate base at a 9.11 percent weighted average cost of capital.

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The filing also included a proposed Competition Transition Charge, as required by the legislation. The Competition Transition Charge is designed to recover stranded costs (ECOM) related to TNMP's
generation assets and purchased power contracts, as determined by a PUCT-established model. The legislation allows securitization of up to 75 percent of estimated ECOM as determined by the PUCT. Although the PUCT will make an initial determination of
ECOM, the actual amount of ECOM will be determined through one of the four market-based mechanisms included in the legislation. The actual determination of ECOM may differ from the PUCT's initial determination.

On August 28 and October 2, 2000, TNMP filed updated information for its calculation of ECOM and UCOS, respectively. The update to the ECOM calculation resulted in no net change to TNMP's initial
calculation. TNMP's proposed UCOS tariffs were revised to reflect a projected cost of service of $154.7 million, including return on transmission and distribution rate base at a 9.27 percent weighted average cost of capital.

In March 2001, TNMP and other parties to the UCOS reached a settlement regarding the transmission and distribution cost of service. The parties are preparing to present the settlement to the PUCT for its
consideration.

In addition to UCOS issues, TNMP expects the PUCT to address certain issues related to its January 2000 Business Separation Plan filing in the UCOS. The current schedule for TNMP's UCOS contemplates
issuance of a final order in August 2001.

Fuel Reconciliation.     In June 2000, TNMP filed with the PUCT to 1) increase its fuel factor to recover projected fuel and energy-related purchased power costs, 2)
implement an interim surcharge to recover under-recovered fuel and energy-related purchased power costs of $24.7 million as of March 31, 2000, and 3) reconcile its eligible fuel and energy-related purchased power expenses for the three-year period
ended December 31, 1999.

PUCT rules require TNMP to reconcile its fuel and energy-related purchased power costs at least every three years. Management believes the ultimate outcome of the fuel reconciliation will not have a
material adverse effect on TNP's or TNMP's consolidated financial position.

As the result of a settlement hearing, TNMP implemented an interim fuel factor in July 2000 that was approximately 20 percent higher than its previous factor. In September 2000, TNMP implemented the
permanent fuel factor resulting from the settlement, and an interim surcharge to begin collecting $23.7 million of under-recovered fuel and energy-related purchased power costs. The interim surcharge is effective through December 31, 2001, the end of the
surcharge period.

In December 2000, TNMP filed a request with the PUCT seeking approval to implement a fuel factor that is higher than the factor it implemented in September 2000. TNMP also requested a surcharge to collect
$15.2 million in under-recovered fuel and energy-related purchased power cost incurred in April through September 2000, plus interest. TNMP proposed to collect the surcharge through December 31, 2002.

In January 2001, TNMP and other parties agreed to a settlement of the December 2000 filing that resulted in TNMP implementing an interim fuel factor that is approximately 30 percent higher than the factor
it implemented in September 2000. TNMP will implement the permanent fuel factor resulting from the settlement in March 2001. The settlement also grants TNMP's request to implement its requested surcharge beginning in March 2001. In February 2001, the PUCT
ratified the settlement, but extended the period over which the surcharge will be collected to December 31, 2002.

At December 31, 2000, TNMP had an under-recovered balance of fuel and the energy-related portion of purchased power costs of $37.3 million. Under the legislation, TNMP may request changes in its fuel
factor until December 31, 2001.

New Mexico

1999 Rate Case.     On August 15, 2000, the NMPRC approved a settlement between TNMP and the NMPRC Staff. The settlement calls for a decrease in TNMP's base rates of $1.8
million, or 6 percent, effective October 1, 1999. TNMP has a refund obligation of $1.7 million to New Mexico customers covering the period from October 1, 1999, to September 1, 2000. The NMPRC is considering a proposal by TNMP to apply the refund
obligation to its under-recovered fuel balance, which was $2.0 million at December 31, 2000.

Restructuring.     The New Mexico Legislature opened the state's electric power market to consumer choice with the passage of the Electric Utility Industry Restructuring Act
of 1999 (the Act) in April 1999. The Act allows recovery of at least 50 percent of a utility's stranded costs over a five-year period, and originally provided for the phase-in of retail choice beginning January 1, 2001. On May 17, 2000, the NMPRC delayed
the date for retail electric competition for residential, school, and small commercial customers by one year to January 1, 2002. At the same time the NMPRC moved the date for open access for large commercial and industrial customers back six months, from
January 1, 2002 to July 1, 2002. During March 2001, a proposal to delay the start of competition by five years passed the New Mexico Legislature and awaits the Governor's signature.

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During the second quarter of 2000, TNMP revised its reserve for stranded costs associated with purchased power contracts as a result of the NMPRC action to delay the start of competition. TNMP
reduced the reserve by $1.2 million, from $2.1 million to $0.9 million.

The Act also requires utilities to disaggregate their regulated transmission and distribution business activities from their generation operations, which will be subject to competition. TNMP filed its plan
for complying with the Act on June 1, 2000. The filing explained TNMP's intention to separate its New Mexico operations into a transmission and distribution affiliate and a competitive power supply affiliate. The filing also contains a timetable for
achieving the various tasks necessary to comply with the Act.



Note 4.   Discontinued Nonregulated Operations

During 1998, TNP discontinued all remaining operations of FWI. The pre-tax loss on discontinued operations recognized in 1998 was $19.6 million ($12.7 million, net of taxes).

Note 5.   Sale of TNP One

As discussed in Note 3, the legislation establishing retail competition in Texas established methods for quantifying stranded costs, one of which is the sale of generation assets. On November 14, 2000,
the Board of Directors of TNP authorized management to sell TNP One, subject to the approval of the Board, for the purposes of determining the amount of stranded costs related to TNP One in compliance with the legislation.

Note 6.   Employee Benefit Plans

Pension and Postretirement Benefits Plans

TNP and TNMP sponsor a defined benefit pension plan covering substantially all of its employees. Benefits are based on an employee's years of service and compensation. TNP's and TNMP's funding policy
is to contribute the minimum amount required by federal funding standards. TNP and TNMP provide an excess benefit plan for certain key personnel and retired employees whose benefits federal law restricts. TNP and TNMP also sponsor a health care plan that
provides postretirement medical and death benefits to retirees who satisfied minimum age and service requirements during employment.



|                                        |                                                |                                               | Pension Benefits | Postretirement Benefits
|--------------------------------------- | ---------------------------------------------- | --------------------------------------------- | ---------------- | -----------------------
|                                        |                                                |                                               | 2000             | 1999                   
|                                        |                                                |                                               |                  | (In thousands)         
|Change in projected benefit obligation: |                                                |                                               |                  |                        
|                                        | Benefit obligation at beginning of year        | $   73,361                                    | $  79,262        | $    8,969             
|                                        |                                                | Service cost                                  | 1,715            | 1,828                  
|                                        |                                                | Interest cost                                 | 5,675            | 5,198                  
|                                        |                                                | Participant contributions                     | -                | -                      
|                                        |                                                | Actuarial (gain) or loss, including changes   |                  |                        
|                                        |                                                | in discount rate                              | 3,930            | (5,490)                
|                                        |                                                | Curtailments/settlements                      | 2,048            | -                      
|                                        |                                                | Special termination benefits paid             | (1,806)          | -                      
|                                        |                                                | Benefits paid                                 | (6,735)          | (7,437)                
|                                        | Benefit obligation at end of year              | $   78,188                                    | $   73,361       | $  11,509              
|                                        |                                                |                                               |                  |                        
|Change in plan assets:                  |                                                |                                               |                  |                        
|                                        | Fair value of plan assets at beginning of year | $  104,197                                    | $  97,714        | $    8,855             
|                                        |                                                | Actual return on plan assets, net of expenses | 1,781            | 13,409                 
|                                        |                                                | Employer contributions                        | -                | -                      
|                                        |                                                | Participant contributions                     | -                | -                      
|                                        |                                                | Benefits paid                                 | (6,026)          | (6,926)                
|                                        | Fair value of plan assets at end of year       | $    99,952                                   | $ 104,197        | $   7,393              
|                                        |                                                |                                               |                  |                        

As discussed in Note 2, the Merger was accounted for under the purchase method of accounting. Acquired assets and assumed liabilities were recorded based on their estimated fair values.
Accordingly, TNP recorded an asset for the pension plan assets in excess of the projected benefit obligations, and a liability for the postretirement projected benefit obligation in excess of the plan assets, thereby eliminating any previously existing
unrecognized actuarial net gains or losses, prior service cost, and net transitional obligation. TNP also recorded a net regulatory liability associated with the pension plan and postretirement benefit plan that will be amortized in conjunction with
TNMP's amortization of its unrecognized gain or loss, unrecognized prior service cost, or unrecognized net transitional obligation, in order to reflect the amounts permitted for rate making purposes in operations.

