----

----

**UNITED      STATES **

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**______________________**

**FORM      10-K**

**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**For        the Fiscal Year Ended December 31, 2005**

| **Commission****File                  Number** |   | **Registrants,                  State of Incorporation,****Address                  and Telephone Number**                                                                                                                           |   | **I.R.S.                  Employer****Identification                  No.** |
|------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
| 001-32462                                      |   | PNM                  Resources, Inc.(A                  New Mexico Corporation)Alvarado                  SquareAlbuquerque,                  New Mexico 87158(505)                  241-2700                                         |   | 85-0468296                                                                  |
|                                           |   |                                                                                                                                                                                                                                 |   |                                                                        |
| 001-06986                                      |   | Public                  Service Company of New Mexico(A                  New Mexico Corporation)Alvarado                  SquareAlbuquerque,                  New Mexico 87158(505)                  241-2700                        |   | 85-0019030                                                                  |
|                                           |   |                                                                                                                                                                                                                                 |   |                                                                        |
| 002-97230                                      |   | Texas-New                  Mexico Power Company(A                  Texas Corporation)4100                  International Plaza,P.O.                  Box 2943Fort                  Worth, Texas 76113(817)                  731-0099 |   | 75-0204070                                                                  |

**Securities        Registered Pursuant To Section 12(b) Of The Act:**

|                               |   |                                                |   | **Name                of Each Exchange** |
|------------------------------------|--------|-----------------------------------------------------|--------|------------------------------------------|
| **Registrant**                     |   | **Title                of Each Class**              |   | **on                Which Registered**   |
| PNM                Resources, Inc. |   | Common                Stock, no par value           |   | New                York Stock Exchange   |
| PNM                Resources, Inc. |   | 6.75%                Equity Units, $50 stated value |   | New                York Stock Exchange   |

**Securities      Registered Pursuant To Section 12(g) Of The Act:**

| **Registrant**                                      |   | **Title                of Each Class**                       |
|-----------------------------------------------------|--------|--------------------------------------------------------------|
| Public                Service Company of New Mexico |   | 1965                Series, 4.58% Cumulative Preferred Stock |
|                                                |   | ($100                stated value without sinking fund)      |

| PNM                  Resources, Inc. (“PNMR”)                 | YES | ü                         | NO |                      |
|---------------------------------------------------------------------------|-----|--------------------------------|----|--------------------------------|
| Public                  Service Company of New Mexico (“PNM”) | YES |                      | NO | ü                         |
| Texas-New                  Mexico Power Company (“TNMP”)      | YES |                      | NO | ü                         |

| PNMR | YES |                           | NO |  ü |
|------|-----|--------------------------------|----|--------------|
| PNM  | YES |                      | NO | ü       |
| TNMP | YES |    ü       | NO |         |

----

| Large                accelerated filer   ü | Accelerated                filer                  __  | Non-accelerated                filer  __                  |
|-----------------------------------------------------------|-----------------------------------------------------------------|---------------------------------------------------------------------|

| Large                accelerated filer  __                  | Accelerated                filer  __                  | Non-accelerated                filer  ü |
|-----------------------------------------------------------------------|-----------------------------------------------------------------|---------------------------------------------------|

**PNM      AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (I) (1) (a)      AND      (b) OF FORM 10-K AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE      FORMAT PURSUANT TO GENERAL INSTRUCTION (I) (2).**

**DOCUMENTS      INCORPORATED BY REFERENCE**

----

----

**PNM      RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC      SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW      MEXICO POWER COMPANY AND SUBSIDIARIES**

**INDEX**

|                         | **Page**                                                                 |
|------------------------------|--------------------------------------------------------------------------|
| GLOSSARY                     | vi                                                                       |
|                         |                                                                     |   |
|                         | **PART                  I**                                              |   |
| ITEM  1.           | BUSINESS                                                                 | A-1 |
|                         | THE                  COMPANY                                             | A-1 |
|                         | COMPANY                  WEBSITE                                         | A-1 |
|                         | REGULATED                  OPERATIONS                                    | A-2 |
|                         | PNM                  Electric                                            | A-2 |
|                         | TNMP                  Electric                                           | A-3 |
|                         | PNM                  Gas                                                 | A-4 |
|                         | UNREGULATED                  OPERATIONS                                  | A-5 |
|                         | PNM                  Wholesale                                           | A-5 |
|                         | First                  Choice                                            | A-6 |
|                         | CORPORATE                  AND OTHER                                     | A-6 |
|                         | SOURCES                  OF POWER                                        | A-7 |
|                         | MARKET                  REACH                                            | A-8 |
|                         | FUEL                  AND WATER SUPPLY                                   | A-9 |
|                         | RATES                  AND REGULATION                                    | A-10 |
|                         | ENVIRONMENTAL                  MATTERS                                   | A-13 |
|                         | COMPETITION                                                              | A-13 |
|                         | EMPLOYEES                                                                | A-14 |
|                         |                                                                     |   |
| ITEM  1A.          | RISK                  FACTORS                                            | A-15 |
|                         |                                                                     |   |
| ITEM  1B.          | UNRESOLVED                  STAFF COMMENTS                               | A-24 |
|                         |                                                                     |   |
| ITEM  2.           | PROPERTIES                                                               | A-25 |
|                         |                                                                     |   |
| ITEM  3.           | LEGAL                  PROCEEDINGS                                       | A-27 |
|                         |                                                                     |   |
| ITEM  4.           | SUBMISSION                  OF MATTERS TO A VOTE OF SECURITY HOLDERS     | A-28 |
|                         |                                                                     |   |
| **PART                  II** |
|                         |
| ITEM  5.           | MARKET                  FOR THE COMPANY’S COMMON EQUITY, RELATED   |   |
|                         | STOCKHOLDER MATTERS                  AND ISSUER PURCHASES OF        |   |
|                         | EQUITY                  SECURITIES                                       | A-30 |
|                         |                                                                     |   |
| ITEM  6.           | SELECTED                  FINANCIAL DATA                                 | A-32 |
|                         |                                                                     |   |
| ITEM  7.           | MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL |   |
|                         | CONDITION                  AND RESULTS OF OPERATION                      | A-36 |
|                         |                                                                     |   |
| ITEM  7A.          | QUANTITATIVE                  AND QUALITATIVE DISCLOSURE ABOUT           |   |
|                         | MARKET                  RISK                                             | A-80 |
|                         |                                                                     |   |
| ITEM  8.           | FINANCIAL                  STATEMENTS AND SUPPLEMENTARY DATA             | B-1 |
|                         |                                                                     |   |
| ITEM  9.           | CHANGES                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON        |   |
|                         | ACCOUNTING                  AND FINANCIAL DISCLOSURE                     | C-1 |
|                         |                                                                     |   |
| ITEM                  9A.    | CONTROLS                  AND PROCEDURES                                 | C-1 |
|                         |                                                                     |   |
| ITEM                  9B.    | OTHER                  INFORMATION                                       | C-1 |

----

| **PART                III** |
|-----------------------------|
|                        |   |
| ITEM 10.               | DIRECTORS                AND EXECUTIVE OFFICERS OF THE COMPANY | D-1 |
|                        |   |   |
| ITEM 11.               | EXECUTIVE                COMPENSATION | D-1 |
|                        |   |   |
| ITEM 12.               | SECURITY                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND |   |
|                        | MANAGEMENTAND                RELATED STOCKHOLDER MATTERS | D-1 |
|                        |   |   |
| ITEM 13.               | CERTAIN                RELATIONSHIPS AND RELATED TRANSACTIONS | D-1 |
|                        |   |   |
| ITEM                14.     | PRINCIPAL                ACCOUNTANT FEES AND SERVICES | D-1 |
|                        |   |   |
| **PART                IV**  |
|                        |   |
| ITEM 15.               | EXHIBITS,                FINANCIAL STATEMENT SCHEDULES | E-1 |
|                        |   |   |
| SIGNATURES                  | E-25 |

----

**GLOSSARY**

| Afton                                      | Afton                  Generating Station                                                                                                                                                                             |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ALJ                                        | Administrative                  Law Judge                                                                                                                                                                             |
| Altura                                     | Altura                  Power L.P.                                                                                                                                                                                    |
| APB                                        | Accounting                  Principles Board                                                                                                                                                                          |
| APS                                        | Arizona                  Public Service Company                                                                                                                                                                       |
| ARO                                        | Asset                  Retirement Obligation                                                                                                                                                                          |
| Avistar                                    | Avistar,                  Inc.                                                                                                                                                                                        |
| BLM                                        | U.S.                  Department of the Interior Bureau of Land Management                                                                                                                                            |
| BNCC                                       | BHP                  Navajo Coal Company                                                                                                                                                                              |
| Board                                      | Board                  of Directors                                                                                                                                                                                   |
| BTU                                        | British                  Thermal Unit                                                                                                                                                                                 |
| Cal                  PX                    | California                  Power Exchange                                                                                                                                                                            |
| Cal                  ISO                   | California                  Independent System Operator                                                                                                                                                               |
| CCN                                        | Certificate                  of Public Convenience and Necessity                                                                                                                                                      |
| Company                                    | PNM                  Resources, Inc. and Subsidiaries                                                                                                                                                                 |
| Congress                                   | United                  States Congress                                                                                                                                                                               |
| Constellation                              | Constellation                  Energy Commodities Group, Inc.                                                                                                                                                         |
| Decatherm                                  | 1,000,000                  BTUs                                                                                                                                                                                       |
| Delta                                      | Delta-Person                  Limited Partnership                                                                                                                                                                     |
| DOJ                                        | United                  States Department of Justice                                                                                                                                                                  |
| Duke                                       | Duke                  Energy Corporation                                                                                                                                                                              |
| EaR                                        | Earnings                  at Risk                                                                                                                                                                                     |
| EIP                                        | Eastern                  Interconnection Project                                                                                                                                                                      |
| EITF                                       | Emerging                  Issues Task Force                                                                                                                                                                           |
| EPE                                        | El                  Paso Electric Company                                                                                                                                                                             |
| EPA                                        | United                  States Environmental Protection Agency                                                                                                                                                        |
| ERCOT                                      | Electric                  Reliability Council of Texas                                                                                                                                                                |
| ESPP                                       | Employee                  Stock Purchase Plan                                                                                                                                                                         |
| FASB                                       | Financial                  Accounting Standards Board                                                                                                                                                                 |
| Farmington                                 | City                  of Farmington, New Mexico                                                                                                                                                                       |
| FCPSP                                      | First                  Choice Power Special Purpose, L.P.                                                                                                                                                             |
| FERC                                       | Federal                  Energy Regulatory Commission                                                                                                                                                                 |
| First                  Choice              | First                  Choice Power, L. P. and Subsidiaries                                                                                                                                                           |
| FIP                                        | Federal                  Implementation Plan                                                                                                                                                                          |
| Four                  Corners              | Four                  Corners Power Plant                                                                                                                                                                             |
| FPL                                        | FPL                  Energy New Mexico Wind, LLC                                                                                                                                                                      |
| GAAP                                       | Generally                  Accepted Accounting Principles in the United                                                                                                                                               |
|                                       | States                  of America                                                                                                                                                                                    |
| GCT                                        | Grand                  Canyon Trust                                                                                                                                                                                   |
| Global                  Electric Agreement | Signed                  by PNMR and other parties in 2003; provides for a five-year rate                  path for                  New Mexico jurisdictional customers that began in September                  2003 |
| Great                  Southwestern        | Great                  Southwestern Construction, Inc.                                                                                                                                                                |
| IBLA                                       | Interior                  Board of Land Appeals                                                                                                                                                                       |
| IRS                                        | United                  States Internal Revenue Service                                                                                                                                                               |
| ISO                                        | Independent                  System Operator                                                                                                                                                                          |
| LIBOR                                      | London                  Interbank Offered Rate                                                                                                                                                                        |
| Lordsburg                                  | Lordsburg                  Generating Station                                                                                                                                                                         |
| Luna                                       | Luna                  Energy Facility                                                                                                                                                                                 |
| MMBTUs                                     | Million                  British Thermal Units                                                                                                                                                                        |
| Moody's                                    | Moody’s                  Investor Services, Inc.                                                                                                                                                                |

----

| MW                                 | Megawatt                                                                         |
|------------------------------------|----------------------------------------------------------------------------------|
| MWh                                | Megawatt                  Hour                                                   |
| Navajo                  Acts       | Navajo                  Nation Air Pollution Prevention and Control Act, the     |
|                               | Navajo                  Nation Safe Drinking Water Act, and the Navajo           |
|                               | Nation                  Pesticide Act                                            |
| Ninth                  Circuit     | United                  States Court of Appeals for the Ninth Circuit            |
| NMED                               | New                  Mexico Environment Department                               |
| NMPRC                              | New                  Mexico Public Regulation Commission                         |
| NNHPD                              | Navajo                  Nation Historic Preservation Department                  |
| NRC                                | United                  States Nuclear Regulatory Commission                     |
| NSPS                               | New                  Source Performance Standards                                |
| NSR                                | New                  Source Review                                               |
| OASIS                              | Open                  Access Same Time Information System                        |
| OATT                               | Open                  Access Transmission Tariff                                 |
| O&M                            | Operations                  and Maintenance                                      |
| PGAC                               | Purchased                  Gas Adjustment Clause                                 |
| PG&E                           | Pacific                  Gas and Electric Co.                                    |
| PNM                                | Public                  Service Company of New Mexico and Subsidiary             |
| PNMR                               | PNM                  Resources, Inc. and Subsidiaries                            |
| PPA                                | Power                  Purchase Agreement                                        |
| PRG                                | Power                  Resource Group, Inc.                                      |
| PSA                                | Power                  Supply Agreement                                          |
| PSD                                | Prevention                  of Significant Deterioration                         |
| PUCT                               | Public                  Utility Commission of Texas                              |
| PUHCA                              | The                  Public Utility Holding Company Act                          |
| PURPA                              | Public                  Utility Regulatory Policy Act of 1978                    |
| PVNGS                              | Palo                  Verde Nuclear Generating Station                           |
| Reeves                             | Reeves                  Generating Station                                       |
| REP                                | Retail                  Electricity Provider                                     |
| Restructuring                  Act | New                  Mexico Electric Utility Industry Restructuring Act of 1999, |
|                               | as                  amended                                                      |
| RMC                                | Risk                  Management Committee                                       |
| RMRR                               | Routine                  Maintenance, Repair or Replacement                      |
| RTO                                | Regional                  Transmission Organization                              |
| SCE                                | Southern                  California Edison Company                              |
| SCPPA                              | Southern                  California Public Power Authority                      |
| SDG&E                          | San                  Diego Gas and Electric Company                              |
| SEC                                | United                  States Securities and Exchange Commission                |
| Sempra                             | Sempra                  Energy                                                   |
| Senate                  Bill 7     | Legislation                  that established retail competition in Texas        |
| SESCO                              | San                  Angelo Electric Service Company                             |
| SFAS                               | Statement                  of Financial Accounting Standards                     |
| SJCC                               | San                  Juan Coal Company                                           |
| SJGS                               | San                  Juan Generating Station                                     |
| SO2                                | Sulfur                  Dioxide                                                  |
| S&P                            | Standard                  and Poors Ratings Services                             |
| SPS                                | Southwestern                  Public Service Company                             |
| SW                  Acquisition    | SW                  Acquisition, L.P.                                            |
| TCEQ                               | Texas                  Commission on Environmental Quality                       |
| TECA                               | Texas                  Electric Choice Act (also known as Senate Bill 7)         |
| TNMP                               | Texas-New                  Mexico Power Company and Subsidiaries                 |
| TNP                                | TNP                  Enterprises, Inc. and Subsidiaries                          |
| Throughput                         | Volumes                  of gas delivered, whether or not owned by the Company   |
| Tri-State                          | Tri-State                  Generation and Transmission Association, Inc.         |
| Tucson                             | Tucson                  Electric Power Company                                   |

----

| Twin                  Oaks  | Assets                  of Twin Oaks Power, LP and Twin Oaks Power III, LP |
|-----------------------------|----------------------------------------------------------------------------|
| UAMPS                       | Utah                  Associated Municipal Power Systems                   |
| USBR                        | United                  States Bureau of Reclamation                       |
| USFS                        | United                  States Forest Service                              |
| VaR                         | Value                  at Risk                                             |
| Wood                  River | Wood                  River Partners, L.P.                                 |
| WSPP                        | Western                  Systems Power Pool                                |

----

**PART      I**

**ITEM      1.**
**BUSINESS**

**THE      COMPANY**

**COMPANY      WEBSITE**

*Do      the Right Thing-*

----

*Principles      of Business Conduct*

**REGULATED      OPERATIONS**

**PNM      Electric**

----

**System      Peak Demands**

|   | **2005**    |   | **2004** |   | **2003** |
|--------|-------------|--------|----------|--------|----------|
|   | (Megawatts) |
|   |        |   |     |   |     |
| Summer | 1,779       |   | 1,655    |   | 1,661    |
| Winter | 1,530       |   | 1,481    |   | 1,434    |

**TNMP      Electric**

----

**PNM      Gas**

----

**UNREGULATED      OPERATIONS**

**PNM      Wholesale**

*“Accounting      for Derivative Instruments and Hedging Activities,”*

----

**First      Choice**

**CORPORATE      AND OTHER**

----

**SOURCES      OF POWER**

*Sources      of Power - Owned*

----

*Sources      of Power - Leased*

*Sources      of Power - PPAs*

**MARKET      REACH**

----

**FUEL      AND WATER SUPPLY**

|   | **Coal**                      |   | **Nuclear** |   | **Gas                and Oil** |
|--------|-------------------------------|--------|-------------|--------|--------------------------------|
|   | **Percent                of** |   | **Average** |   | **Percent                of**  |   | **Average** |   | **Percent                of** |   | **Average** |
|   | **Generation**                |   | **Cost**    |   | **Generation**                 |   | **Cost** |   | **Generation** |   | **Cost** |
|   |                          |   |        |   |                           |   |   |   |   |   |   |
| 2005   | 71.3%                         |   | 163.9       |   | 26.3%                          |   | 45.7 |   | 2.4% |   | 687.6 |
| 2004   | 70.1%                         |   | 154.4       |   | 28.1%                          |   | 52.5 |   | 1.8% |   | 693.9 |
| 2003   | 68.0%                         |   | 163.8       |   | 29.5%                          |   | 44.5 |   | 2.5% |   | 625.2 |

*Coal*

*Natural      Gas*

*Nuclear      Fuel*

| ·   | mining                and milling of uranium ore to produce uranium                concentrates; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | conversion                of uranium concentrates to uranium                hexafluoride; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | enrichment                of uranium hexafluoride; |
|--------------------|----------------------------------------------------|

| ·   | fabrication                of fuel assemblies; |
|--------------------|------------------------------------------------|

| ·   | utilization                of fuel assemblies in reactors; and |
|--------------------|----------------------------------------------------------------|

| ·   | storage                and disposal of spent nuclear fuel. |
|--------------------|------------------------------------------------------------|

*Water      Supply*

----

**RATES      AND REGULATION**

**Energy      Policy Act**

----

**Regional      Transmission Issues**

**Generation      Market Power Filings**

**FERC      Office of Market Oversight and Investigations Audit **

----

**Global      Electric Agreement**

**Renewable      Portfolio Standard**

**FERC      Office of Market Oversight and Investigations Audit **

**Acquisition      Agreements**

| ·   | a                two-year electric rate freeze that includes a $13.0 million annual                rate                reduction in TNMP's retail delivery rates effective May 1,                2005; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                authorized return on equity of 10.25% on an implied capital structure                of                60% debt and 40% equity for certain reporting                purposes; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                use of a 60/40% debt/equity capital structure in TNMP's next base                rate                case if filed before January 1, 2009;                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | a                $6.0 million synergy savings credit amortized over 24 months effective                after the close of the transaction. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                three-phase rate reduction totaling 15%, to TNMP’s electric customers in                southern New Mexico, beginning January 2006 and ending December 2010;                the                rate reduction will lower TNMP electric rates by approximately $9.6                million in the first year; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                imputed 55/45% debt/equity structure with an assumed rate of return                on                equity of 10.5% for TNMP; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PNM                to remain the power supplier for TNMP’s New Mexico needs through 2010;                and |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | integration                of TNMP’s New Mexico assets into PNM effective January 1, 2007, the                companies, however, will maintain separate rates, at minimum, through                2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ENVIRONMENTAL      MATTERS**

| ·   | Person                Station |
|--------------------|-------------------------------|

| ·   | Retired                Fossil-Fueled Plant Decommissioning                Costs |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Nuclear                Spent Fuel and Waste Disposal |
|--------------------|------------------------------------------------------|

| ·   | Navajo                Nation Environmental Issues |
|--------------------|---------------------------------------------------|

| ·   | New                Source Review Rules |
|--------------------|----------------------------------------|

| ·   | The                Clean Air Act |
|--------------------|----------------------------------|

| ·   | Citizen                Suit Under the Clean Air Act |
|--------------------|-----------------------------------------------------|

| ·   | Four                Corners Air Emissions |
|--------------------|-------------------------------------------|

| ·   | Excess                Emissions Reports |
|--------------------|-----------------------------------------|

| ·   | Santa                Fe Generating Station |
|--------------------|--------------------------------------------|

| ·   | SESCO                Matter (for both PNM and TNMP) |
|--------------------|-----------------------------------------------------|

| ·   | Coal                Combustion Waste Disposal |
|--------------------|-----------------------------------------------|

| ·   | Environmental                Issues |
|--------------------|-------------------------------------|

**COMPETITION**

----

**EMPLOYEES**

|                         | **PNMR** |   | **PNM** |   | **TNMP** |
|------------------------------|----------|--------|---------|--------|----------|
| Corporate                *   | 751      |   | -       |   | -        |
| PNM                Electric  | 1,165    |   | 1,165   |   | -        |
| TNMP                Electric | 469      |   | -       |   | 469      |
| PNM                Gas       | 736      |   | 736     |   | -        |
| PNM                Wholesale | 70       |   | 70      |   | -        |
| First                Choice  | 174      |   | -       |   | -        |
| Other                        | 17       |   | -       |   | -        |
| Total                        | 3,382    |   | 1,971   |   | 469      |

|                         | **PNMR** |   | **PNM** |
|------------------------------|----------|--------|---------|
| PNM                Electric  | 496      |   | 496     |
| PNM                Gas       | 82       |   | 82      |
| PNM                Wholesale | 45       |   | 45      |
| Total                        | 623      |   | 623     |

----

**ITEM      1A.**
**RISK      FACTORS**

**PNMR      may fail to successfully integrate acquisitions, including the TNP acquisition      and the proposed acquisition of Twin Oaks, into its other businesses or      otherwise fail to achieve the anticipated benefits of pending and future      acquisitions.**

| ·   | delays                or difficulties in completing the integration of acquired companies                or                assets, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher                than expected costs or a need to allocate resources to manage unexpected                operating difficulties, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | diversion                of the attention and resources of its                management, |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | reliance                on inaccurate assumptions in evaluating the expected benefits of                a given                acquisition, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | inability                to retain key employees or key customers of acquired companies,                and |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | assumption                of liabilities unrecognized in the due diligence                process. |
|--------------------|----------------------------------------------------------------------------------------------------|

**Acquisition      of TNP in 2005**

**Proposed      Acquisition of Twin Oaks in 2006**

----

**PNMR,      PNM and TNMP are subject to complex government regulation, which may have a      negative impact on their business, financial position and results of      operations.**

----

**PNM's      retail electric rate reduction and retail electric rate freeze, and the New      Mexico settlement relating to the TNP acquisition, could adversely affect its      profit margin if it does not control costs.**

| ·   | a                4% reduction effective September 1,                2003, |
|--------------------|---------------------------------------------------------------------------|

| ·   | an                additional 2.5% reduction effective September 1, 2005,                and |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | maintain                these reduced retail electric rates through December 31,                2007.  |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | PNM’s                413,000 electric customers will receive rate credits totaling $4.6                million                or nearly $1.84 million annually over a 30-month period beginning                January                2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PNM’s                471,000 gas customers will receive $4.3 million in rate credits over                five                years, or $860,000 annually, beginning June 6, 2005. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**The      impact from the TNP acquisition settlements could adversely affect TNMP’s profit      margin if TNMP does not control costs.**

| ·   | a                two-year electric rate freeze that includes a $13.0 million annual                rate                reduction in TNMP's retail delivery rates effective May 1,                2005, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                $6.0 million synergy savings credit (whether or not these savings                are                actually achieved) amortized over 24 months effective after the closing                of                the transaction, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                three-phase rate reduction totaling 15%, beginning January 2006 and                ending                December 2010, to TNMP’s electric customers in southern New Mexico; the                rate reduction, which includes TNMP’s annual synergy-savings allocation,                will lower TNMP electric rates by $9.6 million in the first year,                and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | maintain                PNM as the power supplier for TNMP’s New Mexico needs through                2010. |
|--------------------|------------------------------------------------------------------------------------------------------------------|

----

** **

**The      ability of First Choice to attract and retain customers and its ability to      mitigate the fluctuation in costs of energy supply could have a significant      adverse effect on PNMR’s business, financial position, results of operations and      liquidity.**

**There      are inherent risks in the operation of nuclear facilities, such as      environmental, health and financial risks and the risk of terrorist      attack.**

**PNMR’s      and its electric subsidiaries’ financial performance may be adversely affected      if their power plants and transmission and distribution system are not      successfully operated.**

*General*

----

*PVNGS*

**The      operations of PNMR and its operating subsidiaries are subject to risks beyond      their control that may reduce their revenues.**

| ·   | weather                conditions, including hurricanes, seasonality and temperature                extremes, |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | fluctuations                in economic activity and growth in PNMR’s service area and the western                region of the United States, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                extent of additional energy available from current or new competitors,                and |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | the                ability of First Choice to attract and retain                customers. |
|--------------------|--------------------------------------------------------------------------------------------|

----

**The      inability to raise capital could limit PNMR’s ability to execute its growth      strategy and finance its capital requirements, which could adversely affect      PNMR’s business, financial position, results of operations and      liquidity.**

| ·   | an                economic downturn, |
|--------------------|--------------------------------------|

| ·   | changes                in capital market conditions                generally, |
|--------------------|-------------------------------------------------------------------------------|

| ·   | the                bankruptcy of an unrelated energy                company, |
|--------------------|------------------------------------------------------------------------------|

| ·   | increased                market prices for electricity and                gas, |
|--------------------|--------------------------------------------------------------------------------|

| ·   | terrorist                attacks or threatened attacks on facilities of PNMR’s operating                subsidiaries or those of unrelated energy companies,                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | deterioration                in the overall health of the utility                industry. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | could                increase borrowing costs, which would diminish financial                results, |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | could                require payment of a higher interest rate in future financings and                the                potential pool of investors and funding sources could                decrease, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | could                increase borrowing costs under certain of existing credit                facilities, |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | could                also require the provision of additional support in the form of letters                of                credit or cash or other collateral to various counterparties, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | could                limit access to or increase the cost of access to the commercial                paper                market, and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | below                investment grade credit ratings would also require approvals from                the                NMPRC for new wholesale plant projects and for continuing to participate                in wholesale plant projects of more than a certain dollar value and                under                certain conditions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Costs      of environmental compliance, liabilities and litigation could exceed estimates      by PNMR’s and its operating subsidiaries, which could adversely affect their      business, financial position, results of operations and liquidity.**

**PNMR’s      business, results of operations and financial position may be adversely affected      if PNMR and its operating subsidiaries do not successfully compete for wholesale      customers and generation plant acquisition opportunities. Wholesale plants      will      be exposed to price risk to the extent they must compete for the sale of energy      and capacity. **

| ·   | PNMR                and its operating subsidiaries are able to acquire additional generation                to compete in the wholesale market, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | new                opportunities are created for the expansion of wholesale load,                and |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | current                wholesale customers elect to purchase from other suppliers after                existing                contracts expire. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNMR      and its operating subsidiaries may not be able to mitigate fuel and wholesale      electricity pricing risks, which could result in unanticipated liabilities      or      increased volatility in earnings.**

| ·   | prevailing                market prices for coal, oil, natural gas and other fuels used in                the                generation plants of PNMR and its operating subsidiaries, including                associated transportation costs, and supplies of such                commodities, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | prevailing                market conditions in the general wholesale electricity                market, |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | liquidity                in the commodity markets, |
|--------------------|----------------------------------------------------|

| ·   | the                rate of growth in electricity as a result of population changes,                regional                economic conditions and the implementation of conservation                programs, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | weather                conditions impacting demand for electricity or availability of                hydroelectric power or fuel                supplies, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in the regulatory framework for the commodities markets that PNMR                and its                operating subsidiaries rely on for purchased power and                fuel, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                actions of external parties, such as the FERC or independent system                operators, that may impose price limitations and other mechanisms                to                address some of the volatility in the United States’ western energy                markets, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in federal and state energy and environmental laws and                regulations, |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | union                and labor relations, and |
|--------------------|-----------------------------------------------|

| ·   | natural                disasters, wars, embargoes and other catastrophic events. |
|--------------------|----------------------------------------------------------------------------------|

**Impairments      of tangible long-lived assets of PNMR, PNM and TNMP could adversely affect      their      business, financial position, liquidity and results of operations.**

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

----

**Impairments      of goodwill and intangible assets of PNMR and its subsidiaries could adversely      affect their business, financial position, liquidity and results of operations.      **

*Goodwill      and Other Intangible Assets*

**Actual      results could differ from estimates used to prepare PNMR’s, PNM’s and TNMP’s      financial statements.**

**Provisions      of PNMR’s organizational documents, as well as several other statutory and      regulatory factors, will limit another party’s ability to acquire PNMR and could      deprive PNMR’s shareholders of the opportunity to gain a takeover premium for      shares of PNMR’s common stock.**

| ·   | authorization                for the PNMR Board to issue PNMR’s preferred stock in series and to fix                rights and preferences of the series (including, among other things,                whether, and to what extent, the shares of any series will have voting                rights, subject to certain limitations, and the extent of the preferences                of the shares of any series with respect to dividends and other                matters), |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | advance                notice procedures with respect to any proposal other than those adopted                or                recommended by PNMR’s Board, and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | provisions                specifying that only a majority of the Board, the chairman of the                Board,                the president or holders of not less than one-tenth of all of PNMR's                shares entitled to vote may call a special meeting of                stockholders. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM      1B.**
**UNRESOLVED      STAFF COMMENTS**

----

**ITEM      2.**
**PROPERTIES**

**Electric**

|     |   |     |   |         |   | **Total                  Net** |
|----------|--------|----------|--------|--------------|--------|--------------------------------|
|     |   |     |   |         |   | **Generation**                 |
|     |   |     |   |         |   | **Capacity**                   |
| **Type** |   | **Name** |   | **Location** |   | **(MW)**                       |

| Coal    |   | SJGS                  (a)         |   | Waterflow,                  New Mexico   |   | 765   |                        |
|---------|--------|-----------------------------------|--------|------------------------------------------|--------|-------|-----------------------------|
| Coal    |   | Four                  Corners (b) |   | Fruitland,                  New Mexico   |   | 192   |                        |
| Gas/Oil |   | Reeves                  Station   |   | Albuquerque,                  New Mexico |   | 154   |                        |
| Gas/Oil |   | Las                  Vegas (c)    |   | Las                  Vegas, New Mexico   |   | 18    |                        |
| Gas/Oil |   | Afton                  (d)        |   | La                  Mesa, New Mexico     |   | 141   |                        |
| Gas     |   | Lordsburg                  (e)    |   | Lordsburg,                  New Mexico   |   | 72    |                        |
| Nuclear |   | PVNGS                  (f)        |   | Wintersburg,                  Arizona    |   | 402   |                    (g) |
|    |   |                              |   |                                     |   | 1,744 |                        |

| (a)   | SJGS                  Units 1, 2 and 3 are 50% owned by PNM; SJGS Unit 4 is 38.5% owned                  by                  PNM. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|
| (b)   | Four                  Corners Units 4 and 5 are 13% owned by                  PNM. |
|-----------------|------------------------------------------------------------------------------------|
| (c)   | PNM                  has filed with the NMPRC for approval to close the Las Vegas Generating                  Station in 2006. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------|
| (d)   | Subject                  to NMPRC approval, PNM plans to convert Afton to a combined cycle                  plant                  and bring Afton into retail rates, with 50% of Afton's capacity                  designated                  to serve PNM's customers and the other 50% designated to serve                  TNMP's New                  Mexico customers. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (e)   | PNM’s                  Lordsburg plant was built to serve wholesale customers and other                  sales                  rather than New Mexico retail customers and, therefore, is not                  currently                  included in the retail rates. However, it is possible that this                  plant may                  be needed in the future to serve the growing retail                  load. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (f)   | PNM                  is entitled to 10.2% of the power and energy generated by PVNGS.                  PNM has a                  10.2% ownership interest in Unit 3 and has leasehold interests                  in                  approximately 7.9% of Units 1 and 2 and an ownership interest in                  approximately 2.3% of Units 1 and 2. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (g)   | For                  load and resource purposes, PNM has notified the NMPRC that the                  maximum                  dependable capacity rating for PVNGS is 395                  MW. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Fossil-Fueled          Plants**

----

**Nuclear      Plant **

*PNM’s      Interest in PVNGS*

*Other      PVNGS Matters*

**Transmission      and Distribution**

**Gas**

**Other      Information**

----

**ITEM      3.**
**LEGAL      PROCEEDINGS**

| ·   | Tax                Refund Litigation |
|--------------------|--------------------------------------|

| ·   | PVNGS                Water Supply Litigation |
|--------------------|----------------------------------------------|

| ·   | San                Juan River Adjudication |
|--------------------|--------------------------------------------|

| ·   | Navajo                Nation Environmental Issues |
|--------------------|---------------------------------------------------|

| ·   | Citizen                Suit Under the Clean Air Act |
|--------------------|-----------------------------------------------------|

| ·   | Excess                Emissions Reports |
|--------------------|-----------------------------------------|

| ·   | Santa                Fe Generating Station |
|--------------------|--------------------------------------------|

| ·   | Natural                Gas Royalties Qui Tam Litigation |
|--------------------|---------------------------------------------------------|

| ·   | Asbestos                Cases |
|--------------------|-------------------------------|

| ·   | SESCO                Matter (for both PNM and TNMP) |
|--------------------|-----------------------------------------------------|

| ·   | Archaeological                Site Disturbance |
|--------------------|------------------------------------------------|
|                 ·   | Legal              Proceedings discussed under the caption "Western United States Wholesale              Power Market" |
|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------|
| ·   | Wholesale              Power Marketing Antitrust Suit |
|--------------------|-------------------------------------------------------|
| ·   | TNMP              True-Up Proceeding |
|--------------------|--------------------------------------|
| ·   | Power              Resource Group Litigation |
|--------------------|----------------------------------------------|

----

**ITEM      4.**
**SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**SUPPLEMENTAL      ITEM - EXECUTIVE OFFICERS OF PNM RESOURCES, INC.**

| **Name**                       | **Age** | **Office**                                                            | **Initial                Effective Date**            |
|--------------------------------|---------|-----------------------------------------------------------------------|------------------------------------------------------|
|                           |    |                                                                  |                                                 |
| J.                E. Sterba    | 50      | Chairman,                President and Chief Executive Officer        |     December                2001 |
|                           |    | Chairman,                President and Chief Executive Officer, PNM   | October                2000                          |
|                           |    | President                and Chief Executive Officer, PNM             | June                2000                             |
|                           |    | President,                PNM                                         | March                2000                            |
|                           |    |                                                                  |                                                 |
| C.                N. Eldred 1  | 52      | Senior                Vice President and Chief                        |                                                 |
|                           |    | Financial                Officer                                      | January                2006                          |
|                           |    | Vice                President and Chief Financial Officer,            |                                                 |
|                           |    | Omaha                Public Power District                            | November                1999                         |
|                           |    |                                                                  |                                                 |
| A.                A. Cobb      | 58      | Senior                Vice President and Chief Administrative Officer | June                2005                             |
|                           |    | Senior                Vice President, Peoples Services and            |                                                 |
|                           |    | Development                                                           | December                2001                         |
|                           |    | Senior                Vice President, Peoples Services and            |                                                 |
|                           |    | Development,                PNM                                       | September                2001                        |
|                           |    | Global                Human Resources Officer, Clientlogic            | November                1999                         |
|                           |    |                                                                  |                                                 |
| P.                T. Ortiz     | 56      | Senior                Vice President and General Counsel              | June                2005                             |
|                           |    | Senior                Vice President, General Counsel and Secretary   | December                2001                         |
|                           |    | Senior                Vice President, General Counsel and             |                                                 |
|                           |    | Secretary,                PNM                                         | August                1999                           |
|                           |    |                                                                  |                                                 |
| W.J.                Real       | 57      | Senior                Vice President, Public Policy (PNMR and PNM)    | July                2002                             |
|                           |    | Executive                Vice President, Power Production             |                                                 |
|                           |    | and                Marketing                                          | December                2001                         |
|                           |    | Executive                Vice President, Power Production             |                                                 |
|                           |    | and                Marketing, PNM                                     | January                1999                          |
|                           |    |                                                                  |                                                 |
| H.                W. Smith 2   | 48      | Senior                Vice President, Energy Resources (PNMR and PNM) | March                2004                            |
|                           |    | Vice                President, Energy Supply, Trading and             |                                                 |
|                           |    | Services,                TECO Energy, Inc.                            | January                2001                          |
|                           |    |                                                                  |                                                 |
| W.D                Hobbs 3     | 62      | Senior                Vice President, Customer and Delivery Services  | June                2005                             |
|                           |    | Senior                Vice President and Chief Operations             |                                                 |
|                           |    | Officer,                TNMP                                          | August                2002                           |
|                           |    | Vice                President, Transmission and                       |                                                 |
|                           |    | Distribution                Operations, TNMP                          | June                2002                             |
|                           |    | Vice                President, Texas Transmission and                 |                                                 |
|                           |    | Distribution                Operations, TNMP                          | October                2000                          |
|                           |    |                                                                  |                                                 |
| J.                D. Shorter 4 | 40      | Senior                Vice President                                  | April                2005                            |
|                           |    | Managing                Partner, Wolfrox Partners LLP                 | August                2004                           |
|                           |    | Senior                Vice President, North America                   |                                                 |
|                           |    | Commercial                Operations, TXU Corp.                       | June                2003                             |
|                           |    | Vice                President and Director of Trading, TXU Corp.      | March                1999                            |
|                           |    |                                                                  |                                                 |
| T.                G. Sategna   | 52      | Vice                President and Corporate Controller (PNMR and PNM) | October                2003                          |
|                           |    | Controller,                Utility Operations (PNMR and PNM)          | August                2002                           |
|                           |    | Controller,                Electric and Gas                           | December                2001                         |
|                           |    | Controller,                Electric and Gas Services, PNM             | May                2000                              |

----

----

**PART      II**

**ITEM      5.**
**MARKET      FOR THE COMPANY’S COMMON EQUITY, RELATED **

**             **STOCKHOLDER MATTERS      AND ISSUER PURCHASES OF EQUITY SECURITIES****

|  **Quarter                Ended** |     |   | **Range                of****Sales                Prices** |   |  **Dividends**          |
|----------------------------------------|----------|--------|------------------------------------------------------------|--------|------------------------------|
|                                   | **High** |   | **Low**                                                    |   | **Per                Share** |
| **2005**                               |     |   |                                                       |   |                         |
| December                31             | $29.22   |   | $24.03                                                     |   | $0.200                       |
| September                30            | $30.45   |   | $27.62                                                     |   | $0.400                       |
| June                30                 | $30.38   |   | $26.12                                                     |   | $                *-*         |
| March                31                | $28.20   |   | $23.83                                                     |   | $0.185                       |
| Fiscal                Year             | $30.45   |   | $23.83                                                     |   | $0.785                       |
|                                   |     |   |                                                       |   |                         |
| **2004**                               |     |   |                                                       |   |                         |
| December                31             | $26.11   |   | $22.57                                                     |   | $0.185                       |
| September                30            | $22.75   |   | $20.09                                                     |   | $0.160                       |
| June                30                 | $20.87   |   | $18.70                                                     |   | $0.160                       |
| March                31                | $21.20   |   | $18.77                                                     |   | $0.160                       |
| Fiscal                Year             | $26.11   |   | $18.70                                                     |   | $0.665                       |

