On December 15, 1994 you were offered the  position of  Vice-President  for
Texas-New  Mexico Power Company.  The offer letter from Kevern Joyce commits "to
develop a method to give you some  credit  for  non-vested  service  with  other
employers should you ultimately  retire from TNP." Since you were employed,  the
company has revised the Pension  Plan to a Cash Balance  Plan.  The Cash Balance
Plan determines  retirement in a much different manner than the plan that was in
place at the time of your offer  letter and has  affected  the  Company's  prior
efforts  to honor its  commitment  in the  original  offer  letter.  In order to
continue  the  benefit as it existed  at the time of the  December  15 offer the
Company  will use the use the then  existing  pension  formula  as the  basis to
determine your  supplemental  retirement  benefits  previously  discussed.  This
formula is being added to the pension  formula as  Supplement A, a copy of which
is attached hereto.

     The  Company  therefore  offers to you the  following  benefit  in full and
complete  satisfaction  of its commitment to you in its offer letter of December
15, 1994:

               In the event you are still  employed  by the  Company  at age 65,
          your retirement  benefits payable from TNMP's Excess Benefit Plan will
          be calculated using the Supplement A formula.

               In the  case of a  Change-in-Control,  you  will  become  fully
          vested in this  supplemental  pension  benefit.  The  benefit  will be
          accrued and vested as of the date of the change-in-control or the date
          at which the executive  would have been age 62,  whichever  benefit is
          greater. Change of Control is defined as that term is defined in the
          Executive  Severance  Compensation  Agreement  which you have executed
          previously with the Company .

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



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



I agree with the foregoing:



/s/  Ralph Johnson                                       Dated February 16, 1998
---------------------------------
Ralph Johnson, Sr. Vice President

<PAGE>
                                  SUPPLEMENT A
                                  ------------

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


FORMULA:

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


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

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