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|                                                |                                                    |                                     | Pension Benefits | Postretirement Benefits
|----------------------------------------------- | -------------------------------------------------- | ----------------------------------- | ---------------- | -----------------------
|                                                |                                                    |                                     | 2000             | 1999                   
|                                                |                                                    | (In thousands)                      |                 
|Reconciliation of funded status:                |                                                    |                                     |                  |                        
|                                                | TNMP                                               |                                     |                  |                        
|                                                | Funded status                                      | $   21,763                          | $  30,836        | $   (4,116)            
|                                                | Unrecognized actuarial gain                        | (26,842)                            | (35,930)         | (2,489)                
|                                                | Unrecognized transition (asset) or obligation      | -                                   | (11)             | 3,891                  
|                                                | Unrecognized prior service cost                    | (2,479)                             | (2,699)          | -                      
|                                                |                                                    | TNMP prepaid (accrued) benefit cost | $    (7,558)     | $   (7,804)            
|                                                | TNP                                                |                                     |                  |                        
|                                                | Recognition of amounts in purchase accounting      | 38,024                              | -                | 1,083                  
|                                                | TNP prepaid (accrued) benefit cost                 | $   30,466                          | $   (7,804)      | $   (1,631)            
|                                                |                                                    |                                     |                  |                        
|Components of net periodic benefit cost:        |                                                    |                                     |                  |                        
|                                                | TNMP                                               |                                     |                  |                        
|                                                | Service cost                                       | $    1,715                          | $   1,827        | $     324              
|                                                | Interest cost                                      | 5,675                               | 5,198            | 852                    
|                                                | Expected return on plan assets                     | (7,654)                             | (7,018)          | (497)                  
|                                                | Amortization of prior service cost                 | (220)                               | (220)            | -                      
|                                                | Amortization of transitional (asset) or obligation | (11)                                | (24)             | 325                    
|                                                | Recognized actuarial gain                          | (508)                               | 107              | (192)                  
|                                                |                                                    | TNMP net periodic benefit cost      | (1,003)          | (130)                  
|                                                | TNP                                                |                                     |                  |                        
|                                                | Elimination of amortization and actuarial amounts  | 1,236                               | -                | (100)                  
|                                                | Amortization of regulatory assets (liabilities)    | (1,236)                             | -                | 100                    
|                                                |                                                    | Net periodic benefit cost           | $   (1,003)      | $     (130)            
|                                                |                                                    |                                     |                  |                        
|Weighted-average assumptions as of December 31: |                                                    |                                     |                  |                        
|                                                | Discount rate                                      | 7.50%                               | 8.00%            | 7.50%                  
|                                                | Expected long-term rate of return on plan assets   | 9.50%                               | 9.50%            | 5.25%                  
|                                                | Average rate of compensation increase              | 4.00%                               | 4.00%            | N/A                    

The assumed health care cost trend rate used to measure the expected cost of benefits was 5.0 percent for 2000 and is assumed to trend downward slightly each year to
4.3 percent for 2003 and thereafter. Assumed health care cost trend rates could have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following
effects (in thousands):



|                                             | One-Percentage-Point | One-Percentage-Point
|-------------------------------------------- | -------------------- | --------------------
|                                             | Increase             | Decrease            
|                                             |                      |                     
|Effect on total of service and interest cost |                      |                     
|components for 2000                          | $       891          | $       (889)       
|Effect on year-end 2000 postretirement       |                      |                     
|benefit obligation                           | $   12,059           | $   (12,032)        

The projected benefit obligation of the excess benefit plan, which has an accumulated benefit obligation in excess of plan assets, was $4.8 million and $4.7 million at December 31, 2000 and
1999, respectively. The accumulated benefit obligation of the excess benefit plan was $4.6 million and $4.5 million at December 31, 2000 and 1999, respectively. The excess benefit plan had no plan assets at December 31, 2000 and 1999, respectively.

Incentive Plans

TNP and TNMP have several incentive compensation plans. All employees participate in one or more of these plans. Incentive compensation is based on meeting key financial and operational performance
goals such as cash flow from operations, customer satisfaction, and system reliability measures. Combined operating expenses of TNP and TNMP for 2000, 1999, and 1998 included costs for the various plans of $6.0 million, $5.3 million, and $5.9 million,
respectively.

Other Employee Benefits

TNP and TNMP have a 401(k) plan designed to enhance the other retirement plans available to its employees. Employees may invest their contributions in various mutual funds. TNP's and TNMP's
contributions are invested in the same manner as the employee's contributions. Combined operating expenses of TNP and TNMP for 2000, 1999, and 1998 included contribution costs of $0.9 million, $0.8 million and $0.8 million, respectively.

-43-

________________________________________________________________________________________________________

In connection with the Merger described in Note 2, TNMP entered into employment agreements with certain members of TNMP's senior management. These agreements provide that the executive continues to
hold his or her present position with TNMP and will receive a minimum level of compensation over the next three years.



Note 7.   Income Taxes

As discussed in Item 7, "Results of Operations," amounts shown below for TNP for the year ended December 31, 2000, include both pre-merger and post-merger information. Components of income taxes were
as follows:

|                                 |                    | TNP      | TNMP    
|-------------------------------- | ------------------ | -------- | --------
|                                 |                    | 2000     | 1999    
|                                 |                    |          |         
|Taxes on net operating income:   |                    |          |         
|                                 | Federal - current  | $  1,235 | $ 10,161
|                                 | State - current    | 1,827    | 582     
|                                 | Federal - deferred | 5,251    | 5,849   
|                                 | ITC adjustments    | (1,468)  | 2,528   
|                                 |                    | 6,845    | 19,120  
|                                 |                    |          |         
|Taxes on other income (loss):    |                    |          |         
|                                 | Federal - current  | (74)     | (2,229) 
|                                 | Federal - deferred | 687      | 687     
|                                 | ITC adjustments    | -        | (324)   
|                                 |                    | 613      | (1,866) 
|                                 |                    |          |         
|Tax benefit from discontinued    |                    |          |         
|nonregulated operations (Note 4) | -                  | -        | (6,843) 
|                                 |                    |          |         
|                                 | Total income taxes | $  7,458 | $ 17,254
|                                 |                    |          |         

The amounts for total income taxes differ from the amounts computed by applying the appropriate federal income tax rate to earnings (loss) before income taxes for the following reasons:

|                          |                          | TNP       | TNMP     
|------------------------- | ------------------------ | --------- | ---------
|                          |                          | 2000      | 1999     
|                          |                          |           |          
|Tax at statutory tax rate | $  3,729                 | $  16,393 | $  9,796 
|                          | Amortization of          |           |          
|                          | accumulated deferred ITC | (1,601)   | (1,632)  
|                          | Amortization of          |           |          
|                          | excess deferred taxes    | (141)     | (141)    
|                          | State income taxes       | 1,827     | 1,044    
|                          | ITC related to 1995      |           |          
|                          | PUCT disallowance        | -         | (324)    
|                          | Goodwill amortization    | 3,130     | -        
|                          | Other, net               | 514       | 1,914    
|                          | Actual income taxes      | $ 7,458   | $  17,254
|                          |                          |           |          

-44-

________________________________________________________________________________________________________

The tax effects of temporary differences that gave rise to significant portions of net current and net noncurrent deferred income taxes as of December 31, 2000, and 1999, are presented below.

|                                  |                                                                                                | TNP        | TNMP          
|--------------------------------- | ---------------------------------------------------------------------------------------------- | ---------- | --------------
|                                  |                                                                                                | 2000       | 1999          
|                                  |                                                                                                |            | (In thousands)
|Current deferred income taxes:    |                                                                                                |            |               
|Deferred tax assets:              |                                                                                                |            |               
|                                  | Unbilled revenues                                                                              | $  1,738   | $    673      
|                                  | Other                                                                                          | 1,243      | 2,273         
|                                  |                                                                                                | 2,981      | 2,946         
|Deferred tax liability:           |                                                                                                |            |               
|                                  | Recoverable stranded costs                                                                     | (2,648)    | (2,648)       
|                                  | Deferred purchased power and fuel costs                                                        | (13,760)   | (7,841)       
|                                  | Current deferred income taxes, net                                                             | $(13,427)  | $(7,543)      
|                                  |                                                                                                |            |               
|                                  |                                                                                                |            |               
|Noncurrent deferred income taxes: |                                                                                                |            |               
|                                  | Deferred tax assets:                                                                           |            |               
|                                  | Minimum tax credit carryforwards                                                               | $ 29,532   | $ 29,624      
|                                  | ITC carryforwards                                                                              | 1,320      | 1,482         
|                                  | Regulatory related items                                                                       | 12,562     | 13,493        
|                                  | Accrued employee benefit costs                                                                 | 2,037      | 3,109         
|                                  | Excess earnings                                                                                | 14,216     | 7,825         
|                                  | Other                                                                                          | 1,409      | 1,384         
|                                  |                                                                                                | 61,076     | 56,917        
|                                  | Deferred tax liabilities:                                                                      |            |               
|                                  | Utility plant, principally due to                                                              |            |               
|                                  | depreciation and basis differences,
      including TNP One revaluation
      regulatory asset | (141,154)  | (135,973)     
|                                  | Deferred charges                                                                               | (12,692)   | (12,257)      
|                                  | Other recoverable stranded costs
      (noncurrent)                                            | (4,491)    | (4,455)       
|                                  | Regulatory related items                                                                       | (1,092)    | (1,428)       
|                                  |                                                                                                | (159,429)  | (154,113)     
|                                  | Noncurrent deferred income taxes, net net                                                      | $ (98,353) | $ (97,196)    
|                                  |                                                                                                |            |               

Federal tax carryforwards as of December 31, 2000, were as follows:

|                      |                   | TNP            | TNMP    
|--------------------- | ----------------- | -------------- | --------
|                      |                   | (In thousands)
|Minimum tax credits   |                   |               
|                      | Amount            | $ 29,532       | $ 28,322
|                      | Expiration period | None           | None    
|Investment tax credit |                   |               
|                      | Amount            | $   1,320      | $     - 
|                      | Expiration period | 2005           |         



Note 8.   Long-Term Debt

TNMP

In connection with the Merger, TNMP entered into a Backstop Credit Facility (Backstop Facility) in the amount of $240 million on April 17, 2000, so that it could repurchase up to $100 million of its
9.25 percent Series U First Mortgage Bonds and up to $140 million of its 10.75 percent Series A Secured Debentures. As required by its first mortgage bond and secured debenture indentures, TNMP was required to offer to repurchase this debt at 101 percent
of par value due to the change in control of TNP resulting from the Merger.