----

**Cumulative      Preferred Stock**

**Sales      of Unregistered Securities**

----

**ITEM      6.**
**SELECTED      FINANCIAL DATA**

**PNM      RESOURCES, INC. AND SUBSIDIARIES**

|                                                                   |   | **2005**                                                          |      | **2004** |   | **2003**  |   | **2002** |      | **2001** |   |
|------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|----------|--------|-----------|--------|----------|-----------|----------|--------|
|                                                                   |   | (In                thousands except per share amounts and ratios) |      |
| **Total                Operating Revenues**                            |   | $                                                                 | 2,076,810 |     | $      | 1,604,792 |   | $        | 1,455,653 |     | $      | 1,118,694 |   | $ | 2,254,178 |   |
| **Net                Earnings Before Cumulative Effect of Changes**    |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| **in                Accounting Principles**                            |   | $                                                                 | 68,153    |     | $      | 87,686    |   | $        | 58,552    |     | $      | 63,686 |   | $ | 149,847 |   |
| **Net                Earnings**                                        |   | $                                                                 | 67,227    |     | $      | 87,686    |   | $        | 95,173    |     | $      | 63,686 |   | $ | 149,847 |   |
| **Net                Earnings per Common Share**                       |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| Basic                                                                  |   | $                                                                 | 1.02      |     | $      | 1.45      |   | $        | 1.60      |     | $      | 1.09 |   | $ | 2.55 |   |
| Diluted                                                                |   | $                                                                 | 1.00      |     | $      | 1.43      |   | $        | 1.58      |     | $      | 1.07 |   | $ | 2.51 |   |
| **Cash                Flow Data**                                      |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| Net                cash flows provided from operating activities       |   | $                                                                 | 210,451   |     | $      | 235,142   |   | $        | 225,915   |     | $      | 97,359 |   | $ | 327,346 |   |
| Net                cash flows used in investing activities             |   | $                                                                 | (154,643  | )        | $      | (143,838  | )      | $        | (98,790   | )        | $      | (200,427 | ) | $ | (407,014 | ) |
| Net                cash flows generated (used) by financing activities |   | $                                                                 | (4,804    | )        | $      | (86,803   | )      | $        | (118,133  | )        | $      | 78,362 |   | $ | 385 |   |
| **Total                Assets**                                        |   | $                                                                 | 5,124,709 |     | $      | 3,487,635 |   | $        | 3,378,629 |     | $      | 3,247,227 |   | $ | 3,127,602 |   |
| **Long-Term                Debt**                                      |   | $                                                                 | 1,746,395 |     | $      | 987,823   |   | $        | 987,210   |     | $      | 980,092 |   | $ | 953,884 |   |
| **Common                Stock Data**                                   |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| Market                price per common share at year end               |   | $                                                                 | 24.49     |     | $      | 25.29     |   | $        | 18.73     |     | $      | 15.88 |   | $ | 18.63 |   |
| Book                value per common share at year end                 |   | $                                                                 | 19.51     |     | $      | 18.20     |   | $        | 18.07     |     | $      | 16.60 |   | $ | 17.25 |   |
| Average                number of common shares outstanding             |   |                                                              | 65,928    |     |   | 60,414    |   |     | 59,620    |     |   | 58,677 |   |   | 58,677 |   |
| Dividends                declared per common share                     |   | $                                                                 | 0.785     |     | $      | 0.665     |   | $        | 0.600     |     | $      | 0.587 |   | $ | 0.533 |   |
| Return                on average common equity                         |   |                                                              | 5.6       | %        |   | 8.1       | %      |     | 9.3       | %        |   | 6.4 | % |   | 15.5 | % |
| **Capitalization**                                                     |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| Common                stockholders’ equity                       |   |                                                              | 42.3      | %        |   | 52.4      | %      |     | 51.9      | %        |   | 49.5 | % |   | 50.8 | % |
| Preferred                stock without mandatory redemption            |   |                                                              |      |     |   |      |   |     |      |     |   |   |   |   |   |   |
| requirements                                                           |   |                                                              | 0.4       |     |   | 0.6       |   |     | 0.6       |     |   | 0.7 |   |   | 0.6 |   |
| Long-term                debt                                          |   |                                                              | 57.3      |     |   | 47.0      |   |     | 47.5      |     |   | 49.8 |   |   | 48.6 |   |
|                                                                   |   |                                                              | 100.0     | %        |   | 100.0     | %      |     | 100.0     | %        |   | 100.0 | % |   | 100.0 | % |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES** |
|---------------------------------------------------------|
| **COMPARATIVE                OPERATING STATISTICS**     |
|                                                    |
|                                                    | **2005** |   | **2004** |   | **2003** |   | **2002** |   | **2001** |
| **Regulated                Operations**                 |   |   |   |   |   |   |   |   |   |
| **PNM                Electric MWh Sales**               |   |   |   |   |   |   |   |   |   |
| Residential                                             | 2,652,475 |   | 2,509,449 |   | 2,405,488 |   | 2,298,542 |   | 2,197,889 |
| Commercial                                              | 3,526,133 |   | 3,450,503 |   | 3,379,147 |   | 3,254,576 |   | 3,213,208 |
| Industrial                                              | 1,277,156 |   | 1,283,769 |   | 1,292,711 |   | 1,612,723 |   | 1,603,266 |
| Other                                                   | 256,202 |   | 253,393 |   | 247,255 |   | 267,070 |   | 240,934 |
| Total                PNM Electric MWh Sales             | 7,711,966 |   | 7,497,114 |   | 7,324,601 |   | 7,432,911 |   | 7,255,297 |
| **TNMP                Electric MWh Sales ***            |   |   |   |   |   |   |   |   |   |
| Residential                                             | 1,859,020 |   | - |   | - |   | - |   | - |
| General                Services                         | 144,203 |   | - |   | - |   | - |   | - |
| Primary/Economy/Transmission                            | 1,311,208 |   | - |   | - |   | - |   | - |
| Secondary                                               | 1,174,587 |   | - |   | - |   | - |   | - |
| Municipal/Lighting                                      | 86,307 |   | - |   | - |   | - |   | - |
| Total                TNMP MWh Sales                     | 4,575,325 |   | - |   | - |   | - |   | - |
| **PNM                Gas Throughput - Decatherms**      |   |   |   |   |   |   |   |   |   |
| (In                thousands):                          |   |   |   |   |   |   |   |   |   |
| Residential                                             | 28,119 |   | 30,618 |   | 27,416 |   | 29,627 |   | 27,848 |
| Commercial                                              | 10,554 |   | 11,639 |   | 10,810 |   | 12,009 |   | 10,421 |
| Industrial                                              | 369 |   | 413 |   | 485 |   | 749 |   | 3,920 |
| Transportation                                          | 37,013 |   | 43,208 |   | 50,756 |   | 44,889 |   | 51,395 |
| Other                                                   | 9,780 |   | 13,871 |   | 5,510 |   | 4,807 |   | 4,355 |
| Total                PNM Gas Throughput                 | 85,835 |   | 99,749 |   | 94,977 |   | 92,081 |   | 97,939 |
| **Unregulated                Operations**               |   |   |   |   |   |   |   |   |   |
| **PNM                Wholesale MWh Sales**              |   |   |   |   |   |   |   |   |   |
| Long-term                contracts                      | 2,516,907 |   | 2,943,372 |   | 2,469,707 |   | 844,169 |   | 1,463,031 |
| Short-term                sales                         | 8,069,751 |   | 9,057,172 |   | 9,432,297 |   | 8,605,985 |   | 11,133,669 |
| Total                PNM Wholesale MWh Sales            | 10,586,658 |   | 12,000,544 |   | 11,902,004 |   | 9,450,154 |   | 12,596,700 |
| **First                Choice MWh Sales ***             |   |   |   |   |   |   |   |   |   |
| Residential                                             | 1,591,005 |   | - |   | - |   | - |   | - |
| Mass-market                                             | 400,839 |   | - |   | - |   | - |   | - |
| Mid-market                                              | 478,531 |   | - |   | - |   | - |   | - |
| Other                                                   | 29,780 |   | - |   | - |   | - |   | - |
| Total                First Choice MWh Sales             | 2,500,155 |   | - |   | - |   | - |   | - |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES** |
|---------------------------------------------------------|
| **COMPARATIVE                OPERATING STATISTICS**     |
|                                                    |
|                                                    | **2005** |   | **2004** |   | **2003** |   | **2002** |   | **2001** |
|                                                    | (In                thousands) |
|                                                    |   |   |   |   |   |   |   |   |   |
| **Regulated                Operations**                 |   |   |   |   |   |   |   |   |   |
| **PNM                Electric Revenues**                |   |   |   |   |   |   |   |   |   |
| Residential                                             | $                216,890 |   | $                206,950 |   | $                203,710 |   | $                197,174 |   | $                 187,600 |
| Commercial                                              | 254,480 |   | 251,092 |   | 252,876 |   | 247,800 |   | 242,372 |
| Industrial                                              | 61,146 |   | 61,905 |   | 64,549 |   | 82,009 |   | 82,752 |
| Transmission                                            | 21,509 |   | 18,327 |   | 19,453 |   | 23,857 |   | 26,553 |
| Other                                                   | 19,951 |   | 20,138 |   | 19,876 |   | 19,956 |   | 19,949 |
| Total                PNM Electric Revenues              | $                573,976 |   | $                558,412 |   | $                560,464 |   | $                570,796 |   | $                 559,226 |
| **TNMP                Electric Revenues ***             |   |   |   |   |   |   |   |   |   |
| Residential                                             | $                  57,732 |   | $           - |   | $                           - |   | $                           - |   | $                            - |
| General                Services                         | 18,864 |   | - |   | - |   | - |   | - |
| Primary/Economy/Transmission                            | 25,815 |   | - |   | - |   | - |   | - |
| Secondary                                               | 29,925 |   | - |   | - |   | - |   | - |
| Municipal/Lighting                                      | 5,311 |   | - |   | - |   | - |   | - |
| Other                                                   | 16,703 |   | - |   | - |   | - |   | - |
| Total                TNMP Revenues                      | $                154,350 |   | $           - |   | $                           - |   | $            - |   | $                             - |
| **PNM                Gas Revenues**                     |   |   |   |   |   |   |   |   |   |
| Residential                                             | $                311,043 |   | $                292,163 |   | $                226,799 |   | $                176,284 |   | $                  221,409 |
| Commercial                                              | 98,929 |   | 92,128 |   | 72,269 |   | 53,734 |   | 65,654 |
| Industrial                                              | 3,375 |   | 2,889 |   | 2,820 |   | 2,872 |   | 27,519 |
| Transportation                                          | 13,813 |   | 15,274 |   | 18,906 |   | 17,735 |   | 20,188 |
| Other                                                   | 84,282 |   | 88,467 |   | 37,473 |   | 26,781 |   | 36,495 |
| Total                PNM Gas Revenues                   | $                511,442 |   | $                490,921 |   | $                358,267 |   | $                277,406 |   | $                  371,265 |
| **Unregulated                Operations**               |   |   |   |   |   |   |   |   |   |
| **PNM                Wholesale Revenues**               |   |   |   |   |   |   |   |   |   |
| Long-term                contracts                      | $                154,692 |   | $                158,085 |   | $                135,674 |   | $                  58,546 |   | $                    77,250 |
| Short-term                sales                         | 473,336 |   | 430,158 |   | 417,486 |                  (a) | 285,234 |   | 1,244,899 |
| Total                PNM Wholesale Revenues             | $                628,028 |   | $                588,243 |   | $                553,160 |   | $                343,780 |   | $1,322,149 |
| **First                Choice Revenues ***              |   |   |   |   |   |   |   |   |   |
| Residential                                             | $                198,218 |   | $                          - |   | $                           - |   | $                           - |   | $              - |
| Mass-market                                             | 53,111 |   | - |   | - |   | - |   | - |
| Mid-market                                              | 46,584 |   | - |   | - |   | - |   | - |
| Other                                                   | 18,417 |   | - |   | - |   | - |   | - |
| Total                First Choice Revenues              | $                316,330 |   | $           - |   | $                           - |   | $                          - |   | $                             - |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES** |
|---------------------------------------------------------|
| **COMPARATIVE                OPERATING STATISTICS**     |
|                                                    |
|                                                    | **2005** |   | **2004** |   | **2003** |   | **2002** |   | **2001** |
| **Regulated                Operations**                 |   |   |   |   |   |   |   |   |   |
| **PNM                Electric Customers**               |   |   |   |   |   |   |   |   |   |
| Residential                                             | 378,116 |   | 367,491 |   | 358,099 |   | 345,588 |   | 340,656 |
| Commercial                                              | 44,721 |   | 43,425 |   | 42,391 |   | 41,092 |   | 40,065 |
| Industrial                                              | 281 |   | 290 |   | 296 |   | 311 |   | 377 |
| Other                                                   | 838 |   | 818 |   | 822 |   | 796 |   | 924 |
| Total                PNM Electric Customers             | 423,956 |   | 412,024 |   | 401,608 |   | 387,787 |   | 382,022 |
| **TNMP                Electric Customers ***            |   |   |   |   |   |   |   |   |   |
| Residential                                             | 222,688 |   | - |   | - |   | - |   | - |
| General                Services                         | 6,147 |   | - |   | - |   | - |   | - |
| Primary/Economy/Transmission                            | 208 |   | - |   | - |   | - |   | - |
| Secondary                                               | 29,038 |   | - |   | - |   | - |   | - |
| Municipal/Lighting                                      | 2,188 |   | - |   | - |   | - |   | - |
| Total                TNMP Customers                     | 260,269 |   | - |   | - |   | - |   | - |
| **PNM                Gas Customers**                    |   |   |   |   |   |   |   |   |   |
| Residential                                             | 440,624 |   | 430,578 |   | 421,104 |   | 411,642 |   | 404,753 |
| Commercial                                              | 35,136 |   | 34,993 |   | 34,645 |   | 35,194 |   | 32,894 |
| Industrial                                              | 42 |   | 47 |   | 46 |   | 58 |   | 50 |
| Transportation                                          | 26 |   | 23 |   | 40 |   | 27 |   | 34 |
| Other                                                   | 2,654 |   | 2,931 |   | 2,983 |   | 3,664 |   | 3,528 |
| Total                PNM Gas Customers                  | 478,482 |   | 468,572 |   | 458,818 |   | 450,585 |   | 441,259 |
| **Unregulated                Operations**               |   |   |   |   |   |   |   |   |   |
| **PNM                Wholesale Customers**              |   |   |   |   |   |   |   |   |   |
| Long-term                and short-term                 | 76 |   | 68 |   | 72 |   | 76 |   | 79 |
| Total                PNM Wholesale Customers            | 76 |   | 68 |   | 72 |   | 76 |   | 79 |
| **First                Choice Customers ***             |   |   |   |   |   |   |   |   |   |
| Residential                                             | 178,128 |   | - |   | - |   | - |   | - |
| Mass-market                                             | 23,914 |   | - |   | - |   | - |   | - |
| Mid-market                                              | 6,649 |   | - |   | - |   | - |   | - |
| Other                                                   | 1,760 |   | - |   | - |   | - |   | - |
| Total                First Choice Customers             | 210,451 |   | - |   | - |   | - |   | - |
| **PNM                Generation Statistics**            |   |   |   |   |   |   |   |   |   |
| Reliable                Net Capability - MW             | 1,744 |   | 1,729 |   | 1,742 |   | 1,734 |   | 1,521 |
| Coincidental                Peak Demand - MW            | 1,779 |   | 1,655 |   | 1,661 |   | 1,478 |   | 1,431 |
| Average                Fuel Cost per Million BTU        | $                1.4711 |   | $                1.3751 |   | $                1.4120 |   | $                1.3910 |   | $                1.6007 |
| BTU                per KWh of Net Generation            | 10,706 |   | 10,442 |   | 10,854 |   | 10,568 |   | 10,549 |

----

**ITEM      7.**
**MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATION**

**RESULTS      OF OPERATION - EXECUTIVE SUMMARY**

----

***Regulated      Operations***

**PNM      Electric**

**PNM      Gas**

**TNMP      Electric**

***Unregulated      Operations***

**PNM      Wholesale**

----

**First      Choice**

***Corporate      and Other***

***TNP      Acquisition***

----

| ·   | a                two-year electric rate freeze that includes a $13.0 million annual                rate                reduction in TNMP's retail delivery rates effective May 1,                2005; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                authorized return on equity of 10.25% on an implied capital structure                of                60% debt and 40% equity for certain reporting                purposes; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                use of a 60/40% debt/equity capital structure in TNMP's next base                rate                case if filed before January 1, 2009;                and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                $6.0 million synergy savings credit (whether or not savings are achieved)                amortized over 24 months effective after the close of the                transaction. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                three-phase rate reduction totaling 15%, to TNMP’s electric customers in                southern New Mexico, beginning January 2006 and ending December 2010;                the                rate reduction will lower TNMP electric rates by approximately $9.6                million in the first year; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                imputed 55/45% debt/equity structure with an assumed rate of return                on                equity of 10.5% for TNMP; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PNM                to remain the power supplier for TNMP’s New Mexico needs through 2010;                and |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | integration                of TNMP’s New Mexico assets into PNM effective January 1, 2007, the                companies, however, will maintain separate rates through                2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Proposed      Twin Oaks Acquisition***

***Competitive      Strategy***

----

*        Expand Regulated and Unregulated Operations*

*Acquire      Additional Generating Assets in the Southwest Region*

*Maintain      Prudent Cost Controls*

*Continue        to Improve Credit Strength and Reduce Cost of Capital*

*Commitment      to Corporate Citizenship*

----

**RESULTS      OF OPERATION - PNMR**

**YEAR      ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31,      2004**

| ·   | TNP                acquisition integration costs of $10.1                million; |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | turbine                impairment of $9.0 million (see Note                1); |
|--------------------|--------------------------------------------------------------------------------|

| ·   | charge                related to issuance of equity-linked units of $7.3 million (see Note                6); |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | TNP                debt refinancing costs of $5.1                million; |
|--------------------|---------------------------------------------------------------------------|

| ·   | software                write-off of $2.7 million; |
|--------------------|----------------------------------------------------|

| ·   | charge                associated with the NMPRC’s approval of the TNP acquisition of $1.4                million; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | cumulative                effect of adoption of FIN 47 of $0.9 million (see Note                1). |
|--------------------|-----------------------------------------------------------------------------------------------------|

*“Reporting      Realized Gains and Losses on Derivative Instruments That Are Subject to FASB      Statement No. 133 and Not Held for Trading Purposes,”*

----

**Regulated      Operations**

**PNM      Electric **

|                                                   |   | **Year                  Ended**   |        |                            |   |
|--------------------------------------------------------|--------|-----------------------------------|-------------|---------------------------------|--------|
|                                                   |   | **December                  31,** |        |                            |   |
|                                                   |   | **2005**                          |        | **2004**                        |   | **Variance** |   |
|                                                   |   |                              |        | (In                  thousands) |   |   |   |
|                                                   |   |                              |        |                            |   |   |   |
| **Operating                  revenues**                |   | **$**                             | **573,976** |                            | **$**  | **558,412** |   | **$** | **15,564** |   |
| Less:                  Cost of energy                  |   |                              | 210,169     |                            |   | 186,517 |   |   | 23,652 |   |
| Intersegment                  energy transfer          |   |                              | (35,829     | )                               |   | (42,769 | ) |   | 6,940 |   |
| **Gross                  margin**                      |   |                              | **399,636** |                            |   | **414,664** |   |   | **(15,028** | **)** |
| Energy                  production costs               |   |                              | 118,633     |                            |   | 113,848 |   |   | 4,785 |   |
| Transmission                  and distribution O&M |   |                              | 30,462      |                            |   | 31,360 |   |   | (898 | ) |
| Customer                  related expense              |   |                              | 19,454      |                            |   | 18,190 |   |   | 1,264 |   |
| Administrative                  and general            |   |                              | 11,001      |                            |   | 4,640 |   |   | 6,361 |   |
| **Total                  non-fuel O&M**            |   |                              | **179,550** |                            |   | **168,038** |   |   | **11,512** |   |
| Corporate                  allocation                  |   |                              | 64,170      |                            |   | 69,820 |   |   | (5,650 | ) |
| Depreciation                  and amortization         |   |                              | 69,798      |                            |   | 63,050 |   |   | 6,748 |   |
| Taxes                  other than income taxes         |   |                              | 19,726      |                            |   | 20,324 |   |   | (598 | ) |
| Income                  taxes                          |   |                              | 13,065      |                            |   | 23,141 |   |   | (10,076 | ) |
| **Total                  non-fuel operating expenses** |   |                              | **346,309** |                            |   | **344,373** |   |   | **1,936** |   |
| **Operating                  income**                  |   | **$**                             | **53,327**  |                            | **$**  | **70,291** |   | **$** | **(16,964** | **)** |

**PNM      Electric Revenues**

|                               |   | **Year                  Ended**                   |    |     |   |
|------------------------------------|--------|---------------------------------------------------|---------|----------|--------|
|                               |   | **December                  31,**                 |    |     |   |
|                               |   | **2005**                                          |    | **2004** |   | **Variance** |   |
|                               |   | (In                  thousands, except customers) |    |
| Residential                        |   | $                                                 | 216,890 |     | $      | 206,950 |   | $ | 9,940 |   |
| Commercial                         |   |                                              | 254,480 |     |   | 251,092 |   |   | 3,388 |   |
| Industrial                         |   |                                              | 61,146  |     |   | 61,905 |   |   | (759 | ) |
| Transmission                       |   |                                              | 21,509  |     |   | 18,327 |   |   | 3,182 |   |
| Other                              |   |                                              | 19,951  |     |   | 20,138 |   |   | (187 | ) |
|                               |   | $                                                 | 573,976 |     | $      | 558,412 |   | $ | 15,564 |   |
|                               |   |                                              |    |     |   |   |   |   |   |   |
| Average                  customers |   |                                              | 417,986 |     |   | 406,968 |   |   | 11,018 |   |

----

**PNM      Electric Sales**

|        |   | **Year                Ended**   |      |     |   |
|-------------|--------|---------------------------------|-----------|----------|--------|
|        |   | **December                31,** |      |     |   |
|        |   | **2005**                        |      | **2004** |   | **Variance** |   |
|        |   | (Megawatt                hours) |      |
| Residential |   |                            | 2,652,475 |     |   | 2,509,449 |   |   | 143,026 |   |
| Commercial  |   |                            | 3,526,133 |     |   | 3,450,503 |   |   | 75,630 |   |
| Industrial  |   |                            | 1,277,156 |     |   | 1,283,769 |   |   | (6,613 | ) |
| Other       |   |                            | 256,202   |     |   | 253,393 |   |   | 2,809 |   |
|        |   |                            | 7,711,966 |     |   | 7,497,114 |   |   | 214,852 |   |

----

**TNMP      Electric**

| **For                  the Period**                    |   |
|--------------------------------------------------------|--------|
| **June                  6 - December 31, 2005**        |   |
| (In                  thousands)                        |   |
| **Operating                  revenues**                |   | **$** | **154,350** |   |
| Less:                  Cost of energy                  |   |   | 58,014 |   |
| **Gross                  margin**                      |   |   | **96,336** |   |
| Transmission                  and distribution O&M |   |   | 12,403 |   |
| Customer                  related expense              |   |   | 3,111 |   |
| Administrative                  and general            |   |   | 415 |   |
| **Total                  non-fuel O&M**            |   |   | **15,929** |   |
| Corporate                  allocation                  |   |   | 9,386 |   |
| Depreciation                  and amortization         |   |   | 17,596 |   |
| Taxes                  other than income taxes         |   |   | 14,261 |   |
| Income                  taxes                          |   |   | 8,442 |   |
| **Total                  non-fuel operating expenses** |   |   | **65,614** |   |
| **Operating                  income**                  |   | **$** | **30,722** |   |

**TNMP      Electric Revenues**

| **For                  the Period**               |   |
|---------------------------------------------------|--------|
| **June                  6 - December 31, 2005**   |   |
| (In                  thousands, except customers) |   |
| Residential                                       |   | $ | 57,732 |   |
| General                  Services                 |   |   | 18,864 |   |
| Primary/Economy/Transmission                      |   |   | 25,815 |   |
| Secondary                                         |   |   | 29,925 |   |
| Municipal/Lighting                                |   |   | 5,311 |   |
| Other                                             |   |   | 16,703 |   |
|                                              |   | $ | 154,350 |   |
|                                              |   |   |   |   |
| Average                  customers *              |   |   | 255,335 |   |

----

**TNMP      Electric Sales ***

| **For                  the Period**             |   |
|-------------------------------------------------|--------|
| **June                  6 - December 31, 2005** |   |
| (Megawatt                  hours)               |   |
| Residential                                     |   |   | 1,859,020 |   |
| General                  Services               |   |   | 144,203 |   |
| Primary/Economy/Transmission                    |   |   | 1,311,208 |   |
| Secondary                                       |   |   | 1,174,587 |   |
| Municipal/Lighting                              |   |   | 86,307 |   |
|                                            |   |   | 4,575,325 |   |

----

**PNM      Gas**

|                                                   |   | **Year                  Ended**   |        |                            |   |
|--------------------------------------------------------|--------|-----------------------------------|-------------|---------------------------------|--------|
|                                                   |   | **December                  31,** |        |                            |   |
|                                                   |   | **2005**                          |        | **2004**                        |   | **Variance** |   |
|                                                   |   |                              |        | (In                  thousands) |   |   |   |
| **Operating                  revenues**                |   | **$**                             | **511,442** |                            | **$**  | **490,921** |   | **$** | **20,521** |   |
| Less:                  Cost of energy                  |   |                              | 364,205     |                            |   | 343,219 |   |   | 20,986 |   |
| **Gross                  margin**                      |   |                              | **147,237** |                            |   | **147,702** |   |   | **(465** | **)** |
| Energy                  production costs               |   |                              | 2,444       |                            |   | 2,338 |   |   | 106 |   |
| Transmission                  and distribution O&M |   |                              | 27,817      |                            |   | 28,006 |   |   | (189 | ) |
| Customer                  related expense              |   |                              | 19,616      |                            |   | 19,283 |   |   | 333 |   |
| Administrative                  and general            |   |                              | 3,487       |                            |   | 1,648 |   |   | 1,839 |   |
| **Total                  non-fuel O&M**            |   |                              | **53,364**  |                            |   | **51,275** |   |   | **2,089** |   |
| Corporate                  allocation                  |   |                              | 37,028      |                            |   | 38,725 |   |   | (1,697 | ) |
| Depreciation                  and amortization         |   |                              | 22,548      |                            |   | 18,894 |   |   | 3,654 |   |
| Taxes                  other than income taxes         |   |                              | 8,010       |                            |   | 7,412 |   |   | 598 |   |
| Income                  taxes                          |   |                              | 5,853       |                            |   | 8,063 |   |   | (2,210 | ) |
| **Total                  non-fuel operating expenses** |   |                              | **126,803** |                            |   | **124,369** |   |   | **2,434** |   |
| **Operating                  income**                  |   | **$**                             | **20,434**  |                            | **$**  | **23,333** |   | **$** | **(2,899** | **)** |

**PNM      Gas Revenues**

|                               |   | **Year                  Ended**                   |    |     |   |
|------------------------------------|--------|---------------------------------------------------|---------|----------|--------|
|                               |   | **December                  31,**                 |    |     |   |
|                               |   | **2005**                                          |    | **2004** |   | **Variance** |   |
|                               |   | (In                  thousands, except customers) |    |
| Residential                        |   | $                                                 | 311,043 |     | $      | 292,163 |   | $ | 18,880 |   |
| Commercial                         |   |                                              | 98,929  |     |   | 92,128 |   |   | 6,801 |   |
| Industrial                         |   |                                              | 3,375   |     |   | 2,889 |   |   | 486 |   |
| Transportation*                    |   |                                              | 13,813  |     |   | 15,274 |   |   | (1,461 | ) |
| Other                              |   |                                              | 84,282  |     |   | 88,467 |   |   | (4,185 | ) |
|                               |   | $                                                 | 511,442 |     | $      | 490,921 |   | $ | 20,521 |   |
|                               |   |                                              |    |     |   |   |   |   |   |   |
| Average                  customers |   |                                              | 471,321 |     |   | 461,399 |   |   | 9,922 |   |

----

**PNM      Gas Throughput**

|            |   | **Year                  Ended**            |   |     |   |
|-----------------|--------|--------------------------------------------|--------|----------|--------|
|            |   | **December                  31,**          |   |     |   |
|            |   | **2005**                                   |   | **2004** |   | **Variance** |   |
|            |   | (Thousands                  of decatherms) |   |
| Residential     |   |                                       | 28,119 |     |   | 30,618 |   |   | (2,499 | ) |
| Commercial      |   |                                       | 10,554 |     |   | 11,639 |   |   | (1,085 | ) |
| Industrial      |   |                                       | 369    |     |   | 413 |   |   | (44 | ) |
| Transportation* |   |                                       | 37,013 |     |   | 43,208 |   |   | (6,195 | ) |
| Other           |   |                                       | 9,780  |     |   | 13,871 |   |   | (4,091 | ) |
|            |   |                                       | 85,835 |     |   | 99,749 |   |   | (13,914 | ) |

----

**Unregulated      Operations**

**PNM      Wholesale**

|                                                   |   | **Year                  Ended**   |        |                            |   |
|--------------------------------------------------------|--------|-----------------------------------|-------------|---------------------------------|--------|
|                                                   |   | **December                  31,** |        |                            |   |
|                                                   |   | **2005**                          |        | **2004**                        |   | **2005** |   |
|                                                   |   |                              |        | (In                  thousands) |   |   |   |
| **Operating                  revenues**                |   | **$**                             | **628,028** |                            | **$**  | **588,243** |   | **$** | **39,785** |   |
| Less:                  Cost of energy                  |   |                              | 506,935     |                            |   | 449,059 |   |   | 57,876 |   |
| Intersegment                  energy transfer          |   |                              | 35,829      |                            |   | 42,769 |   |   | (6,940 | ) |
| **Gross                  margin**                      |   |                              | **85,264**  |                            |   | **96,415** |   |   | **(11,151** | **)** |
| Energy                  production costs               |   |                              | 29,614      |                            |   | 29,967 |   |   | (353 | ) |
| Transmission                  and distribution O&M |   |                              | 54          |                            |   | 81 |   |   | (27 | ) |
| Customer                  related expense              |   |                              | 879         |                            |   | 1,049 |   |   | (170 | ) |
| Administrative                  and general            |   |                              | 6,446       |                            |   | 7,255 |   |   | (809 | ) |
| **Total                  non-fuel O&M**            |   |                              | **36,993**  |                            |   | **38,352** |   |   | **(1,359** | **)** |
| Corporate                  allocation                  |   |                              | 4,395       |                            |   | 4,557 |   |   | (162 | ) |
| Depreciation                  and amortization         |   |                              | 15,669      |                            |   | 14,809 |   |   | 860 |   |
| Taxes                  other than income taxes         |   |                              | 3,439       |                            |   | 3,533 |   |   | (94 | ) |
| Income                  taxes                          |   |                              | 3,612       |                            |   | 8,537 |   |   | (4,925 | ) |
| **Total                  non-fuel operating expenses** |   |                              | **64,108**  |                            |   | **69,788** |   |   | **(5,680** | **)** |
| **Operating                  income**                  |   | **$**                             | **21,156**  |                            | **$**  | **26,627** |   | **$** | **(5,471** | **)** |

----

**PNM      Wholesale Revenues**

|                               |   | **Year                Ended**   |    |     |   |
|------------------------------------|--------|---------------------------------|---------|----------|--------|
|                               |   | **December                31,** |    |     |   |
|                               |   | **2005**                        |    | **2004** |   | **Variance** |   |
|                               |   | (In                thousands)   |    |
| Long-term                contracts |   | $                               | 154,692 |     | $      | 158,085 |   | $ | (3,393 | ) |
| Short-term                sales    |   |                            | 473,336 |     |   | 430,158 |   |   | 43,178 |   |
|                               |   | $                               | 628,028 |     | $      | 588,243 |   | $ | 39,785 |   |

**PNM      Wholesale Sales**

|                               |   | **Year                Ended**   |       |     |   |
|------------------------------------|--------|---------------------------------|------------|----------|--------|
|                               |   | **December                31,** |       |     |   |
|                               |   | **2005**                        |       | **2004** |   | **Variance** |   |
|                               |   | (Megawatt                hours) |       |
| Long-term                contracts |   |                            | 2,516,907  |     |   | 2,943,372 |   |   | (426,465 | ) |
| Short-term                sales    |   |                            | 8,069,751  |     |   | 9,057,172 |   |   | (987,421 | ) |
|                               |   |                            | 10,586,658 |     |   | 12,000,544 |   |   | (1,413,886 | ) |

----

**First      Choice**

| **For                the Period**                    |   |
|------------------------------------------------------|--------|
| **June                6 - December 31, 2005**        |   |
| (In                thousands)                        |   |
| **Operating                revenues**                |   | **$** | **316,330** |   |
| Less:                Cost of energy                  |   |   | 243,053 |   |
| **Gross                margin**                      |   |   | **73,277** |   |
| Customer                related expense              |   |   | 2,539 |   |
| Administrative                and general            |   |   | 13,008 |   |
| **Total                non-fuel O&M**            |   |   | **15,547** |   |
| Corporate                allocation                  |   |   | 8,434 |   |
| Depreciation                and amortization         |   |   | 1,094 |   |
| Taxes                other than income taxes         |   |   | 3,916 |   |
| Income                taxes                          |   |   | 15,450 |   |
| **Total                non-fuel operating expenses** |   |   | **44,441** |   |
| **Operating                income**                  |   | **$** | **28,836** |   |

**First      Choice Electric Revenues**

| **For                the Period**               |   |
|-------------------------------------------------|--------|
| **June                6 - December 31, 2005**   |   |
| (In                thousands, except customers) |   |
| Residential                                     |   | $ | 198,218 |   |
| Mass-market                                     |   |   | 53,111 |   |
| Mid-market                                      |   |   | 46,584 |   |
| Other                                           |   |   | 18,417 |   |
|                                            |   | $ | 316,330 |   |
|                                            |   |   |   |   |
| Average                customers *              |   |   | 209,464 |   |

**First      Choice Electric Sales ***

| **For                the Period**             |   |
|-----------------------------------------------|--------|
| **June                6 - December 31, 2005** |   |
| (Megawatt                hours)               |   |
| Residential                                   |   |   | 1,591,005 |   |
| Mass-market                                   |   |   | 400,839 |   |
| Mid-market                                    |   |   | 478,531 |   |
| Other                                         |   |   | 29,780 |   |
|                                          |   |   | 2,500,155 |   |

----

**Corporate      and Other**

*Corporate      Administrative and General Expenses*

**PNMR      Consolidated**

*Other      Income and Deductions*

*Interest      Charges*

----

*Cumulative      Effect of a Change in Accounting Principle*

*“Accounting      for Conditional Asset Retirement Obligations”*

*Income      Taxes*

----

**RESULTS      OF OPERATION - PNM**

**YEAR      ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31,      2004**

*Cumulative      Effect of a Change in Accounting Principle*

----

**RESULTS      OF OPERATION - TNMP**

**YEAR      ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31,      2004**

*Cumulative      Effect of a Change in Accounting Principle*

----

**RESULTS      OF OPERATION - PNMR**

**YEAR      ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31,      2003**

*”Accounting        for Asset Retirement Obligations” *

----

**Regulated      Operations**

**PNM      Electric **

|                                                   |   | **Year                  Ended**   |        |                            |   |
|--------------------------------------------------------|--------|-----------------------------------|-------------|---------------------------------|--------|
|                                                   |   | **December                  31,** |        |                            |   |
|                                                   |   | **2004**                          |        | **2003**                        |   | **Variance** |   |
|                                                   |   |                              |        | (In                  thousands) |   |   |   |
|                                                   |   |                              |        |                            |   |   |   |
| **Operating                  revenues**                |   | **$**                             | **558,412** |                            | **$**  | **560,464** |   | **$** | **(2,052** | **)** |
| Less:                  Cost of energy                  |   |                              | 186,517     |                            |   | 177,767 |   |   | 8,750 |   |
| Intersegment                  energy transfer          |   |                              | (42,769     | )                               |   | (34,760 | ) |   | (8,009 | ) |
| **Gross                  margin**                      |   |                              | **414,664** |                            |   | **417,457** |   |   | **(2,793** | **)** |
| Energy                  production costs               |   |                              | 113,848     |                            |   | 108,734 |   |   | 5,114 |   |
| Transmission                  and distribution O&M |   |                              | 31,360      |                            |   | 31,596 |   |   | (236 | ) |
| Customer                  related expense              |   |                              | 18,190      |                            |   | 15,543 |   |   | 2,647 |   |
| Administrative                  and general            |   |                              | 4,640       |                            |   | 6,972 |   |   | (2,332 | ) |
| **Total                  non-fuel O&M**            |   |                              | **168,038** |                            |   | **162,845** |   |   | **5,193** |   |
| Corporate                  allocation                  |   |                              | 69,820      |                            |   | 69,269 |   |   | 551 |   |
| Depreciation                  and amortization         |   |                              | 63,050      |                            |   | 73,532 |   |   | (10,482 | ) |
| Taxes                  other than income taxes         |   |                              | 20,324      |                            |   | 20,520 |   |   | (196 | ) |
| Income                  taxes                          |   |                              | 23,141      |                            |   | 23,750 |   |   | (609 | ) |
| **Total                  non-fuel operating expenses** |   |                              | **344,373** |                            |   | **349,916** |   |   | **(5,543** | **)** |
| **Operating                  income**                  |   | **$**                             | **70,291**  |                            | **$**  | **67,541** |   | **$** | **2,750** |   |

**PNM      Electric Revenues**

|                             |   | **Year                Ended**                   |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **December                31,**                 |    |     |   |
|                             |   | **2004**                                        |    | **2003** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 206,950 |     | $      | 203,710 |   | $ | 3,240 |   |
| Commercial                       |   |                                            | 251,092 |     |   | 252,876 |   |   | (1,784 | ) |
| Industrial                       |   |                                            | 61,905  |     |   | 64,549 |   |   | (2,644 | ) |
| Transmission                     |   |                                            | 18,327  |     |   | 19,453 |   |   | (1,126 | ) |
| Other                            |   |                                            | 20,138  |     |   | 19,876 |   |   | 262 |   |
|                             |   | $                                               | 558,412 |     | $      | 560,464 |   | $ | (2,052 | ) |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 406,968 |     |   | 396,303 |   |   | 10,665 |   |

----

**PNM      Electric Sales**

|        |   | **Year                Ended**   |      |     |   |
|-------------|--------|---------------------------------|-----------|----------|--------|
|        |   | **December                31,** |      |     |   |
|        |   | **2004**                        |      | **2003** |   | **Variance** |   |
|        |   | (Megawatt                hours) |      |
| Residential |   |                            | 2,509,449 |     |   | 2,405,488 |   |   | 103,961 |   |
| Commercial  |   |                            | 3,450,503 |     |   | 3,379,147 |   |   | 71,356 |   |
| Industrial  |   |                            | 1,283,769 |     |   | 1,292,711 |   |   | (8,942 | ) |
| Other       |   |                            | 253,393   |     |   | 247,255 |   |   | 6,138 |   |
|        |   |                            | 7,497,114 |     |   | 7,324,601 |   |   | 172,513 |   |

----

**PNM      Gas**

|                                                 |   | **Year                Ended**   |        |    |   |
|------------------------------------------------------|--------|---------------------------------|-------------|--------------|--------|
|                                                 |   | **December                31,** |        |    |   |
|                                                 |   | **2004**                        |        | **2003**     |   |  **Variance** |   |
|                                                 |   | (In                thousands)   |        |
| **Operating                revenues**                |   | **$**                           | **490,921** |         | **$**  | **358,267** |   | **$** | **132,654** |   |
| Less:                Cost of energy                  |   |                            | 343,219     |         |   | 228,345 |   |   | 114,874 |   |
| **Gross                margin**                      |   |                            | **147,702** |         |   | **129,922** |   |   | **17,780** |   |
| Energy                production costs               |   |                            | 2,338       |         |   | 1,930 |   |   | 408 |   |
| Transmission                and distribution O&M |   |                            | 28,006      |         |   | 29,515 |   |   | (1,509 | ) |
| Customer                related expense              |   |                            | 19,283      |         |   | 16,832 |   |   | 2,451 |   |
| Administrative                and general            |   |                            | 1,648       |         |   | 2,040 |   |   | (392 | ) |
| **Total                non-fuel O&M**            |   |                            | **51,275**  |         |   | **50,317** |   |   | **958** |   |
| Corporate                allocation                  |   |                            | 38,725      |         |   | 39,543 |   |   | (818 | ) |
| Depreciation                and amortization         |   |                            | 18,894      |         |   | 22,186 |   |   | (3,292 | ) |
| Taxes                other than income taxes         |   |                            | 7,412       |         |   | 6,886 |   |   | 526 |   |
| Income                taxes                          |   |                            | 8,063       |         |   | (956 | ) |   | 9,019 |   |
| **Total                non-fuel operating expenses** |   |                            | **124,369** |         |   | **117,976** |   |   | **6,393** |   |
| **Operating                income**                  |   | **$**                           | **23,333**  |         | **$**  | **11,946** |   | **$** | **11,387** |   |

**PNM      Gas Revenues**

|                             |   | **Year                Ended**                   |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **December                31,**                 |    |     |   |
|                             |   | **2004**                                        |    | **2003** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 292,163 |     | $      | 226,799 |   | $ | 65,364 |   |
| Commercial                       |   |                                            | 92,128  |     |   | 72,269 |   |   | 19,859 |   |
| Industrial                       |   |                                            | 2,889   |     |   | 2,820 |   |   | 69 |   |
| Transportation*                  |   |                                            | 15,274  |     |   | 18,906 |   |   | (3,632 | ) |
| Other                            |   |                                            | 88,467  |     |   | 37,473 |   |   | 50,994 |   |
|                             |   | $                                               | 490,921 |     | $      | 358,267 |   | $ | 132,654 |   |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 461,399 |     |   | 452,328 |   |   | 9,071 |   |

----

**PNM      Gas Throughput**

|            |   | **Year                Ended**            |   |     |   |
|-----------------|--------|------------------------------------------|--------|----------|--------|
|            |   | **December                31,**          |   |     |   |
|            |   | **2004**                                 |   | **2003** |   | **Variance** |   |
|            |   | (Thousands                of decatherms) |   |
| Residential     |   |                                     | 30,618 |     |   | 27,416 |   |   | 3,202 |   |
| Commercial      |   |                                     | 11,639 |     |   | 10,810 |   |   | 829 |   |
| Industrial      |   |                                     | 413    |     |   | 485 |   |   | (72 | ) |
| Transportation* |   |                                     | 43,208 |     |   | 50,756 |   |   | (7,548 | ) |
| Other           |   |                                     | 13,871 |     |   | 5,510 |   |   | 8,361 |   |
|            |   |                                     | 99,749 |     |   | 94,977 |   |   | 4,772 |   |

----

**Unregulated      Operations**

**PNM      Wholesale**

|                                                 |   | **Year                Ended**   |        |     |   |
|------------------------------------------------------|--------|---------------------------------|-------------|----------|--------|
|                                                 |   | **December                31,** |        |     |   |
|                                                 |   | **2004**                        |        | **2003** |   | **Variance** |   |
|                                                 |   | (In                thousands)   |        |
| **Operating                revenues**                |   |                            |        |     |   |   |   |   |   |   |
| External                sales                        |   | $                               | 588,243     |     | $      | 551,625 |   | $ | 36,618 |   |
| Intersegment                sales                    |   |                            | -           |     |   | 1,535 |   |   | (1,535 | ) |
| **Total                revenues**                    |   |                            | **588,243** |     |   | **553,160** |   |   | **35,083** |   |
| Less:                Cost of energy                  |   |                            | 449,059     |     |   | 413,089 |   |   | 35,970 |   |
| Intersegment                energy transfer          |   |                            | 42,769      |     |   | 34,760 |   |   | 8,009 |   |
| **Gross                margin**                      |   |                            | **96,415**  |     |   | **105,311** |   |   | **(8,896** | **)** |
| Energy                production costs               |   |                            | 29,967      |     |   | 29,919 |   |   | 48 |   |
| Transmission                and distribution O&M |   |                            | 81          |     |   | 59 |   |   | 22 |   |
| Customer                related expense              |   |                            | 1,049       |     |   | 711 |   |   | 338 |   |
| Administrative                and general            |   |                            | 7,255       |     |   | 8,390 |   |   | (1,135 | ) |
| **Total                non-fuel O&M**            |   |                            | **38,352**  |     |   | **39,079** |   |   | **(727** | **)** |
| Corporate                allocation                  |   |                            | 4,557       |     |   | 2,586 |   |   | 1,971 |   |
| Depreciation                and amortization         |   |                            | 14,809      |     |   | 14,230 |   |   | 579 |   |
| Taxes                other than income taxes         |   |                            | 3,533       |     |   | 3,263 |   |   | 270 |   |
| Income                taxes                          |   |                            | 8,537       |     |   | 12,111 |   |   | (3,574 | ) |
| **Total                non-fuel operating expenses** |   |                            | **69,788**  |     |   | **71,269** |   |   | **(1,481** | **)** |
| **Operating                income**                  |   | **$**                           | **26,627**  |     | **$**  | **34,042** |   | **$** | **(7,415** | **)** |

----

**PNM      Wholesale Revenues**

|                               |   | **Year                Ended**   |    |     |   |
|------------------------------------|--------|---------------------------------|---------|----------|--------|
|                               |   | **December                31,** |    |     |   |
|                               |   | **2004**                        |    | **2003** |   | **Variance** |   |
|                               |   | (In                thousands)   |    |
| Long-term                contracts |   | $                               | 158,085 |     | $      | 135,674 |   | $ | 22,411 |   |
| Short-term                sales    |   |                            | 430,158 |     |   | 415,951 |   |   | 14,207 |   |
| Intersegment                sales  |   |                            | -       |     |   | 1,535 |   |   | (1,535 | ) |
|                               |   | $                               | 588,243 |     | $      | 553,160 |   | $ | 35,083 |   |

**PNM      Wholesale Sales**

|                               |   | **Year                Ended**   |       |     |   |
|------------------------------------|--------|---------------------------------|------------|----------|--------|
|                               |   | **December                31,** |       |     |   |
|                               |   | **2004**                        |       | **2003** |   | **Variance** |   |
|                               |   | (Megawatt                hours) |       |
| Long-term                contracts |   |                            | 2,943,372  |     |   | 2,469,707 |   |   | 473,665 |   |
| Short-term                sales    |   |                            | 9,057,172  |     |   | 9,432,297 |   |   | (375,125 | ) |
|                               |   |                            | 12,000,544 |     |   | 11,902,004 |   |   | 98,540 |   |

**Corporate      and Other**

*Corporate      Administrative and General Expenses*

----

**PNMR      Consolidated**

*Other      Income and Deductions*

*Interest      Expense*

*Income      Taxes*

*Cumulative      Effect of Changes in Accounting Principles*

----

**CRITICAL      ACCOUNTING POLICIES AND ESTIMATES**

*Revenue      Recognition*

*Regulatory      Assets and Liabilities*

*Accounting      for the Effects of Certain Types of Regulation*

*Asset      Impairment*

----

*Goodwill      and Other Intangible Assets*

*,      “Business Combinations” *

*Purchase      Accounting*

*Decommissioning      Costs*

*Financial      Instruments *

----

*Pension      and Other Postretirement Benefits*

*“Employers'      Accounting for Pensions”*
*Employers'      Accounting for Postretirement Benefits Other Than Pensions”*