On June 1, 2000, TNMP repurchased approximately $112.8 million of its Series A Secured Debentures and approximately $90.5 million of its Series U First Mortgage bonds at 101 percent of par plus accrued
interest. TNMP borrowed $203.0 million from the Backstop Facility and $6.6 million from its existing bank facility to refinance the tendered debt.

-45-

________________________________________________________________________________________________________

TNMP incurred a loss of approximately $1.6 million related to unamortized debt expense associated with the retirement of the Series U First Mortgage Bonds and Series A Secured Debentures. In
accordance with SFAS 71, TNMP deferred approximately $0.9 million of the loss and will amortize that amount in future periods. Approximately $0.7 million of the loss, associated with the portion of TNMP's business no longer accounted for under regulated
accounting principles, was expensed in the second quarter of 2000.

On September 15, 2000, TNMP redeemed the remaining $27.2 million of Series A Secured Debentures and $9.5 million of Series U First Mortgage Bonds. TNMP financed the redemption by drawing $36.0 million from
its existing bank facility, which it used to pay principal and accrued interest. TNMP incurred a loss of approximately $0.3 million associated with the redemption. In accordance with SFAS 71, TNMP deferred approximately $0.2 million of the loss for
amortization in future periods, and expensed the approximately $0.1 million of the loss related to the portion of TNMP's business no longer accounted for under regulated accounting principles.

On October 30, 2000, TNMP established a new $315.0 million credit facility ($315 Million Credit Facility). TNMP used funds from the $315 Million Credit Facility to retire the Backstop Facility and its
existing bank facility, which had balances at October 30, 2000, of $203 million and $49 million, respectively. The $315 Million Credit Facility matures in October 2003, and bears interest at a variable rate that was 8.0673 percent as of December 31, 2000.
The $315 Million Credit Facility had an outstanding balance of $252 million, and TNMP had the ability to borrow an additional $63 million under the $315 Million Credit Facility as of December 31, 2000.

For the year ended December 31, 2000, the average interest rate on the $315 Million Credit Facility was 8.09 percent.

The composite average borrowing rates under TNMP's credit facilities were 7.86 percent and 6.11 percent for 2000 and 1999, respectively.

TNP

ST Corp. financed the merger through the sale of various debt and equity securities, as discussed in Notes 8 and 9.

Senior Subordinated Notes.     On April 7, 2000, ST Corp. issued $275 million of 10.25 percent senior subordinated notes (Notes) due 2010 in a private offering. The Notes
pay interest semi-annually, and are unsecured. TNP can redeem up to 35 percent of the Notes at specified prices out of the net proceeds of a TNP common equity offering before April 1, 2003, but cannot otherwise redeem the Notes before April 1, 2005. In
July 2000, TNP issued an offer to exchange the privately placed Senior Subordinated Notes for registered Senior Subordinated Notes with terms substantially identical to the old notes except for transfer restrictions, registration rights and liquidated
damages. As of August 14, 2000, the closing of the offer, all holders of the privately placed Senior Subordinated Notes had exchanged the Notes for registered Senior Subordinated Notes.

Senior Secured Credit Facility.     ST Corp. established a senior secured credit facility (Senior Credit Facility) in the amount of $185 million. The Senior Credit Facility
consists of a $160 million term loan due 2006 and a $25 million revolving credit facility that expires in 2003. TNP may request that the revolving credit facility be extended to 2006. As of December 31, 2000, the term loan had an outstanding balance of
$158.8 million. TNP had no amounts borrowed under the revolving credit facility as of December 31, 2000, giving TNP the ability to borrow the full $25 million commitment under the revolving credit facility. The term loan bears interest at a variable rate
that was 9.45 percent as of December 31, 2000.

For the year ended December 31, 2000, the average interest rate on the Senior Credit Facility was 9.50 percent.

The Senior Credit Facility contains a number of financial covenants and includes a number of covenants restricting various transactions. The Senior Credit Facility is secured by a pledge of all TNMP common
stock held by TNP.

Maturities

As of December 31, 2000, scheduled maturities of long-term debt for the five years following 2000 are as follows:



|Year | TNMP CreditFacility | TNP CreditFacility | Total       
|---- | ------------------- | ------------------ | ------------
|     |                     | (In thousands)     |             
|2001 | $        -          | $      1,600       | $      1,600
|2002 | -                   | 1,600              | 1,600       
|2003 | 252,000             | 1,600              | 253,600     
|2004 | -                   | 1,600              | 1,600       
|2005 | -                   | 76,800             | 76,800      

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________________________________________________________________________________________________________

Note 9.   Capital Stock and Dividends

TNMP

The $315 Million Credit Facility restricts the payment of cash dividends by TNMP. TNMP may not declare or pay dividends if doing so would cause cumulative dividends declared or paid in the preceding
twenty-four month period to exceed cumulative net income available for common stock in the same period. As of December 31, 2000, $20.7 million of unrestricted retained earnings were available for dividends.

On September 15, 2000, TNMP redeemed all $0.8 million of its outstanding Series B Preferred Stock and all $0.7 million of its outstanding Series C Preferred Stock at par value.

TNP

Senior Redeemable Preferred Stock.     On April 7, 2000, ST Corp. issued $100 million of senior preferred stock under a bridge preferred stock
commitment. In May 2000, TNP replaced the bridge preferred stock with $100 million of senior redeemable preferred stock (Preferred Stock) and 100,000 warrants to purchase limited partnership interests of SW Acquisition, together comprising 100,000 units
issued in a private placement. The Preferred Stock pays a dividend of 14.50 percent and must be redeemed by April 1, 2011. Through April 1, 2005, dividends on the Preferred Stock will be paid by issuing additional shares of Preferred Stock having an
aggregate liquidation preference equal to the amount of the dividends to be paid. After April 1, 2005, TNP has the option to pay dividends in cash or by issuing additional shares of Preferred Stock as previously described.

Before April 1, 2003, TNP can redeem all, but not less than all, of the Preferred Stock at a specified price, plus accumulated dividends, out of the net proceeds of a TNP common equity offering. Before
April 1, 2005, TNP can redeem all, but not less than all, of the Preferred Stock at a specified price, plus accumulated dividends, in the event of a change in control. After April 1, 2005, TNP may redeem any amount of the Preferred Stock at specified prices
 .

The warrants issued as part of the units as described above had an aggregate fair market value of approximately $3.8 million at issue and were treated as a capital contribution to TNP from SW Acquisition.

The Preferred Stock was recorded at its fair market value at the time of issuance, reflecting the value of the warrants described above and the issuance discount of $1.0 million. TNP will accrete the
Preferred Stock to its redemption value of $100 million, through periodic charges against income applicable to common stock.

On October 20, 2000, TNP completed the registration process to exchange the privately placed Preferred Stock for registered Senior Redeemable Preferred Stock with terms substantially identical to the old
preferred stock, including the liquidation preference and dividend rate. As of November 22, 2000, the deadline for the exchange, substantially all holders of privately placed shares had exchanged their shares for the registered Senior Redeemable Preferred
Stock.



Note 10.	   Commitments and Contingencies

Fuel Supply Agreement

TNMP has an agreement with the Walnut Creek Mining Company to purchase lignite for TNP One through at least 2017. Depending on the output of TNP One, the contract could supply the plant for several
years beyond 2017. Peter Kiewit Sons' has acquired the interest of Phillips Coal Company, and now owns all interests in Walnut Creek Mining Company.

Wholesale Purchased Power Agreements

TNMP purchases approximately 78% of its electricity requirements from various wholesale suppliers. These contracts are scheduled to expire in various years through 2005.

At December 31, 2000, TNMP had various outstanding commitments for take or pay agreements, including the Fuel Supply Agreement discussed above. Detailed below are the fixed and determinable portion of the
obligations (amounts in millions):



|                           |          | 2001    | 2002    | 2003     | 2004    | 2005   
|-------------------------- | -------- | ------- | ------- | -------- | ------- | -------
|                           |          |         |         |          |         |        
|Purchased power agreements | $   99.5 | $  39.9 | $  22.7 | $   11.5 | $    - 
|Fuel supply agreements     | 31.3     | 30.0    | 30.3    | 30.5     | 30.7   
|                           | Total    | $ 130.8 | $  69.9 | $  53.0  | $  42.0 | $  30.7
|                           |          |         |         |          |         |        

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________________________________________________________________________________________________________

Legal Actions

Phillips Petroleum.TNMP is the defendant in a suit styled Phillips Petroleum Company vs. Texas-New Mexico Power Company, filed on October 1, 1997 and pending in the 149th
State District Court of Brazoria County, Texas. In May 1999, TNMP filed a Third Party Petition naming Sweeny Cogeneration Limited Partnership, the operator of cogeneration and related facilities at the Phillips refinery, as a defendant. The suits, which
are in the discovery stage, are based on events surrounding an interruption of electricity to a petroleum refinery and related facilities that occurred in May 1997. Phillips Petroleum Company is seeking the recovery of damages arising from the
interruption and in May 1999 demanded payment in the amount of $47.1 million. TNMP's tariff approved by the PUCT contains limitations against recovery of the great majority of Phillips' alleged damages. The Texas Supreme Court, in another matter, has
upheld the enforceability of such tariff limitations in litigation of this type; TNMP believes the ruling will operate to substantially limit any recovery by Phillips to the cost of its electrical equipment, in the event that any damages are awarded in
this matter. Phillips has previously reported to the SEC that it incurred costs of approximately $2.0 million in this interruption. TNMP has previously charged to earnings the deductible amount of its insurance coverage, $500,000.