----

**LIQUIDITY      AND CAPITAL RESOURCES**

----

*Pension      and Other Postretirement Benefits*

----

*Capital      Requirements*

*Liquidity*

----

----

*Off-Balance      Sheet Arrangements*

*Commitments      and Contractual Obligations*

----

|                                          |   | **Payments                Due** |      |
|-----------------------------------------------|--------|---------------------------------|-----------|
|                                          |   |                            |      | **Less                than** |   |   |   |   |   | **After** |   |
| **Contractual                Obligations**    |   | **Total**                       |      | **1                year** |   | **2-3                years** |   | **4-5                years** |   | **5                years** |   |
|                                          |   | (In                thousands)   |      |
|                                          |   |                            |      |   |   |   |   |   |   |   |   |
| Long-Term                Debt (a)             |   | $                               | 1,749,745 |   | $ | - |   | $ | 548,935 |   | $ | 514,940 |   | $ | 685,870 |   |
| Interest                on Long-Term Debt (b) |   |                            | 810,713   |   |   | 97,174 |   |   | 186,725 |   |   | 110,838 |   |   | 415,976 |   |
| Equity-Linked                Units Forward    |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Contracts                                     |   |                            | 16,038    |   |   | 5,983 |   |   | 9,988 |   |   | 67 |   |   | - |   |
| Interest                on Forward Contracts  |   |                            | 759       |   |   | 465 |   |   | 294 |   |   | - |   |   | - |   |
| Operating                Leases               |   |                            | 380,593   |   |   | 34,363 |   |   | 69,005 |   |   | 62,749 |   |   | 214,476 |   |
| Purchased                Power Agreements     |   |                            | 85,457    |   |   | 32,027 |   |   | 24,924 |   |   | 24,119 |   |   | 4,387 |   |
| Coal                Contracts (c)             |   |                            | 694,307   |   |   | 49,905 |   |   | 103,635 |   |   | 110,206 |   |   | 430,561 |   |
| Other                Purchase Obligations (d) |   |                            | 1,609,268 |   |   | 424,376 |   |   | 752,061 |   |   | 432,831 |   |   | - |   |
|                                          |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                         |   | $                               | 5,346,880 |   | $ | 644,293 |   | $ | 1,695,567 |   | $ | 1,255,750 |   | $ | 1,751,270 |   |

| (a)   | Represents                total long-term debt excluding unamortized discount of $3.4                million. |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (b)   | Represents                the annual interest expense on fixed and variable rate debt. Projections                of interest expense on variable rate debt are based on current interest                rates as of December 31, 2005. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Represents                only certain minimum payments that may be required under the coal                contracts if no deliveries are                made. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Represents                commitments for capital expenditures, pension and postretirement                benefit                obligations and other obligations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | **Amount                of Commitment Expiration Per Period** |      |
|--------------------------------------|--------|---------------------------------------------------------------|-----------|
|                                 |   | **Total**                                                     |      |   |   |   |   |   |   |   |   |
| **Other                Commercial**  |   | **Amounts**                                                   |      |   |   |   |   |   |   | **After** |   |
| **Commitments**                      |   | **Committed**                                                 |      | **1                year** |   | **2-3                years** |   | **4-5                years** |   | **5                years** |   |
|                                 |   | (In                thousands)                                 |      |
|                                 |   |                                                          |      |   |   |   |   |   |   |   |   |
| Short-Term                Debt (a)   |   | $                                                             | 967,492   |   | $ | 395,500 |   | $ | - |   | $ | 571,992 |   | $ | - |   |
| Local                Lines of Credit |   |                                                          | 38,500    |   |   | 38,500 |   |   | - |   |   | - |   |   | - |   |
|                                 |   |                                                          |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                |   | $                                                             | 1,005,992 |   | $ | 434,000 |   | $ | - |   | $ | 571,992 |   | $ | - |   |

|   | (a) | Represents                the unused borrowing capacity of the various credit facilities less                outstanding letters of credit of $22.5 million and borrowings of                $10.0                million as of December 31, 2005. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | **Payments                Due** |      |
|--------------------------------------------------|--------|---------------------------------|-----------|
|  **Contractual                Obligations** |   |  **Total**                 |      | **Less                than****1                year** |   |  **2-3                years** |   |  **4-5                years** |   | **After****5                years** |   |
|                                             |   | (In                thousands)   |      |
|                                             |   |                            |      |   |   |   |   |   |   |   |   |
| Long-Term                Debt (a)                |   | $                               | 985,870   |   | $ | - |   | $ | 300,000 |   | $ | - |   | $ | 685,870 |   |
| Interest                on Long-Term Debt (b)    |   |                            | 637,861   |   |   | 49,657 |   |   | 99,314 |   |   | 72,914 |   |   | 415,976 |   |
| Operating                Leases                  |   |                            | 353,430   |   |   | 29,322 |   |   | 61,353 |   |   | 57,990 |   |   | 204,765 |   |
| Purchased                Power Agreements        |   |                            | 71,239    |   |   | 17,809 |   |   | 24,924 |   |   | 24,119 |   |   | 4,387 |   |
| Coal                Contracts (c)                |   |                            | 694,307   |   |   | 49,905 |   |   | 103,635 |   |   | 110,206 |   |   | 430,561 |   |
| Other                Purchase Obligations (d)    |   |                            | 1,295,107 |   |   | 352,316 |   |   | 610,613 |   |   | 332,178 |   |   | - |   |
|                                             |   |                            |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                               | 4,037,814 |   | $ | 499,009 |   | $ | 1,199,839 |   | $ | 597,407 |   | $ | 1,741,559 |   |

| (a)   | Represents                total long-term debt excluding unamortized premium of $1.2                million. |
|-----------------|--------------------------------------------------------------------------------------------------------------|

| (b)   | Represents                the annual interest expense on fixed and variable rate debt. Projections                of interest expense on variable rate debt are based on current interest                rates as of December 31, 2005. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Represents                only certain minimum payments that may be required under the coal                contracts if no deliveries are                made. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Represents                commitments for capital expenditures, pension and postretirement                benefit                obligations and other obligations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | **Amount                of Commitment Expiration Per Period** |    |
|----------------------------------------------------------|--------|---------------------------------------------------------------|---------|
|  **Other                Commercial****Commitments** |   | **Total****Amounts****Committed**                             |    |   **1                year** |   |   **2-3                years** |   |   **4-5                years** |   |  **After****5                years** |   |
|                                                     |   | (In                thousands)                                 |    |
|                                                     |   |                                                          |    |   |   |   |   |   |   |   |   |
| Short-Term                Debt (a)                       |   | $                                                             | 395,500 |   | $ | 395,500 |   | $ | - |   | $ | - |   | $ | - |   |
| Local                Lines of Credit                     |   |                                                          | 23,500  |   |   | 23,500 |   |   | - |   |   | - |   |   | - |   |
|                                                     |   |                                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                    |   | $                                                             | 419,000 |   | $ | 419,000 |   | $ | - |   | $ | - |   | $ | - |   |

| (a)   | Represents                the unused borrowing capacity of the various credit facilities less                outstanding letters of credit of $4.5 million as of December 31,                2005. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   | **Payments                Due** |    |
|--------------------------------------------------|--------|---------------------------------|---------|
|  **Contractual                Obligations** |   |  **Total**                 |    | **Less                than****1                year** |   |  **2-3                years** |   |  **4-5                years** |   | **After****5                years** |   |
|                                             |   | (In                thousands)   |    |
|                                             |   |                            |    |   |   |   |   |   |   |   |   |
| Long-Term                Debt (a)                |   | $                               | 416,625 |   | $ | - |   | $ | 248,935 |   | $ | 167,690 |   | $ | - |   |
| Interest                on Long-Term Debt (b)    |   |                            | 74,800  |   |   | 25,728 |   |   | 43,832 |   |   | 5,240 |   |   | - |   |
| Operating                Leases                  |   |                            | 8,493   |   |   | 3,159 |   |   | 3,887 |   |   | 993 |   |   | 454 |   |
| Purchased                Power Agreements        |   |                            | 14,218  |   |   | 14,218 |   |   | - |   |   | - |   |   | - |   |
| Other                Purchase Obligations (c)    |   |                            | 233,979 |   |   | 44,555 |   |   | 110,809 |   |   | 78,615 |   |   | - |   |
|                                             |   |                            |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                               | 748,115 |   | $ | 87,660 |   | $ | 407,463 |   | $ | 252,538 |   | $ | 454 |   |

| (a)   | Represents                total long-term debt excluding unamortized discount of $0.8                million. |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (b)   | Represents                the annual interest expense on fixed and variable rate debt. Projections                of interest expense on variable rate debt are based on current interest                rates as of December 31, 2005. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Represents                commitments for capital expenditures, pension and postretirement                benefit                obligations and other obligations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     |   | **Amount                of Commitment Expiration Per Period** |                  |
|----------------------------------------------------------|--------|---------------------------------------------------------------|-----------------------|
|  **Other                Commercial****Commitments** |   | **Total****Amounts****Committed**                             |                  |   **1                year** |   |   **2-3                years** |   |   **4-5                years** |   |  **After****5                years** |   |
|                                                     |   | (In                thousands)                                 |                  |
|                                                     |   |                                                          |                  |   |   |   |   |   |   |   |   |
| Short-Term                Debt (a)                       |   | $                                                             | 97                587 |   | $ | - |   | $ | - |   | $ | 97,587 |   | $ | - |   |
|                                                     |   |                                                          |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                    |   | $                                                             | 97,587                |   | $ | - |   | $ | - |   | $ | 97,587 |   | $ | - |   |

|   | (a) | Represents                the unused borrowing capacity of TNMP on the PNMR credit facility                less                outstanding letters of credit of $2.4 million as of December 31,                2005. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Contingent      Provisions of Certain Obligations*

----

*Financing      Activities*

----

*Dividends*

----

*Capital      Structure*

|                                |   | **December                31,** |   | **December                31,** |   |
|-------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                                |   | **2005**                        |   | **2004**                        |   |
|                                |   |                            |   |                            |   |
| Common                Equity        |   |                            | 42.3   | %                               |   | 52.4 | % |
| Preferred                Stock      |   |                            | 0.4    | %                               |   | 0.6 | % |
| Long-term                Debt       |   |                            | 57.3   | %                               |   | 47.0 | % |
| Total                Capitalization |   |                            | 100.0  | %                               |   | 100.0 | % |

|                                |   | **December                31,** |   | **December                31,** |   |
|-------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                                |   | **2005**                        |   | **2004**                        |   |
|                                |   |                            |   |                            |   |
| Common                Equity        |   |                            | 50.2   | %                               |   | 50.8 | % |
| Preferred                Stock      |   |                            | 0.6    | %                               |   | 0.6 | % |
| Long-term                Debt       |   |                            | 49.2   | %                               |   | 48.6 | % |
| Total                Capitalization |   |                            | 100.0  | %                               |   | 100.0 | % |

|                                |   | **December                31,** |   | **December                31,** |   |
|-------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                                |   | **2005**                        |   | **2004**                        |   |
|                                |   |                            |   |                            |   |
| Common                Equity        |   |                            | 58.6   | %                               |   | 31.3 | % |
| Long-term                Debt       |   |                            | 41.4   | %                               |   | 68.7 | % |
| Total                Capitalization |   |                            | 100.0  | %                               |   | 100.0 | % |

----

**COMPETITION**

**OTHER      ISSUES FACING THE COMPANY**

----

**NEW      ACCOUNTING STANDARDS**

*“Share      Based Payment” *
*“Accounting      for Conditional Asset Retirement Obligations.”*

**DISCLOSURE      REGARDING FORWARD LOOKING STATEMENTS**

| ·   | The                potential unavailability of cash at TNP and its                subsidiaries, |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | The                risk that TNP and its subsidiaries will not be integrated successfully                into PNMR, |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | The                risk that the benefits of the TNP acquisition will not be fully realized                or will take longer to realize than                expected, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Disruption                from the TNP acquisition making it more difficult to maintain                relationships with customers, employees, suppliers or other third                parties, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                outcome of any appeals of the PUCT order in the stranded cost true-up                proceeding, |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | The                ability of First Choice to attract and retain                customers, |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Changes                in ERCOT protocols, |
|--------------------|--------------------------------------------|

| ·   | Changes                in the cost of power acquired by First                Choice, |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Collections                experience, |
|--------------------|----------------------------------------|

| ·   | Insurance                coverage available for claims made in                litigation, |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | Fluctuations                in interest rates, |
|--------------------|------------------------------------------------|

| ·   | Weather                (including impacts of the hurricanes in the Gulf Coast                region), |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | Water                supply, |
|--------------------|------------------------------|

| ·   | Changes                in fuel costs, |
|--------------------|---------------------------------------|

| ·   | Availability                of fuel supplies, |
|--------------------|-----------------------------------------------|

| ·   | The                effectiveness of risk management and commodity risk                transactions, |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Seasonality                and other changes in supply and demand in the market for electric                power, |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Variability                of wholesale power prices and natural gas                prices, |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Volatility                and liquidity in the wholesale power markets and the natural gas                markets, |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Changes                in the competitive environment in the electric and natural gas                industries, |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | The                performance of generating units, including PVNGS, and transmission                systems, |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | The                market for electrical generating                equipment, |
|--------------------|-------------------------------------------------------------------------------|

| ·   | The                ability to secure long-term power                sales, |
|--------------------|----------------------------------------------------------------------------|

| ·   | The                risks associated with completion of construction of Luna, including                construction delays and unanticipated cost                overruns, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | State                and federal regulatory and legislative decisions and                actions, |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | The                outcome of legal proceedings, |
|--------------------|--------------------------------------------------|

| ·   | Changes                in applicable accounting                principles, |
|--------------------|----------------------------------------------------------------------------|

| ·   | The                performance of state, regional and national economies,                and |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | The                other factors described in Item 1A. “Risk Factors” in this Form                10-K. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

----

**SECURITIES      ACT DISCLAIMER**

**ITEM      7A.**
**      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

*Commodity      Risk *

----

*Accounting      for Derivatives*

----

|                                                             |   | **December                31,** |    | **December                31,** |   |
|------------------------------------------------------------------|--------|---------------------------------|---------|---------------------------------|--------|
|                                                             |   | **2005**                        |    | **2004**                        |   |
|                                                             |   | (In                thousands)   |    |
| Mark-to-Market                Energy Contracts:                  |   |                            |    |                            |   |
| Current                asset                                     |   | $                               | 14,555  |                            | $      | 6,890 |   |
| Long-term                asset                                   |   |                            | 21,292  |                            |   | 316 |   |
| Total                mark-to-market assets                       |   |                            | 35,847  |                            |   | 7,206 |   |
| Current                liability                                 |   |                            | (11,198 | )                               |   | (5,007 | ) |
| Long-term                liability                               |   |                            | (20,903 | )                               |   | (126 | ) |
| Total                mark-to-market liabilities                  |   |                            | (32,101 | )                               |   | (5,133 | ) |
|                                                             |   |                            |    |                            |   |   |   |
| Net                fair value of mark-to-market energy contracts |   | $                               | 3,746   |                            | $      | 2,073 |   |

|                                                  |   | **Year                Ended**   |   |
|-------------------------------------------------------|--------|---------------------------------|--------|
|                                                  |   | **December                31,** |   |
|                                                  |   | **2005**                        |   | **2004** |   |
|                                                  |   | (In                thousands)   |   |
| Sources                of Fair Value Gain/(Loss):     |   |                            |   |   |   |   |   |
| Fair                value at beginning of year        |   | $                               | 2,073  |   | $ | 433 |   |
|                                                  |   |                            |   |   |   |   |   |
| Change                in valuation method 1           |   |                            | -      |   |   | (227 | ) |
|                                                  |   |                            |   |   |   |   |   |
| Amount                realized on contracts delivered |   |                            |   |   |   |   |   |
| during                period                          |   |                            | (1,535 | ) |   | (160 | ) |
|                                                  |   |                            |   |   |   |   |   |
| Changes                in fair value                  |   |                            | 3,208  |   |   | 1,800 |   |
|                                                  |   |                            |   |   |   |   |   |
| Net                fair value at end of period        |   | $                               | 3,746  |   | $ | 1,846 |   |
|                                                  |   |                            |   |   |   |   |   |
| Net                change recorded as mark-to-market  |   | $                               | 1,673  |   | $ | 1,640 |   |

----

**Fair      Value at December 31**
**,      2005**

| **Maturities**               |
|------------------------------|
| **Less                than** |   |   |   |   |   |   |
| **1                year**    |   | **1-3                Years** |   | **4+                Years** |   | **Total** |
|                         |   | (In                thousands) |   |   |
| $3,325                       |   | $194 |   | $227 |   | $3,746 |
|                         |   |   |   |   |   |   |

|                                                             |   | **December                31,** |    | **December                31,** |   |
|------------------------------------------------------------------|--------|---------------------------------|---------|---------------------------------|--------|
|                                                             |   | **2005**                        |    | **2004**                        |   |
|                                                             |   | (In                thousands)   |    |
| Mark-to-Market                Energy Contracts:                  |   |                            |    |                            |   |
| Current                asset                                     |   | $                               | 10,433  |                            | $      | 6,890 |   |
| Long-term                asset                                   |   |                            | 21,292  |                            |   | 316 |   |
| Total                mark-to-market assets                       |   |                            | 31,725  |                            |   | 7,206 |   |
| Current                liability                                 |   |                            | (8,437  | )                               |   | (5,007 | ) |
| Long-term                liability                               |   |                            | (20,903 | )                               |   | (126 | ) |
| Total                mark-to-market liabilities                  |   |                            | (29,340 | )                               |   | (5,133 | ) |
|                                                             |   |                            |    |                            |   |   |   |
| Net                fair value of mark-to-market energy contracts |   | $                               | 2,385   |                            | $      | 2,073 |   |

----

|                                                  |   | **Year                Ended**   |   |
|-------------------------------------------------------|--------|---------------------------------|--------|
|                                                  |   | **December                31,** |   |
|                                                  |   | **2005**                        |   | **2004** |   |
|                                                  |   | (In                thousands)   |   |
| Sources                of Fair Value Gain/(Loss):     |   |                            |   |   |   |
| Fair                value at beginning of year        |   | $                               | 2,073  |   | $ | 433 |   |
|                                                  |   |                            |   |   |   |   |   |
| Change                in valuation method 1           |   |                            | -      |   |   | (227 | ) |
|                                                  |   |                            |   |   |   |   |   |
| Amount                realized on contracts delivered |   |                            |   |   |   |   |   |
| during                period                          |   |                            | (2,319 | ) |   | (160 | ) |
|                                                  |   |                            |   |   |   |   |   |
| Changes                in fair value                  |   |                            | 2,631  |   |   | 1,800 |   |
|                                                  |   |                            |   |   |   |   |   |
| Net                fair value at end of period        |   | $                               | 2,385  |   | $ | 1,846 |   |
|                                                  |   |                            |   |   |   |   |   |
| Net                change recorded as mark-to-market  |   | $                               | 312    |   | $ | 1,640 |   |

**Fair      Value at December 31**
**,      2005**

| **Maturities**               |
|------------------------------|
| **Less                than** |   |   |   |   |   |   |
| **1                year**    |   | **1-3                Years** |   | **4+                Years** |   | **Total** |
|                         |   | (In                thousands) |   |   |
|                         |   |   |   |   |
| $1,964                       |   | $194 |   | $227 |   | $2,385 |

*Risk      Management Activities*

----

----

*“Amendment      of Statement 133 on Derivative Instruments and Hedging*
*Activities.”*

*Credit      Risk*

----

**Schedule      of PNM Wholesale Credit Risk Exposure**

**December      31, 2005**

|                                |   |                                  |    |         |   | **Net**      |   |
|-------------------------------------|--------|---------------------------------------|---------|--------------|--------|--------------|--------|
|                                |   | **(b)**                               |    | **Number**   |   | **Exposure** |   |
|                                |   | **Net**                               |    | **of**       |   | **of**       |   |
|                                |   | **Credit**                            |    | **Counter**  |   | **Counter-** |   |
|                                |   | **Risk**                              |    | **-parties** |   | **parties**  |   |
| **Rating                (a)**       |   | **Exposure**                          |    | **>10%**  |   | **>10%**  |   |
|                                |   | (Dollars                in thousands) |    |
|                                |   |                                  |    |         |   |         |   |
| Investment                grade     |   | $                                     | 117,734 |         |   | 2            |   | $ | 38,887 |   |
| Non-investment                grade |   |                                  | 985     |         |   | -            |   |   | - |   |
| Internal                ratings     |   |                                  |    |         |   |         |   |   |   |   |
| Investment                grade     |   |                                  | 51      |         |   | -            |   |   | - |   |
| Non-investment                grade |   |                                  | 3,663   |         |   | -            |   |   | - |   |
| Total                               |   | $                                     | 122,433 |         |   |         |   | $ | 38,887 |   |

| (a)   | ***The                Rating***** **included                in “Investment Grade” is for counterparties with a minimum S&P rating                of BBB- or Moody's rating of Baa3. If the counterparty has provided                a                guarantee by a higher rated entity (e.g., its parent), determination                is                based on the rating of its guarantor. The category “Internal Ratings -                Investment Grade” includes those counterparties that are internally rated                as investment grade in accordance with the guidelines established                in the                Company’s credit policy. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                ***Net                Credit Risk*** ***Exposure***is                the net credit exposure to PNM from PNM Wholesale operations. This                includes long-term contracts, forward sales and short-term sales.                The                exposure captures the net amounts due to PNM from receivables/payables                for                realized transactions, delivered and unbilled revenues, and mark-to-market                gains/losses (pursuant to contract terms). Exposures are offset according                to legally enforceable netting arrangements and reduced by credit                collateral. Credit collateral includes cash deposits, letters of                credit                and performance bonds received from counterparties. Amounts are presented                before those reserves that are determined on a portfolio                basis. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM      Wholesale**

**Maturity      of Credit Risk Exposure**

**December      31, 2005**

|                                |   |                         |    |                          |   |                           |   | **Total**    |   |
|-------------------------------------|--------|------------------------------|---------|-------------------------------|--------|--------------------------------|--------|--------------|--------|
|                                |   | **Less                than** |    |                          |   |                           |   | **Net**      |   |
| **Rating**                          |   | **2                Years**   |    | **2-5                Years**  |   | **>5                Years** |   | **Exposure** |   |
|                                |   |                         |    | (In                thousands) |   |                           |   |
|                                |   |                         |    |                          |   |                           |   |         |   |
| Investment                grade     |   | $                            | 100,489 |                          | $      | 13,686                         |   | $            | 3,559  |   | $ | 117,734 |   |
| Non-investment                grade |   |                         | 985     |                          |   | -                              |   |         | -      |   |   | 985 |   |
| Internal                ratings     |   |                         |    |                          |   |                           |   |         |   |   |   |   |   |
| Investment                grade     |   |                         | 51      |                          |   | -                              |   |         | -      |   |   | 51 |   |
| Non-investment                grade |   |                         | 3,663   |                          |   | -                              |   |         | -      |   |   | 3,663 |   |
| Total                               |   | $                            | 105,188 |                          | $      | 13,686                         |   | $            | 3,559  |   | $ | 122,433 |   |

*First      Choice*

*PNM      Gas Supply Hedging Activities*

----

*Interest      Rate Risk*

----

*Equity      Market Risk*

*“Accounting      for Certain Investments in Debt and Equity Securities”*

----

**ITEM        8.**
**FINANCIAL        STATEMENTS AND SUPPLEMENTARY DATA**

**PNM        RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC        SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW        MEXICO POWER COMPANY AND SUBSIDIARIES **

**GLOSSARY**

| Afton                         | Afton                  Generating Station                                  |
|-------------------------------|----------------------------------------------------------------------------|
| ALJ                           | Administrative                  Law Judge                                  |
| Altura                        | Altura                  Power L.P.                                         |
| APB                           | Accounting                  Principles Board                               |
| APS                           | Arizona                  Public Service Company                            |
| ARO                           | Asset                  Retirement Obligation                               |
| Avistar                       | Avistar,                  Inc.                                             |
| BLM                           | U.S.                  Department of the Interior Bureau of Land Management |
| BNCC                          | BHP                  Navajo Coal Company                                   |
| Board                         | Board                  of Directors                                        |
| BTU                           | British                  Thermal Unit                                      |
| Cal                  PX       | California                  Power Exchange                                 |
| Cal                  ISO      | California                  Independent System Operator                    |
| CCN                           | Certificate                  of Public Convenience and Necessity           |
| Company                       | PNM                  Resources, Inc. and Subsidiaries                      |
| Congress                      | United                  States Congress                                    |
| Constellation                 | Constellation                  Energy Commodities Group, Inc.              |
| Decatherm                     | 1,000,000                  BTUs                                            |
| Delta                         | Delta-Person                  Limited Partnership                          |
| DOJ                           | United                  States Department of Justice                       |
| Duke                          | Duke                  Energy Corporation                                   |
| EaR                           | Earnings                  at Risk                                          |
| EIP                           | Eastern                  Interconnection Project                           |
| EITF                          | Emerging                  Issues Task Force                                |
| EPE                           | El                  Paso Electric Company                                  |
| EPA                           | United                  States Environmental Protection Agency             |
| ERCOT                         | Electric                  Reliability Council of Texas                     |
| ESPP                          | Employee                  Stock Purchase Plan                              |
| FASB                          | Financial                  Accounting Standards Board                      |
| Farmington                    | City                  of Farmington, New Mexico                            |
| FCPSP                         | First                  Choice Power Special Purpose, L.P.                  |
| FERC                          | Federal                  Energy Regulatory Commission                      |
| First                  Choice | First                  Choice Power, L. P. and Subsidiaries                |
| FIP                           | Federal                  Implementation Plan                               |
| Four                  Corners | Four                  Corners Power Plant                                  |
| FPL                           | FPL                  Energy New Mexico Wind, LLC                           |
| GAAP                          | Generally                  Accepted Accounting Principles in the United    |
|                          | States                  of America                                         |
| GCT                           | Grand                  Canyon Trust                                        |

----

| Global                  Electric Agreement | Signed                  by PNMR and other parties in 2003; provides for a five-year rate                  path for                  New Mexico jurisdictional customers that began in September                  2003 |
|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Great                  Southwestern        | Great                  Southwestern Construction, Inc.                                                                                                                                                                |
| IBLA                                       | Interior                  Board of Land Appeals                                                                                                                                                                       |
| IRS                                        | United                  States Internal Revenue Service                                                                                                                                                               |
| ISO                                        | Independent                  System Operator                                                                                                                                                                          |
| LIBOR                                      | London                  Interbank Offered Rate                                                                                                                                                                        |
| Lordsburg                                  | Lordsburg                  Generating Station                                                                                                                                                                         |
| Luna                                       | Luna                  Energy Facility                                                                                                                                                                                 |
| MMBTUs                                     | Million                  British Thermal Units                                                                                                                                                                        |
| Moody's                                    | Moody’s                  Investor Services, Inc.                                                                                                                                                                |
| MW                                         | Megawatt                                                                                                                                                                                                              |
| MWh                                        | Megawatt                  Hour                                                                                                                                                                                        |
| Navajo                  Acts               | Navajo                  Nation Air Pollution Prevention and Control Act, the                                                                                                                                          |
|                                       | Navajo                  Nation Safe Drinking Water Act, and the Navajo                                                                                                                                                |
|                                       | Nation                  Pesticide Act                                                                                                                                                                                 |
| Ninth                  Circuit             | United                  States Court of Appeals for the Ninth Circuit                                                                                                                                                 |
| NMED                                       | New                  Mexico Environment Department                                                                                                                                                                    |
| NMPRC                                      | New                  Mexico Public Regulation Commission                                                                                                                                                              |
| NNHPD                                      | Navajo                  Nation Historic Preservation Department                                                                                                                                                       |
| NRC                                        | United                  States Nuclear Regulatory Commission                                                                                                                                                          |
| NSPS                                       | New                  Source Performance Standards                                                                                                                                                                     |
| NSR                                        | New                  Source Review                                                                                                                                                                                    |
| OASIS                                      | Open                  Access Same Time Information System                                                                                                                                                             |
| OATT                                       | Open                  Access Transmission Tariff                                                                                                                                                                      |
| O&M                                    | Operations                  and Maintenance                                                                                                                                                                           |
| PGAC                                       | Purchased                  Gas Adjustment Clause                                                                                                                                                                      |
| PG&E                                   | Pacific                  Gas and Electric Co.                                                                                                                                                                         |
| PNM                                        | Public                  Service Company of New Mexico and Subsidiary                                                                                                                                                  |
| PNMR                                       | PNM                  Resources, Inc. and Subsidiaries                                                                                                                                                                 |
| PPA                                        | Power                  Purchase Agreement                                                                                                                                                                             |
| PRG                                        | Power                  Resource Group, Inc.                                                                                                                                                                           |
| PSA                                        | Power                  Supply Agreement                                                                                                                                                                               |
| PSD                                        | Prevention                  of Significant Deterioration                                                                                                                                                              |
| PUCT                                       | Public                  Utility Commission of Texas                                                                                                                                                                   |
| PUHCA                                      | The                  Public Utility Holding Company Act                                                                                                                                                               |
| PURPA                                      | Public                  Utility Regulatory Policy Act of 1978                                                                                                                                                         |
| PVNGS                                      | Palo                  Verde Nuclear Generating Station                                                                                                                                                                |
| Reeves                                     | Reeves                  Generating Station                                                                                                                                                                            |
| REP                                        | Retail                  Electricity Provider                                                                                                                                                                          |
| Restructuring                  Act         | New                  Mexico Electric Utility Industry Restructuring Act of                                                                                                                                            |
|                                       | 1999,                  as amended                                                                                                                                                                                     |
| RMC                                        | Risk                  Management Committee                                                                                                                                                                            |
| RMRR                                       | Routine                  Maintenance, Repair or Replacement                                                                                                                                                           |
| RTO                                        | Regional                  Transmission Organization                                                                                                                                                                   |

----

| SCE                             | Southern                  California Edison Company                            |
|---------------------------------|--------------------------------------------------------------------------------|
| SCPPA                           | Southern                  California Public Power Authority                    |
| SDG&E                       | San                  Diego Gas and Electric Company                            |
| SEC                             | United                  States Securities and Exchange Commission              |
| Sempra                          | Sempra                  Energy                                                 |
| Senate                  Bill 7  | Legislation                  that established retail competition in Texas      |
| SESCO                           | San                  Angelo Electric Service Company                           |
| SFAS                            | Statement                  of Financial Accounting Standards                   |
| SJCC                            | San                  Juan Coal Company                                         |
| SJGS                            | San                  Juan Generating Station                                   |
| SO2                             | Sulfur                  Dioxide                                                |
| S&P                         | Standard                  and Poors Ratings Services                           |
| SPS                             | Southwestern                  Public Service Company                           |
| SW                  Acquisition | SW                  Acquisition, L.P.                                          |
| TCEQ                            | Texas                  Commission on Environmental Quality                     |
| TECA                            | Texas                  Electric Choice Act (also known as Senate Bill 7)       |
| TNMP                            | Texas-New                  Mexico Power Company and Subsidiaries               |
| TNP                             | TNP                  Enterprises, Inc. and Subsidiaries                        |
| Throughput                      | Volumes                  of gas delivered, whether or not owned by the Company |
| Tri-State                       | Tri-State                  Generation and Transmission Association, Inc.       |
| Tucson                          | Tucson                  Electric Power Company                                 |
| Twin                  Oaks      | Assets                  of Twin Oaks Power, LP and Twin Oaks Power III, LP     |
| UAMPS                           | Utah                  Associated Municipal Power Systems                       |
| USBR                            | United                  States Bureau of Reclamation                           |
| USFS                            | United                  States Forest Service                                  |
| VaR                             | Value                  at Risk                                                 |
| Wood                  River     | Wood                  River Partners, L.P.                                     |
| WSPP                            | Western                  Systems Power Pool                                    |

----

**PNM        RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC        SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW        MEXICO POWER COMPANY AND SUBSIDIARIES**

**INDEX**

|                                                                                                       | **Page** |
|------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                       |     |
| Glossary                                                                                                   | B-1      |
| Management’s                    Annual Report on Internal Control Over Financial Reporting           | B-5      |
| Report                    of Independent Registered Public Accounting Firm                                 | B-7      |
| Financial                    Statements:                                                                   |     |
| PNM                    Resources, Inc. and Subsidiaries                                                    |     |
| Consolidated                    Statements of Earnings                                                     | B-13     |
| Consolidated                    Statements of Retained Earnings                                            | B-14     |
| Consolidated                    Balance Sheets                                                             | B-15     |
| Consolidated                    Statements of Cash Flows                                                   | B-17     |
| Consolidated                    Statements of Capitalization                                               | B-19     |
| Consolidated                    Statements of Comprehensive Income (Loss)                                  | B-20     |
| Public                    Service Company of New Mexico and Subsidiary                                     |     |
| Consolidated                    Statements of Earnings                                                     | B-21     |
| Consolidated                    Statements of Retained Earnings                                            | B-22     |
| Consolidated                    Balance Sheets                                                             | B-23     |
| Consolidated                    Statements of Cash Flows                                                   | B-25     |
| Consolidated                    Statements of Capitalization                                               | B-27     |
| Consolidated                    Statements of Comprehensive Income (Loss)                                  | B-28     |
| Texas-New                    Mexico Power Company and Subsidiaries                                         |     |
| Consolidated                    Statements of Earnings                                                     | B-29     |
| Consolidated                    Statements of Retained Earnings                                            | B-30     |
| Consolidated                    Balance Sheets                                                             | B-31     |
| Consolidated                    Statements of Cash Flows                                                   | B-33     |
| Consolidated                    Statements of Capitalization                                               | B-35     |
| Consolidated                    Statements of Comprehensive Income (Loss)                                  | B-36     |
| Notes                    to Consolidated Financial Statements                                              | B-37     |
| Supplementary                    Data:                                                                     |     |
| Report                    of Independent Registered Public Accounting Firm on                    Schedules | B-133    |
| Schedule                    I Condensed Financial Information of Parent Company                            | B-135    |
| Schedule                    II Valuation and Qualifying Accounts                                           | B-138    |

----

**Management’s        Annual Report on Internal Control Over Financial Reporting**

*Internal        Control - Integrated Framework*

----

**Management’s        Annual Report on Internal Control Over Financial Reporting**

*Internal        Control - Integrated Framework*

----

*Internal        Control—Integrated Framework*

*Internal        Control—Integrated Framework*
*Internal        Control—Integrated Framework*

----

*Accounting        for Conditional Asset Retirement Obligations*

----

*Internal        Control—Integrated Framework*

*Internal        Control—Integrated Framework*
*Internal        Control—Integrated Framework*

*Accounting        for Conditional Asset Retirement Obligations*

----

*Accounting        for Asset Retirement Obligations*
*Accounting        for Conditional Asset Retirement Obligations *

*Internal        Control—Integrated Framework*

----

*Accounting        for Asset Retirement Obligations,*
*Accounting        for Conditional Asset Retirement Obligations*