Power Resource Group.	On January 16, 2001, TNMP obtained a summary judgment in its favor in the suit styled Power Resource Group, Inc. v. Public Utility Commission of Texas and Texas-New
Mexico Power Company, pending in the 345th District Court of Travis County, Texas. The court also dismissed this lawsuit on that date. This lawsuit, which was originally filed on May 21, 1999, challenged the PUCT's dismissal of a regulatory case that PR Group had filed
against TNMP. PR Group is a developer of electric generating plants that are intended to be qualifying cogeneration facilities.

Other.TNMP is involved in various claims and other legal proceedings arising in the ordinary course of business. In the opinion of management, the ultimate dispositions
of these matters will not have a material adverse effect on TNMP's and TNP's consolidated financial condition or results of operations.

Contract Disputes with Industrial Customers

In November 2000, TNMP and two significant industrial customers reached agreements regarding contracts for electric service. TNMP and its customers had been operating without contracts since the
expiration of the existing contracts in May 1999 and June 2000. As a result of the settlement, the industrial customers agreed to pay approximately $5.0 million that they had withheld during the dispute. TNMP had recorded the disputed amounts as revenue
during the dispute. The settlements also established terms and conditions for electric service between TNMP and the industrial customers through December 31, 2001.

-48-

________________________________________________________________________________________________________

TNP ENTERPRISES, INC. AND SUBSIDIARIES



The following selected quarterly consolidated financial data for TNP is unaudited, and, in the opinion of TNP's management, is a fair summary of the results of operations for such periods:

|                     | Predecessor    |         
|-------------------- | -------------- | --------
|                     | March 31       | June 30 
|                     | (In thousands)
|2000                 |                |         
|Operating revenues   | $124,526       | $155,931
|Net operating income | 14,033         | 22,006  
|Net income (loss)    | 3,853          | 532     
|                     |                |         
|                     | Predecessor   
|                     | March 31       | June 30 
|1999                 |                |         
|Operating revenues   | $118,125       | $144,027
|Net operating income | 14,492         | 22,175  
|Net income (loss)    | 3,132          | 12,403  

Generally, the variations between quarters reflect the seasonal fluctuations of TNMP's business. The Merger discussed in Note 2 effected operating results beginning with the second quarter of
2000. The first quarter of 2000 includes amounts recorded between April 1, 2000 and April 7, 2000 for pre-merger severance and retirement benefits. Beginning in 1999, operating results reflect the effects of the new legislation described in Note 3.



Item 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.

TNP filed a report on Form 8-K dated May 2, 2000, to disclose the termination of Arthur Andersen, LLP, and the appointment of Deloitte & Touche LLP, as its independent accountants effective April 25, 2000.

-49-

________________________________________________________________________________________________________

PART III

Item 10.     DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT.

Directors

William J. Catacosinos, 70, joined TNP upon the closing of the merger as Chairman, President and Chief Executive Officer. He also serves on TNMP's board of directors. Since 1998, Dr.
Catacosinos has served as Managing Partner of Laurel Hill. Dr. Catacosinos served as Chairman and Chief Executive Officer of LILCO from 1984 to 1998. He also serves as a director of Atlantic Bank of New York.

Kevern R. Joyce, 54, has served as Chairman of TNMP since April 1995, and was also Chairman of TNP until the closing of the merger. Mr. Joyce joined TNP and TNMP in April 1994 as President
and Chief Executive Officer. He is a director of AZZ Incorporated, an electrical products manufacturer for the industrial market, a provider of galvanizing services and oil field tubular products.

Leeam Lowin, 55, became a director of both TNP and TNMP at the closing of the merger. For the past 34 years, Mr. Lowin has been an investment manager for private accounts. From 1984 to 1998,
Mr. Lowin served as a consultant to LILCO. From 1992 to 1996, he was a member of the board of directors of AEL Industries and managed the sale of that company to Tracor.

James T. Flynn, 67, became a director of TNMP at the closing of the merger and of TNP in November 2000. Mr. Flynn, prior to his retirement, was President and Chief Operating Officer of LILCO
from 1996 to 1998. From 1994 to 1996, Mr. Flynn was Executive Vice President and Chief Operating Officer of LILCO.

Preston M. Geren, III, 48, became a director of both TNP and TNMP at the closing of the merger. Mr. Geren is an attorney and currently manages personal business interests in real estate, oil
and gas and securities. Mr. Geren currently serves on the board of directors of Cullen Frost Bankers (NYSE) and Anadarko Petroleum Corp (NYSE). Mr. Geren also is Vice Chairman of the board of directors of Dallas-Fort Worth International Airport.
Previously Mr. Geren worked as a management consultant with Public Strategies, Inc. a Texas-based public affairs firm from 1997 to 1998. He was a member of the United States Congress for four terms, from 1989 until 1997. Previous corporate board
experience includes service as an advisory director of TXU as a director of Union Pacific Resources and as a director of Overton Bank and Trust, Fort Worth, Texas.

Committees and Meetings.

TNP's and TNMP's Boards of Directors maintain the following two standing committees.

- Audit Committee. This committee oversees the financial reporting process; reviews the annual and quarterly financial statements; recommends to the full board the appointment of the independent accountants and evaluates their
performance and fees charged; reviews the internal audit function; meets with the independent accountants and with appropriate financial personnel and internal auditors regarding corporate financial reporting, accounting procedures and controls, and the
scope of internal and independent audits; and evaluates officer's compliance with ethics policies, national and state laws and regulations related to securities, criminal conduct and the environment. Messrs. Flynn, Geren and Lowin were named to the Audit
Committees of TNP and TNMP in 2000, after the Merger. Mr. Geren is the Chair of both committees.
- Compensation Committee. This committee reviews the performance of the Company's officers and establishes the appropriate level of base compensation ranges and specific base salaries within such ranges for the officers who
report to the Chief Executive Officer; recommends actions with respect to adoption, amendment, administration or termination of compensation, welfare, benefit, pension and other plans related to compensation of employees; reviews the terms and conditions
of all employee benefit plans; establishes performance goals for all incentive compensation plans and designates participants in incentive compensation plans for management; oversees the management organization; and makes recommendations to the full board
with respect to directors' compensation. After the Merger, Messrs. Flynn, Geren and Lowin were named to the Compensation Committee of TNP and Messrs. Catacosinos, Flynn, Geren and Lowin were named to the Compensation Committee of TNMP. Mr. Flynn chairs
both committees.

TNP's current board of directors held five meetings during 2000, and acted by unanimous consent once. The predecessor board held two meetings and acted by unanimous consent once prior to the Merger. TNMP's
current board of directors held three meetings during 2000, and acted by unanimous consent twice. The predecessor board held two meetings prior to the Merger. The committees held the following number of meetings: Audit Committee, four (including one held
prior to the Merger by the predecessor Audit Committee); and Compensation Committee, four (including two meetings held by the predecessor Compensation Committee prior to the Merger). All directors attended at least 75% of all the meetings of the Board of
Directors and committees on which they served during 2000.

-50-

________________________________________________________________________________________________________

Director Compensation

Each non-employee director receives an annual retainer of $20,000 from TNP and $28,000 from TNMP, and a fee of $1,250 for each meeting of the TNP and TNMP boards and committees that he attends.
Directors and committee members are also reimbursed for travel and other incidental expenses incurred in connection with their duties. Directors who are employees receive no additional compensation for serving as directors.



Compensation Committee Interlocks and Insider Participation

No Compensation Committee member is a director of or serves on the compensation committee of an entity that has an executive officer serving on TNP's Board of Directors or Compensation Committee.

Executive Officers

The information set forth under "Employees and Executives" in Part I is incorporated here by reference.

Item 11.   EXECUTIVE COMPENSATION.

The following table summarizes the compensation paid to the Chief Executive Officer and the other most highly compensated executive officers of TNP and TNMP (the "Named
Executive Officers") for services rendered in all capacities to TNP and TNMP and its affiliated companies during 1998, 1999, and 2000.

SUMMARY COMPENSATION TABLE

|                                                                                                 |                | Annual Compensation      | Long TermCompensation    | All Other      Compensation(4)
|------------------------------------------------------------------------------------------------ | -------------- | ------------------------ | ------------------------ | ------------------------------
|Name & Principal Position(1)                                                                     | Year           | Salary                   | Bonus(2)                 | Payouts(3)                    
|William J. Catacosinos, Chairman, President and Chief Executive Officer of TNP                   | 2000           | $960,577                 | $323,596                 | --                            
|                                                                                                 |                |                          |                          |                               
|Kevern R. Joyce, President and Chief Executive Officer of TNMP                                   | 2000
1999
1998 | $423,820
391,146
370,525 | $104,150
278,466
340,822 | $490,193
304,714
418,151      
|                                                                                                 |                |                          |                          |                               
|Jack V. Chambers, Senior Vice President & Chief Operations Officer of TNMP                       | 2000
1999
1998 | $252,181
233,294
223,819 | $61,971
99,826
129,092   | $237,059
175,666
249,893      
|                                                                                                 |                |                          |                          |                               
|Manjit S. Cheema, Senior Vice President & Chief Financial Officer of TNMP; Treasurer of TNP      | 2000
1999
1998 | $221,485
204,898
195,239 | $54,428
94,413
118,488   | $213,573
158,229
213,756      
|                                                                                                 |                |                          |                          |                               
|R. Michael Matte, Vice President, Business Development of TNMP; President, First Choice Power(5) | 2000
1999
1998 | $197,153
182,064
134,592 | $128,448
59,713
60,822   | $182,377
79,181
45,089        
|                                                                                                 |                |                          |                          |                               
|W. Douglas Hobbs, Vice President, Texas Transmission & Distribution Operations of TNMP           | 2000
1999
1998 | $168,839
156,193
149,920 | $42,807
45,119
53,118    | $127,289
102,154
135,636      
|                                                                                                 |                |                          |                          |                               
|Theodore A. Babcock, Chief Financial Officer of TNP                                              | 2000           | $163,654                 | $ 46,310                 | --                            









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________________________________________________________________________________________________________







|                | 401(k) Plan | Life Insurance Premiums
|--------------- | ----------- | -----------------------
|Dr. Catacosinos | $ 8,787     | $ 10,649               
|Mr. Joyce       | 8,787       | 2,045                  
|Mr. Chambers    | 8,787       | 1,162                  
|Mr. Cheema      | 8,787       | 1,769                  
|Mr. Matte       | 8,787       | 573                    
|Mr. Hobbs       | 8,726       | 1,367                  
|Mr. Babcock     | 8,459       | 454                    
|                |             |                        



Pension Plan

Effective October 1, 1997, TNMP amended its pension plan to change it to a cash balance retirement plan. As amended, the pension plan provides benefits based on an account balance rather than a
formula-based benefit. Before that date, the pension plan was a noncontributory defined benefit plan. Employees who, as of October 1, 1997, were at least 55 years of age, or were at least 50 years of age and had at least 10 years of service, can be
"grandfathered" in the prior pension plan, and will receive benefits under the plan that provides the better retirement payments.

The amended pension plan bases its benefits on an employee's account balance when he or she retires or leaves the company. An employee's initial account balance was based on his or her accrued pension
benefits under the pre-amendment plan. The account balance will grow as TNMP adds benefit credits consisting of a percentage of compensation and interest credits based on one-year Treasury bill rates. All employees are eligible to participate in the
pension plan. All Named Executive Officers participate in the pension plan, as amended.

The following table sets forth information concerning annual benefits payable upon normal retirement at age 65 to TNP and TNMP employees under the pre-amendment pension plan, and reflects the
"grandfathered" benefit formula for individuals retiring in 2000 with the years of service indicated.

|                |  | PENSION PLAN TABLE
|--------------- |  | ------------------
|                |  | Years of Service  
|Remuneration(1) |  | 15                
|                |  |                   
|$125,000        |  | $29,697           
|150,000         |  | 36,072            
|175,000         |  | 42,447            
|200,000         |  | 48,822            
|250,000         |  | 61,572            
|300,000         |  | 74,322            
|350,000         |  | 87,072            
|400,000         |  | 99,822            
|450,000         |  | 112,572           
|500,000         |  | 125,322           

-52-

________________________________________________________________________________________________________

(

Annual contributions to the pre-amendment pension plan are computed on an actuarial basis and cannot be calculated readily on a per person basis. Benefits for each eligible employee under the old formula
are based on his or her years of service computed through the month of his or her retirement, multiplied by a specified percentage of his or her average monthly compensation for each full calendar year of service completed after 1992. TNMP made no
contribution to the pension plan for 2000.

Pension plan benefits are not subject to reduction for Social Security benefits, but are subject to reduction for retirement prior to age 62.

Highly compensated employees whose pensions are subject to being reduced to an amount below what the pension plan otherwise would provide as a result of compliance with Tax Code Sections 415 and
401(a)(17), and whom the Board of Directors designate as eligible, may also participate in TNMP's "Excess Benefit Plan." The Boards of TNMP and TNP have designated 20 TNMP employees and two TNP employees as eligible to participate in the Excess Benefit
Plan, including the Named Executive Officers and three retired employees now receiving excess benefit payments. Amounts paid as long-term incentive compensation pursuant to the TNP Equity Incentive Plan or other plans will be included in the remuneration
base for pension and Excess Benefit Plan purposes.

During 2000, the TNMP Board of Directors approved TNP and First Choice Power, the corporation designated to become company's affiliated retail electric provider, as participants in the Pension and Excess
Benefit Plans.



Employment Contracts and Termination, Severance and Change of Control Arrangements

Each Named Executive Officer of TNP and TNMP, other than Mr. Babcock, is employed pursuant to a written agreement of employment.

William J. Catacosinos. Dr. Catacosinos is employed by TNP as its Chairman, President and Chief Executive Officer pursuant to an employment agreement dated as of April 7, 2000 (the "Catacosinos
Agreement"). The term of his agreement is three years. This term shall automatically be extended for an additional one year period on each anniversary date of the agreement, unless either Dr. Catacosinos or TNP gives notice to the other at least 90 days
prior to any such anniversary date that the Agreement term, as then extended, shall not be extended beyond its then automatically extended term.

Dr. Catacosinos shall receive an annual base salary of not less than $1,350,000 during the first year of the agreement term, not less than $1,450,000 during the second year, and not less than $1,550,000
per year thereafter. He shall be entitled to participate in all incentive, pension, retirement, savings, 401(k) and other employee pension benefit plans and programs that TNP and/or TNMP maintains from time to time for the benefit of its senior management
executives. He is also entitled to participate in all of TNP and TNMP's other compensation and employee benefit plans or programs and to receive officer perquisites.

If Dr. Catacosinos resigns for Good Reason or is terminated without Cause (as the Catacosinos Agreement defines such terms), he will be entitled to receive his base salary at the rate then in effect for a
period of 18 months after the termination. Such termination or resignation would require 30 days prior written notice to the affected party. If Dr. Catacosinos is terminated for Cause or resigns without Good Reason, he would receive his base salary then
in effect through the date of his termination. If he dies or becomes Disabled (as the Catacosinos Agreement defines the term), Dr. Catacosinos, his estate or his legal representative, as the case may be, would be entitled to receive his base salary at the
rate then in effect for a period of six months from the date of termination. In each instance, Dr. Catacosinos would also be entitled to any base salary accrued but not unpaid as of the termination date, immediate payment of any unpaid compensation due to
him as of the termination date, reimbursement of all reasonable business expenses incurred but not yet paid, payment for all unused accrued vacation days, and any other compensation and benefits payable pursuant to any applicable plans or programs of TNP
and/or TNMP.

Messrs. Joyce, Chambers, Cheema, Matte and Hobbs.TNMP entered into employment agreements with Messrs. Joyce, Chambers, Cheema, Matte and Hobbs as of April 7, 2000, the effective date of the
Merger (such agreements, respectively, the "Joyce Agreement," "Chambers Agreement," the "Cheema Agreement," the "Matte Agreement" and the "Hobbs Agreement" and collectively, the "2000 Employment Agreements." Each of the 2000 Employment Agreements has a
three-year term, beginning on April 7, 2000. Each specifies the position and duties of the executive during the period of employment. Currently, (i) Mr. Joyce is Chairman, President and Chief Executive Officer, (ii) Mr. Chambers is Senior Vice President
and Chief Operations Officer, (iii) Mr. Cheema serves as Senior Vice President and Chief Financial Officer, (iv) Mr. Matte is Vice President-Business Development and as President of First Choice Power, the corporation designated to become the company's
retail electric provider affiliate; and (v) Mr. Hobbs is Vice President - Texas Transmission and Distribution Operations.

-53-

________________________________________________________________________________________________________

Each of the 2000 Employment Agreements specifies the compensation and benefits provided to the executive during the agreement term, and that each will receive a minimum level of compensation over
the next three years. The minimum compensation for (i) Mr. Joyce is $1,200,000; (ii) Mr. Chambers is $600,000; (iii) Mr. Cheema is $525,000; (iv) Mr. Matte is $330,000; and (v) Mr. Hobbs is 330,000. This compensation will consist of:

- an annual base salary and an annual bonus payable in a lump sum on each of the first, second and third anniversary of the new agreement, provided the executive is still employed by TNMP (the "Annual Bonus"). The base salary and
Annual Bonus, respectively for (i) Mr. Joyce are $434,500 and $656,875; (ii) Mr. Chambers are $258,535 and $276,831; (iii) Mr. Cheema are $227,066 and $241,167; and (iv) Mr. Matte are $202,121 and $77,349; and (v) Mr. Hobbs are $173,093 and $113,634.
- an annual incentive bonus ranging from 0% to 37.5% of the executive's base salary based on his attainment of certain pre-established financial and operational goals, and subject to employment through the end of the relevant
calendar year. The target annual incentive bonus will be equal to 25 percent of base salary in each case; and
- an additional bonus equal to the shortfall from the minimum level of compensation including base salary, Annual Bonus and annual incentive bonus, provided the executive is still employed by TNMP on the anniversary date of his
Employment Agreement.

Each of the 2000 Employment Agreements provides that if the company terminates the executive for any reason other than Cause or if he resigns for Good Reason (each term is defined in each of the 2000
Employment Agreements), he will be entitled to receive

- an amount equal to the product of (i) his average annual base salary received under his Employment Agreement prior to the date of his termination, and (ii) a fraction having a numerator equal to the number of months (or portion
thereof) remaining from the date of such termination of employment until the third anniversary of the date of his employment agreement, and a denominator equal to 12, and
- an amount equal to the product of (x) the amount of his Annual Bonus, and (y) a fraction having a numerator equal to the number of months (or portion thereof) he was employed by the company in the year of his termination of
employment, and a denominator equal to 12.
- an amount equal to the sum of any excise taxes that he would incur as a result of the payment of these amounts, and any additional federal, state or local income tax liability and excise tax liability attributable to the payments
described in this sentence.