*Internal        Control—Integrated Framework*

----

*Accounting        for Conditional Asset Retirement Obligations*

----

| **PNM                    RESOURCES, INC. AND SUBSIDIARIES**                                                                                                  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                    STATEMENTS OF EARNINGS**                                                                                                   |   |
|                                                                                                                                                         |   |   |   |
|                                                                                                                                                         |   | **Year                    Ended December 31,** |   |
|                                                                                                                                                         |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                         |   | (In                    thousands, except per share amounts) |   |
| **Operating                    Revenues:**                                                                                                                   |   |   |   |   |   |   |   |
| Electric                                                                                                                                                     |   | $ | 1,564,077 |   | $ | 1,113,046 |   | $ | 1,097,075 |   |
| Gas                                                                                                                                                          |   |   | 510,801 |   |   | 490,921 |   |   | 358,267 |   |
| Other                                                                                                                                                        |   |   | 1,932 |   |   | 825 |   |   | 311 |   |
| Total                    operating revenues                                                                                                                  |   |   | 2,076,810 |   |   | 1,604,792 |   |   | 1,455,653 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Operating                    Expenses:**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Cost                    of energy sold                                                                                                                       |   |   | 1,274,647 |   |   | 945,309 |   |   | 802,670 |   |
| Administrative                    and general                                                                                                                |   |   | 217,983 |   |   | 168,095 |   |   | 158,706 |   |
| Energy                    production costs                                                                                                                   |   |   | 165,580 |   |   | 146,153 |   |   | 140,584 |   |
| Depreciation                    and amortization                                                                                                             |   |   | 138,722 |   |   | 102,221 |   |   | 115,649 |   |
| Transmission                    and distribution costs                                                                                                       |   |   | 70,465 |   |   | 59,447 |   |   | 60,070 |   |
| Taxes,                    other than income taxes                                                                                                            |   |   | 52,594 |   |   | 34,607 |   |   | 31,310 |   |
| Income                    taxes                                                                                                                              |   |   | 19,450 |   |   | 36,062 |   |   | 28,072 |   |
| Total                    operating expenses                                                                                                                  |   |   | 1,939,441 |   |   | 1,491,894 |   |   | 1,337,061 |   |
| Operating                    income                                                                                                                          |   |   | 137,369 |   |   | 112,898 |   |   | 118,592 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Other                    Income and Deductions:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                                                                                                                           |   |   | 42,829 |   |   | 38,007 |   |   | 41,826 |   |
| Other                    income                                                                                                                              |   |   | 17,639 |   |   | 10,063 |   |   | 10,879 |   |
| Carrying                    charges on regulatory assets                                                                                                     |   |   | 4,376 |   |   | - |   |   | - |   |
| Other                    deductions                                                                                                                          |   |   | (24,104 | ) |   | (8,150 | ) |   | (46,153 | ) |
| Other                    income taxes                                                                                                                        |   |   | (13,411 | ) |   | (13,185 | ) |   | 183 |   |
| Net                    other income and deductions                                                                                                           |   |   | 27,329 |   |   | 26,735 |   |   | 6,735 |   |
| Earnings                    before interest charges                                                                                                          |   |   | 164,698 |   |   | 139,633 |   |   | 125,327 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Interest                    Charges:**                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Interest                    on long-term debt, net                                                                                                           |   |   | 75,736 |   |   | 46,702 |   |   | 59,429 |   |
| Other                    interest charges                                                                                                                    |   |   | 17,941 |   |   | 4,673 |   |   | 6,760 |   |
| Net                    interest charges                                                                                                                      |   |   | 93,677 |   |   | 51,375 |   |   | 66,189 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Preferred                    Stock Dividend Requirements**                                                                                                 |   |   | 2,868 |   |   | 572 |   |   | 586 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings Before Cumulative Effect of Changes in Accounting                    Principles**                                          |   |   | 68,153 |   |   | 87,686 |   |   | 58,552 |   |
| **Cumulative                    Effect of Changes in Accounting Principles**                                                                                 |   |   |   |   |   |   |   |   |   |   |
| **Net                    of Tax (Expense) Benefit of $592, $0 and                    $(23,999)**                                                             |   |   | (926 | ) |   | - |   |   | 36,621 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings**                                                                                                                          |   | $ | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings per Common Share (see Note 10):**                                                                                          |   |   |   |   |   |   |   |   |   |   |
| **Basic**                                                                                                                                                    |   | $ | 1.02 |   | $ | 1.45 |   | $ | 1.60 |   |
| **Diluted**                                                                                                                                                  |   | $ | 1.00 |   | $ | 1.43 |   | $ | 1.58 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| **Dividends                    Declared per Common Share**                                                                                                   |   | $ | 0.785 |   | $ | 0.665 |   | $ | 0.600 |   |
|                                                                                                                                                         |
| The                    accompanying notes, as they relate to PNMR, are an integral part                    of these                    financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF RETAINED EARNINGS**                                                                                      |   |
|                                                                                                                                                   |   |   |   |
|                                                                                                                                                   |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Balance                  at Beginning of Year**                                                                                                      |   | $ | 550,566 |   | $ | 503,069 |   | $ | 444,651 |   |
| Net                  earnings                                                                                                                          |   |   | 67,227 |   |   | 87,686 |   |   | 95,173 |   |
| Dividends:                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Common                  stock                                                                                                                          |   |   | (53,170 | ) |   | (40,189 | ) |   | (36,755 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at End of Year**                                                                                                            |   | $ | 564,623 |   | $ | 550,566 |   | $ | 503,069 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                       |   |
|                                                                                                                                                   |   |
|                                                                                                                                                   |   | **December                  31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
| **ASSETS**                                                                                                                                             |   |   |   |   |   |
| **Utility                  Plant:**                                                                                                                    |   |   |   |   |   |
| Electric                  plant in service                                                                                                             |   | $ | 3,315,642 |   | $ | 2,488,961 |   |
| Gas                  plant in service                                                                                                                  |   |   | 711,823 |   |   | 680,487 |   |
| Common                  plant in service and plant held for future use                                                                                 |   |   | 135,849 |   |   | 140,818 |   |
|                                                                                                                                                   |   |   | 4,163,314 |   |   | 3,310,266 |   |
| Less                  accumulated depreciation and amortization                                                                                        |   |   | 1,374,599 |   |   | 1,135,510 |   |
|                                                                                                                                                   |   |   | 2,788,715 |   |   | 2,174,756 |   |
| Construction                  work in progress                                                                                                         |   |   | 168,195 |   |   | 124,381 |   |
| Nuclear                  fuel, net of accumulated amortization of $14,679 and                  $16,448                                                 |   |   | 27,182 |   |   | 25,449 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Net                  utility plant                                                                                                                     |   |   | 2,984,092 |   |   | 2,324,586 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Other                  Property and Investments:**                                                                                                   |   |   |   |   |   |   |   |
| Investment                  in lessor notes                                                                                                            |   |   | 286,678 |   |   | 308,680 |   |
| Other                  investments                                                                                                                     |   |   | 180,013 |   |   | 139,848 |   |
| Non-utility                  property, net of accumulated depreciation of $22 and                  $1,773                                              |   |   | 4,214 |   |   | 1,437 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  other property and investments                                                                                                  |   |   | 470,905 |   |   | 449,965 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Current                  Assets:**                                                                                                                   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                             |   |   | 68,199 |   |   | 17,195 |   |
| Special                  deposits                                                                                                                      |   |   | 534 |   |   | - |   |
| Accounts                  receivable, net of allowance for uncollectible accounts of $3,653                  and                  $1,329               |   |   | 128,834 |   |   | 96,600 |   |
| Unbilled                  revenues                                                                                                                     |   |   | 151,773 |   |   | 104,708 |   |
| Other                  receivables                                                                                                                     |   |   | 64,285 |   |   | 48,393 |   |
| Inventories                                                                                                                                            |   |   | 52,037 |   |   | 41,352 |   |
| Regulatory                  assets                                                                                                                     |   |   | 28,058 |   |   | 3,339 |   |
| Other                  current assets                                                                                                                  |   |   | 102,577 |   |   | 51,967 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  current assets                                                                                                                  |   |   | 596,297 |   |   | 363,554 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Deferred                  charges:**                                                                                                                 |   |   |   |   |   |   |   |
| Regulatory                  assets                                                                                                                     |   |   | 347,279 |   |   | 217,196 |   |
| Prepaid                  pension cost                                                                                                                  |   |   | 91,444 |   |   | 87,336 |   |
| Goodwill                                                                                                                                               |   |   | 499,155 |   |   | - |   |
| Other                  intangible assets                                                                                                               |   |   | 78,512 |   |   | - |   |
| Other                  deferred charges                                                                                                                |   |   | 57,025 |   |   | 44,998 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  deferred charges                                                                                                                |   |   | 1,073,415 |   |   | 349,530 |   |
|                                                                                                                                                   |   | $ | 5,124,709 |   | $ | 3,487,635 |   |
|                                                                                                                                                   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                       |   |
|                                                                                                                                                   |   |   |   |
|                                                                                                                                                   |   | **December                  31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                                    |   |   |   |   |   |
| **Capitalization:**                                                                                                                                    |   |   |   |   |   |
| Common                  stockholders’ equity:                                                                                                    |   |   |   |   |   |   |   |
| Common                  stock outstanding (no par value, 120,000,000 shares                  authorized:                                               |   |   |   |   |   |   |   |
| issued                  68,786,286 and 60,464,595 at December 31, 2005 and 2004,                  respectively)                                        |   | $ | 813,425 |   | $ | 638,826 |   |
| Accumulated                  other comprehensive loss, net of tax                                                                                      |   |   | (91,589 | ) |   | (89,813 | ) |
| Retained                  earnings                                                                                                                     |   |   | 564,623 |   |   | 550,566 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  common stockholders’ equity                                                                                               |   |   | 1,286,459 |   |   | 1,099,579 |   |
| Cumulative                  preferred stock of subsidiary without mandatory redemption                                                                 |   |   |   |   |   |   |   |
| ($100 stated                  value, 10,000,000 shares authorized: issued 115,293 at                                                              |   |   |   |   |   |   |   |
| December                  31, 2005 and 2004)                                                                                                           |   |   | 11,529 |   |   | 11,529 |   |
| Long-term                  debt                                                                                                                        |   |   | 1,746,395 |   |   | 987,823 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  capitalization                                                                                                                  |   |   | 3,044,383 |   |   | 2,098,931 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Current                  Liabilities:**                                                                                                              |   |   |   |   |   |   |   |
| Short-term                  debt                                                                                                                       |   |   | 332,200 |   |   | 94,700 |   |
| Accounts                  payable                                                                                                                      |   |   | 206,648 |   |   | 117,645 |   |
| Accrued                  interest and taxes                                                                                                            |   |   | 27,815 |   |   | 15,796 |   |
| Other                  current liabilities                                                                                                             |   |   | 156,833 |   |   | 128,476 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  current liabilities                                                                                                             |   |   | 723,496 |   |   | 356,617 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Long-Term                  Liabilities:**                                                                                                            |   |   |   |   |   |   |   |
| Accumulated                  deferred income taxes                                                                                                     |   |   | 451,263 |   |   | 284,528 |   |
| Accumulated                  deferred investment tax credits                                                                                           |   |   | 33,806 |   |   | 35,360 |   |
| Regulatory                  liabilities                                                                                                                |   |   | 402,253 |   |   | 327,419 |   |
| Asset                  retirement obligations                                                                                                          |   |   | 55,646 |   |   | 50,361 |   |
| Accrued                  pension liability and postretirement benefit cost                                                                             |   |   | 227,202 |   |   | 180,903 |   |
| Other                  deferred credits                                                                                                                |   |   | 186,660 |   |   | 153,516 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Total                  long-term liabilities                                                                                                           |   |   | 1,356,830 |   |   | 1,032,087 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| Commitments                  and Contingencies (see Note 16)                                                                                           |   |   | - |   |   | - |   |
|                                                                                                                                                   |   | $ | 5,124,709 |   | $ | 3,487,635 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                             |   |
|                                                                                                                                                   |   |   |   |
|                                                                                                                                                   |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
| **Cash                  Flows From Operating Activities:**                                                                                             |   |   |   |
| Net                  earnings                                                                                                                          |   | $ | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Adjustments                  to reconcile net earnings to net cash flows from operating                  activities:                                   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                                                                                                         |   |   | 160,591 |   |   | 131,625 |   |   | 144,854 |   |
| Allowance                  for equity funds used during construction                                                                                   |   |   | (1,892 | ) |   | (1,294 | ) |   | (2,589 | ) |
| Accumulated                  deferred income tax                                                                                                       |   |   | 28,318 |   |   | 39,966 |   |   | 90,175 |   |
| Transition                  costs write-off                                                                                                            |   |   | - |   |   | - |   |   | 16,720 |   |
| Loss                  on reacquired debt                                                                                                               |   |   | - |   |   | - |   |   | 16,576 |   |
| Cumulative                  effect of a changes in accounting principles                                                                               |   |   | 1,518 |   |   | - |   |   | (60,620 | ) |
| Net                  unrealized (gains)/losses on trading and investment                  securities                                                   |   |   | 3,753 |   |   | (1,640 | ) |   | (1,360 | ) |
| Realized                  gains on investment securities                                                                                               |   |   | (8,562 | ) |   | (2,584 | ) |   | (1,251 | ) |
| Carrying                  charges on deferred stranded costs                                                                                           |   |   | (4,376 | ) |   | - |   |   | - |   |
| Equity-linked                  units charge                                                                                                            |   |   | 11,348 |   |   | - |   |   | - |   |
| Turbine                  impairment                                                                                                                    |   |   | 14,958 |   |   | - |   |   | - |   |
| Other,                  net                                                                                                                            |   |   | (1,384 | ) |   | - |   |   | (2,433 | ) |
| Changes                  in certain assets and liabilities, net of amounts                  acquired:                                                  |   |   |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                   |   |   | (14,375 | ) |   | (28,342 | ) |   | (21,344 | ) |
| Unbilled                  revenues                                                                                                                     |   |   | (13,291 | ) |   | (21,809 | ) |   | 5,539 |   |
| Accrued                  postretirement benefit costs                                                                                                  |   |   | 13,586 |   |   | (6,089 | ) |   | (14,962 | ) |
| Other                  assets                                                                                                                          |   |   | (85,388 | ) |   | (2,085 | ) |   | (5,972 | ) |
| Accounts                  payable                                                                                                                      |   |   | 45,839 |   |   | 30,429 |   |   | (7,317 | ) |
| Accrued                  interest and taxes                                                                                                            |   |   | 20,474 |   |   | (7,680 | ) |   | (22,712 | ) |
| Other                  liabilities                                                                                                                     |   |   | (27,893 | ) |   | 16,959 |   |   | (2,562 | ) |
| Net                  cash flows from operating activities                                                                                              |   |   | 210,451 |   |   | 235,142 |   |   | 225,915 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows From Investing Activities:**                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Utility                  plant additions                                                                                                               |   |   | (211,160 | ) |   | (135,795 | ) |   | (167,701 | ) |
| Nuclear                  fuel additions                                                                                                                |   |   | (10,654 | ) |   | (9,915 | ) |   | (9,503 | ) |
| Redemption                  of available-for-sale investments                                                                                          |   |   | - |   |   | - |   |   | 80,291 |   |
| Proceeds                  from sales of securities                                                                                                     |   |   | 104,623 |   |   | 81,218 |   |   | 79,624 |   |
| Purchases                  of securities                                                                                                               |   |   | (109,795 | ) |   | (87,823 | ) |   | (84,068 | ) |
| Cash                  acquired from purchase of TNP, net of cash paid                                                                                  |   |   | 45,965 |   |   | - |   |   | - |   |
| Combustion                  turbine payments                                                                                                           |   |   | - |   |   | - |   |   | (11,136 | ) |
| Bond                  purchase                                                                                                                         |   |   | - |   |   | - |   |   | (6,675 | ) |
| Return                  of principal PVNGS lessor notes                                                                                                |   |   | 21,432 |   |   | 20,292 |   |   | 18,360 |   |
| Luna                  investment                                                                                                                       |   |   | - |   |   | (13,379 | ) |   | - |   |
| Other,                  net                                                                                                                            |   |   | 4,946 |   |   | 1,564 |   |   | 2,018 |   |
| Net                  cash flows from investing activities                                                                                              |   |   | (154,643 | ) |   | (143,838 | ) |   | (98,790 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                             |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
|                                                                                                                                                   |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |
| **Cash                  Flows From Financing Activities:**                                                                                             |   |   |   |   |   |   |   |
| Short-term                  borrowings (repayments), net                                                                                               |   |   | 237,500 |   |   | (31,218 | ) |   | (24,082 | ) |
| Long-term                  debt borrowings                                                                                                             |   |   | 339,832 |   |   | - |   |   | 483,882 |   |
| Long-term                  debt repayments                                                                                                             |   |   | (399,626 | ) |   | - |   |   | (476,572 | ) |
| Premium                  on long-term debt refinancing                                                                                                 |   |   | - |   |   | - |   |   | (23,905 | ) |
| Refund                  costs of pollution control bonds                                                                                               |   |   | - |   |   | - |   |   | (31,427 | ) |
| Issuance                  of common stock                                                                                                              |   |   | 101,231 |   |   | - |   |   | - |   |
| Redemption                  of TNP preferred stock                                                                                                     |   |   | (224,564 | ) |   | - |   |   | - |   |
| Retirement                  of preferred stock                                                                                                         |   |   | - |   |   | (1,118 | ) |   | - |   |
| Exercise                  of employee stock options                                                                                                    |   |   | (9,735 | ) |   | (16,430 | ) |   | (9,639 | ) |
| Dividends                  paid                                                                                                                        |   |   | (51,128 | ) |   | (38,848 | ) |   | (36,702 | ) |
| Other,                  net                                                                                                                            |   |   | 1,686 |   |   | 811 |   |   | 312 |   |
| Net                  cash flows from financing activities                                                                                              |   |   | (4,804 | ) |   | (86,803 | ) |   | (118,133 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Increase                  in Cash and Cash Equivalents                                                                                                 |   |   | 51,004 |   |   | 4,501 |   |   | 8,992 |   |
| Beginning                  of Year                                                                                                                     |   |   | 17,195 |   |   | 12,694 |   |   | 3,702 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| End                  of Year                                                                                                                           |   | $ | 68,199 |   | $ | 17,195 |   | $ | 12,694 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Cash Flow Disclosures:**                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid, net of capitalized interest                                                                                            |   | $ | 77,066 |   | $ | 46,469 |   | $ | 69,046 |   |
| Income                  taxes paid (refunded), net                                                                                                     |   | $ | (4,174 | ) | $ | 14,459 |   | $ | (23,154 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  schedule of noncash transactions:**                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Pension                  contribution of PNMR common shares                                                                                            |   | $ | - |   | $ | - |   | $ | 28,950 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  schedule of noncash investing and financing                  activities**:                                             |   |   |   |   |   |   |   |   |   |   |
| During                  2005, PNMR purchased all of the outstanding common shares of TNP                  for $74.6                  million in cash   |
| and                  $87.4 million in PNMR common stock. In conjunction with the acquisition,                  liabilities were                        |
| assumed                  as follows:                                                                                                                   |
|                    Fair value of assets acquired                                                                                                  |   | $ | 1,501,114 |   |   |   |   |   |   |   |
|                    Cash paid for transaction costs                                                                                                |   |   | (21,520 | ) |   |   |   |   |   |   |
|                    Cash paid for TNP common shares                                                                                                |   |   | (74,648 | ) |   |   |   |   |   |   |
|                    PNMR common stock exchanged for TNP common stock                                                                               |   |   | (87,392 | ) |   |   |   |   |   |   |
| Liabilities                  assumed                                                                                                                   |   | $ | 1,317,554 |   |   |   |   |   |   |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PNM                    RESOURCES, INC. AND SUBSIDIARIES**                         |
|-------------------------------------------------------------------------------------|
| **CONSOLIDATED                    STATEMENTS OF                    CAPITALIZATION** |

|                                                                                                                                                         |   | **December                    31,** |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|
|                                                                                                                                                         |   | **2005**                            |      | **2004** |   |
|                                                                                                                                                         |   | (In                    thousands)   |      |
| **Common                    Stockholders’ Equity:**                                                                                                    |   |                                |      |   |   |
| Common                    Stock, no par value                                                                                                                |   | $                                   | 813,425   |   | $ | 638,826 |   |
| Accumulated                    other comprehensive income, net of tax                                                                                        |   |                                | (91,589   | ) |   | (89,813 | ) |
| Retained                    earnings                                                                                                                         |   |                                | 564,623   |   |   | 550,566 |   |
| Total                    common stockholders’ equity                                                                                                   |   |                                | 1,286,459 |   |   | 1,099,579 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| **Cumulative                    Preferred Stock:**                                                                                                           |   |                                |      |   |   |   |   |
| Without                    mandatory redemption requirements:                                                                                                |   |                                |      |   |   |   |   |
| 1965                    Series, 4.58% with a stated value of $100.00 and a                                                                                   |   |                                |      |   |   |   |   |
| current                    redemption price of $102.00; outstanding shares                                                                                   |   |                                |      |   |   |   |   |
| at                    December 31, 2005 and 2004 were 115,293                                                                                                |   |                                | 11,529    |   |   | 11,529 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| **Long-Term                    Debt:**                                                                                                                       |   |                                |      |   |   |   |   |
| **Issue                    and Final Maturity**                                                                                                              |   |                                |      |   |   |   |   |
| First                    Mortgage Bonds, Pollution Control Revenue Bonds:                                                                                    |   |                                |      |   |   |   |   |
| 5.7%                    due 2016                                                                                                                             |   |                                | 65,000    |   |   | 65,000 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| Senior                    Unsecured Notes, Pollution Control Revenue Bonds:                                                                                  |   |                                |      |   |   |   |   |
| 6.30%                    due 2016                                                                                                                            |   |                                | 77,045    |   |   | 77,045 |   |
| 5.75%                    due 2022                                                                                                                            |   |                                | 37,300    |   |   | 37,300 |   |
| 5.80%                    due 2022                                                                                                                            |   |                                | 100,000   |   |   | 100,000 |   |
| 6.375%                    due 2022                                                                                                                           |   |                                | 90,000    |   |   | 90,000 |   |
| 6.30%                    due 2026                                                                                                                            |   |                                | 23,000    |   |   | 23,000 |   |
| 6.60%                    due 2029                                                                                                                            |   |                                | 11,500    |   |   | 11,500 |   |
| 2.10%                    due 2033                                                                                                                            |   |                                | 46,000    |   |   | 46,000 |   |
| 2.10%                    due 2033                                                                                                                            |   |                                | 100,000   |   |   | 100,000 |   |
| 4.00%                    due 2038                                                                                                                            |   |                                | 36,000    |   |   | 36,000 |   |
| Total                    Senior Unsecured Notes, Pollution Control Revenue Bonds                                                                             |   |                                | 520,845   |   |   | 520,845 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| Senior                    Unsecured Notes:                                                                                                                   |   |                                |      |   |   |   |   |
| 4.40%                    due 2008                                                                                                                            |   |                                | 300,000   |   |   | 300,000 |   |
| 7.50%                    due 2018                                                                                                                            |   |                                | 100,025   |   |   | 100,025 |   |
| 6.125%                    due 2008                                                                                                                           |   |                                | 248,935   |   |   | - |   |
| 6.25%                    due 2009                                                                                                                            |   |                                | 167,690   |   |   | - |   |
| Other,                    including unamortized discounts                                                                                                    |   |                                | (3,350    | ) |   | 1,953 |   |
| Total                    Senior Unsecured Notes                                                                                                              |   |                                | 813,300   |   |   | 401,978 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| Equity-Linked                    Units:                                                                                                                      |   |                                |      |   |   |   |   |
| 6.75%                    due 2010                                                                                                                            |   |                                | 247,250   |   |   | - |   |
| 6.625%                    due 2010                                                                                                                           |   |                                | 100,000   |   |   | - |   |
| Total                    Equity-Linked Units                                                                                                                 |   |                                | 347,250   |   |   | - |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| Total                    long-term debt                                                                                                                      |   |                                | 1,746,395 |   |   | 987,823 |   |
| Total                    Capitalization                                                                                                                      |   | $                                   | 3,044,383 |   | $ | 2,098,931 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |
| The                    accompanying notes, as they relate to PNMR, are an integral part                    of these                    financial statements. |

----

| **PNM                  RESOURCES, INC. AND SUBSIDIARIES**                                                                                              |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                  STATEMENTS OF COMPREHENSIVE INCOME (LOSS****)**                                                                        |   |
|                                                                                                                                                   |   |   |   |
|                                                                                                                                                   |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
|                                                                                                                                                   |   |   |   |
| **Net                  Earnings**                                                                                                                      |   | $ | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Other                  Comprehensive Income (Loss):                                                                                                    |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Unrealized                  gain (loss) on securities**:                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Unrealized                  holding gains arising during the period,                                                                                   |   |   |   |   |   |   |   |   |   |   |
| net                  of tax expense of $2,948, $1,212 and $1,256                                                                                       |   |   | 4,498 |   |   | 1,849 |   |   | 1,916 |   |
| Reclassification                  adjustment for gains included in net income,                                                                         |   |   |   |   |   |   |   |   |   |   |
| net                  of tax expense of $2,925, $745 and $440                                                                                           |   |   | (4,464 | ) |   | (1,137 | ) |   | (672 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Additional                  minimum pension liability adjustment, net of tax**                                                                       |   |   |   |   |   |   |   |   |   |   |
| **(expense)                  benefit of $8,322, $14,415 and $(6,284)**                                                                                 |   |   | (12,701 | ) |   | (21,996 | ) |   | 9,589 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Mark-to-market                  adjustment for certain derivative transactions:**                                                                    |   |   |   |   |   |   |   |   |   |   |
| Change                  in fair market value of designated cash flow hedges,                                                                           |   |   |   |   |   |   |   |   |   |   |
| net                  of tax expense of $7,913, $3,567 and $6,816                                                                                       |   |   | 11,844 |   |   | 5,443 |   |   | 10,401 |   |
| Reclassification                  adjustment for gains included in net income,                                                                         |   |   |   |   |   |   |   |   |   |   |
| net                  of tax expense of $624, $318 and $0                                                                                               |   |   | (953 | ) |   | (485 | ) |   | - |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Other Comprehensive Income (Loss)**                                                                                           |   |   | (1,776 | ) |   | (16,326 | ) |   | 21,234 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Comprehensive Income**                                                                                                        |   | $ | 65,451 |   | $ | 71,360 |   | $ | 116,407 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNMR, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  STATEMENTS OF EARNINGS**                                                                                              |   |
|                                                                                                                                                  |   |   |   |
|                                                                                                                                                  |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **Operating                  Revenues:**                                                                                                              |   |   |   |   |   |   |   |
| Electric                                                                                                                                              |   | $ | 1,164,656 |   | $ | 1,113,046 |   | $ | 1,097,075 |   |
| Gas                                                                                                                                                   |   |   | 510,801 |   |   | 490,921 |   |   | 358,267 |   |
| Total                  operating revenues                                                                                                             |   |   | 1,675,457 |   |   | 1,603,967 |   |   | 1,455,342 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Operating                  Expenses:**                                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Cost                  of energy sold                                                                                                                  |   |   | 1,043,490 |   |   | 945,186 |   |   | 802,650 |   |
| Administrative                  and general                                                                                                           |   |   | 176,641 |   |   | 165,942 |   |   | 160,200 |   |
| Energy                  production costs                                                                                                              |   |   | 165,580 |   |   | 146,153 |   |   | 140,584 |   |
| Depreciation                  and amortization                                                                                                        |   |   | 115,791 |   |   | 99,633 |   |   | 113,921 |   |
| Transmission                  and distribution costs                                                                                                  |   |   | 58,231 |   |   | 59,447 |   |   | 61,169 |   |
| Taxes,                  other than income taxes                                                                                                       |   |   | 31,175 |   |   | 31,270 |   |   | 29,670 |   |
| Income                  taxes                                                                                                                         |   |   | 8,217 |   |   | 37,964 |   |   | 28,262 |   |
| Total                  operating expenses                                                                                                             |   |   | 1,599,125 |   |   | 1,485,595 |   |   | 1,336,456 |   |
| Operating                  income                                                                                                                     |   |   | 76,332 |   |   | 118,372 |   |   | 118,886 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Other                  Income and Deductions:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                                                                                                                      |   |   | 37,919 |   |   | 37,721 |   |   | 38,918 |   |
| Other                  income                                                                                                                         |   |   | 17,211 |   |   | 10,006 |   |   | 9,837 |   |
| Other                  deductions                                                                                                                     |   |   | (7,141 | ) |   | (5,497 | ) |   | (39,625 | ) |
| Other                  income taxes                                                                                                                   |   |   | (17,077 | ) |   | (14,733 | ) |   | (2,328 | ) |
| Net                  other income and deductions                                                                                                      |   |   | 30,912 |   |   | 27,497 |   |   | 6,802 |   |
| Earnings                  before interest charges                                                                                                     |   |   | 107,244 |   |   | 145,869 |   |   | 125,688 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Charges:**                                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Interest                  on long-term debt, net                                                                                                      |   |   | 49,102 |   |   | 49,015 |   |   | 59,013 |   |
| Other                  interest charges                                                                                                               |   |   | 5,022 |   |   | 4,416 |   |   | 6,697 |   |
| Net                  interest charges                                                                                                                 |   |   | 54,124 |   |   | 53,431 |   |   | 65,710 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings Before Cumulative Effect of Changes in Accounting                  Principles**                                       |   |   | 53,120 |   |   | 92,438 |   |   | 59,978 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Cumulative                  Effect of Changes in Accounting Principles,**                                                                           |   |   |   |   |   |   |   |   |   |   |
| **Net                  of Tax (Expense) Benefit of $331, $0 and                  $(23,999)**                                                          |   |   | (506 | ) |   | - |   |   | 36,621 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings**                                                                                                                     |   |   | 52,614 |   |   | 92,438 |   |   | 96,599 |   |
| Preferred                  Stock Dividend Requirements                                                                                                |   |   | 528 |   |   | 572 |   |   | 586 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings Available for Common Stock**                                                                                          |   | $ | 52,086 |   | $ | 91,866 |   | $ | 96,013 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  STATEMENTS OF RETAINED EARNINGS**                                                                                     |   |
|                                                                                                                                                  |   |   |   |
|                                                                                                                                                  |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Balance                  at Beginning of Year**                                                                                                     |   | $ | 371,455 |   | $ | 302,589 |   | $ | 256,157 |   |
| Net                  earnings                                                                                                                         |   |   | 52,614 |   |   | 92,438 |   |   | 96,599 |   |
| Dividends:                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Cumulative                  preferred stock                                                                                                           |   |   | (528 | ) |   | (572 | ) |   | (586 | ) |
| Common                  stock dividends paid to parent company                                                                                        |   |   | (90,999 | ) |   | (23,000 | ) |   | (49,581 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at End of Year**                                                                                                           |   | $ | 332,542 |   | $ | 371,455 |   | $ | 302,589 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                              |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                      |   |
|                                                                                                                                                  |   |
|                                                                                                                                                  |   | **December                  31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **ASSETS**                                                                                                                                            |   |   |   |   |   |
| **Utility                  Plant:**                                                                                                                   |   |   |   |   |   |
| Electric                  plant in service                                                                                                            |   | $ | 2,576,182 |   | $ | 2,488,961 |   |
| Gas                  plant in service                                                                                                                 |   |   | 711,823 |   |   | 680,487 |   |
| Common                  plant in service and plant held for future use                                                                                |   |   | 74,857 |   |   | 97,369 |   |
|                                                                                                                                                  |   |   | 3,362,862 |   |   | 3,266,817 |   |
| Less                  accumulated depreciation and amortization                                                                                       |   |   | 1,205,386 |   |   | 1,125,444 |   |
|                                                                                                                                                  |   |   | 2,157,476 |   |   | 2,141,373 |   |
| Construction                  work in progress                                                                                                        |   |   | 137,663 |   |   | 110,406 |   |
| Nuclear                  fuel, net of accumulated amortization of $14,679 and                  $16,448                                                |   |   | 27,182 |   |   | 25,449 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Net                  utility plant                                                                                                                    |   |   | 2,322,321 |   |   | 2,277,228 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Other                  Property and Investments:**                                                                                                  |   |   |   |   |   |   |   |
| Investment                  in lessor notes                                                                                                           |   |   | 286,678 |   |   | 308,680 |   |
| Other                  investments                                                                                                                    |   |   | 170,422 |   |   | 116,134 |   |
| Non-utility                  property                                                                                                                 |   |   | 966 |   |   | 966 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  other property and investments                                                                                                 |   |   | 458,066 |   |   | 425,780 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Current                  Assets:**                                                                                                                  |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                            |   |   | 12,690 |   |   | 16,448 |   |
| Special                  deposits                                                                                                                     |   |   | 263 |   |   | - |   |
| Accounts                  receivable, net of allowance for uncollectible accounts of $1,435                  and                  $1,329              |   |   | 108,569 |   |   | 96,600 |   |
| Unbilled                  revenues                                                                                                                    |   |   | 121,453 |   |   | 104,708 |   |
| Other                  receivables                                                                                                                    |   |   | 53,546 |   |   | 45,717 |   |
| Inventories                                                                                                                                           |   |   | 50,411 |   |   | 41,246 |   |
| Regulatory                  assets                                                                                                                    |   |   | 28,058 |   |   | 3,339 |   |
| Other                  current assets                                                                                                                 |   |   | 75,885 |   |   | 39,933 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  current assets                                                                                                                 |   |   | 450,875 |   |   | 347,991 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Deferred                  charges:**                                                                                                                |   |   |   |   |   |   |   |
| Regulatory                  assets                                                                                                                    |   |   | 223,325 |   |   | 217,196 |   |
| Prepaid                  pension cost                                                                                                                 |   |   | 91,444 |   |   | 87,336 |   |
| Other                  deferred charges                                                                                                               |   |   | 41,720 |   |   | 38,199 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  deferred charges                                                                                                               |   |   | 356,489 |   |   | 342,731 |   |
|                                                                                                                                                  |   | $ | 3,587,751 |   | $ | 3,393,730 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                              |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                      |   |
|                                                                                                                                                  |   |   |   |
|                                                                                                                                                  |   | **December                  31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                                   |   |   |   |   |   |
| **Capitalization:**                                                                                                                                   |   |   |   |   |   |
| Common                  stockholder’s equity:                                                                                                   |   |   |   |   |   |
| Common                  stock outstanding (no par value, 40,000,000 shares authorized:                                                                |   |   |   |   |   |
| issued                  39,117,799 at December 31, 2005 and 2004)                                                                                     |   | $ | 765,500 |   | $ | 752,350 |   |
| Accumulated                  other comprehensive loss, net of tax                                                                                     |   |   | (90,515 | ) |   | (89,813 | ) |
| Retained                  earnings                                                                                                                    |   |   | 332,542 |   |   | 371,455 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  common stockholder’s equity                                                                                              |   |   | 1,007,527 |   |   | 1,033,992 |   |
| Cumulative                  preferred stock of subsidiary without mandatory redemption                                                                |   |   |   |   |   |   |   |
| ($100                  stated value, 10,000,000 shares authorized: issued 115,293 at                                                                  |   |   |   |   |   |   |   |
| December                  31, 2005 and 2004)                                                                                                          |   |   | 11,529 |   |   | 11,529 |   |
| Long-term                  debt                                                                                                                       |   |   | 987,068 |   |   | 987,676 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  capitalization                                                                                                                 |   |   | 2,006,124 |   |   | 2,033,197 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Current                  Liabilities:**                                                                                                             |   |   |   |   |   |   |   |
| Short-term                  debt                                                                                                                      |   |   | 128,200 |   |   | 60,400 |   |
| Accounts                  payable                                                                                                                     |   |   | 170,517 |   |   | 116,763 |   |
| Intercompany                  accounts payable                                                                                                        |   |   | 50,070 |   |   | 38,700 |   |
| Accrued                  interest and taxes                                                                                                           |   |   | 15,951 |   |   | 28,783 |   |
| Other                  current liabilities                                                                                                            |   |   | 98,753 |   |   | 91,765 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  current liabilities                                                                                                            |   |   | 463,491 |   |   | 336,411 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Long-Term                  Liabilities:**                                                                                                           |   |   |   |   |   |   |   |
| Accumulated                  deferred income taxes                                                                                                    |   |   | 300,752 |   |   | 278,907 |   |
| Accumulated                  deferred investment tax credits                                                                                          |   |   | 32,266 |   |   | 35,360 |   |
| Regulatory                  liabilities                                                                                                               |   |   | 346,007 |   |   | 327,419 |   |
| Asset                  retirement obligations                                                                                                         |   |   | 54,940 |   |   | 50,361 |   |
| Accrued                  pension liability and postretirement benefit cost                                                                            |   |   | 217,092 |   |   | 180,903 |   |
| Other                  deferred credits                                                                                                               |   |   | 167,079 |   |   | 151,172 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  long-term liabilities                                                                                                          |   |   | 1,118,136 |   |   | 1,024,122 |   |
| Commitments                  and Contingencies (see Note 16)                                                                                          |   |   | - |   |   | - |   |
|                                                                                                                                                  |   | $ | 3,587,751 |   | $ | 3,393,730 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                            |   |
|                                                                                                                                                  |   |   |   |
|                                                                                                                                                  |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **Cash                  Flows From Operating Activities:**                                                                                            |   |   |   |
| Net                  earnings                                                                                                                         |   | $ | 52,614 |   | $ | 92,438 |   | $ | 96,599 |   |
| Adjustments                  to reconcile net earnings to net cash flows from operating                  activities:                                  |   |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                                                                                                        |   |   | 135,813 |   |   | 129,018 |   |   | 143,940 |   |
| Allowance                  for equity funds used during construction                                                                                  |   |   | (1,757 | ) |   | (1,228 | ) |   | (2,551 | ) |
| Accumulated                  deferred income tax                                                                                                      |   |   | 20,039 |   |   | 38,162 |   |   | 82,799 |   |
| Transition                  costs write-off                                                                                                           |   |   | - |   |   | - |   |   | 16,720 |   |
| Loss                  on reacquired debt                                                                                                              |   |   | - |   |   | - |   |   | 16,576 |   |
| Cumulative                  effect of changes in accounting principles                                                                                |   |   | 837 |   |   | - |   |   | (60,620 | ) |
| Net                  unrealized gains on trading and investment securities                                                                            |   |   | (5,749 | ) |   | (1,640 | ) |   | (1,360 | ) |
| Realized                  gains on investment securities                                                                                              |   |   | (8,562 | ) |   | (2,584 | ) |   | (1,251 | ) |
| Wholesale                  credit reserve                                                                                                             |   |   | - |   |   | - |   |   | (2,433 | ) |
| Turbine                  impairment                                                                                                                   |   |   | 14,958 |   |   | - |   |   | - |   |
| Changes                  in certain assets and liabilities:                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                  |   |   | (11,969 | ) |   | (28,342 | ) |   | (21,344 | ) |
| Unbilled                  revenues                                                                                                                    |   |   | (16,745 | ) |   | (21,809 | ) |   | 5,539 |   |
| Accrued                  postretirement benefit costs                                                                                                 |   |   | 11,556 |   |   | (6,090 | ) |   | (14,962 | ) |
| Other                  assets                                                                                                                         |   |   | (84,104 | ) |   | 7,104 |   |   | (3,716 | ) |
| Accounts                  payable                                                                                                                     |   |   | 53,754 |   |   | 37,388 |   |   | (12,905 | ) |
| Accrued                  interest and taxes                                                                                                           |   |   | (12,833 | ) |   | 19,905 |   |   | (27,572 | ) |
| Other                  liabilities                                                                                                                    |   |   | 23,691 |   |   | (1,309 | ) |   | (19,285 | ) |
| Net                  cash flows from operating activities                                                                                             |   |   | 171,543 |   |   | 261,013 |   |   | 194,174 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Cash                  Flows From Investing Activities:**                                                                                            |   |   |   |   |   |   |   |   |   |   |
| Utility                  plant additions                                                                                                              |   |   | (157,092 | ) |   | (128,236 | ) |   | (159,322 | ) |
| Nuclear                  fuel additions                                                                                                               |   |   | (10,654 | ) |   | (9,915 | ) |   | (9,503 | ) |
| Proceeds                  from sales of securities                                                                                                    |   |   | 104,623 |   |   | 81,218 |   |   | 79,624 |   |
| Purchases                  of securities                                                                                                              |   |   | (109,795 | ) |   | (87,823 | ) |   | (84,068 | ) |
| Combustion                  turbine payments                                                                                                          |   |   | - |   |   | - |   |   | (11,136 | ) |
| EIP                  buyout                                                                                                                           |   |   | - |   |   | - |   |   | (36,925 | ) |
| Return                  of principal PVNGS lessor notes                                                                                               |   |   | 21,432 |   |   | 20,292 |   |   | 18,360 |   |
| Purchase                  of EIP investment                                                                                                           |   |   | - |   |   | (12,247 | ) |   | - |   |
| Other,                  net                                                                                                                           |   |   | 213 |   |   | 4,942 |   |   | 472 |   |
| Net                  cash flows from investing activities                                                                                             |   |   | (151,273 | ) |   | (131,769 | ) |   | (202,498 | ) |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                            |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
|                                                                                                                                                  |   | **Year                  Ended December 31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **Cash                  Flows From Financing Activities:**                                                                                            |   |   |   |   |   |   |   |
| Short-term                  borrowings (repayments), net                                                                                              |   |   | 67,800 |   |   | (64,500 | ) |   | (25,100 | ) |
| Long-term                  debt borrowings                                                                                                            |   |   | - |   |   | - |   |   | 483,780 |   |
| Long-term                  debt repayments                                                                                                            |   |   | (611 | ) |   | - |   |   | (450,420 | ) |
| Premium                  on long-term debt refinancing                                                                                                |   |   | - |   |   | - |   |   | (23,905 | ) |
| Refund                  costs of pollution control bonds                                                                                              |   |   | - |   |   | - |   |   | (31,427 | ) |
| Equity                  contribution from parent                                                                                                      |   |   | - |   |   | - |   |   | 126,053 |   |
| Retirement                  of preferred stock                                                                                                        |   |   | - |   |   | (1,118 | ) |   | - |   |
| Dividends                  paid                                                                                                                       |   |   | (91,527 | ) |   | (23,586 | ) |   | (49,581 | ) |
| Change                  in intercompany borrowings                                                                                                    |   |   | 25,555 |   |   | (34,871 | ) |   | (12,340 | ) |
| Other,                  net                                                                                                                           |   |   | 55 |   |   | (328 | ) |   | (223 | ) |
| Net                  cash flows from financing activities                                                                                             |   |   | (24,028 | ) |   | (124,403 | ) |   | 16,837 |   |
| Increase                  (Decrease) in Cash and Cash Equivalents                                                                                     |   |   | (3,758 | ) |   | 4,841 |   |   | 8,513 |   |
| Beginning                  of Year                                                                                                                    |   |   | 16,448 |   |   | 11,607 |   |   | 3,094 |   |
| End                  of Year                                                                                                                          |   | $ | 12,690 |   | $ | 16,448 |   | $ | 11,607 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Cash Flow Disclosures:**                                                                                              |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid, net of capitalized interest                                                                                           |   | $ | 51,593 |   | $ | 49,937 |   | $ | 67,500 |   |
| Income                  taxes paid (refunded), net                                                                                                    |   | $ | 5 |   | $ | 18,002 |   | $ | (5,084 | ) |
|                                                                                                                                                  |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                           |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                 |   |
| **CONSOLIDATED                  STATEMENTS OF CAPITALIZATION**                                                                                        |   |
|                                                                                                                                                  |   |   |   |   |   |
|                                                                                                                                                  |   | **December                  31,** |   |
|                                                                                                                                                  |   | **2005** |   | **2004** |   |
|                                                                                                                                                  |   | (In                  thousands) |   |
| **Common                  Stockholder’s Equity:**                                                                                               |   |   |   |   |   |
| Common                  stock outstanding, no par value                                                                                               |   | $ | 765,500 |   | $ | 752,350 |   |
| Accumulated                  other comprehensive income, net of tax                                                                                   |   |   | (90,515 | ) |   | (89,813 | ) |
| Retained                  earnings                                                                                                                    |   |   | 332,542 |   |   | 371,455 |   |
| Total                  common stockholder’s equity                                                                                              |   |   | 1,007,527 |   |   | 1,033,992 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Cumulative                  Preferred Stock:**                                                                                                      |   |   |   |   |   |   |   |
| Without                  mandatory redemption requirements:                                                                                           |   |   |   |   |   |   |   |
| 1965                  Series, 4.58% with a stated value of $100.00 and a current redemption                  price of                                 |   |   |   |   |   |   |   |
| $102.00;                  outstanding shares at December 31, 2005 and 2004 of                  115,293                                                |   |   | 11,529 |   |   | 11,529 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| **Long-Term                  Debt:**                                                                                                                  |   |   |   |   |   |   |   |
| **Issue                  and Final Maturity**                                                                                                         |   |   |   |   |   |   |   |
| First                  Mortgage Bonds, Pollution Control Revenue Bonds:                                                                               |   |   |   |   |   |   |   |
| 5.7%                  due 2016                                                                                                                        |   |   | 65,000 |   |   | 65,000 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Senior                  Unsecured Notes, Pollution Control Revenue Bonds:                                                                             |   |   |   |   |   |   |   |
| 6.30%                  due 2016                                                                                                                       |   |   | 77,045 |   |   | 77,045 |   |
| 5.75%                  due 2022                                                                                                                       |   |   | 37,300 |   |   | 37,300 |   |
| 5.80%                  due 2022                                                                                                                       |   |   | 100,000 |   |   | 100,000 |   |
| 6.375%                  due 2022                                                                                                                      |   |   | 90,000 |   |   | 90,000 |   |
| 6.30%                  due 2026                                                                                                                       |   |   | 23,000 |   |   | 23,000 |   |
| 6.60%                  due 2029                                                                                                                       |   |   | 11,500 |   |   | 11,500 |   |
| 2.10%                  due 2033                                                                                                                       |   |   | 46,000 |   |   | 46,000 |   |
| 2.10%                  due 2033                                                                                                                       |   |   | 100,000 |   |   | 100,000 |   |
| 4.00%                  due 2038                                                                                                                       |   |   | 36,000 |   |   | 36,000 |   |
| Total                  Senior Unsecured Notes, Pollution Control Revenue Bonds                                                                        |   |   | 520,845 |   |   | 520,845 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Senior                  Unsecured Notes:                                                                                                              |   |   |   |   |   |   |   |
| 4.40%                  due 2008                                                                                                                       |   |   | 300,000 |   |   | 300,000 |   |
| 7.50%                  due 2018                                                                                                                       |   |   | 100,025 |   |   | 100,025 |   |
| Other,                  including unamortized discounts                                                                                               |   |   | 1,198 |   |   | 1,806 |   |
| Total                  Senior Unsecured Notes                                                                                                         |   |   | 401,223 |   |   | 401,831 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| Total                  long-term debt                                                                                                                 |   |   | 987,068 |   |   | 987,676 |   |
| Total                  Capitalization                                                                                                                 |   | $ | 2,006,124 |   | $ | 2,033,197 |   |
|                                                                                                                                                  |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to PNM, are an integral part                  of these                  financial statements. |

----

| **PUBLIC                    SERVICE COMPANY OF NEW MEXICO AND****SUBSIDIARY**                                                                               |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                    WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                     |   |
| **CONSOLIDATED                    STATEMENTS OF COMPREHENSIVE INCOME****(LOSS)**                                                                            |   |
|                                                                                                                                                        |   |
|                                                                                                                                                        |   | **Year                    Ended December 31,** |   |
|                                                                                                                                                        |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                        |   | (In                    thousands) |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |
| **Net                    Earnings Available for Common Stock**                                                                                              |   | $ | 52,086 |   | $ | 91,866 |   | $ | 96,013 |   |
| Other                    Comprehensive Income (Loss):                                                                                                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| **Unrealized                    gain (loss) on securities**:                                                                                                |   |   |   |   |   |   |   |   |   |   |
| Unrealized                    holding gains arising from the period,                                                                                        |   |   |   |   |   |   |   |   |   |   |
| net                    of tax expense of $2,948, $1,212 and $1,545                                                                                          |   |   | 4,498 |   |   | 1,849 |   |   | 2,357 |   |
| Reclassification                    adjustment for gains included in net income,                                                                            |   |   |   |   |   |   |   |   |   |   |
| net                    of tax expense of $2,925, $745 and $440                                                                                              |   |   | (4,464 | ) |   | (1,137 | ) |   | (672 | ) |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| **Additional                    minimum pension liability adjustment, net of tax**                                                                          |   |   |   |   |   |   |   |   |   |   |
| **(expense)                    benefit of $8,304, $14,415 and $(6,284)**                                                                                    |   |   | (12,672 | ) |   | (21,996 | ) |   | 9,589 |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| **Mark-to-market                    adjustment for certain derivative transactions:**                                                                       |   |   |   |   |   |   |   |   |   |   |
| Change                    in fair market value of designated cash flow hedges,                                                                              |   |   |   |   |   |   |   |   |   |   |
| net                    of tax expense of $8,447, $3,567 and $6,140                                                                                          |   |   | 12,889 |   |   | 5,443 |   |   | 9,369 |   |
| Reclassification                    adjustment for gains included in net income,                                                                            |   |   |   |   |   |   |   |   |   |   |
| net                    of tax expense of $624, $318 and $0                                                                                                  |   |   | (953 | ) |   | (485 | ) |   | - |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| **Total                    Other Comprehensive Income (Loss)**                                                                                              |   |   | (702 | ) |   | (16,326 | ) |   | 20,643 |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| **Total                    Comprehensive Income**                                                                                                           |   | $ | 51,384 |   | $ | 75,540 |   | $ | 116,656 |   |
|                                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying notes, as they relate to PNM, are an integral part                    of these                    financial statements. |

----

| **TEXAS-NEW                    MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                       |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                    WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                      |   |
| **CONSOLIDATED                    STATEMENTS OF EARNINGS**                                                                                                   |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                         |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   |
|                                                                                                                                                         |   | **For                    the Period** |   |   | **For                    the Period** |   | **Year                    Ended** |   | **Year                    Ended** |   |
|                                                                                                                                                         |   | **June                    6-** |   |   | **January                    1-** |   | **December                    31,** |   | **December                    31,** |   |
|                                                                                                                                                         |   | **December                    31, 2005** |   |   | **June                    6, 2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                         |   |   |   |   |                                               (In thousands) |   |
| **Operating                    Revenues:**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Electric                                                                                                                                                     |   | $ | 154,350 |   |   | $ | 112,820 |   | $ | 269,665 |   | $ | 249,488 |   |
| Total                    operating revenues                                                                                                                  |   |   | 154,350 |   |   |   | 112,820 |   |   | 269,665 |   |   | 249,488 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                    Expenses:**                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                    of energy sold                                                                                                                       |   |   | 58,014 |   |   |   | 43,885 |   |   | 101,361 |   |   | 89,818 |   |
| Administrative                    and general                                                                                                                |   |   | 14,165 |   |   |   | 11,048 |   |   | 27,963 |   |   | 23,715 |   |
| Depreciation                    and amortization                                                                                                             |   |   | 17,596 |   |   |   | 12,954 |   |   | 29,691 |   |   | 28,631 |   |
| Transmission                    and distribution costs                                                                                                       |   |   | 12,403 |   |   |   | 9,111 |   |   | 19,314 |   |   | 20,289 |   |
| Taxes,                    other than income taxes                                                                                                            |   |   | 14,261 |   |   |   | 9,228 |   |   | 22,884 |   |   | 21,227 |   |
| Income                    taxes                                                                                                                              |   |   | 7,965 |   |   |   | 5,055 |   |   | 13,680 |   |   | 13,044 |   |
| Total                    operating expenses                                                                                                                  |   |   | 124,404 |   |   |   | 91,281 |   |   | 214,893 |   |   | 196,724 |   |
| Operating                    income                                                                                                                          |   |   | 29,946 |   |   |   | 21,539 |   |   | 54,772 |   |   | 52,764 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                    Income and Deductions:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                                                                                                                           |   |   | 1,001 |   |   |   | 650 |   |   | 677 |   |   | 364 |   |
| Other                    income                                                                                                                              |   |   | 528 |   |   |   | 523 |   |   | 844 |   |   | 1,750 |   |
| Carrying                    charges on regulatory assets                                                                                                     |   |   | 4,376 |   |   |   | (1,407 | ) |   | 32,006 |   |   | - |   |
| Other                    deductions                                                                                                                          |   |   | (74 | ) |   |   | (79 | ) |   | (254 | ) |   | (35 | ) |
| Other                    income taxes                                                                                                                        |   |   | (2,071 | ) |   |   | 154 |   |   | (12,711 | ) |   | (661 | ) |
| Net                    other income and deductions                                                                                                           |   |   | 3,760 |   |   |   | (159 | ) |   | 20,562 |   |   | 1,418 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                    Charges:**                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    on long-term debt, net                                                                                                           |   |   | 14,650 |   |   |   | 11,077 |   |   | 25,855 |   |   | 25,279 |   |
| Other                    interest charges                                                                                                                    |   |   | 1,225 |   |   |   | 1,043 |   |   | 2,836 |   |   | 3,621 |   |
| Net                    interest charges                                                                                                                      |   |   | 15,875 |   |   |   | 12,120 |   |   | 28,691 |   |   | 28,900 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings Before Extraordinary Item**                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **and                    Cumulative Effect of Change in**                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Accounting                    Principle**                                                                                                                  |   |   | 17,831 |   |   |   | 9,260 |   |   | 46,643 |   |   | 25,282 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Extraordinary                    Item - Disallowance of**                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Stranded                    Costs, Net of Tax Benefit**                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **of                    $57,317**                                                                                                                            |   |   | - |   |   |   | - |   |   | (97,836 | ) |   | - |   |
| **Cumulative                    Effect of Change in Accounting**                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Principle,                    Net of Tax Benefit of $234**                                                                                                 |   |   | (381 | ) |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings (Loss)**                                                                                                                   |   | $ | 17,450 |   |   | $ | 9,260 |   | $ | (51,193 | ) | $ | 25,282 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                    accompanying notes, as they relate to TNMP, are an integral part                    of these                    financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                  |   |
| **CONSOLIDATED                  STATEMENTS OF RETAINED EARNINGS**                                                                                      |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                   |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   |
|                                                                                                                                                   |   | **For                  the Period** |   |   | **For                  the Period** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                                                                                                                   |   | **June                  6-** |   |   | **January                  1-** |   | **December                  31,** |   | **December                  31,** |   |
|                                                                                                                                                   |   | **December                  31, 2005** |   |   | **June                  6, 2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   |   |   |   |                                      (In thousands) |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at Beginning of Period**                                                                                                    |   | $ | - |   |   | $ | (6,795 | ) | $ | 50,398 |   | $ | 54,516 |   |
| Net                  earnings                                                                                                                          |   |   | 17,450 |   |   |   | 9,260 |   |   | (51,193 | ) |   | 25,282 |   |
| Dividends:                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock dividends paid to parent                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| company                                                                                                                                                |   |   | (12,000 | ) |   |   | - |   |   | (6,000 | ) |   | (29,400 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  at End of Period**                                                                                                          |   | $ | 5,450 |   |   | $ | 2,465 |   | $ | (6,795 | ) | $ | 50,398 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                  |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                       |   |
|                                                                                                                                                   |   |
|                                                                                                                                                   |   | **December                  31,** |   |
|                                                                                                                                                   |   | **2005** |   |   | **2004** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
| **ASSETS**                                                                                                                                             |   |   |   |   |   |   |
| **Utility                  Plant:**                                                                                                                    |   |   |   |   |   |   |
| Electric                  plant in service                                                                                                             |   | $ | 877,893 |   |   | $ | 845,900 |   |
| Construction                  work in progress                                                                                                         |   |   | 7,138 |   |   |   | 4,261 |   |
| Common                  plant in service and plant held for future use                                                                                 |   |   | 589 |   |   |   | 589 |   |
|                                                                                                                                                   |   |   | 885,620 |   |   |   | 850,750 |   |
| Less                  accumulated depreciation and amortization                                                                                        |   |   | 296,611 |   |   |   | 276,081 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Net                  utility plant                                                                                                                     |   |   | 589,009 |   |   |   | 574,669 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| **Other                  Property and Investments:**                                                                                                   |   |   |   |   |   |   |   |   |
| Other                  investments                                                                                                                     |   |   | 548 |   |   |   | 530 |   |
| Non-utility                  property, net of accumulated depreciation of $3 and $3                                                                    |   |   | 2,120 |   |   |   | 343 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  other property and investments                                                                                                  |   |   | 2,668 |   |   |   | 873 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| **Current                  Assets:**                                                                                                                   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                                             |   |   | 16,228 |   |   |   | 65,759 |   |
| Special                  deposits                                                                                                                      |   |   | - |   |   |   | 3,086 |   |
| Accounts                  receivable, net of allowance for uncollectible accounts of $100                  and                  $191                   |   |   | 13,191 |   |   |   | 12,739 |   |
| Federal                  income tax refund                                                                                                             |   |   | 36,392 |   |   |   | 22,912 |   |
| Unbilled                  revenues                                                                                                                     |   |   | 6,679 |   |   |   | 7,576 |   |
| Other                  receivables                                                                                                                     |   |   | 6,087 |   |   |   | 10,083 |   |
| Inventories                                                                                                                                            |   |   | 1,478 |   |   |   | 1,505 |   |
| Other                  current assets                                                                                                                  |   |   | 1,211 |   |   |   | 7,526 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  current assets                                                                                                                  |   |   | 81,266 |   |   |   | 131,186 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| **Deferred                  charges:**                                                                                                                 |   |   |   |   |   |   |   |   |
| Stranded                  costs                                                                                                                        |   |   | 87,316 |   |   |   | 87,316 |   |
| Carrying                  charges on stranded costs                                                                                                    |   |   | 33,918 |   |   |   | 48,130 |   |
| Other                  regulatory assets                                                                                                               |   |   | 2,720 |   |   |   | 8,105 |   |
| Goodwill                                                                                                                                               |   |   | 456,088 |   |   |   | - |   |
| Other                  deferred charges                                                                                                                |   |   | 4,948 |   |   |   | 22,227 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  deferred charges                                                                                                                |   |   | 584,990 |   |   |   | 165,778 |   |
|                                                                                                                                                   |   | $ | 1,257,933 |   |   | $ | 872,506 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                  |   |
| **CONSOLIDATED                  BALANCE SHEETS**                                                                                                       |   |
|                                                                                                                                                   |   |   |   |
|                                                                                                                                                   |   | **December                  31,** |   |
|                                                                                                                                                   |   | **2005** |   |   | **2004** |   |
|                                                                                                                                                   |   | (In                  thousands) |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                                    |   |   |   |   |   |   |
| **Capitalization:**                                                                                                                                    |   |   |   |   |   |   |
| Common                  stockholder’s equity:                                                                                                    |   |   |   |   |   |   |
| Common                  stock outstanding ($10 par value, 12,000,000 shares authorized:                                                                |   |   |   |   |   |   |
| issued                  9,615 and 10,705 at December 31, 2005 and 2004,                  respectively)                                                 |   | $ | 96 |   |   | $ | 107 |   |
| Paid-in-capital                                                                                                                                        |   |   | 583,130 |   |   |   | 197,751 |   |
| Accumulated                  other comprehensive loss, net of tax                                                                                      |   |   | (29 | ) |   |   | (1,761 | ) |
| Retained                  earnings                                                                                                                     |   |   | 5,450 |   |   |   | (6,795 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  common stockholder’s equity                                                                                               |   |   | 588,647 |   |   |   | 189,302 |   |
| Long-term                  debt                                                                                                                        |   |   | 415,864 |   |   |   | 415,569 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  capitalization                                                                                                                  |   |   | 1,004,511 |   |   |   | 604,871 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| **Current                  Liabilities:**                                                                                                              |   |   |   |   |   |   |   |   |
| Accounts                  payable                                                                                                                      |   |   | 11,913 |   |   |   | 15,649 |   |
| Accrued                  interest and taxes                                                                                                            |   |   | 24,250 |   |   |   | 22,647 |   |
| Accrued                  payroll and benefits                                                                                                          |   |   | 3,268 |   |   |   | 1,583 |   |
| Other                  current liabilities                                                                                                             |   |   | 5,516 |   |   |   | 5,155 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  current liabilities                                                                                                             |   |   | 44,947 |   |   |   | 45,034 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| **Long-Term                  Liabilities:**                                                                                                            |   |   |   |   |   |   |   |   |
| Accumulated                  deferred income taxes                                                                                                     |   |   | 139,405 |   |   |   | 138,249 |   |
| Accumulated                  deferred investment tax credits                                                                                           |   |   | 1,540 |   |   |   | 2,326 |   |
| Regulatory                  liabilities                                                                                                                |   |   | 56,246 |   |   |   | 40,729 |   |
| Accrued                  pension liability                                                                                                             |   |   | 3,585 |   |   |   | 4,844 |   |
| Accrued                  postretirement benefit cost                                                                                                   |   |   | 6,525 |   |   |   | 2,693 |   |
| Other                  deferred credits                                                                                                                |   |   | 1,174 |   |   |   | 33,760 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| Total                  long-term liabilities                                                                                                           |   |   | 208,475 |   |   |   | 222,601 |   |
| Commitments                  and Contingencies (see Note 16)                                                                                           |   |   | - |   |   |   | - |   |
|                                                                                                                                                   |   | $ | 1,257,933 |   |   | $ | 872,506 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                  |   |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                             |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                   |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   |
|                                                                                                                                                   |   | **For                  the Period** |   |   | **For                  the Period** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                                                                                                                   |   | **June                  6-** |   |   | **January                  1-** |   | **December                  31,** |   | **December                  31,** |   |
|                                                                                                                                                   |   | **December                  31, 2005** |   |   | **June                  6, 2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   |   |   |   | (In                  thousands) |   |
| **Cash                  Flows From Operating Activities:**                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Net                  earnings (loss)                                                                                                                   |   | $ | 17,450 |   |   | $ | 9,260 |   | $ | (51,193 | ) | $ | 25,282 |   |
| Adjustments                  to reconcile net                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| earnings                  to net cash flows                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| from                  operating activities:                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                                                                                                         |   |   | 18,619 |   |   |   | 14,042 |   |   | 32,279 |   |   | 31,472 |   |
| Allowance                  for equity funds used                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| during                  construction                                                                                                                   |   |   | (112 | ) |   |   | (60 | ) |   | (384 | ) |   | (584 | ) |
| Accumulated                  deferred income tax                                                                                                       |   |   | 9,870 |   |   |   | (1,267 | ) |   | 43,135 |   |   | 2,179 |   |
| Carrying                  charges on regulatory assets                                                                                                 |   |   | (4,376 | ) |   |   | 1,407 |   |   | (32,006 | ) |   | - |   |
| Cumulative                  effect of change in                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| accounting                  principle                                                                                                                  |   |   | 615 |   |   |   | - |   |   | - |   |   | - |   |
| Disallowance                  of stranded costs,                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                  of tax benefit                                                                                                                    |   |   | - |   |   |   | - |   |   | 97,836 |   |   | - |   |
| Deferred                  purchased power and fuel costs                                                                                               |   |   | - |   |   |   | - |   |   | (511 | ) |   | 18,373 |   |
| Changes                  in certain assets and liabilities:                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                                   |   |   | (481 | ) |   |   | 29 |   |   | 820 |   |   | 3,131 |   |
| Unbilled                  revenues                                                                                                                     |   |   | 1,003 |   |   |   | (106 | ) |   | 1,225 |   |   | (1,896 | ) |
| Accounts                  payable                                                                                                                      |   |   | 86 |   |   |   | (5,379 | ) |   | 2,347 |   |   | 3,758 |   |
| Accrued                  interest and taxes                                                                                                            |   |   | 8,799 |   |   |   | (7,314 | ) |   | (16,621 | ) |   | 1,088 |   |
| Interest                  rate lock on issuance of senior                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| notes                                                                                                                                                  |   |   | - |   |   |   | - |   |   | - |   |   | (4,162 | ) |
| Acquisition                  related benefit programs                                                                                                  |   |   | (2,604 | ) |   |   | - |   |   | - |   |   | - |   |
| Payments                  for stranded/fuel costs                                                                                                      |   |   | (4,284 | ) |   |   | - |   |   | - |   |   | - |   |
| Receipt                  for retail competition                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transition                  obligation                                                                                                                 |   |   | 16,336 |   |   |   | - |   |   | - |   |   | - |   |
| Other                  assets and liabilities                                                                                                          |   |   | (9,347 | ) |   |   | 4,741 |   |   | (9,520 | ) |   | (6,927 | ) |
| Net                  cash flows from                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operating                  activities                                                                                                                  |   |   | 51,574 |   |   |   | 15,353 |   |   | 67,407 |   |   | 71,714 |   |
| **Cash                  Flows From Investing Activities:**                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility                  plant additions                                                                                                               |   |   | (27,801 | ) |   |   | (17,822 | ) |   | (42,817 | ) |   | (44,548 | ) |
| Other,                  net                                                                                                                            |   |   | 3,111 |   |   |   | (242 | ) |   | (356 | ) |   | (2,909 | ) |
| Net                  cash flows from                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investing                  activities                                                                                                                  |   |   | (24,690 | ) |   |   | (18,064 | ) |   | (43,173 | ) |   | (47,457 | ) |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                  |   |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS**                                                                                             |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                   |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   |
|                                                                                                                                                   |   | **For                  the Period** |   |   | **For                  the Period** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                                                                                                                   |   | **June                  6-** |   |   | **January                  1-** |   | **December                  31,** |   | **December                  31,** |   |
|                                                                                                                                                   |   | **December                  31, 2005** |   |   | **June                  6, 2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                   |   |   |   |   | (In                  thousands) |   |
| **Cash                  Flows From Financing Activities:**                                                                                             |   |   |   |   |   |   |   |   |   |   |
| Long-term                  debt costs and repayments                                                                                                   |   |   | - |   |   |   | - |   |   | (9,382 | ) |   | (172,600 | ) |
| Redemption                  of common stock                                                                                                            |   |   | (62,000 | ) |   |   | - |   |   | - |   |   | - |   |
| Repayments                  to affiliate                                                                                                               |   |   | - |   |   |   | - |   |   | - |   |   | (14,557 | ) |
| Issuance                  of senior notes, net of discount                                                                                             |   |   | - |   |   |   | - |   |   | - |   |   | 248,923 |   |
| Dividends                  paid                                                                                                                        |   |   | (12,000 | ) |   |   | - |   |   | (6,000 | ) |   | (29,400 | ) |
| Other                                                                                                                                                  |   |   | 169 |   |   |   | 127 |   |   | - |   |   | - |   |
| Net                  cash flows from                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| financing                  activities                                                                                                                  |   |   | (73,831 | ) |   |   | 127 |   |   | (15,382 | ) |   | 32,366 |   |
| Increase                  (Decrease) in Cash and Cash                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equivalents                                                                                                                                            |   |   | (46,947 | ) |   |   | (2,584 | ) |   | 8,852 |   |   | 56,623 |   |
| Beginning                  of Period                                                                                                                   |   |   | 63,175 |   |   |   | 65,759 |   |   | 56,907 |   |   | 284 |   |
| End                  of Period                                                                                                                         |   | $ | 16,228 |   |   | $ | 63,175 |   | $ | 65,759 |   | $ | 56,907 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                  Cash Flow Disclosures:**                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid, net of capitalized interest                                                                                            |   | $ | (609 | ) |   | $ | 12,868 |   | $ | 26,145 |   | $ | 27,424 |   |
| Income                  taxes paid, net                                                                                                                |   | $ | (20,014 | ) |   | $ | 2,456 |   | $ | 8,434 |   | $ | 14,000 |   |
|                                                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements. |

----

| **TEXAS-NEW                      MEXICO POWER COMPANY AND SUBSIDIARIES**                |
|-----------------------------------------------------------------------------------------|
| **A                      WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**               |
| **CONSOLIDATED                      STATEMENTS OF                      CAPITALIZATION** |

|                                                                                                                                                         |   | **December                    31,** |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|
|                                                                                                                                                         |   | **2005**                            |      |   | **2004** |   |
|                                                                                                                                                         |   | (In                    thousands)   |      |
| **Common                    Stockholder’s Equity:**                                                                                                    |   |                                |      |   |   |   |
| Common                    stock outstanding, par value $10 per share                                                                                         |   | $                                   | 96        |   |   | $ | 107 |   |
| Paid-in-capital                                                                                                                                              |   |                                | 583,130   |   |   |   | 197,751 |   |
| Accumulated                    other comprehensive loss, net of tax                                                                                          |   |                                | (29       | ) |   |   | (1,761 | ) |
| Retained                    earnings                                                                                                                         |   |                                | 5,450     |   |   |   | (6,795 | ) |
| Total                    common stockholder’s equity                                                                                                   |   |                                | 588,647   |   |   |   | 189,302 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |   |
| **Long-Term                    Debt:**                                                                                                                       |   |                                |      |   |   |   |   |   |
| **Issue                    and Final Maturity**                                                                                                              |   |                                |      |   |   |   |   |   |
| Senior                    Notes:                                                                                                                             |   |                                |      |   |   |   |   |   |
| 6.125%                    due 2008                                                                                                                           |   |                                | 248,935   |   |   |   | 248,935 |   |
| 6.25%                    due 2009                                                                                                                            |   |                                | 167,690   |   |   |   | 167,690 |   |
| Other,                    including unamortized discounts                                                                                                    |   |                                | (761      | ) |   |   | (1,056 | ) |
| Total                    long-term debt                                                                                                                      |   |                                | 415,864   |   |   |   | 415,569 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |   |
| Total                    Capitalization                                                                                                                      |   | $                                   | 1,004,511 |   |   | $ | 604,871 |   |
|                                                                                                                                                         |   |                                |      |   |   |   |   |   |
| The                    accompanying notes, as they relate to TNMP, are an integral part                    of these                    financial statements. |

----

| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                                                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                                                           |   |
| **CONSOLIDATED                  STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**                                                                                                     |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                            |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   | **Pre-Acquisition** |   |
|                                                                                                                                                                            |   | **For                  the Period** |   |   | **For                  the Period** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                                                                                                                                            |   | **June                  6-** |   |   | **January                  1-** |   | **December                  31,** |   | **December                  31,** |   |
|                                                                                                                                                                            |   | **December                  31, 2005** |   |   | **June                  6, 2005** |   | **2004** |   | **2003** |   |
|                                                                                                                                                                            |   |   |   |   | (In                  thousands) |   |   |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings (Loss)**                                                                                                                                        |   | $ | 17,450 |   |   | $ | 9,260 |   | $ | (51,193 | ) | $ | 25,282 |   |
| Other                  Comprehensive Income (Loss):                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  rate hedge net of reclassification                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| adjustment,                  net of income tax benefit                                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (expense)                  of $0, $1,084, $317and $(685)                                                                                                                        |   |   | - |   |   |   | 1,761 |   |   | 516 |   |   | (1,111 | ) |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additional                  minimum pension liability                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| adjustment,                  net of tax (expense)                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| benefit                  of $18, $0, $0 and $(132)                                                                                                                              |   |   | (29 | ) |   |   | - |   |   | - |   |   | 214 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Comprehensive Income (Loss)**                                                                                                                          |   | $ | 17,421 |   |   | $ | 11,021 |   | $ | (50,677 | ) | $ | 24,385 |   |
|                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  conjunction with the acquisition of TNP by PNMR, the interest rate                  hedge                  was fair valued at zero. The acquired book value |
| was                  $1.7 million.                                                                                                                                              |
|                                                                                                                                                                            |
| The                  accompanying notes, as they relate to TNMP, are an integral part                  of these                  financial statements.                          |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS**

**December                31, 2005, 2004 and 2003**

**(1)              **
**Summary        of the Business and Significant Accounting Policies**

*Nature        of Business*

*TNP        Acquisition*

*“Goodwill        and Intangible Assets”*

*Presentation*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

*“Accounting        for the Effects of Certain Types of Regulation,”*

*“Accounting        for the Discontinuation of Application of FASB Statement No.        71.”*

*Principles        of Consolidation*

*Accounting        for Certain Financial Instruments with Characteristics of both Liabilities        and        Equity*
** **

*Financial        Statement Preparation*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Cash        and Cash Equivalents*

*Utility        Plant*

*Allowance        For Funds Used During Construction*

*Capitalized        Interest*

*“Capitalization        of Interest Costs”*

*Carrying        Charges on Stranded Costs*

*Inventories*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                        |   | **PNMR**                        |   | **PNM**  |   | **TNMP** |   |
|---------------------------------------------|--------|---------------------------------|--------|----------|--------|----------|--------|
|                                        |   | **2005**                        |   | **2004** |   | **2005** |   | **2004** |   | **2005** |   |   | **2004** |   |
|                                        |   | (In                  thousands) |   |
|                                        |   |                            |   |     |   |     |   |   |   |   |   |   |   |   |
| Coal                                        |   | $                               | 11,410 |     | $      | 9,802    |   | $ | 11,410 |   | $ | 9,802 |   | $ | - |   |   | $ | - |   |
| Gas                  in underground storage |   |                            | 12,487 |     |   | 5,324    |   |   | 12,487 |   |   | 5,324 |   |   | - |   |   |   | - |   |
| Materials                  and supplies     |   |                            | 28,140 |     |   | 26,226   |   |   | 26,514 |   |   | 26,120 |   |   | 1,478 |   |   |   | 1,505 |   |
|                                        |   | $                               | 52,037 |     | $      | 41,352   |   | $ | 50,411 |   | $ | 41,246 |   | $ | 1,478 |   |   | $ | 1,505 |   |

*Investments*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Goodwill        and Other Intangible Assets*

*Goodwill        and Other Intangible Assets*
*Accounting        for the Impairment or Disposal of Long-Lived Assets*

|                                             |   | **TNMP                  Electric** |    | **First                  Choice** |   | **Total****PNMR** |   |
|--------------------------------------------------|--------|------------------------------------|---------|-----------------------------------|--------|-------------------|--------|
|                                             |   | (In                  thousands)    |    |
|                                             |   |                               |    |                              |   |              |   |
| Balance                  as of January 1, 2005   |   | $                                  | -       |                              | $      | -                 |   | $ | - |   |
| Purchase                  of TNP during 2005     |   |                               | 456,088 |                              |   | 43,067            |   |   | 499,155 |   |
| Balance                  as of December 31, 2005 |   | $                                  | 456,088 |                              | $      | 43,067            |   | $ | 499,155 |   |

|                                           |   | **Gross                  Carrying Amount** |   | **Accumulated                  Amortization** |   |
|------------------------------------------------|--------|--------------------------------------------|--------|-----------------------------------------------|--------|
|                                           |   | (In                  thousands)            |   |
|                                           |   |                                       |   |                                          |   |
| Amortized                  intangible asset:   |   |                                       |   |                                          |   |
| First                  Choice customer list    |   | $                                          | 10,480 |                                          | $      | 742 |   |
| Unamortized                  intangible asset: |   |                                       |   |                                          |   |   |   |
| First                  Choice trade name       |   | $                                          | 68,774 |                                          | $      | - |   |

*Asset        Impairment*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Revenue        Recognition*

*Reporting        Gains and Losses on Derivative Instruments That Are Subject to FASB Statement        No. 133, Accounting for Derivative Instruments and Hedging Activities, and        Not        Held for Trading Purposes*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Depreciation        and Amortization*

|                            | **2005** |   | **2004** |   | **2003** |
|---------------------------------|----------|--------|----------|--------|----------|
|                            |     |   |     |   |     |
| Electric                  plant | 3.10%    |   | 3.07%    |   | 3.33%    |
| Gas                  plant      | 2.93%    |   | 2.87%    |   | 2.96%    |
| Common                  plant   | 8.65%    |   | 8.08%    |   | 8.38%    |

|                                             | **2005** |   | **2004** |   | **2003** |
|--------------------------------------------------|----------|--------|----------|--------|----------|
|                                             |     |   |     |   |     |
| Electric                  plant and common plant | 3.34%    |   | 3.62%    |   | 3.66%    |

*Amortization        of Debt Acquisition Costs*

*Financial        Instruments *

*“Accounting        for Derivative Instruments and Hedging Activities”*

*Amendment        of Statement 133 on Derivative Instruments and Hedging        Activities*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Issues          Related to Accounting for Contracts Involved in Energy Trading and Risk          Management Activities.” *
* *

*Decommissioning        Costs*

*"Accounting        for Asset Retirement Obligations”*

*Pension        and Other Postretirement Benefits *

*Stock        Based Compensation*

*Accounting        for Stock Issued to Employee*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*“Accounting        for Stock-Based Compensation”*

|                                                                |   | **Year                  Ended December 31,**           |   |
|---------------------------------------------------------------------|--------|--------------------------------------------------------|--------|
|                                                                |   | **2005**                                               |   | **2004** |   | **2003** |   |
|                                                                |   | (In                  thousands, except per share data) |   |
|                                                                |   |                                                   |   |   |   |   |   |
| PNMR                  net earnings:                                 |   | $                                                      | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Add:                  Stock compensation expense included           |   |                                                   |   |   |   |   |   |   |   |   |
| in                  reported net income, net of related tax effects |   |                                                   | 761    |   |   | 1,362 |   |   | - |   |
| Deduct:                  Total stock-based employee                 |   |                                                   |   |   |   |   |   |   |   |   |
| compensation                  expense determined under              |   |                                                   |   |   |   |   |   |   |   |   |
| fair                  value based method for all awards,            |   |                                                   |   |   |   |   |   |   |   |   |
| net                  of related tax effects                         |   |                                                   | (3,072 | ) |   | (4,177 | ) |   | (2,200 | ) |
| PNMR                  pro forma net earnings                        |   | $                                                      | 64,916 |   | $ | 84,871 |   | $ | 92,973 |   |
|                                                                |   |                                                   |   |   |   |   |   |   |   |   |
| PNMR                  earnings per share:                           |   |                                                   |   |   |   |   |   |   |   |   |
| Basic                  - as reported                                |   | $                                                      | 1.02   |   | $ | 1.45 |   | $ | 1.60 |   |
|                                                                |   |                                                   |   |   |   |   |   |   |   |   |
| Basic                  - pro forma                                  |   | $                                                      | 0.98   |   | $ | 1.40 |   | $ | 1.56 |   |
|                                                                |   |                                                   |   |   |   |   |   |   |   |   |
| Diluted                  - as reported                              |   | $                                                      | 1.00   |   | $ | 1.43 |   | $ | 1.58 |   |
|                                                                |   |                                                   |   |   |   |   |   |   |   |   |
| Diluted                  - pro forma                                |   | $                                                      | 0.97   |   | $ | 1.38 |   | $ | 1.54 |   |

*“Share        Based Payment”*

----

**PNM                  RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                  MEXICO POWER COMPANY**
**AND                  SUBSIDIARIES**

**NOTES                  TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                  31, 2005, 2004 and 2003**

*Income          Taxes*

*Accounting        for Income Taxes*

*Excise        Taxes*

*Cumulative        Effect of Changes in Accounting Principles*

*“Accounting          for Conditional Asset Retirement Obligations”*

*Extraordinary        Item*

*“Regulated          Enterprises - Accounting for the Discontinuance of the Application of FASB          Statement No. 71.”*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Change        in Presentation *

**(2)              **
**TNP        Acquisition**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| (In                  thousands)                 |   |
|-------------------------------------------------|--------|
|                                            |   |   |   |
| Net                  utility plant              |   | $ | 580,427 |   |
| Other                  property and investments |   |   | 3,785 |   |
| Current                  assets                 |   |   | 213,229 |   |
| Goodwill                                        |   |   | 499,155 |   |
| Other                  intangible assets        |   |   | 79,254 |   |
| Deferred                  assets                |   |   | 125,264 |   |
| Total                  assets acquired          |   | $ | 1,501,114 |   |
|                                            |   |   |   |   |
| Current                  liabilities            |   | $ | 70,815 |   |
| Long-term                  debt                 |   |   | 814,725 |   |
| Preferred                  stock                |   |   | 222,224 |   |
| Deferred                  liabilities           |   |   | 209,790 |   |
| Total                  liabilities assumed      |   | $ | 1,317,554 |   |
|                                            |   |   |   |   |
| Net                  assets acquired            |   | $ | 183,560 |   |

*“Business        Combinations”*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                |   | **For                  the Year Ended December 31,**      |      |
|---------------------------------------------------------------------|--------|-----------------------------------------------------------|-----------|
|                                                                |   | **2005**                                                  |      | **2004** |   |
|                                                                |   | (In                  thousands, except per share amounts) |      |
| Operating                  revenues                                 |   | $                                                         | 2,301,333 |   | $ | 2,286,680 |   |
| Operating                  expenses                                 |   | $                                                         | 2,141,382 |   | $ | 2,094,219 |   |
| Earnings                  before extraordinary item and cumulative  |   |                                                      |      |   |   |   |   |
| effect                  of change in accounting principle           |   | $                                                         | 81,077    |   | $ | 147,565 |   |
| Net                  earnings                                       |   | $                                                         | 80,151    |   | $ | 49,729 |   |
| Net                  earnings per common share before extraordinary |   |                                                      |      |   |   |   |   |
| item                  and cumulative effect of change in            |   |                                                      |      |   |   |   |   |
| accounting                  principle:                              |   |                                                      |      |   |   |   |   |
| Basic                                                               |   | $                                                         | 1.18      |   | $ | 2.15 |   |
| Diluted                                                             |   | $                                                         | 1.16      |   | $ | 2.12 |   |
| Net                  earnings per common share:                     |   |                                                      |      |   |   |   |   |
| Basic                                                               |   | $                                                         | 1.17      |   | $ | 0.72 |   |
| Diluted                                                             |   | $                                                         | 1.15      |   | $ | 0.71 |   |

**(3)              **
**Segment        Information**

**REGULATED        OPERATIONS**

**PNM        Electric **

**TNMP        Electric**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**PNM        Gas**

**UNREGULATED        OPERATIONS **

**PNM        Wholesale**

*Reporting        Realized Gains and Losses on Derivative Instruments that are subject to FASB        statement No. 133 and Not Held for Trading Purposes*

**First        Choice**

**CORPORATE        AND OTHER**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

|                                               |   | **Regulated** |      | **Unregulated**                   |   |      |   |          |    |                            |   |
|----------------------------------------------------|--------|---------------|-----------|-----------------------------------|--------|-----------|--------|---------------|---------|---------------------------------|--------|
| Segments                    of Business            |   | **PNM**       |      | **TNMP**                          |   | **PNM**   |   | **PNM**       |    | **First**                       |   | **Corporate** |   |   |   |   |   |
|                                               |   | **Electric**  |      | **Electric                    *** |   | **Gas**   |   | **Wholesale** |    | **Choice                    *** |   | **&                    Other** |   |   |   | **Consolidated** |   |
| **2005:**                                          |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |
| Operating                    revenues              |   | $             | 567,270   |                              | $      | 108,475   |   | $             | 510,801 |                            | $      | 602,939 |   | $ | 316,330 |   | $ | (29,005 | ) |   | (a) |   | $ | 2,076,810 |   |
| Intersegment                    revenues           |   |          | 6,706     |                              |   | 45,875    |   |          | 641     |                            |   | 25,089 |   |   | - |   |   | (78,311 | ) |   |   |   |   | - |   |
| **Total                    revenues**              |   |          | 573,976   |                              |   | 154,350   |   |          | 511,442 |                            |   | 628,028 |   |   | 316,330 |   |   | (107,316 | ) |   |   |   |   | 2,076,810 |   |
| Less:                    Cost of energy            |   |          | 210,169   |                              |   | 58,014    |   |          | 364,205 |                            |   | 506,935 |   |   | 243,053 |   |   | (107,729 | ) |   | (a) |   |   | 1,274,647 |   |
| Intersegment                    energy             |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transfer                                           |   |          | (35,829   | )                                 |   | -         |   |          | -       |                            |   | 35,829 |   |   | - |   |   | -  |   |   |   |   |   | - |   |
| **Gross                    margin**                |   |          | 399,636   |                              |   | 96,336    |   |          | 147,237 |                            |   | 85,264 |   |   | 73,277 |   |   | 413 |   |   |   |   |   | 802,163 |   |
| Operating                    expenses              |   |          | 263,446   |                              |   | 39,576    |   |          | 98,402  |                            |   | 44,827 |   |   | 27,897 |   |   | 32,474 |   |   | (b) |   |   | 506,622 |   |
| Depreciation                    and                |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |   |   |   |   |  |   |   |   |
| amortization                                       |   |          | 69,798    |                              |   | 17,596    |   |          | 22,548  |                            |   | 15,669 |   |   | 1,094 |   |   | 12,017 |   |   | (c) |   |   | 138,722 |   |
| Income                    taxes                    |   |          | 13,065    |                              |   | 8,442     |   |          | 5,853   |                            |   | 3,612 |   |   | 15,450 |   |   | (26,972 | ) |   | (b,c,e) |   |   | 19,450 |   |
| **Operating                    income**            |   |          | 53,327    |                              |   | 30,722    |   |          | 20,434  |                            |   | 21,156 |   |   | 28,836 |   |   | (17,106 | ) |   |   |   |   | 137,369 |   |
|                                               |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    Income                 |   |          | 27,459    |                              |   | 1,001     |   |          | 3,769   |                            |   | 5,249 |   |   | 1,545 |   |   | 3,806 |   |   |   |   |   | 42,829 |   |
| Other                    income/(deductions)       |   |          | 6,859     |                              |   | 4,829     |   |          | 689     |                            |   | 2,856 |   |   | (79 | ) |   | (20,111 | ) |   | (d) |   |   | (4,957 | ) |
| Other                    income taxes              |   |          | (13,586   | )                                 |   | (2,071    | )      |          | (1,765  | )                               |   | (3,209 | ) |   | (528 | ) |   | 7,748 |   |   | (d) |   |   | (13,411 | ) |
| Interest                    charges                |   |          | (33,392   | )                                 |   | (15,875   | )      |          | (11,503 | )                               |   | (15,644 | ) |   | (905 | ) |   | (16,358 | ) |   | (e) |   |   | (93,677 | ) |
| **Segment                    net income (loss)**** |   | $             | 40,667    |                              | $      | 18,606    |   | $             | 11,624  |                            | $      | 10,408 |   | $ | 28,869 |   | $ | (42,021 | ) |   |   |   | $ | 68,153 |   |
|                                               |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    assets at**             |   |          |      |                              |   |      |   |          |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                    31, 2005**           |   | $             | 1,937,811 |                              | $      | 1,257,933 |   | $             | 721,021 |                            | $      | 421,377 |   | $ | 229,977 |   | $ | 556,590 |   |   |   |   | $ | 5,124,709 |   |
| **Goodwill**                                       |   | $             | -         |                              | $      | 456,088   |   | $             | -       |                            | $      | - |   | $ | 43,067 |   | $ | - |   |   |   |   | $ | 499,155 |   |
| **Gross                    property additions**    |   | $             | 135,632   |                              | $      | 27,801    |   | $             | 31,019  |                            | $      | 14,595 |   | $ | 482 |   | $ | 12,285 |   |   |   |   | $ | 221,814 |   |

| (a)   | Reflects                  EITF 03-11 impact, under which wholesale revenues and the associated                  cost                  of energy of $30.9 million are reclassified to a net margin basis                  in                  accordance with GAAP. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                  the impairment of a turbine of $15.0 million, TNP acquisition related                  costs of $17.0 million and regulatory costs associated with the                  NMPRC’s                  approval of the acquisition of $2.3 million in operating expense                  and an                  income tax benefit of $13.5 million in income                  taxes. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                  a write-off of software costs of $4.5 million in depreciation and                  amortization and an income tax benefit of $1.8 million in income                  taxes. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Includes                  an $11.3 million charge related to the issuance of equity-linked                  units in                  October 2005, TNP debt refinancing costs of $1.0 million in other                  income/(deductions) and an income tax benefit of $3.5 million in                  other                  income taxes. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Includes                  TNP debt refinancing costs of $5.3 million in interest charges                  and an                  income tax benefit of $2.0 million in income                  taxes. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                               | **Regulated**                                         |   | **Unregulated**                            |   |                           |   |                                       |
|----------------------------------------------------|-------------------------------------------------------|--------|--------------------------------------------|--------|--------------------------------|--------|--------------------------------------------|
| Segments                      of Business          | **PNM**                                               |   | **TNMP**                                   |   | **PNM**                        |   | **PNM**                                    |   | **First** |   | **Corporate** |   |   |
|                                               | **Electric**                                          |   | **Electric**                               |   | **Gas**                        |   | **Wholesale**                              |   | **Choice** |   | **&                      Other** |   | **Consolidated** |
| **2004:**                                          |                                                  |   |                                       |   |                           |   |                                       |   |   |   |   |   |   |
| Operating                      revenues            | $                       552,563                  |   | $                         - |   | $                      489,767 |   | $                        588,243 |   | $                         - |   | $                       (32,784) |                        (a) | $1,597,789 |
| Intersegment                      revenues         | 5,849                                                 |   | -                                          |   | 1,154                          |   | -                                          |   | - |   | - |   | 7,003 |
| **Total                      revenues**            | 558,412                                               |   | -                                          |   | 490,921                        |   | 588,243                                    |   | - |   | (32,784) |   | 1,604,792 |
| Less:                      Cost of energy          | 186,517                                               |   | -                                          |   | 343,219                        |   | 449,059                                    |   | - |   | (33,486) |                        (a) | 945,309 |
| Intersegment                      energy           |                                                  |   |                                       |   |                           |   |                                       |   | - |   |   |   |   |
| transfer                                           | (42,769)                                              |   | -                                          |   | -                              |   | 42,769                                     |   | - |   | - |   | - |
| **Gross                      margin**              | 414,664                                               |   | -                                          |   | 147,702                        |   | 96,415                                     |   | - |   | 702 |   | 659,483 |
| Operating                      expenses            | 258,182                                               |   | -                                          |   | 97,412                         |   | 46,442                                     |   | - |   | 6,266 |   | 408,302 |
| Depreciation                      and              |                                                  |   |                                       |   |                           |   |                                       |   |   |   |   |   |   |
| amortization                                       | 63,050                                                |   | -                                          |   | 18,894                         |   | 14,809                                     |   | - |   | 5,468 |   | 102,221 |
| Income                      taxes                  | 23,141                                                |   | -                                          |   | 8,063                          |   | 8,537                                      |   | - |   | (3,679) |   | 36,062 |
| **Operating                      income**          | 70,291                                                |   | -                                          |   | 23,333                         |   | 26,627                                     |   | - |   | (7,353) |   | 112,898 |
|                                               |                                                  |   |                                       |   |                           |   |                                       |   |   |   |   |   |   |
| Interest                      Income               | 28,445                                                |   | -                                          |   | 2,253                          |   | 5,468                                      |   | - |   | 1,841 |   | 38,007 |
| Other                      income/(deductions)     | 2,045                                                 |   | -                                          |   | 190                            |   | 1,640                                      |   | - |   | (2,534) |   | 1,341 |
| Other                      income taxes            | (12,072)                                              |   | -                                          |   | (967)                          |   | (2,814)                                    |   | - |   | 2,668 |   | (13,185) |
| Interest                      charges              | (34,981)                                              |   | -                                          |   | (11,029)                       |   | (13,601)                                   |   | - |   | 8,236 |   | (51,375) |
| **Segment                      net income (loss)** | $                          53,728 |   | $                         - |   | $                      13,780  |   | $                        17,320  |   | $                         - |   | $                          2,858 |   | $                          87,686 |
|                                               |                                                  |   |                                       |   |                           |   |                                       |   |   |   |   |   |   |
| **Total                      assets at**           |                                                  |   |                                       |   |                           |   |                                       |   |   |   |   |   |   |
| **December                      31, 2004**         | $1,764,032                                            |   | $                         - |   | $                      512,538 |   | $                      430,493             |   | $                         - |   | $                      780,572 |   | $3,487,635 |
| **Gross                      property additions**  | $                          89,124 |   | $                         - |   | $   35,547      |   | $     8,023       |   | $                         - |   | $                        13,016 |   | $                        145,710 |

|   | (a) | Reflects                  EITF 03-11 impact, under which wholesale revenues and the associated                  cost                  of energy of $33.6 million are reclassified to a net margin basis                  in                  accordance with GAAP. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                           | **Regulated**              |   | **Unregulated**                        |   |                       |   |                       |
|------------------------------------------------|----------------------------|--------|----------------------------------------|--------|----------------------------|--------|----------------------------|
| Segments                  of Business          | **PNM**                    |   | **TNMP**                               |   | **PNM**                    |   | **PNM**                    |   | **First** |   | **Corporate** |   |   |
|                                           | **Electric**               |   | **Electric**                           |   | **Gas**                    |   | **Wholesale**              |   | **Choice** |   | **&                  Other** |   | **Consolidated** |
| **2003:**                                      |                       |   |                                   |   |                       |   |                       |   |   |   |   |   |   |
| Operating                  revenues            | $                  553,979 |   | $                     - |   | $                  356,872 |   | $                  551,625 |   | $                      - |   | $                  (14,703) | (a) | $1,447,773 |
| Intersegment                  revenues         | 6,485                      |   | -                                      |   | 1,395                      |   | 1,535                      |   | - |   | (1,535) |   | 7,880 |
| **Total                  revenues**            | 560,464                    |   | -                                      |   | 358,267                    |   | 553,160                    |   | - |   | (16,238) |   | 1,455,653 |
| Less:                  Cost of energy          | 177,767                    |   | -                                      |   | 228,345                    |   | 413,089                    |   | - |   | (16,531) | (a) | 802,670 |
| Intersegment                  energy           |                       |   |                                   |   |                       |   |                       |   | - |   |   |   |   |
| transfer                                       | (34,760)                   |   | -                                      |   | -                          |   | 34,760                     |   | - |   | - |   | - |
| **Gross                  margin**              | 417,457                    |   | -                                      |   | 129,922                    |   | 105,311                    |   | - |   | 293 |   | 652,983 |
| Operating                  expenses            | 252,634                    |   | -                                      |   | 96,746                     |   | 44,928                     |   | - |   | (3,638) |   | 390,670 |
| Depreciation                  and              |                       |   |                                   |   |                       |   |                       |   |   |   |   |   |   |
| amortization                                   | 73,532                     |   | -                                      |   | 22,186                     |   | 14,230                     |   | - |   | 5,701 |   | 115,649 |
| Income                  taxes                  | 23,750                     |   | -                                      |   | (956)                      |   | 12,111                     |   | - |   | (6,833) |   | 28,072 |
| **Operating                  income**          | 67,541                     |   | -                                      |   | 11,946                     |   | 34,042                     |   | - |   | 5,063 |   | 118,592 |
|                                           |                       |   |                                   |   |                       |   |                       |   |   |   |   |   |   |
| Interest                  Income               | 28,669                     |   | -                                      |   | 2,437                      |   | 5,493                      |   | - |   | 5,227 |   | 41,826 |
| Other                  income/(deductions)     | 4,828                      |   | -                                      |   | 587                        |   | 1,097                      |   | - |   | (42,372) |   | (35,860) |
| Other                  income taxes            | (13,830)                   |   | -                                      |   | (1,197)                    |   | (2,609)                    |   | - |   | 17,819 | (b) | 183 |
| Interest                  charges              | (31,303)                   |   | -                                      |   | (13,406)                   |   | (15,562)                   |   | - |   | (5,918) |   | (66,189) |
| **Segment                  net income (loss)** | $                  55,905  |   | $                     - |   | $                  367     |   | $                  22,461  |   | $                     - |   | $                  (20,181) | (b) | $                  58,552 |
|                                           |                       |   |                                   |   |                       |   |                       |   |   |   |   |   |   |
| **Total                  assets at**           |                       |   |                                   |   |                       |   |                       |   |   |   |   |   |   |
| **December                  31, 2003**         | $1,704,592                 |   | $                     - |   | $                  509,111 |   | $                  425,372 |   | $                     - |   | $                  739,554 |   | $3,378,629 |
| **Gross                  property additions**  | $                  108,823 |   | $                     - |   | $                  45,616  |   | $                  14,620  |   | $                     - |   | $                  8,145 |   | $                  177,204 |