The Joyce Agreement also provides that if Mr. Joyce's employment is terminated for any reason, he (or his estate, in the event of his death) shall be entitled to receive a special lump sum retirement
benefit equal to $3,048,183. The Chambers and Cheema Agreements contain like provisions under which Mr. Chambers and Mr. Cheema would be entitled receive a special lump sum retirement benefit equal to $848,677 and $700,000, respectively.

The Matte Agreement provides that Mr. Matte will be eligible to receive an additional annual milestone bonus ranging from 0 to 150% of $100,000, with a target of $100,000 if he remains employed by the
company through the end of each calendar year during the term of the Matte Agreement (the "Milestone Bonus"). Payment of the Milestone Bonus will be based on the attainment of pre-established financial and operational goals of the company's affiliated
retail electric provider, for which he has primary responsibility. If performance is at the minimum level the award would be 50% of the target level. The milestones will be established and approved by the Chief Executive Officer of TNMP at the beginning
of each calendar year, or as soon as practical, and the Chief Executive Officer will also determine the extent to which milestone goals have been accomplished following year-end. If, during the calendar year, Mr. Matte terminates his employment with the
company for Good Reason or he is terminated by the company for any reason other than Cause, he shall be entitled to receive a portion of the $100,000, prorated for the number of months from the anniversary date of the Matte Agreement until the date of
such termination. If such termination occurs prior to the anniversary date of said calendar year, no portion of the $100,000 would be paid.

If any executive's employment is terminated for Cause, all rights under his employment agreement (other than the special retirement benefits for Messrs. Joyce, Chambers and. Cheema described above) shall
cease and he shall not be entitled to any additional compensation or payments under his employment agreement.

Joint Report on Executive Compensation of TNP and TNMP Compensation Committees

The TNP and TNMP Compensation Committees oversee all executive compensation matters of TNP and TNMP. The current TNP Compensation Committee was formed in November 2000. The full TNP Board of Directors
addressed compensation matters during the period from the closing of the Merger to the formation of this Committee. The current TNMP Compensation committee was installed in May 2000, after the Merger. Messrs. Flynn, Lowin and Geren are members of both
Committees.

-54-

________________________________________________________________________________________________________

Dr. Catacosinos, TNP's Chairman and CEO, is a member of the TNMP Compensation Committee only. He is not an officer or employee of TNMP. Dr. Catacosinos has executed this report only as it relates
to TNMP compensation matters.

The compensation of the Named Executive Officers of both TNP and TNMP was in place when each of the current Committees was formed. Neither Committee has made any changes to the compensation or compensation
structure in place.

TNP

Dr. Catacosinos is compensated in accordance with his employment agreement. The compensation of the other officers, including the other TNP Named Executive Officer, was set in accordance with the
following principles.

Base Salary. The salaries for the other officers were based on their levels of responsibility, experience, expertise, sustained corporate performance and the recommendation of the Chief
Executive Officer.

Annual Incentive Compensation. Executive officers who do not have an employment agreement and key employees participate in the TNP and TNMP Management Short-Term Incentive Compensation
program and, along with all other full-time employees, the TNP and TNMP Broad-Based Incentive Compensation Plan. They can receive annual cash incentive awards under both plans if certain specified objectives are met.

TNP paid the incentive bonuses for the 2000 performance period in January 2001. The performance measures used were the same measures used in the TNP and TNMP Management Short-Term and Broad-Based Incentive
Compensation Plans, (i) a cash flow financial measure and (ii) TNMP operational performance measures of customer satisfaction, system reliability and safety, and other measures of performance. The overall attainment of the performance measures resulted in
a payout of 95.9% of target, or approximately 24% of their annual base salary. The performance measures were generally at or above target. One performance measure, operational and maintenance expenses, required that such expenses remain below specified
amounts; since those expenses, however, exceeded the amount that would have permitted a payout related to that goal, there were no incentive payments related to that goal.

In 2000, a portion of TNP's matching contribution to its 401(k) retirement plan for employees was based on the same financial performance measure used in the TNP and TNMP Management Short-Term and
Broad-Based Incentive Compensation Plans. The financial performance measure was slightly above its target goal. The Company made an incentive matching contribution to the 401(k) accounts of eligible participants, including executive officers, equal to
approximately 36 percent of the total amount that TNP matched during 2000, including amounts paid as part of its regular employee benefits and this incentive matching contribution.

Compensation of TNP Chairman and Chief Executive Officer.

Dr. Catacosinos was compensated in accordance with the terms of his employment agreement. Under that agreement, he received a base salary at the annual rate of $1,350,000. His base salary will increase
to $1,450,000 on the first anniversary date of his employment agreement, and to $1,550,000 on the second anniversary date. Under his agreement, he is entitled to participate in all incentive, pension, retirement, savings, 401(k) and other employee pension
benefit plans and programs that the Company and/or TNMP maintain for the benefit of TNMP's senior management executives. He participates in such plans at the same levels and on the same terms as do TNMP senior management executives. Accordingly, he
receives an annual incentive bonus ranging from 0% to 37.5% of his base salary, provided he remains employed by the Company through the end of each calendar year during the term of his employment agreement. The incentive performance measures and goals are
the same as those applicable to the Management Short-Term and Broad-Based Incentive Compensation Plans described above. Dr. Catacosinos' employment agreement is described in this Annual Report under "Executive Compensation- Employment Contracts and
Termination, Severance and Change of Control Arrangements."

TNMP

Compensation for the Period after the Merger

Employment Agreements. Since the Merger, TNMP has compensated its officers in accordance with the employment agreements that each executed at the time of the Merger. The terms of the employment
agreements of the Named Executive Officers are described in more detail in this Annual Report at "Executive Compensation- Employment Contracts and Termination, Severance and Change of Control Arrangements." Each employment agreement provides that the
officer will continue to perform duties consistent with his then-current duties at a minimum level of compensation over the three-year period following the Merger.

The new employment agreements replaced compensation arrangements in place prior to the Merger. They were designed to provide incentives to remain with the Company after the Merger and to compensate them
for forgoing payments to which they would have otherwise been entitled as a result of the Merger under employment severance agreements, incentive compensation agreements, and retention bonus arrangements.

-55-

________________________________________________________________________________________________________

Incentive Compensation. A portion of the Named Executive Officers' compensation under their employment agreements consists of an annual incentive bonus. This bonus may range from 0% to 37.5%
of the officer's base salary, and is based on the attainment of certain pre-established financial and operational goals. It is also subject to the officer's employment with TNMP through the end of the relevant year.

TNMP paid the incentive bonuses for the 2000 performance period in January 2001. The performance measures used, the overall attainment of such measures, and the payout were the same as those described
above for TNP. TNMP also made an incentive matching contribution to its 401(k) retirement plan. The matching contribution was the same as that described above for TNP officers.

In 2000, a portion of TNMP's matching contribution to its 401(k) retirement plan for employees was also based on the same financial performance measure used in the Management Short-Term and Broad-Based
Incentive Compensation Plans. The financial performance measure was slightly above its target goal. The Company made an incentive matching contribution to the 401(k) accounts of eligible participants, including executive officers, equal to approximately
36% of the total amount that TNMP matched during 2000 as part of its regular employee benefits.

Compensation for Period Preceding the Merger

The main components of executives' regular compensation prior to the Merger were a base salary, the annual incentive compensation described above, and long-term incentive compensation. Under this
approach, a high proportion of these officers' compensation was "at risk," namely, the short-term and long-term incentive compensation.

In setting compensation, the prior Committee related total compensation levels for the Company's executive officers to the total compensation paid to similarly situated executives of a peer group of
companies that were of a similar size and with similar performance characteristics, both within and outside of the electric utility industry. The total compensation package was targeted to approximate the median of the peer group. Because of the
performance-oriented nature of the incentive programs, total compensation could exceed market norms when the Company exceeded its targeted performance goals, and lag the market when it did not.

Annual Incentive Compensation. Executive officers and key employees participated in the TNP Management Short-Term Incentive Compensation program and, along with all other full-time employees,
the TNP Broad-Based Incentive Compensation Plan. They received annual cash incentive awards under both plans if certain specified objectives were met. The incentive measures were weighted depending upon the executive officer's area of responsibility. This
incentive compensation for the Named Executive Officers was replaced by the incentive compensation arrangements in their respective employment agreements at the time of the Merger, and they received no incentive compensation pursuant to these plans with
respect to the period in 2000 preceding the Merger.

Long-Term Incentive Compensation. Long-term incentive compensation awards were granted annually. Each award was related to a three-year performance period. Awards were expressed as a
percentage of the individual's salary range midpoint and, if earned, were paid in TNP stock at the end of the three-year period. The Named Executive Officers received cash payments pursuant to change in control provisions in the TNP Equity Incentive Plan
(the "Long-Term Plan") at the time of the Merger. The amount of these payments was equal to the number of shares payable at target under all outstanding long-term incentive compensation awards then outstanding, times $44 per share, the amount paid for TNP
common stock in the Merger. The Long-Term Plan was terminated at the time of the Merger.