| (a) | Reflects                  EITF 03-11 impact, under which certain wholesale revenues and the                  associated cost of energy of $15.0 million are reclassified to                  a net                  margin basis in accordance with GAAP. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Includes                  $9.5 million write-off of transition costs, net of tax benefit                  of $7.2                  million, due to the repeal of deregulation in New Mexico, and the                  $10.0                  million write-off related to refinancing of long-term debt, net                  of tax                  benefit of $6.6 million, that reduced consolidated net earnings. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| Segments                    of Business            | **PNM**                                  |   | **PNM**                                 |   | **PNM**                                 |   |                               |                            |                                     |
|----------------------------------------------------|------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|------------------------------------|---------------------------------|------------------------------------------|
|                                               | **Electric**                             |   | **Gas**                                 |   | **Wholesale**                           |   | **Other**                          |                            | **Consolidated**                         |
| **2005:**                                          |                                     |   |                                    |   |                                    |   |                               |                            |                                     |
| Operating                    revenues              | $                    567,270             |   | $                    510,801            |   | $                    602,939            |   | $                    (34,228)      |                      (a)   | $1,646,782                               |
| Intersegment                    revenues           | 6,706                                    |   | 641                                     |   | 25,089                                  |   | (3,761)                            |                            | 28,675                                   |
| **Total                    revenues**              | 573,976                                  |   | 511,442                                 |   | 628,028                                 |   | (37,989)                           |                            | 1,675,457                                |
| Less:                    Cost of energy            | 210,169                                  |   | 364,205                                 |   | 506,935                                 |   | (37,819)                           |                      (a)   | 1,043,490                                |
| Intersegment                    energy transfer    | (35,829)                                 |   | -                                       |   | 35,829                                  |   | -                                  |                            | -                                        |
| **Gross                    margin**                | 399,636                                  |   | 147,237                                 |   | 85,264                                  |   | (170)                              |                            | 631,967                                  |
| Operating                    expenses              | 263,446                                  |   | 98,402                                  |   | 44,827                                  |   | 24,952                             |                      (b)   | 431,627                                  |
| Depreciation                    and amortization   | 69,798                                   |   | 22,548                                  |   | 15,669                                  |   | 7,776                              |                      (c)   | 115,791                                  |
| Income                    taxes                    | 13,065                                   |   | 5,853                                   |   | 3,612                                   |   | (14,313)                           |                      (b,c) | 8,217                                    |
| **Operating                    income**            | 53,327                                   |   | 20,434                                  |   | 21,156                                  |   | (18,585)                           |                            | 76,332                                   |
|                                               |                                     |   |                                    |   |                                    |   |                               |                            |                                     |
| Interest                    Income                 | 27,459                                   |   | 3,769                                   |   | 5,249                                   |   | 1,442                              |                            | 37,919                                   |
| Other                    income/(deductions)       | 6,859                                    |   | 689                                     |   | 2,856                                   |   | (862)                              |                            | 9,542                                    |
| Other                    income taxes              | (13,586)                                 |   | (1,765)                                 |   | (3,209)                                 |   | 1,483                              |                            | (17,077)                                 |
| Interest                    charges                | (33,392)                                 |   | (11,503)                                |   | (15,644)                                |   | 6,415                              |                            | (54,124)                                 |
| **Segment                    net income (loss) *** | $                     40,667        |   | $                    11,624             |   | $                    10,408             |   | $                    (10,107)      |                            | $     52,592    |
|                                               |                                     |   |                                    |   |                                    |   |                               |                            |                                     |
| **Total                    assets at**             |                                     |   |                                    |   |                                    |   |                               |                            |                                     |
| **December                    31, 2005**           | $1,937,811                               |   | $                    721,021            |   | $                    421,377            |   | $                     507,542 |                            | $3,587,751                               |
| **Gross                    property additions**    | $                      135,632 |   | $                      31,019 |   | $                      14,595 |   | $                    (13,500)      |                            | $                      167,746 |

| (a)   | Reflects                  EITF 03-11 impact, under which wholesale revenues and the associated                  cost                  of energy of $30.9 million are reclassified to a net margin basis                  in                  accordance with GAAP. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                  the impairment of a turbine of $15.0 million, TNP acquisition related                  costs of $8.7 million and regulatory costs associated with the                  NMPRC's                  approval of the acquisition of $2.3 million in operating expenses                  and an                  income tax benefit of $10.3 million in income                  taxes. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Includes                  a write-off of software costs of $4.5 million in depreciation and                  amortization and an income tax benefit of $1.8 million in income                  taxes. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| Segments                    of Business          | **PNM**                                             |   | **PNM**                                 |   | **PNM**                                            |   |                                               |   |                                                |
|--------------------------------------------------|-----------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------------------|--------|----------------------------------------------------|--------|-----------------------------------------------------|
|                                             | **Electric**                                        |   | **Gas**                                 |   | **Wholesale**                                      |   | **Other**                                          |   | **Consolidated**                                    |
| **2004:**                                        |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| Operating                    revenues            | $                    552,563                        |   | $                    489,767            |   | $                    588,243                       |   | $                    (33,609)                      | (a)    | $1,596,964                                          |
| Intersegment                    revenues         | 5,849                                               |   | 1,154                                   |   | -                                                  |   | -                                                  |   | 7,003                                               |
| **Total                    revenues**            | 558,412                                             |   | 490,921                                 |   | 588,243                                            |   | (33,609)                                           |   | 1,603,967                                           |
| Less:                    Cost of energy          | 186,517                                             |   | 343,219                                 |   | 449,059                                            |   | (33,609)                                           | (a)    | 945,186                                             |
| Intersegment                    energy           |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| transfer                                         | (42,769)                                            |   | -                                       |   | 42,769                                             |   | -                                                  |   | -                                                   |
| **Gross                    margin**              | 414,664                                             |   | 147,702                                 |   | 96,415                                             |   | -                                                  |   | 658,781                                             |
| Operating                    expenses            | 258,182                                             |   | 97,412                                  |   | 46,442                                             |   | 776                                                |   | 402,812                                             |
| Depreciation                    and              |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| amortization                                     | 63,050                                              |   | 18,894                                  |   | 14,809                                             |   | 2,880                                              |   | 99,633                                              |
| Income                    taxes                  | 23,141                                              |   | 8,063                                   |   | 8,537                                              |   | (1,777)                                            |   | 37,964                                              |
| **Operating                    income**          | 70,291                                              |   | 23,333                                  |   | 26,627                                             |   | (1,879)                                            |   | 118,372                                             |
|                                             |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| Interest                    Income               | 28,445                                              |   | 2,253                                   |   | 5,468                                              |   | 1,555                                              |   | 37,721                                              |
| Other                    income/(deductions)     | 2,045                                               |   | 190                                     |   | 1,640                                              |   | 62                                                 |   | 3,937                                               |
| Other                    income taxes            | (12,072)                                            |   | (967)                                   |   | (2,814)                                            |   | 1,120                                              |   | (14,733)                                            |
| Interest                    charges              | (34,981)                                            |   | (11,029)                                |   | (13,601)                                           |   | 6,180                                              |   | (53,431)                                            |
| **Segment                    net income (loss)** | $                       53,728       |   | $                      13,780 |   | $                      17,320            |   | $                       7,038       |   | $                        91,866 |
|                                             |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| **Total                    assets at**           |                                                |   |                                    |   |                                               |   |                                               |   |                                                |
| **December                    31, 2004**         | $1,764,032                                          |   | $                    512,538            |   | $                    430,493                       |   | $                    686,667                       |   | $3,393,730                                          |
| **Gross                    property additions**  | $                        89,124 |   | $                      35,547 |   | $                        8,023 |   | $                        5,457 |   | $   138,151                          |

| (a)   | Reflects                  EITF 03-11 impact, under which wholesale revenues and the associated                  cost                  of energy of $33.6 million are reclassified to a net margin basis                  in                  accordance with GAAP. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| Segments                    of Business          | **PNM**                                             |   | **PNM**                                                            |   | **PNM**                                 |   |                                                           |                          |                                                      |
|--------------------------------------------------|-----------------------------------------------------|--------|--------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------------------------------|-------------------------------|-----------------------------------------------------------|
|                                             | **Electric**                                        |   | **Gas**                                                            |   | **Wholesale**                           |   | **Other**                                                      |                          | **Consolidated**                                          |
| **2003:**                                        |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| Operating                    revenues            | $                    553,979                        |   | $                    356,872                                       |   | $                    551,625            |   | $                    (15,014)                                  |                      (a) | $1,447,462                                                |
| Intersegment                    revenues         | 6,485                                               |   | 1,395                                                              |   | 1,535                                   |   | (1,535)                                                        |                          | 7,880                                                     |
| **Total                    revenues**            | 560,464                                             |   | 358,267                                                            |   | 553,160                                 |   | (16,549)                                                       |                          | 1,455,342                                                 |
| Less:                    Cost of energy          | 177,767                                             |   | 228,345                                                            |   | 413,089                                 |   | (16,551)                                                       |                      (a) | 802,650                                                   |
| Intersegment                    energy           |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| transfer                                         | (34,760)                                            |   | -                                                                  |   | 34,760                                  |   | -                                                              |                          | -                                                         |
| **Gross                    margin**              | 417,457                                             |   | 129,922                                                            |   | 105,311                                 |   | 2                                                              |                          | 652,692                                                   |
| Operating                    expenses            | 252,634                                             |   | 96,746                                                             |   | 44,928                                  |   | (2,685)                                                        |                          | 391,623                                                   |
| Depreciation                    and              |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| amortization                                     | 73,532                                              |   | 22,186                                                             |   | 14,230                                  |   | 3,973                                                          |                          | 113,921                                                   |
| Income                    taxes                  | 23,750                                              |   | (956)                                                              |   | 12,111                                  |   | (6,643)                                                        |                          | 28,262                                                    |
| **Operating                    income**          | 67,541                                              |   | 11,946                                                             |   | 34,042                                  |   | 5,357                                                          |                          | 118,886                                                   |
|                                             |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| Interest                    Income               | 28,669                                              |   | 2,437                                                              |   | 5,493                                   |   | 2,319                                                          |                          | 38,918                                                    |
| Other                    income/(deductions)     | 4,828                                               |   | 587                                                                |   | 1,097                                   |   | (36,886)                                                       |                          | (30,374)                                                  |
| Other                    income taxes            | (13,830)                                            |   | (1,197)                                                            |   | (2,609)                                 |   | 15,308                                                         |                      (b) | (2,328)                                                   |
| Interest                    charges              | (31,303)                                            |   | (13,406)                                                           |   | (15,562)                                |   | (5,439)                                                        |                          | (65,710)                                                  |
| **Segment                    net income (loss)** | $                        55,905 |   | $                           367 |   | $                    22,461             |   | $                    (19,341)                                  |                      (b) | $                         59,392 |
|                                             |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| **Total                    assets at**           |                                                |   |                                                               |   |                                    |   |                                                           |                          |                                                      |
| **December                    31, 2003**         | $1,704,592                                          |   | $                    509,111                                       |   | $                    425,372            |   | $                    660,229                                   |                          | $3,299,304                                                |
| **Gross                    property additions**  | $                      108,823            |   | $                      45,616                            |   | $                      14,620 |   | $                          (234) |                          | $                      168,825                  |

| (a)   | Reflects                  EITF 03-11 impact, under which certain wholesale revenues and the                  associated cost of energy of $15.0 million are reclassified to                  a net                  margin basis in accordance with GAAP. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                  $9.5 million write-off of transition costs, net of tax benefit                  of $7.2                  million, due to the repeal of deregulation in New Mexico, and the                  $10.0                  million write-off related to refinancing of long-term debt, net                  of tax                  benefit of $6.6 million, that reduced consolidated net earnings. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **(4)** | **Regulatory                  Assets and Liabilities** |
|---------|--------------------------------------------------------|

* *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                            |   | **December                  31,** |     |
|-----------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                            |   | **2005**                          |     | **2004** |   |
|                                                            |   | (In                  thousands)   |     |
| **Assets:**                                                     |   |                              |     |   |   |
| Current:                                                        |   |                              |     |   |   |
| PGAC                                                            |   | $                                 | 24,885   |   | $ | - |   |
| Gas                  Take-or-Pay Costs                          |   |                              | 1,065    |   |   | 3,339 |   |
| Underground                  Rate                               |   |                              | 790      |   |   | - |   |
| Gas                  Mark-to-Market - Off System Sales          |   |                              | 1,318    |   |   | - |   |
| Subtotal                                                        |   |                              | 28,058   |   |   | 3,339 |   |
| Non-Current:                                                    |   |                              |     |   |   |   |   |
| Mine                  Reclamation Costs                         |   |                              | 94,758   |   |   | 90,587 |   |
| Deferred                  Income Taxes                          |   |                              | 78,671   |   |   | 71,471 |   |
| Financing                  Costs                                |   |                              | 25,362   |   |   | 26,253 |   |
| Loss                  on Reacquired Debt                        |   |                              | 17,398   |   |   | 19,044 |   |
| Renewable                  Energy Certificates                  |   |                              | 5,739    |   |   | 3,448 |   |
| Stranded                  Costs                                 |   |                              | 87,316   |   |   | - |   |
| Carrying                  Charges on Stranded Costs             |   |                              | 33,918   |   |   | - |   |
| Other                                                           |   |                              | 4,117    |   |   | 6,393 |   |
| Subtotal                                                        |   |                              | 347,279  |   |   | 217,196 |   |
| Total                  Regulatory Assets                        |   |                              | 375,337  |   |   | 220,535 |   |
| **Liabilities:**                                                |   |                              |     |   |   |   |   |
| Current:                                                        |   |                              |     |   |   |   |   |
| PGAC                                                            |   |                              | -        |   |   | (657 | ) |
| Gas                  Mark-to-Market - PGAC                      |   |                              | (7,085   | ) |   | - |   |
| Subtotal                                                        |   |                              | (7,085   | ) |   | (657 | ) |
| Non-Current:                                                    |   |                              |     |   |   |   |   |
| Cost                  of Removal                                |   |                              | (298,307 | ) |   | (247,350 | ) |
| Retail                  competition transition obligation       |   |                              | (16,621  | ) |   | - |   |
| Deferred                  Income Taxes                          |   |                              | (30,070  | ) |   | (33,020 | ) |
| Asset                  Retirement Obligation                    |   |                              | (33,367  | ) |   | (30,702 | ) |
| Unrealized                  Gain on PVNGS Decommissioning Trust |   |                              | (7,251   | ) |   | (8,153 | ) |
| PVNGS                  Prudence Audit                           |   |                              | (3,555   | ) |   | (3,931 | ) |
| Settlement                  Due Customers                       |   |                              | (1,075   | ) |   | (1,158 | ) |
| Gain                  on Reacquired Debt                        |   |                              | (692     | ) |   | (1,012 | ) |
| Gas                  Mark-to-Market - PGAC                      |   |                              | (5,564   | ) |   | - |   |
| TNP                  Acquisition - Settlement Due Customers     |   |                              | (2,448   | ) |   | - |   |
| Other                                                           |   |                              | (3,303   | ) |   | (2,093 | ) |
| Subtotal                                                        |   |                              | (402,253 | ) |   | (327,419 | ) |
| Total                  Regulatory Liabilities                   |   |                              | (409,338 | ) |   | (328,076 | ) |
|                                                            |   |                              |     |   |   |   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                            |   | **December                  31,** |     |
|-----------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                            |   | **2005**                          |     | **2004** |   |
|                                                            |   | (In                  thousands)   |     |
| **Assets:**                                                     |   |                              |     |   |   |
| Current:                                                        |   |                              |     |   |   |
| PGAC                                                            |   | $                                 | 24,885   |   | $ | - |   |
| Gas                  Take-or-Pay Costs                          |   |                              | 1,065    |   |   | 3,339 |   |
| Underground                  Rate                               |   |                              | 790      |   |   | - |   |
| Gas                  Mark-to-Market - Off System Sales          |   |                              | 1,318    |   |   | - |   |
| Subtotal                                                        |   |                              | 28,058   |   |   | 3,339 |   |
| Non-Current:                                                    |   |                              |     |   |   |   |   |
| Mine                  Reclamation Costs                         |   |                              | 94,758   |   |   | 90,587 |   |
| Deferred                  Income Taxes                          |   |                              | 75,951   |   |   | 71,471 |   |
| Financing                  Costs                                |   |                              | 25,362   |   |   | 26,253 |   |
| Loss                  on Reacquired Debt                        |   |                              | 17,398   |   |   | 19,044 |   |
| Renewable                  Energy Certificates                  |   |                              | 5,739    |   |   | 3,448 |   |
| Other                                                           |   |                              | 4,117    |   |   | 6,393 |   |
| Subtotal                                                        |   |                              | 223,325  |   |   | 217,196 |   |
| Total                  Regulatory Assets                        |   |                              | 251,383  |   |   | 220,535 |   |
|                                                            |   |                              |     |   |   |   |   |
| **Liabilities:**                                                |   |                              |     |   |   |   |   |
| Current:                                                        |   |                              |     |   |   |   |   |
| PGAC                                                            |   |                              | -        |   |   | (657 | ) |
| Gas                  Mark-to-Market - PGAC                      |   |                              | (7,085   | ) |   | - |   |
| Subtotal                                                        |   |                              | (7,085   | ) |   | (657 | ) |
|                                                            |   |                              |     |   |   |   |   |
| Non-Current:                                                    |   |                              |     |   |   |   |   |
| Cost                  of Removal                                |   |                              | (258,682 | ) |   | (247,350 | ) |
| Deferred                  Income Taxes                          |   |                              | (30,070  | ) |   | (33,020 | ) |
| Asset                  Retirement Obligation                    |   |                              | (33,367  | ) |   | (30,702 | ) |
| Unrealized                  Gain on PVNGS Decommissioning Trust |   |                              | (7,251   | ) |   | (8,153 | ) |
| PVNGS                  Prudence Audit                           |   |                              | (3,555   | ) |   | (3,931 | ) |
| Settlement                  Due Customers                       |   |                              | (1,075   | ) |   | (1,158 | ) |
| Gain                  on Reacquired Debt                        |   |                              | (692     | ) |   | (1,012 | ) |
| Gas                  Mark-to-Market - PGAC                      |   |                              | (5,564   | ) |   | - |   |
| TNP                  Acquisition - Settlement Due Customers     |   |                              | (2,448   | ) |   | - |   |
| Other                                                           |   |                              | (3,303   | ) |   | (2,093 | ) |
| Subtotal                                                        |   |                              | (346,007 | ) |   | (327,419 | ) |
| Total                  Regulatory Liabilities                   |   |                              | (353,092 | ) |   | (328,076 | ) |
|                                                            |   |                              |     |   |   |   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                      |   | **December                  31,** |    |
|-----------------------------------------------------------|--------|-----------------------------------|---------|
|                                                      |   | **2005**                          |    |   | **2004** |   |
|                                                      |   | (In                  thousands)   |    |
| **Assets:**                                               |   |                              |    |   |   |   |
| Non-Current:                                              |   |                              |    |   |   |   |
| Stranded                  Costs                           |   | $                                 | 87,316  |   |   | $ | 87,316 |   |
| Carrying                  Charges on Stranded Costs       |   |                              | 33,918  |   |   |   | 48,130 |   |
| Deferred                  Income Taxes                    |   |                              | 2,720   |   |   |   | 2,484 |   |
| Texas                  System Benefit Fund                |   |                              | -       |   |   |   | 4,006 |   |
| Other                                                     |   |                              | -       |   |   |   | 1,615 |   |
| Subtotal                                                  |   |                              | 123,954 |   |   |   | 143,551 |   |
| Total                  Regulatory Assets                  |   |                              | 123,954 |   |   |   | 143,551 |   |
|                                                      |   |                              |    |   |   |   |   |   |
| **Liabilities:**                                          |   |                              |    |   |   |   |   |   |
| Non-Current:                                              |   |                              |    |   |   |   |   |   |
| Cost                  of Removal                          |   |                              | (39,625 | ) |   |   | (40,729 | ) |
| Retail                  competition transition obligation |   |                              | (16,621 | ) |   |   | - |   |
| Total                  Regulatory Liabilities             |   |                              | (56,246 | ) |   |   | (40,729 | ) |
|                                                      |   |                              |    |   |   |   |   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(5)       **
**Stockholders’        Equity**

*Stock        Split*

|                                                        |   | **Common                  Stock**       |       |
|-------------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                        |   |                                    |       |   |   |
|                                                        |   | **Number**                              |       | **Aggregate** |   |
|                                                        |   | **of                  Shares**          |       | **Value** |   |
|                                                        |   | (Dollars                  in thousands) |       |
|                                                        |   |                                    |       |   |   |
| **Balance                  at December 31, 2003**           |   |                                    | 60,388,496 |   | $ | 647,722 |   |
| Exercise                  of stock options                  |   |                                    | -          |   |   | (16,430 | ) |
| Tax                  benefit from exercise of stock options |   |                                    | -          |   |   | 6,246 |   |
| Stock                  split costs                          |   |                                    | -          |   |   | (142 | ) |
| Retirement                  of preferred stock              |   |                                    | -          |   |   | 153 |   |
| ESPP                  purchase                              |   |                                    | 76,099     |   |   | 1,277 |   |
|                                                        |   |                                    |       |   |   |   |   |
| **Balance                  at December 31, 2004**           |   |                                    | 60,464,595 |   | $ | 638,826 |   |
| Exercise                  of stock options                  |   |                                    | -          |   |   | (16,261 | ) |
| Tax                  benefit from exercise of stock options |   |                                    | -          |   |   | 6,527 |   |
| Issuance                  of equity-linked units            |   |                                    | -          |   |   | (18,769 | ) |
| Other                  charge - equity-linked units         |   |                                    | -          |   |   | 11,348 |   |
| Restricted                  stock                           |   |                                    | -          |   |   | 1,259 |   |
| Sale                  of common stock                       |   |                                    | 3,910,000  |   |   | 101,231 |   |
| Common                  stock issued for TNP acquisition    |   |                                    | 4,326,337  |   |   | 87,392 |   |
| ESPP                  purchase                              |   |                                    | 85,354     |   |   | 1,872 |   |
|                                                        |   |                                    |       |   |   |   |   |
| **Balance                  at December 31, 2005**           |   |                                    | 68,786,286 |   | $ | 813,425 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                              |   | **Common                  Stock**       |       |
|---------------------------------------------------|--------|-----------------------------------------|------------|
|                                              |   |                                    |       |   |   |
|                                              |   | **Number**                              |       | **Aggregate** |   |
|                                              |   | **of                  Shares**          |       | **Value** |   |
|                                              |   | (Dollars                  in thousands) |       |
|                                              |   |                                    |       |   |   |
| **Balance                  at December 31, 2003** |   |                                    | 39,117,799 |   | $ | 752,197 |   |
| Retirement                  of preferred stock    |   |                                    | -          |   |   | 153 |   |
|                                              |   |                                    |       |   |   |   |   |
| **Balance                  at December 31, 2004** |   |                                    | 39,117,799 |   | $ | 752,350 |   |
| Equity                  from parent               |   |                                    | -          |   |   | 13,150 |   |
|                                              |   |                                    |       |   |   |   |   |
| **Balance                  at December 31, 2005** |   |                                    | 39,117,799 |   | $ | 765,500 |   |

|                                              |   | **Common                  Stock**       |   |                           |   |
|---------------------------------------------------|--------|-----------------------------------------|--------|--------------------------------|--------|
|                                              |   |                                    |   |                           |   | **Additional** |   |
|                                              |   | **Number**                              |   | **Aggregate**                  |   | **Paid-In** |   |
|                                              |   | **of                  Shares**          |   | **Par                  Value** |   | **Capital** |   |
|                                              |   | (Dollars                  in thousands) |   |
|                                              |   |                                    |   |                           |   |   |   |
| **Pre-Acquisition:**                              |   |                                    |   |                           |   |   |   |
| **Balance                  at December 31, 2003** |   |                                    | 10,705 |                           | $      | 107 |   | $ | 197,751 |   |
|                                              |   |                                    |   |                           |   |   |   |   |   |   |
|                                              |   |                                    |   |                           |   |   |   |   |   |   |
| **Balance                  at December 31, 2004** |   |                                    | 10,705 |                           | $      | 107 |   | $ | 197,751 |   |
|                                              |   |                                    |   |                           |   |   |   |   |   |   |
| **Post-Acquisition:**                             |   |                                    |   |                           |   |   |   |   |   |   |
| **Balance                  at June 6, 2005**      |   |                                    | 10,705 |                           | $      | 107 |   | $ | - |   |
| Purchase                  accounting adjustments  |   |                                    | -      |                           |   | - |   |   | 645,130 |   |
| Stock                  redemption                 |   |                                    | (1,090 | )                              |   | (11 | ) |   | (62,000 | ) |
|                                              |   |                                    |   |                           |   |   |   |   |   |   |
| **Balance                  at December 31, 2005** |   |                                    | 9,615  |                           | $      | 96 |   | $ | 583,130 |   |

*Dividends*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Cumulative        Preferred Stock*

*PNMR        Equity-Linked Units and Common Stock*

*TNMP        Common Stock*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(6)  **
**Financing        **

*Long-Term        Debt*

*Revolving        and Other Credit Facilities *

*Financing        Activities*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Equity-Linked        Units Offering - Private*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*“Earnings        per Share”*

*Common        Stock Offering*

*Equity-Linked        Units Offering - Public*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Long-Term        Debt*

*Revolving        and Other Credit Facilities *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Financing        Activities*

*Asset        Securitization*

*Long-Term        Debt*

*Revolving        and Other Credit Facilities *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Financing        Activities*

**(7)**
**Lease        Commitments**

|                                          |   | (In                  thousands) |    |
|-----------------------------------------------|--------|---------------------------------|---------|
|                                          |   |                            |    |
| 2006                                          |   | $                               | 34,363  |   |
| 2007                                          |   |                            | 34,634  |   |
| 2008                                          |   |                            | 34,371  |   |
| 2009                                          |   |                            | 31,478  |   |
| 2010                                          |   |                            | 31,271  |   |
| Later                  years                  |   |                            | 214,476 |   |
|                                          |   |                            |    |   |
| Total                  minimum lease payments |   | $                               | 380,593 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                          |   | (In                  thousands) |    |
|-----------------------------------------------|--------|---------------------------------|---------|
|                                          |   |                            |    |
| 2006                                          |   | $                               | 29,322  |   |
| 2007                                          |   |                            | 30,206  |   |
| 2008                                          |   |                            | 31,147  |   |
| 2009                                          |   |                            | 28,995  |   |
| 2010                                          |   |                            | 28,995  |   |
| Later                  years                  |   |                            | 204,765 |   |
|                                          |   |                            |    |   |
| Total                  minimum lease payments |   | $                               | 353,430 |   |

|                                          |   | (In                  thousands) |   |
|-----------------------------------------------|--------|---------------------------------|--------|
|                                          |   |                            |   |
| 2006                                          |   | $                               | 3,159  |   |
| 2007                                          |   |                            | 2,545  |   |
| 2008                                          |   |                            | 1,342  |   |
| 2009                                          |   |                            | 600    |   |
| 2010                                          |   |                            | 393    |   |
| Later                  years                  |   |                            | 454    |   |
|                                          |   |                            |   |   |
| Total                  minimum lease payments |   | $                               | 8,493  |   |

**(8)              **
**Fair        Value of Financial Instruments**

*Interest        Rate Management*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Carrying        Amount/Fair Value*

|                                                |   | **December                  31, 2005** |      | **December                  31, 2004** |   |
|-----------------------------------------------------|--------|----------------------------------------|-----------|----------------------------------------|--------|
|                                                |   | **Carrying**                           |      |                                   |   | **Carrying** |   |   |   |
|                                                |   | **Amount**                             |      | **Fair                  Value**        |   | **Amount** |   | **Fair                  Value** |   |
|                                                |   | (In                  thousands)        |      |
|                                                |   |                                   |      |                                   |   |   |   |   |   |
| Long-term                  debt                     |   | $                                      | 1,746,395 |                                   | $      | 1,828,990 |   | $ | 987,823 |   | $ | 1,026,131 |   |
| Investment                  in PVNGS lessors' notes |   | $                                      | 286,678   |                                   | $      | 331,961 |   | $ | 308,680 |   | $ | 390,244 |   |

|                                        |   | **At                  and For the Year Ended December 31, 2005** |   |
|---------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                        |   | **Unrealized                  Gains**                            |   | **Unrealized                  Losses** |   | **Fair                  Value** |   |
|                                        |   |                                                             |   |   |   |   |   |
| Available-for-sale:                         |   |                                                             |   |   |   |   |   |
| Equity                  securities          |   | $                                                                | 19,155 |   | $ | (459 | ) | $ | 73,562 |   |
| Municipal                  bonds            |   |                                                             | 932    |   |   | (58 | ) |   | 24,621 |   |
| U.S.                  Government securities |   |                                                             | 163    |   |   | (76 | ) |   | 6,786 |   |
| Corporate                  bonds            |   |                                                             | 10     |   |   | (72 | ) |   | 2,569 |   |
| Other                  investments          |   |                                                             | 30     |   |   | (5 | ) |   | 3,569 |   |
|                                        |   | $                                                                | 20,290 |   | $ | (670 | ) | $ | 111,107 |   |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

|                                        |   | **At                  and For the Year Ended December 31, 2004** |   |
|---------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                        |   | **Unrealized                  Gains**                            |   | **Unrealized                  Losses** |   | **Fair                  Value** |   |
|                                        |   |                                                             |   |   |   |   |   |
| Available-for-sale:                         |   |                                                             |   |   |   |   |   |
| Equity                  securities          |   | $                                                                | 20,089 |   | $ | (186 | ) | $ | 62,873 |   |
| Municipal                  bonds            |   |                                                             | 1,220  |   |   | (52 | ) |   | 24,103 |   |
| U.S.                  Government securities |   |                                                             | 226    |   |   | (18 | ) |   | 6,592 |   |
| Corporate                  bonds            |   |                                                             | 31     |   |   | (18 | ) |   | 2,508 |   |
| Other                  investments          |   |                                                             | 6      |   |   | (2 | ) |   | 4,410 |   |
|                                        |   | $                                                                | 21,572 |   | $ | (276 | ) | $ | 100,486 |   |

|                                            |   | **Fair                  Value** |    |
|-------------------------------------------------|--------|---------------------------------|---------|
|                                            |   | (In                  thousands) |    |
|                                            |   |                            |    |
| Within                  1 year                  |   | $                               | 2,923   |   |
| After                  1 year through 5 years   |   |                            | 4,938   |   |
| After                  5 years through 10 years |   |                            | 5,285   |   |
| Over                  10 years                  |   |                            | 20,830  |   |
| Equity                  securities              |   |                            | 73,562  |   |
| Other                  investments              |   |                            | 3,569   |   |
|                                            |   | $                               | 111,107 |   |

|                                   |   | **Year                  Ended December 31,** |    |
|----------------------------------------|--------|----------------------------------------------|---------|
|                                   |   | **2005**                                     |    | **2004** |   | **2003** |   |
|                                   |   | (In                  thousands)              |    |
|                                   |   |                                         |    |   |   |   |   |
| Proceeds                  from sales   |   | $                                            | 106,624 |   | $ | 51,213 |   | $ | 123,030 |   |
| Gross                  realized gains  |   | $                                            | 11,825  |   | $ | 6,737 |   | $ | 7,685 |   |
| Gross                  realized losses |   | $                                            | (3,176  | ) | $ | (4,068 | ) | $ | (5,694 | ) |

*“Accounting        for Certain Investments in Debt and Equity Securities”*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*First        Choice Natural Gas Contracts*

*First        Choice Energy Contracts*

*First        Choice Natural Gas Hedges*

*Carrying        Amount/Fair Value*

|                                                |   | **December                  31, 2005** |    | **December                  31, 2004** |   |
|-----------------------------------------------------|--------|----------------------------------------|---------|----------------------------------------|--------|
|                                                |   | **Carrying**                           |    |                                   |   | **Carrying** |   |   |   |
|                                                |   | **Amount**                             |    | **Fair                  Value**        |   | **Amount** |   | **Fair                  Value** |   |
|                                                |   | (In                  thousands)        |    |
|                                                |   |                                   |    |                                   |   |   |   |   |   |
| Long-term                  debt                     |   | $                                      | 987,068 |                                   | $      | 1,052,736 |   | $ | 987,676 |   | $ | 1,025,983 |   |
| Investment                  in PVNGS lessors' notes |   | $                                      | 286,678 |                                   | $      | 331,961 |   | $ | 308,680 |   | $ | 390,244 |   |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

*Retail        Natural Gas Contracts*

*Wholesale        Electricity Contracts *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Wholesale        Gas Contracts *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Carrying        Amount/Fair Value*

|                            |   | **December                  31, 2005** |    |                            | **December                  31, 2004** |    |
|---------------------------------|--------|----------------------------------------|---------|---------------------------------|----------------------------------------|---------|
|                            |   | **Carrying**                           |    |                            |                                   |    | **Carrying** |   |   |   |
|                            |   | **Amount**                             |    | **Fair                  Value** |                                   |    | **Amount** |   | **Fair                  Value** |   |
|                            |   | (In                  thousands)        |    |
|                            |   |                                   |    |                            |                                   |    |   |   |   |   |
| Long-term                  debt |   | $                                      | 415,864 |                            | $                                      | 432,792 |   |   | $ | 415,569 |   | $ | 434,773 |   |

*Normal        Purchases and Sales *

**(9)             **
**Variable        Interest Entities**

*“Consolidation        of Variable Interest Entities”*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(10)    **
**Earnings        Per Share**

*Earnings        per Share,”*

|                                                                               |   | **Year                  Ended December 31,**              |   |
|------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                               |   | **2005**                                                  |   | **2004** |   | **2003** |   |
|                                                                               |   | (In                  thousands, except per share amounts) |   |
| **Basic:**                                                                         |   |                                                      |   |
| Net                  Earnings Before Cumulative Effect of Changes in               |   | $                                                         | 68,153 |   | $ | 87,686 |   | $ | 58,552 |   |
| Accounting                  Principle                                              |   |                                                      |   |   |   |   |   |   |   |   |
| Cumulative                  Effect of Changes in Accounting Principle,             |   |                                                      |   |   |   |   |   |   |   |   |
| net                  of tax of $592 and $23,999                                    |   |                                                      | (926   | ) |   | - |   |   | 36,621 |   |
| **Net                  Earnings**                                                  |   | $                                                         | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Average                  Number of Common Shares Outstanding                       |   |                                                      | 65,928 |   |   | 60,414 |   |   | 59,620 |   |
| **Net                  Earnings per Share of Common Stock (Basic)**                |   | $                                                         | 1.02   |   | $ | 1.45 |   | $ | 1.60 |   |
| Earnings                  Before Cumulative Effect of Changes in                   |   |                                                      |   |   |   |   |   |   |   |   |
| Accounting                  Principles                                             |   |                                                      | 1.03   |   |   | 1.45 |   |   | 0.99 |   |
| Cumulative                  Effect of Changes in Accounting Principles, net of tax |   |                                                      | (0.01  | ) |   | - |   |   | 0.61 |   |
| **Net                  Earnings per Share of Common Stock (Basic)**                |   | $                                                         | 1.02   |   | $ | 1.45 |   | $ | 1.60 |   |
|                                                                               |   |                                                      |   |   |   |   |   |   |   |   |
| **Diluted:**                                                                       |   |                                                      |   |   |   |   |   |   |   |   |
| Net                  Earnings Before Cumulative Effect of Changes in               |   |                                                      |   |   |   |   |   |   |   |   |
| Accounting                  Principle                                              |   | $                                                         | 68,153 |   | $ | 87,686 |   | $ | 58,552 |   |
| Cumulative                  Effect of Changes in Accounting Principle,             |   |                                                      |   |   |   |   |   |   |   |   |
| net                  of tax of $592 and $23,999                                    |   |                                                      | (926   | ) |   | - |   |   | 36,621 |   |
| **Net                  Earnings**                                                  |   | $                                                         | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Average                  Number of Common Shares Outstanding                       |   |                                                      | 65,928 |   |   | 60,414 |   |   | 59,620 |   |
| Diluted                  Effect of Common Stock Equivalents (a)                    |   |                                                      | 1,152  |   |   | 926 |   |   | 585 |   |
| Average                  Common and Common Equivalent Shares Outstanding           |   |                                                      | 67,080 |   |   | 61,340 |   |   | 60,205 |   |
| **Net                  Earnings per Share of Common Stock (Diluted)**              |   | $                                                         | 1.00   |   | $ | 1.43 |   | $ | 1.58 |   |
| Earnings                  Before Cumulative Effect of Changes in                   |   |                                                      |   |   |   |   |   |   |   |   |
| Accounting                  Principles                                             |   |                                                      | 1.01   |   |   | 1.43 |   |   | 0.97 |   |
| Cumulative                  Effect of Changes in Accounting Principles, net of tax |   |                                                      | (0.01  | ) |   | - |   |   | 0.61 |   |
| **Net                  Earnings per Share of Common Stock (Diluted)**              |   | $                                                         | 1.00   |   | $ | 1.43 |   | $ | 1.58 |   |

| (a) | Excludes                  the effect of average anti-dilutive common stock equivalents related                  to                  out of-the-money options of 433,957 shares, 5,883 shares and 871,493                  shares for the years ended December 31, 2005, 2004 and 2003, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(11)            **
**Income        Taxes**

|                                                                |   | **Year                  Ended December 31,** |   |
|---------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                                |   | (In                  thousands)              |   |
|                                                                |   |                                         |   |   |   |   |   |
| Current                  federal income tax                         |   | $                                            | 4,390  |   | $ | 10,634 |   | $ | (27,621 | ) |
| Current                  state income tax                           |   |                                         | 81     |   |   | 2,495 |   |   | (6,169 | ) |
| Deferred                  federal income tax                        |   |                                         | 28,070 |   |   | 31,725 |   |   | 52,154 |   |
| Deferred                  state income tax                          |   |                                         | 3,872  |   |   | 7,495 |   |   | 12,646 |   |
| Amortization                  of accumulated investment tax credits |   |                                         | (3,552 | ) |   | (3,102 | ) |   | (3,121 | ) |
|                                                                     |   |                                         |   |   |   |   |   |   |   |   |
| Total                  income taxes                                 |   | $                                            | 32,861 |   | $ | 49,247 |   | $ | 27,889 |   |
|                                                                |   |                                         |   |   |   |   |   |   |   |   |
| Charged                  to operating expenses                      |   | $                                            | 19,450 |   | $ | 36,062 |   | $ | 28,072 |   |
| Charged                  to other income and deductions             |   |                                         | 13,411 |   |   | 13,185 |   |   | (183 | ) |
| Total                  income taxes                                 |   | $                                            | 32,861 |   | $ | 49,247 |   | $ | 27,889 |   |

|                                                                                                  |   | **Year                  Ended December 31,** |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                  |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                                                                  |   | (In                  thousands)              |   |
|                                                                                                  |   |                                         |   |   |   |   |   |
| Federal                  income tax at statutory rates                                                |   | $                                            | 36,362 |   | $ | 48,127 |   | $ | 30,459 |   |
| Investment                  tax credits                                                               |   |                                         | (3,552 | ) |   | (3,102 | ) |   | (3,121 | ) |
| Flow-through                  of depreciation items                                                   |   |                                         | 1,903  |   |   | 2,091 |   |   | 2,033 |   |
| Gains                  on the sale and leaseback of PVNGS Units 1 and 2                               |   |                                         | (527   | ) |   | (527 | ) |   | (527 | ) |
| Annual                  reversal of deferred income taxes accrued at prior tax                  rates |   |                                         | (2,086 | ) |   | (1,963 | ) |   | (1,963 | ) |
| Research                  and development credit                                                      |   |                                         | -      |   |   | - |   |   | (966 | ) |
| Affordable                  housing credit                                                            |   |                                         | (750   | ) |   | (789 | ) |   | (969 | ) |
| Allowance                  for funds used during construction                                         |   |                                         | (623   | ) |   | (453 | ) |   | (906 | ) |
| Charitable                  contribution of appreciated property                                      |   |                                         | -      |   |   | (960 | ) |   | - |   |
| State                  income tax                                                                     |   |                                         | 3,356  |   |   | 6,357 |   |   | 4,161 |   |
| Other                                                                                                 |   |                                         | (1,222 | ) |   | 466 |   |   | (312 | ) |
|                                                                                                  |   |                                         |   |   |   |   |   |   |   |   |
| Total                  income taxes                                                                   |   | $                                            | 32,861 |   | $ | 49,247 |   | $ | 27,889 |   |
|                                                                                                  |   |                                         |   |   |   |   |   |   |   |   |
| Effective                  tax rate                                                                   |   |                                         | 31.63  | % |   | 35.81 | % |   | 32.05 | % |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                             |   | **December                  31,** |     |
|------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                             |   | **2005**                          |     | **2004** |   |
|                                                             |   | (In                  thousands)   |     |
| Deferred                  Tax Assets:                            |   |                              |     |   |   |
| Nuclear                  decommissioning costs                   |   | $                                 | 27,610   |   | $ | 31,632 |   |
| Regulatory                  liabilities related to income taxes  |   |                              | 38,331   |   |   | 31,805 |   |
| Minimum                  pension liability                       |   |                              | 72,443   |   |   | 64,139 |   |
| Other                                                            |   |                              | 58,863   |   |   | 43,526 |   |
|                                                             |   |                              |     |   |   |   |   |
| Total                  deferred tax assets                       |   |                              | 197,247  |   |   | 171,102 |   |
|                                                             |   |                              |     |   |   |   |   |
| Deferred                  Tax Liabilities:                       |   |                              |     |   |   |   |   |
| Depreciation                                                     |   |                              | (346,693 | ) |   | (263,542 | ) |
| Investment                  tax credit                           |   |                              | (33,806  | ) |   | (35,360 | ) |
| Regulatory                  assets related to income taxes       |   |                              | (86,931  | ) |   | (70,256 | ) |
| Asset                  retirement obligations                    |   |                              | (16,213  | ) |   | (24,524 | ) |
| Deferred                  charges                                |   |                              | (10,745  | ) |   | - |   |
| Other                  intangibles                               |   |                              | (26,861  | ) |   | - |   |
| Recoverable                  stranded costs                      |   |                              | (46,585  | ) |   | - |   |
| Other                                                            |   |                              | (114,482 | ) |   | (97,308 | ) |
| Total                  deferred tax liabilities                  |   |                              | (682,316 | ) |   | (490,990 | ) |
| Net                  Accumulated deferred income tax liabilities |   | $                                 | (485,069 | ) | $ | (319,888 | ) |

|                                                                                                            |   | **Year                  Ended**        |     |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|----------|
|                                                                                                            |   | **December                  31, 2005** |     |
|                                                                                                            |   | (In                  thousands)        |     |
|                                                                                                            |   |                                   |     |
| Net                  change in deferred income tax liability per above table                                    |   | $                                      | 165,181  |   |
| Inclusion                  of TNP deferred tax liabilities                                                      |   |                                   | (124,947 | ) |
| Change                  in tax effects of income tax related regulatory assets and                  liabilities |   |                                   | (7,725   | ) |
| Tax                  effect of mark-to-market on investments available for sale                                 |   |                                   | (6,999   | ) |
| Tax                  effect of excess pension liability                                                         |   |                                   | 8,304    |   |
| Tax                  effect of cumulative effect of change in accounting                  principle             |   |                                   | 591      |   |
| Other                                                                                                           |   |                                   | (6,015   | ) |
| Deferred                  income tax expense                                                                    |   | $                                      | 28,390   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                |   | **Year                  Ended December 31,** |   |
|---------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                                |   | (In                  thousands)              |   |
|                                                                |   |                                         |   |   |   |   |   |
| Current                  federal income tax                         |   | $                                            | 10,070 |   | $ | 15,057 |   | $ | (19,824 | ) |
| Current                  state income tax                           |   |                                         | 2,289  |   |   | 3,327 |   |   | (4,123 | ) |
| Deferred                  federal income tax                        |   |                                         | 12,792 |   |   | 30,252 |   |   | 46,761 |   |
| Deferred                  state income tax                          |   |                                         | 3,237  |   |   | 7,163 |   |   | 10,897 |   |
| Amortization                  of accumulated investment tax credits |   |                                         | (3,094 | ) |   | (3,102 | ) |   | (3,121 | ) |
|                                                                |   |                                         |   |   |   |   |   |   |   |   |
| Total                  income taxes                                 |   | $                                            | 25,294 |   | $ | 52,697 |   | $ | 30,590 |   |
|                                                                |   |                                         |   |   |   |   |   |   |   |   |
| Charged                  to operating expenses                      |   |                                         | 8,217  |   |   | 37,964 |   |   | 28,262 |   |
| Charged                  to other income and deductions             |   |                                         | 17,077 |   |   | 14,733 |   |   | 2,328 |   |
| Total                  income taxes                                 |   | $                                            | 25,294 |   | $ | 52,697 |   | $ | 30,590 |   |