Special Incentive and Retention Bonus. In early 1999, the predecessor Compensation Committee voted to award a special incentive and retention bonus to officers and certain key employees as
additional compensation to reflect their contributions to the improvement in TNP's value to its shareholders during 1998 and previous years. For the Named Executive Officers, the bonus consisted of five equal annual installments, the first two of which
were paid in January 1999 and January 2000. The remaining installments were superseded by compensation to be paid pursuant to the new employment agreements.

Compensation of TNMP Chairman and Chief Executive Officer.

Mr. Joyce's compensation is as provided in his employment contract. Mr. Joyce's contract provides a base salary of $434,500; an annual bonus of $656,875 payable on the first, second and third
anniversary dates of the agreement; an annual incentive bonus ranging from 0% to 37.5% of his base salary, provided he remains employed by the Company through the end of each calendar year during the term of his employment agreement; and, if his total
compensation during any 12 month period commencing on the date or anniversary date of the employment agreement is less than $1,200,000, an additional bonus for such 12 month period equal to the amount of the shortfall, provided that he has not terminated
his employment with the Company prior to the end of such 12 month period. Mr. Joyce's employment agreement is described in this report under "Executive Compensation- Employment Contracts and Termination, Severance and Change of Control Arrangements."

-56-

________________________________________________________________________________________________________

The predecessor Compensation Committee had raised Mr. Joyce's base salary from $395,000 to $434,500, effective March 1, 2000. At the time of the Merger, Mr. Joyce received payments of $490,913
under the change in control provisions of the Long-Term Plan. This amount represented the target payout amount of all outstanding awards under the Long-Term Plan. All pre-Merger compensation arrangements have been replaced by the arrangements in Mr.
Joyce's employment agreement.

Internal Revenue Code Section 162(m).

Internal Revenue Code Section 162(m) limits tax deductions for executive compensation to $1 million. There are several exemptions to Section 162(m), including one for qualified performance-based
compensation. To be qualified, performance-based compensation must meet various requirements, including shareholder approval. The Committee's policy with respect to the deductibility limit of Section 162(m) generally is to preserve the federal income tax
deductibility of compensation paid when it is appropriate and is in the best interests of TNP and its shareholders. However, the Committee reserves the right to authorize the payment of nondeductible compensation if it deems that such action is appropriate.

Compensation Committee



|TNP Compensation Committee | TNMP Compensation Committee
|-------------------------- | ---------------------------
|                           |                            
|James T. Flynn, Chair      | James T. Flynn, Chair      
|Preston M. Geren, III      | William J. Catacosinos     
|Leeam Lowin                | Preston M. Geren, III      
|                           | Leeam Lowin                

The Compensation Committee Reports on Executive Compensation will not be deemed incorporated by reference by any general statement incorporating this report by reference into any filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that TNP or TNMP specifically incorporates the information by reference.

-57-

________________________________________________________________________________________________________

Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.



SW Acquisition owns 100 percent of the common equity interests of TNP. The following table sets forth the beneficial ownership of TNP as of the date of this report.

|Name of Beneficial Owner                     | Percent of
Class
|-------------------------------------------- | ----------------
|                                             |                 
|SW Acquisition (1)                           | 100.0%          
|William J. Catacosinos (2)                   | 100.0%          
|Kevern R. Joyce(3)                           | 0.0%            
|Leeam Lowin (3)                              | 0.0%            
|James T. Flynn(3)                            | 0.0%            
|Preston M. Geren, III(3)                     | 0.0%            
|Theodore A. Babcock(4)                       | 0.0%            
|Jack V. Chambers(3)                          | 0.0%            
|Manjit S. Cheema(3)                          | 0.0%            
|R. Michael Matte(3)                          | 0.0%            
|W. Douglas Hobbs(3)                          | 0.0%            
|All directors and officers
   as a group (2) | 100.0%          



(1)   The business address of SW Acquisition is 2 Robbins Lane, Suite 201, Jericho, New York 11753.

(2)   Dr. William J. Catacosinos, who controls SW I Acquisition GP, L.P., the general partner of SW Acquisition, may also be deemed to have beneficial ownership of the equity interests reported in the table. The business
address of Dr. Catacosinos is 2 Robbins Lane, Suite 201, Jericho, New York 11753.

(3)   The address for Messrs. Joyce, Lowin, Geren, Chambers, Cheema, Matte and Hobbs is 4100 International Plaza, Fort Worth, Texas 76109.

(4)   The address for Mr. Babcock is 2 Robbins Lane, Suite 201, Jericho, New York 11753.

Item 13.	   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

At the time of the Merger, and in accordance with the SW Acquisition limited partnership agreement, TNP and Laurel Hill entered into a Management Services Agreement under which TNP engaged Laurel Hill
as its agent to provide certain management and financial advisory services to TNP. These services include an assessment of TNP's competitive environment, development and implementation of a strategic plan, assessment and implementation of financing
strategies, development and implementation of operating budgets, development and implementation of marketing and sales initiatives, regulatory advice, and other advice relating to the enhancement of shareholder value, all for the purpose of assisting TNP
in developing and executing its long term business goals and strategy. During the term of this agreement, TNP is paying Laurel Hill an annual fee of $1,200,000, payable monthly. This agreement has a three-year initial term, and will automatically renew
thereafter for successive one-year terms. It provides that TNP will indemnify Laurel Hill, its agents and the companies controlling Laurel Hill for losses arising out of the Agreement or Laurel Hill's duties thereunder. Dr. Catacosinos is the Manager of
Laurel Hill. Laurel Hill is a limited partner of SW Acquisition.

-58-

________________________________________________________________________________________________________

PART IV

Item 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K.

|(a) | The following financial statements are filed as part of this report:                                                                                                                                         |     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|    |                                                                                                                                                                                                              | Page
|    | Reports of Independent Public Accountants                                                                                                                                                                    | 23  
|    |                                                                                                                                                                                                              |     
|    | TNP                                                                                                                                                                                                          |     
|    | Consolidated Statements of Income, Three Years Ended December 31, 2000                                                                                                                                       | 27  
|    | Consolidated Statements of Cash Flows, Three Years Ended December 31, 2000                                                                                                                                   | 28  
|    | Consolidated Balance Sheets, December 31, 2000, and 1999                                                                                                                                                     | 29  
|    | Consolidated Statements of Capitalization, December 31, 2000, and 1999                                                                                                                                       | 30  
|    | Consolidated Statements of Common Shareholders' Equity, Three Years 
   Ended December 31, 2000                                                                                                              | 31  
|    |                                                                                                                                                                                                              |     
|    | TNMP                                                                                                                                                                                                         |     
|    | Consolidated Statements of Income, Three Years Ended December 31, 2000                                                                                                                                       | 32  
|    | Consolidated Statements of Cash Flows, Three Years Ended December 31, 2000                                                                                                                                   | 33  
|    | Consolidated Balance Sheets, December 31, 2000, and 1999                                                                                                                                                     | 34  
|    | Consolidated Statements of Capitalization, December 31, 2000, and 1999                                                                                                                                       | 35  
|    | Consolidated Statements of Common Shareholder's Equity, Three Years
   Ended December 31, 2000                                                                                                               | 36  
|    | Notes to Consolidated Financial Statements                                                                                                                                                                   | 37  
|    | Selected Quarterly Consolidated Financial Data - TNP                                                                                                                                                         | 49  
|    |                                                                                                                                                                                                              |     
|(b) | Report on Form 8-K:                                                                                                                                                                                          |     
|    | TNP filed a report on Form 8-K dated April 21, 2000, to disclose the closing of the Merger.                                                                                                                  |     
|    | TNP filed a report on Form 8-K date May 2, 2000, to disclose the termination of Arthur Andersen, LLP, and the appointment of Deloitte & Touche LLP, as its independent accountants effective April 25, 2000. |     
|    | TNP filed a report on Form 8-K dated August 17, 2000, to disclose second quarter earnings.                                                                                                                   |     
|    |                                                                                                                                                                                                              |     
|(c) | The Exhibit Index on pages 61 - 62 is incorporated here by reference.                                                                                                                                        |     
|    |                                                                                                                                                                                                              |     
|(d) | All financial statement schedules are omitted, as the required information is not applicable or the information is presented in the consolidated financial statements or related Notes.                      |     

-59-

________________________________________________________________________________________________________

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly
authorized.



TNP ENTERPRISES, INC.



Date: March 8, 2001         By:\s\ Theodore A. Babcock
                                          
   Theodore A. Babcock, Chief Financial Officer



TEXAS-NEW MEXICO POWER
COMPANY



Date:March 8, 2001       By: \s\ Manjit S. Cheema
                                          
   Manjit S. Cheema, Senior Vice President & Chief Financial Officer



Date:March 8, 2001       By: \s\ Scott Forbes
                                          
   Scott Forbes, Vice President- Chief Accounting & Information Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrants and in the capacities and on the dates indicated.

|                                                         | Title                                                                              | Date  
|-------------------------------------------------------- | ---------------------------------------------------------------------------------- | ------
|                                                         |                                                                                    |       
|By \s\ Kevern R. Joyce
   Kevern R. Joyce                | Chairman, President & Chief 
   Executive Officer of TNMP                          | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ William J. Catacosinos

   William J. Catacosinos | Chairman, President & Chief
   Executive Officer of TNP                            | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ Manjit S. Cheema
   Manjit S. Cheema              | Senior Vice President & Chief 
   Financial Officer of TNMP; 
    Treasurer of TNP | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ Theodore A. Babcock
   Theodore A. Babcock        | Chief Financial Officer of TNP                                                     | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ Scott Forbes
   Scott Forbes                      | Vice President - Chief Accounting
   & Information Officer of TNMP                 | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ James T. Flynn
   James T. Flynn                  | Director                                                                           | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ Preston M. Geren III
   Preston M. Geren III      | Director                                                                           | 3/8/01
|                                                         |                                                                                    |       
|                                                         |                                                                                    |       
|By \s\ Leeam Lowin
   Leeam Lowin                        | Director                                                                           | 3/8/01

-60-

________________________________________________________________________________________________________

EXHIBIT INDEX

Exhibits filed with this report are denoted by "*."

|ExhibitNo.                                                                                                      | Description                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|TNP incorporates the following Exhibits by reference to the Exhibits and filings noted in parenthesis.         
|3(a)                                                                                                            | Amended and Restated Articles of Incorporation (Ex. 3(a)(i), TNP Form 10-Q, quarter ended March 31, 2000).                                                                                                                                                                                                     
|3(b)                                                                                                            | Amended and Restated Bylaws (Ex. 3(a)(ii), TNP Form 10-Q, quarter ended March 31, 2000).                                                                                                                                                                                                                       
|3(c)                                                                                                            | Articles of Merger of ST Acquisition Corp. with and into TNP Enterprises, Inc. (Ex.3 (a)(iii) TNP Form 10-Q, quarter ended March 31, 2000).                                                                                                                                                                    
|4(a)                                                                                                            | Statement of Resolution Decreasing Series A Preferred Stock, Eliminating Series B Preferred Stock and Establishing Two New Series of Shares, (Series C & D) filed with the Secretary of the State of Texas on May 25, 2000, by the
Registrant (Exhibit 4.1, Form S-4, File No. 333-42116, filed July 24, 2000).
|4(b)                                                                                                            | Form of 14 1/2% Redeemable Preferred Stock of the Registrant. (Exhibit 4.2, Form S-4, File No. 333-42116, filed July 24, 2000).                                                                                                                                                                                
|4(c)                                                                                                            | Unit Agreement dated as of May 26, 2000, among TNP Enterprises, Inc., SW Acquisition, L.P. and The Bank of New York, as Unit Agent. (Exhibit 4.5, Form S-4, File No. 333-42116, filed July 24, 2000).                                                                                                          
|4(d)                                                                                                            | Warrant Agreement, dated as of May 26, 2000, between SW Acquisition, L.P. and The Bank of New York, as Warrant Agent (Exhibit 4.6, Form S- 4, File No. 333-42116 filed July 24, 2000).                                                                                                                         
|4(e)                                                                                                            | Indenture, dated as of April 7, 2000, between ST Acquisition Corp. and The Bank of New York, as Trustee. (Exhibit 4-A, Form 8-K filed April 7, 2000).                                                                                                                                                          
|4(f)                                                                                                            | First Supplemental Indenture dated as of April 7, 2000, between the Registrant and The Bank of New York, as Trustee. (Exhibit 4-B, Form 8- K filed April 7, 2000).                                                                                                                                             
|4(g)                                                                                                            | Form of 10.25% Senior Subordinated Exchange Note of the Registrant. (Exhibit 4-A, Form 8-K filed April 7, 2000).                                                                                                                                                                                               
|                                                                                                                |                                                                                                                                                                                                                                                                                                                
|TNMP incorporates the following Exhibits by reference to the Exhibits and filings noted in parenthesis.        
|                                                                                                                |                                                                                                                                                                                                                                                                                                                
|3(i)                                                                                                            | Amended and Restated Articles of Incorporation. (Ex. 3(b)(i), TNMP Form 10-Q, quarter ended March 31, 2000)                                                                                                                                                                                                    
|3(ii)                                                                                                           | Amended and Restated Bylaws, (Ex. 3(b)(ii), TNMP Form 10-Q, quarter ended March 31, 2000).                                                                                                                                                                                                                     
|                                                                                                               
|TNP and TNMP incorporates the following Exhibits by reference to the Exhibits and filings noted in parenthesis.
|4(a)                                                                                                            | Indenture dated Jan. 1, 1999 between TNMP and the Chase Bank of Texas, N. A. (Ex. 4(w), TNMP 1998 Form 10-K).                                                                                                                                                                                                  
|4(b)                                                                                                            | First Supplemental Indenture dated Jan. 1, 1999 to Indenture dated Jan. 1, 1999 between TNMP and the Chase Bank of Texas, N. A. (Ex. 4(x), TNMP 1998 Form 10-K).                                                                                                                                               
|Contracts Relating to TNP One                                                                                  
|10(a)                                                                                                           | Fuel Supply Agreement, dated Nov. 18, 1987, between Phillips Coal Company and TNMP (Ex. 10(j), TNMP 1987 Form 10-K).                                                                                                                                                                                           
|10(a)1                                                                                                          | Amendment No. 1, dated April 1, 1988, to Fuel Supply Agreement dated Nov. 18, 1987, between Phillips Coal Company and TNMP (Ex. 10(a)1, TNP and TNMP 1994 Form 10-K).                                                                                                                                          
|10(a)2                                                                                                          | Amendment No. 2, dated Nov. 29, 1994, between Walnut Creek Mining Company and TNMP, to Fuel Supply Agreement dated Nov. 18, 1987, between Phillips Coal Company and TNMP, (Ex. 10(a)2, TNP and TNMP 1994 Form 10-K).                                                                                           
|Power Supply Contracts                                                                                         
|10(b)                                                                                                           | Contract dated May 12, 1976, between TNMP and Houston Lighting & Power Company (Ex. 5(a), TNMP 1976 Form 10-K).                                                                                                                                                                                                
|10(b )1                                                                                                         | Amendment, dated Jan. 4, 1989, to contract between TNMP and Houston Lighting & Power Company (Ex. 10(cccc), TNMP 1988 Form 10-K).                                                                                                                                                                              
|10(c)                                                                                                           | Amended and Restated Agreement for Electric Service dated May 14, 1990, between TNMP and Texas Utilities Electric Company (Ex. 10(vv), TNMP 1990 Form 10-K).                                                                                                                                                   
|10(c)1                                                                                                          | Amendment dated April 19, 1993 to Amended and Restated Agreement for Electric Service between TNMP and Texas Utilities Electric Company (Ex. 10(ii)1, 1993 Form S-2, Registration Statement, File No. 33-66232).                                                                                               
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|10(c)2                                                                                                          | Letter agreement dated Nov. 24, 1997 between TNMP and Texas Utilities Electric Company (Ex. 10(qq), TNMP 1998 Form 10-K).                                                                                                                                                                                      
|10(d)                                                                                                           | Contract dated April 27, 1977, between TNMP and West Texas Utilities Company, as amended (Ex. 10(e), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                                                
|10(e)                                                                                                           | Contract dated April 29, 1987, between TNMP and El Paso Electric Company (Ex. 10(f), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                                                                
|10(f)                                                                                                           | Contract dated Dec. 8, 1981, between TNMP and SPS as amended (Ex. 10(h), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                                                                            
|10(f)1                                                                                                          | Amendment, dated Dec. 12, 1988, to contract between TNMP and SPS (Ex. 10(llll), TNMP 1988 Form 10-K).                                                                                                                                                                                                          
|10(f)2                                                                                                          | Amendment, dated Dec. 12, 1990, to contract between TNMP and SPS (Ex. 19(t), TNMP 1990 Form 10-K).                                                                                                                                                                                                             
|10(g)                                                                                                           | Interconnection Agreement between TNMP and Plains Electric Generation and Transmission Cooperative, Inc. dated July 19, 1984 (Ex. 10(j), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                            
|10(h)                                                                                                           | Interchange Agreement between TNMP and El Paso Electric Company dated April 29, 1987 (Ex. 10(l), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                                                    
|10(i)                                                                                                           | Interchange Agreement between TNMP and El Paso Electric Company dated April 29, 1987 (Ex. 10(l), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                                                    
|10(j)                                                                                                           | DC Terminal Participation Agreement between TNMP and El Paso Electric Company dated Dec. 8, 1981 as amended (Ex. 10(m), Form 8 applicable to TNMP 1986 Form 10-K).                                                                                                                                             
|10(k)                                                                                                           | Agreement for Purchase and Sale of Energy effective May 1, 1996 among TNMP, Amoco Chemical Company and Amoco Oil Company (Ex. 10 (pp), TNP and TNMP 1997 Form 10-K).                                                                                                                                           
|10(l)                                                                                                           | Agreement dated Dec. 30, 1994 between TNMP and Union Carbide Corporation for Purchase of Capacity and Energy from UCC (Ex. 10(qq), TNP and TNMP 1997 Form 10-K).                                                                                                                                               
|Management Contracts                                                                                           
|*10(m)                                                                                                          | Agreement dated April 7, 2000 between William J. Catacosinos and TNP.                                                                                                                                                                                                                                          
|*10(n)                                                                                                          | Agreement dated April 6, 2000 between Kevern R. Joyce and TNMP.                                                                                                                                                                                                                                                
|*10(o)                                                                                                          | Agreement dated April 6, 2000 between Jack V. Chambers and TNMP.                                                                                                                                                                                                                                               
|*10(p)                                                                                                          | Agreement dated June 15, 2000 between Manjit S. Cheema and TNMP.                                                                                                                                                                                                                                               
|*10(q)                                                                                                          | Agreement dated June 19, 2000 between R. Michael Matte and TNMP.                                                                                                                                                                                                                                               
|*10(r)                                                                                                          | Agreement dated April 5, 2000 between W. Douglas Hobbs and TNMP.                                                                                                                                                                                                                                               
|*21                                                                                                             | Subsidiaries of the Registrants.                                                                                                                                                                                                                                                                               

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