|                                                                                                  |   | **Year                  Ended December 31,** |   |
|-------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                                                  |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                                                                  |   | (In                  thousands)              |   |
|                                                                                                  |   |                                         |   |   |   |   |   |
| Federal                  income tax at statutory rates                                                |   | $                                            | 27,445 |   | $ | 50,797 |   | $ | 31,699 |   |
| Investment                  tax credits                                                               |   |                                         | (3,094 | ) |   | (3,102 | ) |   | (3,121 | ) |
| Flow-through                  of depreciation items                                                   |   |                                         | 1,903  |   |   | 2,091 |   |   | 2,033 |   |
| Gains                  on the sale and leaseback of PVNGS Units 1 and 2                               |   |                                         | (527   | ) |   | (527 | ) |   | (527 | ) |
| Annual                  reversal of deferred income taxes accrued at prior tax                  rates |   |                                         | (1,963 | ) |   | (1,963 | ) |   | (1,963 | ) |
| Research                  and development credit                                                      |   |                                         | -      |   |   | - |   |   | (966 | ) |
| Allowance                  for funds used during construction                                         |   |                                         | (615   | ) |   | (430 | ) |   | (893 | ) |
| Charitable                  contribution of appreciated property                                      |   |                                         | -      |   |   | (960 | ) |   | - |   |
| State                  income tax                                                                     |   |                                         | 3,694  |   |   | 6,682 |   |   | 4,300 |   |
| Other                                                                                                 |   |                                         | (1,549 | ) |   | 109 |   |   | 28 |   |
|                                                                                                  |   |                                         |   |   |   |   |   |   |   |   |
| Total                  income taxes                                                                   |   | $                                            | 25,294 |   | $ | 52,697 |   | $ | 30,590 |   |
|                                                                                                  |   |                                         |   |   |   |   |   |   |   |   |
| Effective                  tax rate                                                                   |   |                                         | 32.26  | % |   | 36.31 | % |   | 33.78 | % |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                             |   | **December                  31,** |     |
|------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                             |   | **2005**                          |     | **2004** |   |
|                                                             |   | (In                  thousands)   |     |
| Deferred                  Tax Assets:                            |   |                              |     |   |   |   |   |
| Nuclear                  decommissioning costs                   |   | $                                 | 27,610   |   | $ | 31,632 |   |
| Regulatory                  liabilities related to income taxes  |   |                              | 28,351   |   |   | 31,805 |   |
| Minimum                  pension liability                       |   |                              | 72,443   |   |   | 64,139 |   |
| Other                                                            |   |                              | 40,105   |   |   | 47,252 |   |
|                                                             |   |                              |     |   |   |   |   |
| Total                  deferred tax assets                       |   |                              | 168,509  |   |   | 174,828 |   |
|                                                             |   |                              |     |   |   |   |   |
| Deferred                  Tax Liabilities:                       |   |                              |     |   |   |   |   |
| Depreciation                                                     |   |                              | (264,437 | ) |   | (262,039 | ) |
| Investment                  tax credit                           |   |                              | (32,266  | ) |   | (35,360 | ) |
| Regulatory                  assets related to income taxes       |   |                              | (74,231  | ) |   | (70,256 | ) |
| Asset                  retirement obligations                    |   |                              | (16,222  | ) |   | (24,524 | ) |
| Other                                                            |   |                              | (114,371 | ) |   | (96,916 | ) |
| Total                  deferred tax liabilities                  |   |                              | (501,527 | ) |   | (489,095 | ) |
| Net                  Accumulated deferred income tax liabilities |   | $                                 | (333,018 | ) | $ | (314,267 | ) |

|                                                                                                            |   | **Year                  Ended**        |   |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                                            |   | **December                  31, 2005** |   |
|                                                                                                            |   | (In                  thousands)        |   |
|                                                                                                            |   |                                   |   |
| Net                  change in deferred income tax liability per above table                                    |   | $                                      | 18,751 |   |
| Change                  in tax effects of income tax related regulatory assets and                  liabilities |   |                                   | (7,429 | ) |
| Tax                  effect of mark-to-market on investments available for sale                                 |   |                                   | (6,999 | ) |
| Tax                  effect of excess pension liability                                                         |   |                                   | 8,304  |   |
| Tax                  effect of cumulative effect of change in accounting                  principle             |   |                                   | 331    |   |
| Other                                                                                                           |   |                                   | (23    | ) |
| Deferred                  income tax expense                                                                    |   | $                                      | 12,935 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                    |   | **Post-**                         |   |   | **Pre-**                        |   | **Pre-**                          |   | **Pre-**                          |   |
|---------------------------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|--------|-----------------------------------|--------|-----------------------------------|--------|
|                                                    |   | **Acquisition**                   |   |   | **Acquisition**                 |   | **Acquisition**                   |   | **Acquisition**                   |   |
|                                                    |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended**   |   | **Year                  Ended**   |   |
|                                                    |   | **December                  31,** |   |   | **June                  6,**    |   | **December                  31,** |   | **December                  31,** |   |
|                                                    |   | **2005**                          |   |   | **2005**                        |   | **2004**                          |   | **2003**                          |   |
|                                                    |   | (In                  thousands)   |   |
|                                                    |   |                              |   |   |                            |   |                              |   |                              |   |
| Current                  federal income tax             |   | $                                 | 958    |   |                            | $      | 5,634                             |   | $                                 | 6,364  |   | $ | 13,619 |   |
| Current                  state income tax               |   |                              | (60    | )      |                            |   | 676                               |   |                              | 3,048  |   |   | 1,354 |   |
| Deferred                  federal income tax            |   |                              | 8,328  |   |                            |   | (954                              | )      |                              | 15,049 |   |   | (388 | ) |
| Deferred                  state income tax              |   |                              | 1,268  |   |                            |   | (127                              | )      |                              | 2,652  |   |   | (6 | ) |
| Amortization                  of accumulated investment |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| tax                  credits                            |   |                              | (458   | )      |                            |   | (328                              | )      |                              | (722   | ) |   | (874 | ) |
|                                                    |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| Total                  income taxes                     |   | $                                 | 10,036 |   |                            | $      | 4,901                             |   | $                                 | 26,391 |   | $ | 13,705 |   |
|                                                    |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| Charged                  to operating expenses          |   | $                                 | 7,965  |   |                            | $      | 5,055                             |   | $                                 | 13,680 |   | $ | 13,044 |   |
| Charged                  to other income and deductions |   |                              | 2,071  |   |                            |   | (154                              | )      |                              | 12,711 |   |   | 661 |   |
| Total                  income taxes                     |   | $                                 | 10,036 |   |                            | $      | 4,901                             |   | $                                 | 26,391 |   | $ | 13,705 |   |

|                                                              |   | **Post-**                         |   |   | **Pre-**                        |   | **Pre-**                          |   | **Pre-**                          |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|--------|-----------------------------------|--------|-----------------------------------|--------|
|                                                              |   | **Acquisition**                   |   |   | **Acquisition**                 |   | **Acquisition**                   |   | **Acquisition**                   |   |
|                                                              |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended**   |   | **Year                  Ended**   |   |
|                                                              |   | **December                  31,** |   |   | **June                  6,**    |   | **December                  31,** |   | **December                  31,** |   |
|                                                              |   | **2005**                          |   |   | **2005**                        |   | **2004**                          |   | **2003**                          |   |
|                                                              |   | (In                  thousands)   |   |
|                                                              |   |                              |   |   |                            |   |                              |   |                              |   |
| Federal                  income tax at statutory rates            |   | $                                 | 9,753  |   |                            | $      | 4,956                             |   | $                                 | 24,342 |   | $ | 13,451 |   |
| Investment                  tax credits                           |   |                              | (458   | )      |                            |   | (328                              | )      |                              | (722   | ) |   | (874 | ) |
| Annual                  reversal of deferred income taxes accrued |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| at                  prior tax rates                               |   |                              | (123   | )      |                            |   | (93                               | )      |                              | (216   | ) |   | (198 | ) |
| State                  income tax                                 |   |                              | 1,208  |   |                            |   | 549                               |   |                              | 3,048  |   |   | 1,354 |   |
| Other                                                             |   |                              | (344   | )      |                            |   | (183                              | )      |                              | (61    | ) |   | (28 | ) |
|                                                              |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| Total                  income taxes                               |   | $                                 | 10,036 |   |                            | $      | 4,901                             |   | $                                 | 26,391 |   | $ | 13,705 |   |
|                                                              |   |                              |   |   |                            |   |                              |   |                              |   |   |   |   |   |
| Effective                  tax rate                               |   |                              | 36.01  | %      |                            |   | 34.61                             | %      |                              | 36.14  | % |   | 35.15 | % |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                      |   | **December                  31,** |     |
|---------------------------------------------------------------------------|--------|-----------------------------------|----------|
|                                                                      |   | **2005**                          |     |   | **2004** |   |
|                                                                      |   | (In                  thousands)   |     |
| Deferred                  Tax Assets:                                     |   |                              |     |   |   |   |
| Regulatory                  liabilities related to income taxes           |   | $                                 | 9,980    |   |   | $ | 10,602 |   |
| Other                                                                     |   |                              | 2,753    |   |   |   | 2,658 |   |
|                                                                      |   |                              |     |   |   |   |   |   |
| Total                  deferred tax assets                                |   |                              | 12,733   |   |   |   | 13,260 |   |
|                                                                      |   |                              |     |   |   |   |   |   |
| Deferred                  Tax Liabilities:                                |   |                              |     |   |   |   |   |   |
| Utility                  plant, principally due to depreciation and basis |   |                              |     |   |   |   |   |   |
| differences,                  including TNP One recoverable stranded cost |   |                              | (82,108  | ) |   |   | (86,606 | ) |
| Deferred                  charges                                         |   |                              | (10,745  | ) |   |   | (5,232 | ) |
| Investment                  tax credit                                    |   |                              | (1,540   | ) |   |   | (2,326 | ) |
| Other                  recoverable stranded costs (non-current)           |   |                              | (46,585  | ) |   |   | (46,585 | ) |
| Regulatory                  assets related to income taxes                |   |                              | (12,700  | ) |   |   | (13,086 | ) |
| Total                  deferred tax liabilities                           |   |                              | (153,678 | ) |   |   | (153,835 | ) |
| Net                  Accumulated deferred income tax liabilities          |   | $                                 | (140,945 | ) |   | $ | (140,575 | ) |

|                                                                           |   | **Post-**                         |   |   | **Pre-**                        |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|---------------------------------|--------|
|                                                                           |   | **Acquisition**                   |   |   | **Acquisition**                 |   |
|                                                                           |   | **June                  6-**      |   |   | **January                  1-** |   |
|                                                                           |   | **December                  31,** |   |   | **June                  6,**    |   |
|                                                                           |   | **2005**                          |   |   | **2005**                        |   |
|                                                                           |   | (In                  thousands)   |   |
|                                                                           |   |                              |   |   |                            |   |
| Net                  change in deferred income tax liability per above table   |   | $                                 | 1,636  |   |                            | $      | (1,266 | ) |
| Change                  in tax effects of income tax related regulatory assets |   |                              |   |   |                            |   |   |   |
| and                  liabilities                                               |   |                              | (296   | )      |                            |   | 60 |   |
| Other                                                                          |   |                              | 7,798  |   |                            |   | (203 | ) |
| Deferred                  income tax expense                                   |   | $                                 | 9,138  |   |                            | $      | (1,409 | ) |

**(12)            **
**Pension        and Other Postretirement Benefits**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| ·   | Maximize                  the return on assets, commensurate with the risk that the Corporate                  Investment Committee deem appropriate to: meet the obligations                  of the                  pension plans and other postretirement benefits plans; minimize                  the                  volatility of expense; and account for contingencies;                  and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Generate                  a rate of return for the total portfolio that equals or exceeds                  the                  actuarial investment rate                  assumption. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*“Employers'          Accounting for Pensions”*
*Employers'          Accounting for Postretirement Benefits Other Than Pensions”*

*Pension        Plans*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                     |   | **PNM                  Plan**                |    |
|----------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                     |   | **Year                  Ended December 31,** |    |
|                                                     |   | **2005**                                     |    | **2004** |   |
|                                                     |   | (In                  thousands)              |    |
|                                                     |   |                                         |    |   |   |
| Benefit                  obligation at beginning of year |   | $                                            | 517,225 |   | $ | 463,794 |   |
| Service                  cost                            |   |                                         | 1,907   |   |   | 3,524 |   |
| Interest                  cost                           |   |                                         | 30,267  |   |   | 29,891 |   |
| Actuarial                  loss                          |   |                                         | 26,453  |   |   | 44,691 |   |
| Benefits                  paid                           |   |                                         | (25,927 | ) |   | (24,675 | ) |
| Benefit                  obligation at end of year       |   | $                                            | 549,925 |   | $ | 517,225 |   |

|                                                       |   | **TNMP                  Plan**    |   |
|------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                       |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   |
|                                                       |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   |
|                                                       |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   |
|                                                       |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   |
|                                                       |   | **2005**                          |   |   | **2005** |   | **2004** |   |
|                                                       |   | (In                  thousands)   |   |
|                                                       |   |                              |   |   |   |   |   |   |
| Benefit                  obligation at beginning of period |   | $                                 | 85,083 |   |   | $ | 81,290 |   | $ | 81,833 |   |
| Service                  cost                              |   |                              | 1,353  |   |   |   | 848 |   |   | 1,876 |   |
| Interest                  cost                             |   |                              | 2,499  |   |   |   | 1,875 |   |   | 4,590 |   |
| Actuarial                  loss                            |   |                              | (2,691 | ) |   |   | 3,708 |   |   | 304 |   |
| Benefits                  paid                             |   |                              | (4,501 | ) |   |   | (2,638 | ) |   | (7,313 | ) |
| Amendments                                                 |   |                              | (2,419 | ) |   |   | - |   |   | - |   |
| Benefit                  obligation at end of period       |   | $                                 | 79,324 |   |   | $ | 85,083 |   | $ | 81,290 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                            |   | **PNM                  Plan**                |    |
|-----------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                            |   | **Year                  Ended December 31,** |    |
|                                                            |   | **2005**                                     |    | **2004** |   |
|                                                            |   | (In                  thousands)              |    |
|                                                            |   |                                         |    |   |   |
| Fair                  value of plan assets at beginning of year |   | $                                            | 445,101 |   | $ | 425,654 |   |
| Actual                  return on plan assets                   |   |                                         | 40,911  |   |   | 44,122 |   |
| Benefits                  paid                                  |   |                                         | (25,927 | ) |   | (24,675 | ) |
| Fair                  value of plan assets at end of year       |   |                                         | 460,085 |   |   | 445,101 |   |
| Funded                  status                                  |   |                                         | (89,840 | ) |   | (72,124 | ) |
| Unrecognized                  net actuarial loss                |   |                                         | 178,991 |   |   | 156,850 |   |
| Unrecognized                  prior service cost                |   |                                         | 2,293   |   |   | 2,610 |   |
| Prepaid                  pension cost                           |   | $                                            | 91,444  |   | $ | 87,336 |   |

|                                                              |   | **TNMP                  Plan**    |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                              |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   |
|                                                              |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   |
|                                                              |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   |
|                                                              |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   |
|                                                              |   | **2005**                          |   |   | **2005** |   | **2004** |   |
|                                                              |   | (In                  thousands)   |   |
|                                                              |   |                              |   |   |   |   |   |   |
| Fair                  value of plan assets at beginning of period |   | $                                 | 80,176 |   |   | $ | 82,364 |   | $ | 85,052 |   |
| Actual                  return on plan assets                     |   |                              | 6,162  |   |   |   | 450 |   |   | 4,625 |   |
| Benefits                  paid                                    |   |                              | (4,501 | ) |   |   | (2,638 | ) |   | (7,313 | ) |
| Fair                  value of plan assets at end of period       |   |                              | 81,837 |   |   |   | 80,176 |   |   | 82,364 |   |
| Funded                  status                                    |   |                              | 2,513  |   |   |   | (4,907 | ) |   | 1,074 |   |
| Unrecognized                  net actuarial loss                  |   |                              | (4,697 | ) |   |   | 4,284 |   |   | (1,361 | ) |
| Unrecognized                  prior service cost                  |   |                              | -      |   |   |   | (791 | ) |   | (840 | ) |
| Accrued                  pension liability                        |   | $                                 | (2,184 | ) |   | $ | (1,414 | ) | $ | (1,127 | ) |

|                                                               |   | **PNM                  Plan**     |     | **TNMP                  Plan**    |   |
|--------------------------------------------------------------------|--------|-----------------------------------|----------|-----------------------------------|--------|
|                                                               |   | **December                  31,** |     | **December                  31,** |   |
|                                                               |   | **2005**                          |     | **2004**                          |   | **2005** |   |   | **2004** |   |
|                                                               |   | (In                  thousands)   |     |
|                                                               |   |                              |     |                              |   |   |   |   |   |   |
| Prepaid                  pension cost/(Accrued pension liability)  |   | $                                 | 91,444   |                              | $      | 87,336 |   | $ | (2,184 | ) |   | $ | (1,127 | ) |
| Additional                  minimum pension liability              |   |                              | (181,284 | )                                 |   | (159,460 | ) |   | - |   |   |   | - |   |
| Intangible                  asset                                  |   |                              | 2,293    |                              |   | 2,610 |   |   | - |   |   |   | - |   |
| Deferred                  tax asset                                |   |                              | 70,863   |                              |   | 62,096 |   |   | - |   |   |   | - |   |
| Additional                  minimum pension liability adjustment * |   |                              | 108,128  |                              |   | 94,754 |   |   | - |   |   |   | - |   |
| Net                  amount recognized                             |   | $                                 | 91,444   |                              | $      | 87,336 |   | $ | (2,184 | ) |   | $ | (1,127 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **PNM                  Plan**                                     |   | **Pension                  Benefits**        |    |
|-------------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                              |   | **Year                  Ended December 31,** |    |
|                                                              |   | **2005**                                     |    | **2004** |   | **2003** |   |
|                                                              |   | (In                  thousands)              |    |
|                                                              |   |                                         |    |   |   |   |   |
| Service                  cost                                     |   | $                                            | 1,907   |   | $ | 3,524 |   | $ | 5,189 |   |
| Interest                  cost                                    |   |                                         | 30,267  |   |   | 29,891 |   |   | 28,089 |   |
| Expected                  long-term rate of return on plan assets |   |                                         | (40,168 | ) |   | (39,037 | ) |   | (35,109 | ) |
| Amortization                  of net loss                         |   |                                         | 3,569   |   |   | 3,956 |   |   | 3,910 |   |
| Amortization                  of prior service cost               |   |                                         | 317     |   |   | 317 |   |   | 317 |   |
| Net                  pension cost/(income)                        |   | $                                            | (4,108  | ) | $ | (1,349 | ) | $ | 2,396 |   |

| **PNM                  Plan**                                               |   |     |   |     |   |     |   |
|-----------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                                                        |   | **2005** |   | **2004** |   | **2003** |   |
| Discount                  rate for determining projected benefit obligation |   |     |   |     |   |     |   |   |   |   |
| at                  December 31                                             |   |     | 5.75   | %        |   | 6.00     | %      |   | 6.50 | % |
| Discount                  rate for determining net pension cost/(income)    |   |     | 6.00   | %        |   | 6.50     | %      |   | 6.75 | % |
| Expected                  long-term rate of return on plan assets           |   |     | 9.00   | %        |   | 9.00     | %      |   | 9.00 | % |
| Rate                  of compensation increase                              |   |     | N/A    |     |   | N/A      |   |   | N/A |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **TNMP                  Plan**                                    |   | **Pension                  Benefits** |   |
|-------------------------------------------------------------------|--------|---------------------------------------|--------|
|                                                              |   | **Post-**                             |   |   | **Pre-** |   | **Pre-** |   | **Pre-** |   |
|                                                              |   | **Acquisition**                       |   |   | **Acquisition** |   | **Acquisition** |   | **Acquisition** |   |
|                                                              |   | **June                  6-**          |   |   | **January                  1-** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                              |   | **December                  31,**     |   |   | **June                  6,** |   | **December                  31,** |   | **December                  31,** |   |
|                                                              |   | **2005**                              |   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                              |   | (In                  thousands)       |   |
|                                                              |   |                                  |   |   |   |   |   |   |   |   |
| Service                  cost                                     |   | $                                     | 1,353  |   |   | $ | 848 |   | $ | 1,876 |   | $ | 1,784 |   |
| Interest                  cost                                    |   |                                  | 2,499  |   |   |   | 1,875 |   |   | 4,590 |   |   | 4,897 |   |
| Expected                  long-term rate of return on plan assets |   |                                  | (4,155 | ) |   |   | (2,387 | ) |   | (6,040 | ) |   | (6,960 | ) |
| Amortization                  of prior service cost               |   |                                  | -      |   |   |   | (49 | ) |   | (116 | ) |   | (116 | ) |
| Net                  pension benefit cost/(income)                |   | $                                     | (303   | ) |   | $ | 287 |   | $ | 310 |   | $ | (395 | ) |

| **TNMP                  Plan**                                    |   |                              |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                              |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   | **Pre-** |   |
|                                                              |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   | **Acquisition** |   |
|                                                              |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                              |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   | **December                  31,** |   |
|                                                              |   | **2005**                          |   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                              |   | (In                  thousands)   |   |
|                                                              |   |                              |   |   |   |   |   |   |   |   |
| Discount                  rate for determining projected benefit  |   |                              |   |   |   |   |   |   |   |   |
|                     obligation at the end of the period |   |                              | 5.75   | % |   |   | 5.25 | % |   | 5.75 | % |   | 6.00 | % |
| Discount                  rate for determining net pension        |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                     cost/(income)                       |   |                              | 5.25   | % |   |   | 5.75 | % |   | 6.00 | % |   | 6.50 | % |
| Expected                  long-term rate of return on plan assets |   |                              | 9.00   | % |   |   | 7.80 | % |   | 7.80 | % |   | 8.50 | % |
| Rate                  of compensation increase                    |   |                              | 3.50   | % |   |   | 3.50 | % |   | 3.50 | % |   | 3.50 | % |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                            |   | **PNM                  Plan**     |    | **TNMP                  Plan**    |   |
|-------------------------------------------------|--------|-----------------------------------|---------|-----------------------------------|--------|
|                                            |   | **December                  31,** |    | **December                  31,** |   |
|                                            |   | **2005**                          |    | **2004**                          |   | **2005** |   |   | **2004** |   |
|                                            |   | (In                  thousands)   |    |
|                                            |   |                              |    |                              |   |   |   |   |   |   |
| Projected                  benefit obligation   |   | $                                 | 549,925 |                              | $      | 517,225 |   | $ | 79,324 |   |   | $ | 81,290 |   |
| Accumulated                  benefit obligation |   | $                                 | 549,925 |                              | $      | 517,225 |   | $ | 79,324 |   |   | $ | 79,126 |   |
| Fair                  value of plan assets      |   | $                                 | 460,085 |                              | $      | 445,101 |   | $ | 81,837 |   |   | $ | 82,634 |   |

|                                                    |   | **PNM                  Plan**                |   |
|---------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                    |   | **Year                  Ended December 31,** |   |
|                                                    |   | **2005**                                     |   | **2004** |   | **2003** |   |
|                                                    |   | (In                  thousands)              |   |
|                                                    |   |                                         |   |   |   |   |   |
| Included                  in other comprehensive income |   | $                                            | 13,376 |   | $ | 21,539 |   | $ | (13,972 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                 | **PNM                    Plan**     |   | **TNMP                    Plan**    |
|--------------------------------------|-------------------------------------|--------|-------------------------------------|
|                                 | **December                    31,** |   | **December                    31,** |
|                                 | **2005**                            |   | **2004**                            |   | **2005** |   |   | **2004** |
|                                 |                                |   |                                |   |   |   |   |   |
| Equity                    securities | 60%                                 |   | 60%                                 |   | 66% |   |   | 23% |
| Debt                    securities   | 23%                                 |   | 23%                                 |   | 24% |   |   | - |
| Real                    estate       | 6%                                  |   | 7%                                  |   | - |   |   | - |
| Other                                | 11%                                 |   | 10%                                 |   | 10% |   |   | 77% |
|                                 | 100%                                |   | 100%                                |   | 100% |   |   | 100% |

|                             |   | **PNM**  |   | **TNMP** |   |
|----------------------------------|--------|----------|--------|----------|--------|
|                             |   | **Plan** |   | **Plan** |   |
|                             |   |     |   |     |   |
| Domestic                  equity |   |     | 47.5%  |     |   | 47.5% |   |
| Non-US                  equity   |   |     | 10.0%  |     |   | 10.0% |   |
| Fixed                  income    |   |     | 22.5%  |     |   | 22.5% |   |
| Real                  estate     |   |     | 5.0%   |     |   | 5.0% |   |
| Private                  equity  |   |     | 5.0%   |     |   | 5.0% |   |
| Absolute                  return |   |     | 10.0%  |     |   | 10.0% |   |
|                             |   |     | 100%   |     |   | 100% |   |

|                               |   | **PNM**                         |    | **TNMP** |   |
|------------------------------------|--------|---------------------------------|---------|----------|--------|
|                               |   | **Plan**                        |    | **Plan** |   |
|                               |   | (In                  thousands) |    |
|                               |   |                            |    |     |   |
| 2006                               |   | $                               | 27,096  |     | $      | 7,724 |   |
| 2007                               |   | $                               | 27,939  |     | $      | 7,346 |   |
| 2008                               |   | $                               | 29,077  |     | $      | 7,500 |   |
| 2009                               |   | $                               | 30,507  |     | $      | 7,901 |   |
| 2010                               |   | $                               | 32,275  |     | $      | 7,415 |   |
| Years                  2011 - 2015 |   | $                               | 188,000 |     | $      | 35,957 |   |

*Other        Postretirement Benefits*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                     |   | **PNM                  Plan**                |    |
|----------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                     |   | **Year                  Ended December 31,** |    |
|                                                     |   | **2005**                                     |    | **2004** |   |
|                                                     |   | (In                  thousands)              |    |
|                                                     |   |                                         |    |   |   |
| Benefit                  obligation at beginning of year |   | $                                            | 112,592 |   | $ | 114,812 |   |
| Service                  cost                            |   |                                         | 2,764   |   |   | 2,286 |   |
| Interest                  cost                           |   |                                         | 6,765   |   |   | 6,941 |   |
| Participant                  contributions               |   |                                         | 1,240   |   |   | 1,179 |   |
| Amendments                                               |   |                                         | 8,641   |   |   | (17,621 | ) |
| Unrecognized                  actuarial loss             |   |                                         | 7,605   |   |   | 12,031 |   |
| Benefits                  paid                           |   |                                         | (7,918  | ) |   | (7,036 | ) |
| Benefit                  obligation at end of year       |   | $                                            | 131,689 |   | $ | 112,592 |   |

|                                                       |   | **TNMP                  Plan**    |   |
|------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                       |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   |
|                                                       |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   |
|                                                       |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   |
|                                                       |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   |
|                                                       |   | **2005**                          |   |   | **2005** |   | **2004** |   |
|                                                       |   | (In                  thousands)   |   |
|                                                       |   |                              |   |   |   |   |   |   |
| Benefit                  obligation at beginning of period |   | $                                 | 12,864 |   |   | $ | 12,209 |   | $ | 10,864 |   |
| Service                  cost                              |   |                              | 290    |   |   |   | 195 |   |   | 411 |   |
| Interest                  cost                             |   |                              | 376    |   |   |   | 282 |   |   | 679 |   |
| Participant                  contributions                 |   |                              | 505    |   |   |   | 438 |   |   | 857 |   |
| Amendments                                                 |   |                              | 517    |   |   |   | - |   |   | - |   |
| Unrecognized                  actuarial loss               |   |                              | (817   | ) |   |   | 514 |   |   | 1,465 |   |
| Benefits                  paid                             |   |                              | (928   | ) |   |   | (774 | ) |   | (2,067 | ) |
| Benefit                  obligation at end of period       |   | $                                 | 12,807 |   |   | $ | 12,864 |   | $ | 12,209 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                            |   | **PNM                  Plan**                |    |
|-----------------------------------------------------------------|--------|----------------------------------------------|---------|
|                                                            |   | **Year                  Ended December 31,** |    |
|                                                            |   | **2005**                                     |    | **2004** |   |
|                                                            |   | (In                  thousands)              |    |
|                                                            |   |                                         |    |   |   |
| Fair                  value of plan assets at beginning of year |   | $                                            | 56,689  |   | $ | 50,957 |   |
| Actual                  return on plan assets                   |   |                                         | 2,063   |   |   | 5,187 |   |
| Employer                  contributions                         |   |                                         | 6,410   |   |   | 6,402 |   |
| Participant                  contributions                      |   |                                         | 1,240   |   |   | 1,179 |   |
| Benefits                  paid                                  |   |                                         | (7,918  | ) |   | (7,036 | ) |
| Fair                  value of plan assets at end of year       |   |                                         | 58,484  |   |   | 56,689 |   |
| Funded                  status                                  |   |                                         | (73,205 | ) |   | (55,902 | ) |
| Unrecognized                  net actuarial loss                |   |                                         | 84,511  |   |   | 79,773 |   |
| Unrecognized                  prior service cost                |   |                                         | (27,993 | ) |   | (42,924 | ) |
| Accrued                  postretirement benefit obligation      |   | $                                            | (16,687 | ) | $ | (19,053 | ) |

|                                                              |   | **TNMP                  Plan**    |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                              |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   |
|                                                              |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   |
|                                                              |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   |
|                                                              |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   |
|                                                              |   | **2005**                          |   |   | **2005** |   | **2004** |   |
|                                                              |   | (In                  thousands)   |   |
|                                                              |   |                              |   |   |   |   |   |   |
| Fair                  value of plan assets at beginning of period |   | $                                 | 5,979  |   |   | $ | 5,956 |   | $ | 5,689 |   |
| Actual                  return on plan assets                     |   |                              | 120    |   |   |   | 15 |   |   | 369 |   |
| Employer                  contributions                           |   |                              | 786    |   |   |   | 344 |   |   | 1,099 |   |
| Participant                  contributions                        |   |                              | 505    |   |   |   | 438 |   |   | 853 |   |
| Benefits                  paid                                    |   |                              | (928   | ) |   |   | (774 | ) |   | (2,054 | ) |
| Fair                  value of plan assets at end of period       |   | $                                 | 6,462  |   |   | $ | 5,979 |   | $ | 5,956 |   |
| Funded                  status                                    |   |                              | (6,345 | ) |   |   | (6,886 | ) |   | (6,253 | ) |
| Unrecognized                  net transition obligation           |   |                              | -      |   |   |   | 2,458 |   |   | 2,594 |   |
| Unrecognized                  net actuarial loss                  |   |                              | (697   | ) |   |   | 1,611 |   |   | 975 |   |
| Unrecognized                  prior service cost                  |   |                              | 517    |   |   |   | - |   |   | - |   |
| Accrued                  postretirement benefit obligation        |   | $                                 | (6,525 | ) |   | $ | (2,817 | ) | $ | (2,684 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **PNM                  Plan**                                     |   | **Other                  Postretirement Benefits** |   |
|-------------------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                              |   | **Year                  Ended December 31,**       |   |
|                                                              |   | **2005**                                           |   | **2004** |   | **2003** |   |
|                                                              |   | (In                  thousands)                    |   |
|                                                              |   |                                               |   |   |   |   |   |
| Service                  cost                                     |   | $                                                  | 2,764  |   | $ | 2,286 |   | $ | 3,086 |   |
| Interest                  cost                                    |   |                                               | 6,765  |   |   | 6,941 |   |   | 7,840 |   |
| Expected                  long-term return on plan assets         |   |                                               | (5,300 | ) |   | (4,928 | ) |   | (4,592 | ) |
| Prior                  service cost amortization                  |   |                                               | (6,290 | ) |   | (5,462 | ) |   | (2,593 | ) |
| Amortization                  of net loss                         |   |                                               | 6,105  |   |   | 4,985 |   |   | 4,124 |   |
| Adjustment                  to unrecognized transition obligation |   |                                               |   |   |   |   |   |   |   |   |
|                     and unrecognized prior service cost |   |                                               | -      |   |   | (968 | ) |   | - |   |
| Amortization                  of transition obligation            |   |                                               | -      |   |   | - |   |   | 1,817 |   |
| Postretirement                  benefit cost                      |   | $                                                  | 4,044  |   | $ | 2,854 |   | $ | 9,682 |   |

| **PNM                  Plan**                                              |     |   |     |   |     |
|----------------------------------------------------------------------------|----------|--------|----------|--------|----------|
|                                                                       | **2005** |   | **2004** |   | **2003** |
| Discount                  rate for determining accumulated postretirement  |     |   |     |   |     |
| benefit                  obligation at December 31                         | 5.75%    |   | 6.00%    |   | 6.50%    |
| Discount                  rate for determining postretirement benefit cost | 6.00%    |   | 6.50%    |   | 6.75%    |
| Expected                  long-term rate of return on plan assets          | 9.00%    |   | 9.00%    |   | 9.00%    |
| Rate                  of compensation increase                             | N/A      |   | N/A      |   | N/A      |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **TNMP                  Plan**                                    |   |                              |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                              |   | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   | **Pre-** |   |
|                                                              |   | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   | **Acquisition** |   |
|                                                              |   | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   | **Year                  Ended** |   |
|                                                              |   | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   | **December                  31,** |   |
|                                                              |   | **2005**                          |   |   | **2005** |   | **2004** |   | **2003** |   |
|                                                              |   | (In                  thousands)   |   |
|                                                              |   |                              |   |   |   |   |   |   |   |   |
| Service                  cost                                     |   | $                                 | 290    |   |   | $ | 195 |   | $ | 411 |   | $ | 388 |   |
| Interest                  cost                                    |   |                              | 376    |   |   |   | 282 |   |   | 679 |   |   | 686 |   |
| Expected                  long-term rate of return on plan assets |   |                              | (241   | ) |   |   | (136 | ) |   | (315 | ) |   | (333 | ) |
| Amortization                  of transition obligation            |   |                              | -      |   |   |   | 136 |   |   | 324 |   |   | 324 |   |
| Recognized                  actuarial (gain) or loss              |   |                              | -      |   |   |   | - |   |   | - |   |   | (17 | ) |
| Postretirement                  benefit cost                      |   | $                                 | 425    |   |   | $ | 477 |   | $ | 1,099 |   | $ | 1,048 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **TNMP                  Plan**                                             |                              |
|----------------------------------------------------------------------------|-----------------------------------|
|                                                                       | **Post-**                         |   |   | **Pre-** |   | **Pre-** |   | **Pre-** |
|                                                                       | **Acquisition**                   |   |   | **Acquisition** |   | **Acquisition** |   | **Acquisition** |
|                                                                       | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended** |   | **Year                  Ended** |
|                                                                       | **December                  31,** |   |   | **June                  6,** |   | **December                  31,** |   | **December                  31,** |
|                                                                       | **2005**                          |   |   | **2005** |   | **2004** |   | **2003** |
|                                                                       | (In                  thousands)   |
|                                                                       |                              |   |   |   |   |   |   |   |
| Discount                  rate for determining accumulated                 |                              |   |   |   |   |   |   |   |
|                     postretirement benefit obligation at the end |                              |   |   |   |   |   |   |   |
|                     the period                                   | 5.75%                             |   |   | 5.25% |   | 5.75% |   | 6.00% |
| Discount                  rate for determining postretirement              |                              |   |   |   |   |   |   |   |
|                     benefit cost                                 | 5.25%                             |   |   | 5.75% |   | 6.00% |   | 6.50% |
| Expected                  long-term rate of return on plan assets          | 6.90%                             |   |   | 5.50% |   | 5.50% |   | 6.00% |
| Rate                  of compensation increase                             | N/A                               |   |   | N/A |   | N/A |   | N/A |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                | **PNM                  Plan**     |   | **TNMP                  Plan**    |
|---------------------------------------------------------------------|-----------------------------------|--------|-----------------------------------|
|                                                                | **December                  31,** |   | **December                  31,** |
|                                                                | **2005**                          |   | **2004**                          |   | **2005** |   |   | **2004** |
|                                                                |                              |   |                              |   |   |   |   |   |
| Health                  care cost trend rate assumed for next year  | 10.0%                             |   | 10.0%                             |   | N/A |   |   | N/A |
| Rate                  to which the cost trend rate is assumed       |                              |   |                              |   |   |   |   |   |
|                     to decline (the ultimate trend rate)  | 5.0%                              |   | 6.0%                              |   | N/A |   |   | N/A |
| Year                  that the rate reaches the ultimate trend rate | 2012                              |   | 2012                              |   | N/A |   |   | N/A |

|                                                          |   | **PNM                  Plan**       |   |
|---------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                          |   | **1-Percentage-**                   |   | **1-Percentage-** |   |
|                                                          |   | **Point                  Increase** |   | **Point                  Decrease** |   |
|                                                          |   | (In                  thousands)     |   |
|                                                          |   |                                |   |   |   |
| Effect                  on total of service and interest cost |   | $                                   | 1,083  |   | $ | (916 | ) |
| Effect                  on postretirement benefit obligation  |   | $                                   | 11,688 |   | $ | (10,049 | ) |

|                               | **PNM                  Plan**     |   | **TNMP                  Plan**    |
|------------------------------------|-----------------------------------|--------|-----------------------------------|
|                               | **December                  31,** |   | **December                  31,** |
|                               | **2005**                          |   | **2004**                          |   | **2005** |   |   | **2004** |
|                               |                              |   |                              |   |   |   |   |   |
| Equity                  securities | 50%                               |   | 49%                               |   | 23% |   |   | 23% |
| Debt                  securities   | 50%                               |   | 51%                               |   | 77% |   |   | - |
| Other                              | -                                 |   | -                                 |   | - |   |   | 77% |
|                               | 100%                              |   | 100%                              |   | 100% |   |   | 100% |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                               |   | **PNM**                         |   | **TNMP** |   |
|------------------------------------|--------|---------------------------------|--------|----------|--------|
|                               |   | **Plan**                        |   | **Plan** |   |
|                               |   | (In                  thousands) |   |
|                               |   |                            |   |     |   |
| 2006                               |   | $                               | 5,529  |     | $      | 902 |   |
| 2007                               |   | $                               | 5,898  |     | $      | 866 |   |
| 2008                               |   | $                               | 6,440  |     | $      | 871 |   |
| 2009                               |   | $                               | 7,037  |     | $      | 878 |   |
| 2010                               |   | $                               | 7,671  |     | $      | 917 |   |
| Years                  2011 - 2015 |   | $                               | 49,716 |     | $      | 5,053 |   |

*Executive        Retirement Programs*

*Other        Retirement Plans*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(13)    **
**Stock-Based        Compensation Plans**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                |   | **2005**   |   | **2004**     |   | **2003**   |
|-----------------------------------------------------|--------|------------|--------|--------------|--------|------------|
|                                                |   |       |   | **Weighted** |   |       |   | **Weighted** |   |   |   | **Weighted** |
|                                                |   |       |   | **Average**  |   |       |   | **Average** |   |   |   | **Average** |
|                                                |   |       |   | **Exercise** |   |       |   | **Exercise** |   |   |   | **Exercise** |
| **Fixed                  Options**                  |   | **Shares** |   | **Price**    |   | **Shares** |   | **Price** |   | **Shares** |   | **Price** |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Outstanding                  at beginning of year   |   | 3,562,581  |   | $15.94       |   | 4,936,716  |   | $14.47 |   | 5,274,560 |   | $13.95 |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Granted                                             |   | 697,400    |   | $27.52       |   | 905,700    |   | $20.66 |   | 1,292,850 |   | $13.22 |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Exercised                                           |   | 1,203,830  |   | $14.81       |   | 2,248,632  |   | $14.61 |   | 1,587,352 |   | $11.72 |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Forfeited                                           |   | 39,602     |   | $23.02       |   | 29,954     |   | $17.05 |   | 40,003 |   | $14.01 |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Expired                                             |   | -          |   | -            |   | 1,249      |   | $13.03 |   | 3,339 |   | $16.31 |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Outstanding                  at end of year         |   | 3,016,549  |   |         |   | 3,562,581  |   |   |   | 4,936,716 |   |   |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Options                  exercisable at year-end    |   | 1,522,176  |   |         |   | 1,695,279  |   |   |   | 2,931,217 |   |   |
|                                                |   |       |   |         |   |       |   |   |   |   |   |   |
| Options                  available for future grant |   | 4,161,505  |   |         |   | 451,255    |   |   |   | 1,385,327 |   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                          |                               | **Options                  Outstanding** |      | **Options                  Exercisable** |
|-------------------------------|------------------------------------|------------------------------------------|-----------|------------------------------------------|
|                          |                               |                                     |      | **Weighted-**                            |   |   |   |   |   |   |
|                          |                               |                                     |      | **Average**                              |   | **Weighted** |   |   |   | **Weighted** |
| **Range                  of** |                               | **Number**                               |      | **Remaining**                            |   | **Average** |   | **Number** |   | **Average** |
| **Exercise**                  |                               | **Outstanding**                          |      | **Contractual**                          |   | **Exercise** |   | **Exercisable** |   | **Exercise** |
| **Prices**                    |                               | **at                  12/31/05**         |      | **Life**                                 |   | **Prices** |   | **at                  12/31/05** |   | **Prices** |
| DRP                           | $3.667                  - $8.500   | (a)                                      | 13,500    |                                     | 2.60 |   | $5.63 |   | 13,500 |   | $5.63 |
|                          |                               |                                     |      |                                     |   |   |   |   |   |   |   |
| DRP                           | $13.433                  - $27.520 | (b)                                      | 166,150   |                                     | 7.55 |   | $18.07 |   | 157,750 |   | $17.56 |
|                          |                               |                                     |      |                                     |   |   |   |   |   |   |   |
| PSP                           | $7.667                  - $16.208  |                                     | 542,019   |                                     | 4.29 |   | $15.00 |   | 514,526 |   | $14.99 |
|                          |                               |                                     |      |                                     |   |   |   |   |   |   |   |
| PEP                           | $13.033                  - $27.520 |                                     | 2,294,880 |                                     | 7.93 |   | $20.06 |   | 836,400 |   | $16.55 |
|                          |                               |                                     |      |                                     |   |   |   |   |   |   |   |
|                          |                               |                                     | 3,016,549 |                                     | 7.26 |   | $18.97 |   | 1,522,176 |   | $16.03 |

|                                                                           |   | **2005** |   | **2004** |   | **2003** |   |
|--------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                                                           |   |     |   |     |   |     |   |
| PEP                                                                            |   | $        | 5.11   |     | $      | 3.68     |   | $ | 3.27 |   |
| DRP                                                                            |   | $        | 5.11   |     | $      | 3.64     |   | $ | 3.43 |   |
| Total                  fair market value of all options granted (in thousands) |   | $        | 3,564  |     | $      | 3,329    |   | $ | 1,414 |   |

|                                      |   | **2005**                   |   | **2004**                   |   | **2003**                    |   |
|-------------------------------------------|--------|----------------------------|--------|----------------------------|--------|-----------------------------|--------|
|                                      |   |
| Dividend                  yield           |   | 2.55%                      |   | 3.26%                      |   | 5.88%                       |   |
| Expected                  volatility      |   | 24.29%                     |   | 22.90%                     |   | 45.49%                      |   |
| Risk-free                  interest rates |   | 3.79%                      |   | 3.21%                      |   | 4.00%                       |   |
| Expected                  life            |   | 4.2                  years |   | 5.7                  years |   | 10.0                  years |   |

**(14)           **
**Construction        Program and Jointly-Owned Plants**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|   **Station                  (Fuel Type)** |   |  **Plant                  in Service** |    |  **Accumulated                  Depreciation** |   | **Construction****Work                  in****Progress** |   |  **Composite                  Interest** |   |
|------------------------------------------------------|--------|---------------------------------------------|---------|-----------------------------------------------------|--------|----------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                 |   | (In                  thousands)             |    |
|                                                 |   |
| SJGS                  (Coal)                         |   | $                                           | 697,637 |                                                | $      | 405,230                                                  |   | $                                             | 7,248  |   |   | 46.30 | % |
| PVNGS                  (Nuclear) *                   |   | $                                           | 275,881 |                                                | $      | 76,438                                                   |   | $                                             | 19,496 |   |   | 10.20 | % |
| Four                  Corners Units 4 and 5 (Coal)   |   | $                                           | 128,602 |                                                | $      | 97,282                                                   |   | $                                             | 279    |   |   | 13.00 | % |

|   | * | Includes                  interest in PVNGS Unit 3, interest in common facilities for all                  PVNGS                  units and owned interests in PVNGS Units 1 and                  2. |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*San        Juan Generating Station *

*Palo        Verde Nuclear Generating Station *

*Four        Corners Power Plant *

*Luna        Energy Facility *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(15)     **
**Asset        Retirement Obligations**

*SFAS        143*

|                                              |   | **December                  31,** |   | **December                  31,** |   |
|---------------------------------------------------|--------|-----------------------------------|--------|-----------------------------------|--------|
|                                              |   | **2005**                          |   | **2004**                          |   |
|                                              |   | (In                  thousands)   |   |
|                                              |   |                              |   |                              |   |
| Liability                  at beginning of period |   | $                                 | 50,361 |                              | $      | 46,416 |   |
| Liabilities                  incurred             |   |                              | 1,251  |                              |   | - |   |
| Accretion                  expense                |   |                              | 4,034  |                              |   | 3,945 |   |
| Liability                  at end of period       |   | $                                 | 55,646 |                              | $      | 50,361 |   |

|                                              |   | **December                  31,** |   | **December                  31,** |   |
|---------------------------------------------------|--------|-----------------------------------|--------|-----------------------------------|--------|
|                                              |   | **2005**                          |   | **2004**                          |   |
|                                              |   | (In                  thousands)   |   |
|                                              |   |                              |   |                              |   |
| Liability                  at beginning of period |   | $                                 | 50,361 |                              | $      | 46,416 |   |
| Liabilities                  incurred             |   |                              | 545    |                              |   | - |   |
| Accretion                  expense                |   |                              | 4,034  |                              |   | 3,945 |   |
| Liability                  at end of period       |   | $                                 | 54,940 |                              | $      | 50,361 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                              |   | **December                  31,** |   |   | **December                  31,** |   |
|---------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------------|--------|
|                                              |   | **2005**                          |   |   | **2004**                          |   |
|                                              |   | (In                  thousands)   |   |
|                                              |   |                              |   |   |                              |   |
| Liability                  at beginning of period |   | $                                 | -      |   |                              | $      | - |   |
| Liabilities                  incurred             |   |                              | 639    |   |                              |   | - |   |
| Liability                  at end of period       |   | $                                 | 639    |   |                              | $      | - |   |

*FIN        47*

|                                                       | **PNMR**                        |   | **PNM** |   | **TNMP**               |
|------------------------------------------------------------|---------------------------------|--------|---------|--------|------------------------|
|                                                       | (In                  thousands) |
|                                                       |                            |   |    |   |                   |
| January                  1, 2004 pro forma ARO liability   | $47,728                         |   | $47,671 |   | $                  543 |
| December                  31, 2004 pro forma ARO liability | $51,785                         |   | $51,723 |   | $                  589 |
| December                  31, 2005 recorded ARO liability  | $55,646                         |   | $54,940 |   | $                  639 |

**(16)    **
**Commitments        and Contingencies**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Accounting        for Contingencies*

**Tax        Refund Litigation**

**Net        Operating Loss Carry Forwards**

**Coal        Supply**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Person        Station**

**Retired        Fossil-Fueled Plant Decommissioning Costs**

**Natural        Gas Supply**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**PVNGS        Decommissioning Funding**

**Nuclear        Spent Fuel and Waste Disposal**

**PVNGS        Liability and Insurance Matters**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**PVNGS        Operations**

**Price-Anderson        Act Renewal**

**Water        Supply**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**PVNGS        Water Supply Litigation**

**San        Juan River Adjudication**

**Conflicts        at San Juan Mine Involving Oil and Gas Leaseholders**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Navajo        Nation Environmental Issues**

**New        Source Review Rules**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**The        Clean Air Act**

**Citizen        Suit Under the Clean Air Act**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Four        Corners Air Emissions**

**Excess        Emissions Reports**

**Archaeological        Site Disturbance**

**Santa        Fe Generating Station**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Natural        Gas Royalties Qui Tam Litigation**

**Asbestos        Cases**

**SESCO        Matter**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Coal        Combustion Waste Disposal**

**Western        United States Wholesale Power Market**

*California        Refund Proceeding*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Pacific        Northwest Refund Proceeding*

*FERC        Gaming Partnerships Order*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*California        Power Exchange and Pacific Gas and Electric Bankruptcies*

*California        Attorney General Complaint*

*California        Antitrust Litigation*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

*Block        Forward Agreement Litigation*

**Wholesale        Power Marketing Antitrust Suit**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**SESCO        Matter**

**TNMP        True-Up Proceeding**

*“Regulated        Enterprises - Accounting for Phase-In Plans”*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Power        Resource Group Litigation**

**(17)     **
**Regulatory        and Rate Matters**

**Energy        Policy Act**

**Retail        Competition**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Price-to-Beat        Fuel Factor**

**Price-to-Beat        Base Rate Reset**

**Energy        Agreement**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**Global        Electric Agreement**

**Transmission        Rate Case**

**Complaint        Against Southwestern Public Service Company**

**Acquisition        Agreements**

| ·   | a                  two-year electric rate freeze that includes a $13.0 million annual                  rate                  reduction in TNMP's retail delivery rates effective May 1,                  2005; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                  authorized return on equity of 10.25% on an implied capital structure                  of                  60% debt and 40% equity for certain reporting                  purposes; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                  use of a 60/40% debt/equity capital structure in TNMP's next base                  rate                  case if filed before January 1, 2009;                  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                  $6.0 million synergy savings credit amortized over 24 months effective                  after the close of the transaction. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| ·   | a                  three-phase rate reduction totaling 15%, to TNMP’s electric customers in                  southern New Mexico, beginning January 2006 and ending December                  2010; the                  rate reduction will lower TNMP electric rates by approximately                  $9.6                  million in the first year; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an                  imputed 55/45% debt/equity structure with an assumed rate of return                  on                  equity of 10.5% for TNMP; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | PNM                  to remain the power supplier for TNMP’s New Mexico needs through 2010;                  and |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | integration                  of TNMP’s New Mexico assets into PNM effective January 1, 2007, the                  companies, however, will maintain separate rates through                  2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**60-Day        Rate Review**

**Final        Fuel Reconciliation**

**(18)    **
**Environmental        Issues**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

| **PNMR**                          |   | **PNM**                           |   | **TNMP**                          |
|-----------------------------------|--------|-----------------------------------|--------|-----------------------------------|
| **December                  31,** |   | **December                  31,** |   | **December                  31,** |
| **2005**                          |   | **2004**                          |   | **2005**                          |   | **2004** |   | **2005** |   |   | **2004** |
| (In                  thousands)   |
|                              |   |                              |   |                              |   |   |   |   |   |   |   |
| $5,285                            |   | $5,835                            |   | $4,700                            |   | $5,835 |   | $585 |   |   | $615 |

|     | **Year                  Ended December 31,** |
|----------|----------------------------------------------|
|     | **2005**                                     |   | **2004** |   | **2003** |
|     | (In                  thousands)              |
|     |                                         |   |   |   |   |
| **PNMR** | $465                                         |   | $267 |   | $3,156 |
| **PNM**  | $443                                         |   | $267 |   | $3,156 |

|     | **Post-**                         |   |   | **Pre-**                        |   | **Pre-**                          |   | **Pre-**                          |
|----------|-----------------------------------|--------|--------|---------------------------------|--------|-----------------------------------|--------|-----------------------------------|
|     | **Acquisition**                   |   |   | **Acquisition**                 |   | **Acquisition**                   |   | **Acquisition**                   |
|     | **June                  6-**      |   |   | **January                  1-** |   | **Year                  Ended**   |   | **Year                  Ended**   |
|     | **December                  31,** |   |   | **June                  6,**    |   | **December                  31,** |   | **December                  31,** |
|     | **2005**                          |   |   | **2005**                        |   | **2004**                          |   | **2003**                          |
|     | (In                  thousands)   |
|     |                              |   |   |                            |   |                              |   |                              |
| **TNMP** | $22                               |   |   | $20                             |   | $-                                |   | $-                                |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(19)           **
**Accumulated        Other Comprehensive Income (Loss)**

|                                                                        |   |                             |   | **Additional** |   | **Mark-to-**                    |   |                               |    |
|-----------------------------------------------------------------------------|--------|----------------------------------|--------|----------------|--------|---------------------------------|--------|------------------------------------|---------|
|                                                                        |   | **Unrealized**                   |   | **minimum**    |   | **market                  for** |   | **Accumulated**                    |    |
|                                                                        |   | **gain                  (loss)** |   | **pension**    |   | **certain**                     |   | **other**                          |    |
|                                                                        |   | **on**                           |   | **liability**  |   | **derivative**                  |   | **comprehensive**                  |    |
|                                                                        |   | **securities**                   |   | **adjustment** |   | **transactions**                |   | **income                  (loss)** |    |
|                                                                        |   | (In                  thousands)  |   |
| **Balance                  at December 31, 2002**                           |   | $                                | 1,446  |           | $      | (85,464                         | )      | $                                  | (10,703 | ) | $ | (94,721 | ) |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | 9,589                           |   |                               | -       |   |   | 9,589 |   |
| Unrealized                  holding gains arising from the period           |   |                             | 1,916  |           |   | -                               |   |                               | -       |   |   | 1,916 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| net                  income                                                 |   |                             | (672   | )              |   | -                               |   |                               | -       |   |   | (672 | ) |
| Change                  in fair market value of designated cash             |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| flow                  hedges                                                |   |                             | -      |           |   | -                               |   |                               | 10,401  |   |   | 10,401 |   |
| **Balance                  at December 31, 2003**                           |   |                             | 2,690  |           |   | (75,875                         | )      |                               | (302    | ) |   | (73,487 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | (21,996                         | )      |                               | -       |   |   | (21,996 | ) |
| Unrealized                  holding gains arising from the period           |   |                             | 1,849  |           |   | -                               |   |                               | -       |   |   | 1,849 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| net                  income                                                 |   |                             | (1,137 | )              |   | -                               |   |                               | (485    | ) |   | (1,622 | ) |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 5,443   |   |   | 5,443 |   |
| **Balance                  at December 31, 2004**                           |   |                             | 3,402  |           |   | (97,871                         | )      |                               | 4,656   |   |   | (89,813 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | (12,701                         | )      |                               | -       |   |   | (12,701 | ) |
| Unrealized                  holding gains arising from the period           |   |                             | 4,498  |           |   | -                               |   |                               | -       |   |   | 4,498 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |    |   |   |   |   |
| net                  income                                                 |   |                             | (4,464 | )              |   | -                               |   |                               | (953    | ) |   | (5,417 | ) |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 11,844  |   |   | 11,844 |   |
| **Balance                  at December 31, 2005**                           |   | $                                | 3,436  |           | $      | (110,572                        | )      | $                                  | 15,547  |   | $ | (91,589 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                        |   |                             |   | **Additional** |   | **Mark-to-**                    |   |                               |   |
|-----------------------------------------------------------------------------|--------|----------------------------------|--------|----------------|--------|---------------------------------|--------|------------------------------------|--------|
|                                                                        |   | **Unrealized**                   |   | **minimum**    |   | **market                  for** |   | **Accumulated**                    |   |
|                                                                        |   | **gain                  (loss)** |   | **pension**    |   | **certain**                     |   | **other**                          |   |
|                                                                        |   | **on**                           |   | **liability**  |   | **derivative**                  |   | **comprehensive**                  |   |
|                                                                        |   | **securities**                   |   | **adjustment** |   | **transactions**                |   | **income                  (loss)** |   |
|                                                                        |   | (In                  thousands)  |   |
| **Balance                  at December 31, 2002**                           |   | $                                | 1,005  |           | $      | (85,464                         | )      | $                                  | (9,671 | ) | $ | (94,130 | ) |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | 9,589                           |   |                               | -      |   |   | 9,589 |   |
| Unrealized                  holding gains arising from the period           |   |                             | 2,357  |           |   | -                               |   |                               | -      |   |   | 2,357 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| net                  income                                                 |   |                             | (672   | )              |   | -                               |   |                               | -      |   |   | (672 | ) |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 9,369  |   |   | 9,369 |   |
| **Balance                  at December 31, 2003**                           |   |                             | 2,690  |           |   | (75,875                         | )      |                               | (302   | ) |   | (73,487 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | (21,996                         | )      |                               | -      |   |   | (21,996 | ) |
| Unrealized                  holding gains arising from the period           |   |                             | 1,849  |           |   | -                               |   |                               | -      |   |   | 1,849 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| net                  income                                                 |   |                             | (1,137 | )              |   | -                               |   |                               | (485   | ) |   | (1,622 | ) |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 5,443  |   |   | 5,443 |   |
| **Balance                  at December 31, 2004**                           |   |                             | 3,402  |           |   | (97,871                         | )      |                               | 4,656  |   |   | (89,813 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | (12,672                         | )      |                               | -      |   |   | (12,672 | ) |
| Unrealized                  holding gains arising from the period           |   |                             | 4,498  |           |   | -                               |   |                               | -      |   |   | 4,498 |   |
| Reclassification                  adjustment for gains included in          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| net                  income                                                 |   |                             | (4,464 | )              |   | -                               |   |                               | (953   | ) |   | (5,417 | ) |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 12,889 |   |   | 12,889 |   |
| **Balance                  at December 31, 2005**                           |   | $                                | 3,436  |           | $      | (110,543                        | )      | $                                  | 16,592 |   | $ | (90,515 | ) |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

|                                                                        |   |                             |   | **Additional** |   | **Mark-to-**                    |   |                               |   |
|-----------------------------------------------------------------------------|--------|----------------------------------|--------|----------------|--------|---------------------------------|--------|------------------------------------|--------|
|                                                                        |   | **Unrealized**                   |   | **minimum**    |   | **market                  for** |   | **Accumulated**                    |   |
|                                                                        |   | **gain                  (loss)** |   | **pension**    |   | **certain**                     |   | **other**                          |   |
|                                                                        |   | **on**                           |   | **liability**  |   | **derivative**                  |   | **comprehensive**                  |   |
|                                                                        |   | **securities**                   |   | **adjustment** |   | **transactions**                |   | **income                  (loss)** |   |
|                                                                        |   | (In                  thousands)  |   |
| **Pre-Acquisition:**                                                        |   |                             |   |           |   |                            |   |                               |   |
| **Balance                  at December 31, 2002**                           |   | $                                | -      |           | $      | (214                            | )      | $                                  | (1,166 | ) | $ | (1,380 | ) |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   |                             | -      |           |   | 214                             |   |                               | -      |   |   | 214 |   |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | (1,111 | ) |   | (1,111 | ) |
| **Balance                  at December 31, 2003**                           |   | $                                | -      |           | $      | -                               |   | $                                  | (2,277 | ) | $ | (2,277 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 516    |   |   | 516 |   |
| **Balance                  at December 31, 2004**                           |   | $                                | -      |           | $      | -                               |   | $                                  | (1,761 | ) | $ | (1,761 | ) |
|                                                                        |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Change                  in fair market value of designated cash flow hedges |   |                             | -      |           |   | -                               |   |                               | 1,761  |   |   | 1,761 |   |
| **Balance                  at June 6, 2005**                                |   | $                                | -      |           | $      | -                               |   | $                                  | -      |   | $ | - |   |
|                                                                        |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| **Post                  Acquisition:**                                      |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Period                  change in:                                          |   |                             |   |           |   |                            |   |                               |   |   |   |   |   |
| Additional                  minimum pension liability adjustment            |   | $                                | -      |           | $      | (29                             | )      | $                                  | -      |   | $ | (29 | ) |
| **Balance                  at December 31, 2005**                           |   | $                                | -      |           | $      | (29                             | )      | $                                  | -      |   | $ | (29 | ) |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

**(20)           **
**Related        Party Transactions**

*Related        Party Disclosures*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December                31, 2005, 2004 and 2003**

|                                                        |   | **At                  or For the Year Ended December 31,** |    |
|-------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                        |   | **2005**                                                   |    | **2004** |   | **2003** |   |
|                                                        |   | (In                  thousands)                            |    |
| **PNMR                  Transactions With PNM**             |   |                                                       |    |   |   |
| Shared                  services billings from PNMR to PNM  |   | $                                                          | 118,158 |   | $ | 113,895 |   | $ | 108,863 |   |
| Shared                  services receivable/payable         |   | $                                                          | 36,099  |   | $ | 31,875 |   | $ | 32,998 |   |
|                                                        |   |                                                       |    |   |   |   |   |   |   |   |
| **PNM                  Transactions with TNMP**             |   |                                                       |    |   |   |   |   |   |   |   |
| Electricity                  and energy scheduling service  |   |                                                       |    |   |   |   |   |   |   |   |
| billings                  from PNM to TNMP                  |   | $                                                          | 24,253  |   | $ | - |   | $ | - |   |
| Electricity                  and energy scheduling services |   |                                                       |    |   |   |   |   |   |   |   |
| receivable                                                  |   | $                                                          | 4,063   |   | $ | - |   | $ | - |   |
|                                                        |   |                                                       |    |   |   |   |   |   |   |   |
| Transmission                  billings from PNM to TNMP     |   | $                                                          | 1,172   |   | $ | - |   | $ | - |   |
| Transmission                  charges receivable            |   | $                                                          | 174     |   | $ | - |   | $ | - |   |
|                                                        |   |                                                       |    |   |   |   |   |   |   |   |
| Transmission                  billings to PNM from TNMP     |   | $                                                          | 169     |   | $ | - |   | $ | - |   |
| Transmission                  charges payable               |   | $                                                          | 26      |   | $ | - |   | $ | - |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                                | **At                  or For the Year Ended**  |
|---------------------------------------------------------------------|------------------------------------------------|
|                                                                | **December                  31,**              |
|                                                                | **2005**                                       |
|                                                                | (In                  thousands)                |
| **TNMP                  Transactions With PNM**                     |                                           |
| Electricity                  and energy scheduling service          |                                           |
| billings                  to TNMP from PNM                          | $24,253                                        |
| Electricity                  and energy scheduling services payable | $                   4,063                 |
|                                                                |                                           |
| Transmission                  billings to TNMP from PNM             | $                   1,172                 |
| Transmission                  charges payable                       | $                      174      |
|                                                                |                                           |
| Transmission                  billings from TNMP to PNM             | $                     169       |
| Transmission                  charges receivable                    | $                       26 |
|                                                                |                                           |
| **TNMP                  Transactions with PNMR**                    |                                           |
| Shared                  services billings to TNMP from PNMR         | $                   9,048                 |
| Shared                  services payable                            | $                   2,975                 |

**(21)           **
**New        Accounting Pronouncements**

*"Exchanges        of Nonmonetary Assets-An Amendment of APB Opinion No. 29, Accounting for        Nonmonetary Transactions" *
* *

*“Accounting        Changes and Error Corrections”*

*“The        Meaning of Other-Than-Temporary Impairment and Its Application to Certain        Investments” *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(22)           **
**Subsequent        Event**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

**(23)           **
**Quarterly        Operating Results (Unaudited)**

|                                                     | **Quarter                    Ended**                        |   |
|----------------------------------------------------------|-------------------------------------------------------------|--------|
|                                                     | **March                    31**                             |   | **June                    30** |   | **September                    30** |   | **December                    31** |   |
|                                                     | (In                    thousands, except per share amounts) |   |
| **2005:**                                                |                                                        |   |   |   |   |   |   |   |
| Operating                    Revenues                    | $427,913                                                    |   | $405,254 |   | $597,117 |   | $646,526 |   |
| Operating                    Income                      | 37,557                                                      |   | 14,458 |   | 49,685 |   | 35,669 |   |
| Net                    Earnings Before Cumulative Effect |                                                        |   |   |   |   |   |   |   |
| of                    Change in Accounting Principle     | 30,509                                                      |   | 1,541 |   | 28,483 |   | 7,620 |   |
| Net                    Earnings                          | 30,509                                                      |   | 1,541 |   | 28,483 |   | 6,694 | (a) |
| Net                    Earnings Per Share (Basic):       |                                                        |   |   |   |   |   |   |   |
| Net                    Earnings Before Cumulative Effect |                                                        |   |   |   |   |   |   |   |
| of                    Change in Accounting Principle     | 0.50                                                        |   | 0.02 |   | 0.41 |   | 0.11 |   |
| Net                    Earnings                          | 0.50                                                        |   | 0.02 |   | 0.41 |   | 0.10 |   |
| Net                    Earnings Per Share (Diluted):     |                                                        |   |   |   |   |   |   |   |
| Net                    Earnings Before Cumulative Effect |                                                        |   |   |   |   |   |   |   |
| of                    Change in Accounting Principle     | 0.50                                                        |   | 0.02 |   | 0.41 |   | 0.11 |   |
| Net                    Earnings                          | 0.50                                                        |   | 0.02 |   | 0.41 |   | 0.10 |   |
|                                                     |                                                        |   |   |   |   |   |   |   |
| **2004:**                                                |                                                        |   |   |   |   |   |   |   |
| Operating                    Revenues                    | $437,372                                                    |   | $370,403 |   | $386,855 |   | $410,162 |   |
| Operating                    Income                      | 33,534                                                      |   | 22,264 |   | 32,215 |   | 24,885 |   |
| Net                    Earnings                          | 24,778                                                      |   | 16,849 |   | 27,417 |   | 18,642 |   |
| Net                    Earnings Per Share (Basic)        | 0.41                                                        |   | 0.28 |   | 0.45 |   | 0.31 |   |
| Net                    Earnings Per Share (Diluted)      | 0.41                                                        |   | 0.28 |   | 0.45 |   | 0.30 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                                   |                                                      |   | **Quarter                  Ended** |   |                              |   |
|--------------------------------------------------------|-----------------------------------------------------------|--------|------------------------------------|--------|-----------------------------------|--------|
|                                                   | **March                  31**                             |   | **June                  30**       |   | **September                  30** |   | **December                  31** |   |
|                                                   | (In                  thousands, except per share amounts) |   |
| **2005:**                                              |                                                      |   |                               |   |                              |   |   |   |
| Operating                  Revenues                    | $427,676                                                  |   | $352,266                           |   | $403,532                          |   | $491,983 |   |
| Operating                  Income                      | 38,655                                                    |   | 9,166                              |   | 18,098                            |   | 10,413 |   |
| Net                  Earnings Before Cumulative Effect |                                                      |   |                               |   |                              |   |   |   |
| of                  Change in Accounting Principle     | 32,354                                                    |   | 3,998                              |   | 11,134                            |   | 5,106 |   |
| Net                  Earnings                          | 32,354                                                    |   | 3,998                              |   | 11,134                            |   | 4,600 | (a) |
|                                                   |                                                      |   |                               |   |                              |   |   |   |
| **2004:**                                              |                                                      |   |                               |   |                              |   |   |   |
| Operating                  Revenues                    | $437,121                                                  |   | $370,275                           |   | $386,677                          |   | $409,894 |   |
| Operating                  Income                      | 35,131                                                    |   | 21,679                             |   | 33,566                            |   | 27,996 |   |
| Net                  Earnings                          | 27,357                                                    |   | 15,791                             |   | 27,548                            |   | 21,170 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**December              31, 2005, 2004 and 2003**

|                                    | **Quarter/Period                    Ended** |
|-----------------------------------------|---------------------------------------------|
|                                    | **Pre-Acquisition                    ***    |   |   | **Post-Acquisition*** |
|                                    |  **March                    31**       |   | **April                    1-****June                    6** |   |   |  **June                    6-30** |   |  **September                    30** |   |  **December                    31** |
|                                    | (In                    thousands)           |
| **2005:**                               |                                        |   |   |   |   |   |   |   |   |   |   |
| Operating                    Revenues   | $                    65,882                 |   | $                    46 938 |   |   | $                    19,235 |   | $                    71,441 |   | $                    63,674 |   |
| Operating                    Income     | 12,370                                      |   | 9,169 |   |   | 4,105 |   | 15,214 |   | 10,627 |   |
| Net                    Earnings Before  |                                        |   |   |   |   |   |   |   |   |   |   |
| Cumulative                    Effect    |                                        |   |   |   |   |   |   |   |   |   |   |
| of                    Change in         |                                        |   |   |   |   |   |   |   |   |   |   |
| Accounting                    Principle | 2,876                                       |   | 6,384 |   |   | 2,547 |   | 9,643 |   | 5,641 |   |
| Net                    Earnings         | 2,876                                       |   | 6,384 |   |   | 2,547 |   | 9,643 |   | 5,260 | (a) |
|                                    |                                        |   |   |   |   |   |   |   |   |   |   |

|                                                          | **Quarter                        Ended** |
|---------------------------------------------------------------|------------------------------------------|
|                                                          | **March                        31**      |   | **June                        30** |   | **September                        30** |   | **December                        31** |
|                                                          | (In                        thousands)    |
| **Pre-Acquisition                        ***                  |                                     |   |   |   |   |   |   |
| **2004:**                                                     |                                     |   |   |   |   |   |   |
| Operating                        Revenues                     | $                        61,653          |   | $                        65,069 |   | $                        74,732 |   | $                        68,211 |
| Operating                        Income                       | 11,563                                   |   | 12,384 |   | 17,080 |   | 13,745 |
| Net                        Earnings Before Extraordinary Item | 4,744                                    |   |  5,600 |   | 10,809 |   | 25,490 |
| Extraordinary                        Item                     | -                                        |   | (97,836) | (b) | - |   | - |
| Net                        Earnings                           | 4,744                                    |   | (92,236) |   | 10,809 |   | 25,490 |

----

*Accounting        for Asset Retirement Obligations,*
*Accounting        for Conditional Asset Retirement Obligations*

----

*Accounting        for Conditional Asset Retirement Obligations*

----

**SCHEDULE        I**

| **PNM                  RESOURCES, INC****.**                                                                    |   |
|-----------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                  FINANCIAL INFORMATION OF PARENT COMPANY**                                          |   |
| **BALANCE                  SHEET****S**                                                                         |   |
|                                                                                                            |   |
|                                                                                                            |   | **As                  of December 31,** |   |
|                                                                                                            |   | **2005** |   | **2004** |   |
|                                                                                                            |   | (In                  thousands) |   |
| **Assets**                                                                                                      |   |   |   |   |   |
| Cash                  and cash equivalents                                                                      |   | $ | 12,219 |   | $ | 388 |   |
| Intercompany                  receivables                                                                       |   |   | 144,510 |   |   | 81,886 |   |
| Other                  current assets                                                                           |   |   | 14,390 |   |   | 14,560 |   |
| Total                  current assets                                                                           |   |   | 171,119 |   |   | 96,834 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| Property,                  plant and equipment, net of accumulated                                              |   |   |   |   |   |   |   |
| depreciation                  of $7,063 and $10,066                                                             |   |   | 20,289 |   |   | 47,343 |   |
| Long-term                  investments                                                                          |   |   | 8,220 |   |   | 22,001 |   |
| Investment                  in subsidiaries                                                                     |   |   | 1,811,285 |   |   | 1,091,997 |   |
| Other                  long-term assets                                                                         |   |   | 15,999 |   |   | 7,261 |   |
| Total                  long-term assets                                                                         |   |   | 1,855,793 |   |   | 1,168,602 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| **Total                  Assets**                                                                               |   | $ | 2,026,912 |   | $ | 1,265,436 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| **Liabilities                  and Stockholders' Equity**                                                       |   |   |   |   |   |   |   |
| Short-term                  debt                                                                                |   | $ | 194,000 |   | $ | 34,000 |   |
| Current                  liabilities                                                                            |   |   | 94,348 |   |   | 34,476 |   |
| Long-term                  debt                                                                                 |   |   | 343,463 |   |   | 147 |   |
| Other                  long-term liabilities                                                                    |   |   | 16,809 |   |   | 7,421 |   |
| Total                  liabilities                                                                              |   |   | 648,620 |   |   | 76,044 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| Common                  stock outstanding (no par value, 120,000,000 shares                  authorized:        |   |   |   |   |   |   |   |
| issued                  68,786,286 and 60,464,595 at December 31, 2005 and 2004,                  respectively) |   |   | 813,425 |   |   | 638,826 |   |
| Accumulated                  comprehensive income, net of tax                                                   |   |   | 244 |   |   | - |   |
| Retained                  earnings                                                                              |   |   | 564,623 |   |   | 550,566 |   |
| Total                  common stockholders' equity                                                              |   |   | 1,378,292 |   |   | 1,189,392 |   |
|                                                                                                            |   |   |   |   |   |   |   |
| **Total                  Liabilities and Stockholders' Equity**                                                 |   | $ | 2,026,912 |   | $ | 1,265,436 |   |

----

| **PNM                    RESOURCES, INC.**                                       |   |
|----------------------------------------------------------------------------------|--------|
| **CONDENSED                    FINANCIAL INFORMATION OF PARENT COMPANY**         |   |
| **STATEMENTS                    OF EARNINGS**                                    |   |
|                                                                             |   |   |   |
|                                                                             |   | **Year                    ended December 31,** |   |
|                                                                             |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                             |   |   |   | (In                    thousands) |   |   |   |
|                                                                             |   |   |   |   |   |   |   |
| **Operating                    revenues**                                        |   | $ | - |   | $ | - |   | $ | 24,999 |   |
| **Operating                    expenses**                                        |   |   | 14,303 |   |   | 5,157 |   |   | 21,974 |   |
| Operating                    income (loss)                                       |   |   | (14,303 | ) |   | (5,157 | ) |   | 3,025 |   |
| **Other                    income and deductions:**                              |   |   |   |   |   |   |   |   |   |   |
| Equity                    in earnings of subsidiaries                            |   |   | 93,344 |   |   | 90,176 |   |   | 94,105 |   |
| Other                    income                                                  |   |   | 3,775 |   |   | 1,258 |   |   | 2,600 |   |
| Other                    deductions                                              |   |   | (32,426 | ) |   | (932 | ) |   | (5,207 | ) |
| Net                    other income and deductions                               |   |   | 64,693 |   |   | 90,502 |   |   | 91,498 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |
| **Income                    before income taxes**                                |   |   | 50,390 |   |   | 85,345 |   |   | 94,523 |   |
| **Income                    tax benefit**                                        |   |   | (16,877 | ) |   | (2,341 | ) |   | (1,451 | ) |
|                                                                             |   |   |   |   |   |   |   |   |   |   |
| **Net                    Earnings Before Cumulative Effect of Changes in**       |   |   |   |   |   |   |   |   |   |   |
| **Accounting                    Principles**                                     |   |   | 67,267 |   |   | 87,686 |   |   | 95,974 |   |
|                                                                             |   |   |   |   |   |   |   |   |   |   |
| Cumulative                    effect of changes in accounting principles, net of |   |   |   |   |   |   |   |   |   |   |
| tax                    expense of $26, $0 and $525                               |   |   | (40 | ) |   | - |   |   | (801 | ) |
| **Net                    Earnings**                                              |   | $ | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |

----

| **SCHEDULE                  I**                                           |   |
|---------------------------------------------------------------------------|--------|
| **PNM                  RESOURCES, INC.**                                  |   |
| **CONDENSED                  FINANCIAL INFORMATION OF PARENT COMPANY**    |   |
| **STATEMENTS                  OF CASH FLOWS**                             |   |
|                                                                      |   | **Year                  Ended December 31,** |   |
|                                                                      |   | **2005** |   | **2004** |   | **2003** |   |
|                                                                      |   | (In                  thousands) |   |
| **Cash                  Flows From Operating Activities:**                |   |   |   |   |   |   |   |
| Net                  earnings                                             |   | $ | 67,227 |   | $ | 87,686 |   | $ | 95,173 |   |
| Adjustments                  to reconcile net earnings to net cash flows  |   |   |   |   |   |   |   |   |   |   |
| from                  operating activities:                               |   |   |   |   |   |   |   |   |   |   |
| Depreciation                  and amortization                            |   |   | 677 |   |   | 2,604 |   |   | 1,735 |   |
| Allowance                  for equity funds used during construction      |   |   | - |   |   | (66 | ) |   | (38 | ) |
| Accumulated                  deferred income tax                          |   |   | (6,281 | ) |   | 2,131 |   |   | 6,213 |   |
| Equity                  in earnings of subsidiaries                       |   |   | (93,344 | ) |   | (90,176 | ) |   | (94,105 | ) |
| Equity-linked                  units charge                               |   |   | 11,348 |   |   | - |   |   | - |   |
| Other                                                                     |   |   | (2,123 | ) |   | - |   |   | - |   |
| Changes                  in certain assets and liabilities:               |   |   |   |   |   |   |   |   |   |   |
| Other                  assets                                             |   |   | (9,039 | ) |   | (9,030 | ) |   | (1,591 | ) |
| Accounts                  payable                                         |   |   | (2,992 | ) |   | 1,053 |   |   | 4,328 |   |
| Accrued                  income tax                                       |   |   | 77,554 |   |   | (28,013 | ) |   | 6,473 |   |
| Other                  liabilities                                        |   |   | (28,360 | ) |   | 14,999 |   |   | 20,711 |   |
| Net                  cash flows provided (used) from operating activities |   |   | 14,667 |   |   | (18,812 | ) |   | 38,899 |   |
| **Cash                  Flows From Investing Activities:**                |   |   |   |   |   |   |   |   |   |   |
| Property                  plant and equipment                             |   |   | (615 | ) |   | (7,256 | ) |   | (9,363 | ) |
| Redemption                  of short-term investments                     |   |   | - |   |   | - |   |   | 80,291 |   |
| Luna                  investment                                          |   |   |   |   |   | (13,379 | ) |   |   |   |
| Investment                  in subsidiaries                               |   |   | (557,229 | ) |   | - |   |   | - |   |
| Sale                  of bond investment                                  |   |   | - |   |   | 12,247 |   |   | - |   |
| Cash                  dividends from subsidiaries                         |   |   | 140,500 |   |   | 23,000 |   |   | 49,581 |   |
| EIP                  sale                                                 |   |   | - |   |   | - |   |   | 36,925 |   |
| Equity                  contribution to subsidiaries                      |   |   | - |   |   | - |   |   | (139,257 | ) |
| Other                                                                     |   |   | 478 |   |   | 174 |   |   | (8,207 | ) |
| Net                  cash flows provided (used) in investing activities   |   |   | (416,866 | ) |   | 14,786 |   |   | 9,970 |   |
| **Cash                  Flows From Financing Activities:**                |   |   |   |   |   |   |   |   |   |   |
| Short-term                  borrowings                                    |   |   | 160,000 |   |   | 33,282 |   |   | - |   |
| Long-term                  debt repayments                                |   |   | - |   |   | - |   |   | (26,152 | ) |
| Long-term                  debt borrowings                                |   |   | 347,250 |   |   | - |   |   | - |   |
| Issuance                  of common stock                                 |   |   | 101,231 |   |   | - |   |   | - |   |
| Exercise                  of employee stock options                       |   |   | (9,735 | ) |   | (16,430 | ) |   | (9,639 | ) |
| Dividends                  paid                                           |   |   | (51,128 | ) |   | (38,263 | ) |   | (36,115 | ) |
| Change                  in intercompany accounts                          |   |   | (135,620 | ) |   | 24,980 |   |   | 23,592 |   |
| Other                                                                     |   |   | 2,032 |   |   | - |   |   | 290 |   |
| Net                  cash flows generated (used) by financing activities  |   |   | 414,030 |   |   | 3,569 |   |   | (48,024 | ) |
| Increase                  (Decrease) in Cash and Cash Equivalents         |   |   | 11,831 |   |   | (457 | ) |   | 845 |   |
| Beginning                  of Year                                        |   |   | 388 |   |   | 845 |   |   | - |   |
| End                  of Year                                              |   | $ | 12,219 |   | $ | 388 |   | $ | 845 |   |
| **Supplemental                  cash flow disclosures:**                  |   |   |   |   |   |   |   |   |   |   |
| Interest                  paid, net                                       |   | $ | 16,780 |   | $ | (3,145 | ) | $ | 576 |   |
| Income                  taxes refunded, net                               |   | $ | (4,179 | ) | $ | (3,098 | ) | $ | (18,070 | ) |
| Non-cash                  dividends from subsidiaries                     |   | $ | 13,150 |   | $ | - |   | $ | - |   |

----

| **SCHEDULE                    II**                          |
|-------------------------------------------------------------|
| **PNM                    RESOURCES, INC. AND SUBSIDIARIES** |
| **VALUATION                    AND QUALIFYING ACCOUNTS**    |
|                                                        |   |   |   |   |   |   |   |   |
|                                                        |   |   |   | Additions |   | Deductions |   |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |
|                                                        |   | Balance                    at |   | Charged                    to |   | Charged                    to |   |   |   |   |
|                                                        |   | beginning                    of |   | costs                    and |   | other |   | Write-off |   | Balance                    at |
| Description                                                 |   | year |   | expenses |   | accounts |   | adjustments |   | end                    of year |
|                                                        |   |   |   | (In                    thousands) |   |   |
| Allowance                    for doubtful accounts,         |   |   |   |   |   |   |   |   |   |   |
| year                    ended December 31:                  |   |   |   |   |   |   |   |   |   |   |
| 2003                                                        |   | $                    15,575 |   | $                    (3,540)  |   | $                            - |   | $                    2,751 |   | $                    9,284 |
|                                                        |   |   |   |   |   |   |   |   |   |   |
| 2004                                                        |   | $                      9,284 |   | $                      1,731 |   | $                            - |   | $                    9,686 |   | $                    1,329 |
|                                                        |   |   |   |   |   |   |   |   |   |   |
| 2005                                                        |   | $                      1,329 |   | $                      2,780 |   | $                    1,611 | (a) | $                    2,067 |   | $                    3,653 |
|                                                        |   |   |   |   |   |   |   |   |   |   |
| (b) Allowance                    for market and credit |   |   |   |   |   |   |   |   |   |   |
| volatility                    year ended December 31:       |   |   |   |   |   |   |   |   |   |   |
| 2003                                                        |   | $                      2,433 |   | $                    (2,433)  |   | $                           - |   | $                           - |   | $                           - |
|                                                        |   |   |   |   |   |   |   |   |   |   |
| 2004                                                        |   | $                              - |   | $                         110 |   | $                      164 |   | $                      210 |   | $                         64 |
|                                                        |   |   |   |   |   |   |   |   |   |   |
| 2005                                                        |   | $        64 |   | $                         115 |   | $                           - |   | $                          6 |   | $                       173 |

----

| **SCHEDULE                  II**                                         |
|--------------------------------------------------------------------------|
| **PUBLIC                  SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY** |
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**    |
| **VALUATION                  AND QUALIFYING ACCOUNTS**                   |
|                                                                     |   |   |   |   |   |   |   |   |
|                                                                     |   |   |   | Additions |   | Deductions |   |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | Balance                  at |   | Charged                  to |   | Charged                  to |   |   |   |   |
|                                                                     |   | beginning                  of |   | costs                  and |   | other |   | Write-off |   | Balance                  at |
| Description                                                              |   | year |   | expenses |   | accounts |   | adjustments |   | end                  of year |
|                                                                     |   |   |   | (In                  thousands) |   |   |
| Allowance                  for doubtful accounts,                        |   |   |   |   |   |   |   |   |   |   |
| year                  ended December 31:                                 |   |   |   |   |   |   |   |   |   |   |
| 2003                                                                     |   | $                  15,575 |   | $                  (3,540) |   | $                      - |   | $                  2,751 |   | $                  9,284 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| 2004                                                                     |   | $                    9,284 |   | $                   1,731 |   | $                      - |   | $                  9,686 |   | $                  1,329 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| 2005                                                                     |   | $                    1,329 |   | $                      140 |   | $                      - |   | $                       34 |   | $                  1,435 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| (a) Allowance                  for market and credit                |   |   |   |   |   |   |   |   |   |   |
| volatility                  year ended December 31:                      |   |   |   |   |   |   |   |   |   |   |
| 2003                                                                     |   | $                    2,433 |   | $                  (2,433) |   | $                       - |   | $                            - |   | $                          - |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| 2004                                                                     |   | $                            - |   | $                      110 |   | $                  164 |   | $                     210 |   | $                       64 |
|                                                                     |   |   |   |   |   |   |   |   |   |   |
| 2005                                                                     |   | $                         64 |   | $                      115 |   | $                       - |   | $                         6 |   | $                     173 |

----

| **SCHEDULE                  II**                                      |
|-----------------------------------------------------------------------|
| **TEXAS-NEW                  MEXICO POWER COMPANY AND SUBSIDIARIES**  |
| **A                  WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.** |
| **VALUATION                  AND QUALIFYING ACCOUNTS**                |
|                                                                  |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   | Additions |   | Deductions |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Balance                  at |   | Charged                  to |   | Charged                  to |   |   |   |   |
|                                                                  |   | beginning                  of |   | costs                  and |   | other |   | Write-off |   | Balance                  at |
| Description                                                           |   | year |   | expenses |   | accounts |   | adjustments |   | end                  of year |
|                                                                  |   |   |   | (In                  thousands) |   |   |
| Allowance                  for doubtful accounts,                     |   |   |   |   |   |   |   |   |   |   |
| year                  ended December 31:                              |   |   |   |   |   |   |   |   |   |   |
| **Pre-Acquisition                  ***                                |   |   |   |   |   |   |   |   |   |   |
| 2003                                                                  |   | $                  172 |   | $                  358 |   | $                     - |   | $                  174 |   | $                  356 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| 2004                                                                  |   | $                  356 |   | $                  (39) |   | $                     - |   | $                  126 |   | $                  191 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| January                  1 - June 6, 2005                             |   | $                  191 |   | $                  (68) |   | $                     - |   | $                    52 |   | $                    71 |
|                                                                  |   |   |   |   |   |   |   |   |   |   |
| **Post-Acquisition                  ***                               |   |   |   |   |   |   |   |   |   |   |
| June                  6 - December 31, 2005                           |   | $                    71 |   | $                  100 |   | $                     - |   | $                    71 |   | $                  100 |

----

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

**ITEM        9A.**
**CONTROLS        AND PROCEDURES**

**TNP        Acquisition**

**ITEM        9B.**
**OTHER        INFORMATION**

----

**PART        III**

**ITEM        10.**
**DIRECTORS        AND EXECUTIVE OFFICERS OF THE COMPANY**

**ITEM        11.**
**EXECUTIVE        COMPENSATION**

**ITEM        12.**
**SECURITY        OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER        MATTERS**

**ITEM        13.**
**CERTAIN        RELATIONSHIPS AND RELATED TRANSACTIONS**

**ITEM        14.**
**PRINCIPAL        ACCOUNTANT FEES AND SERVICES**

|                                    |   |                              |   |
|-----------------------------------------|--------|-----------------------------------|--------|
|                                    |   | **January                  1 -**  |   | **Year                  Ended** |   |
|                                    |   | **June                  6, 2005** |   | **December                  31, 2004** |   |
|                                    |   | (In                  thousands)   |   |
|                                    |   |                              |   |   |   |
| Audit                  Fees (a)         |   | $                                 | 124    |   | $ | 467 |   |
| Audit-related                  Fees (b) |   |                              | 45     |   |   | 28 |   |
| Tax                  Fees (c)           |   |                              | 4      |   |   | 5 |   |
| All                  Other Fees         |   |                              | -      |   |   | - |   |
| Total                  Fees             |   | $                                 | 173    |   | $ | 500 |   |

----

| (a)   | Audit                  fees represent fees for professional services provided in connection                  with                  the audit of financial statements and review of quarterly financial                  statements and audit services provided in connection with other                  statutory                  or regulatory filings. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Audit-related                  fees consisted primarily of accounting consultations, employee                  benefit                  plan audits, and other attestation                  services. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                  fees for tax compliance, tax planning and tax                  advice. |
|-----------------|--------------------------------------------------------------------------------------------------|

----

**PART      IV**

**ITEM      15.**
**EXHIBITS,      FINANCIAL STATEMENT SCHEDULES**

| **Exhibit                No****.** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                                | PNMR   | Purchase                and Sale Agreement, dated as of January 14, 2006 among Twin Oaks                Power LP,                Twin Oaks Power III, LP, Sempra Energy, Altura Power L.P. and PNM                Resources (Confidential treatment was requested for portions of the                exhibit, and such portions were omitted from this exhibit filed and                were                filed separately with the Securities and Exchange                Commission) |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.6                                | PNMR   | Pledge                Agreement, dated as of October 7, 2005, between PNMR and U.S. Bank                National Association                                                                                                                                                                                                                                                                                                                                                             |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.9                                | PNMR   | Remarketing                Agreement, dated as of October 7, 2005, among PNMR, Banc of America                Securities LLC, as remarketing agent and U.S. Bank National Association                as                purchase contract agent.                                                                                                                                                                                                                                          |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.10                               | PNMR   | Registration                Rights Agreement, dated as of October 7, 2005, between PNMR, as issuer                and                Cascade Investment, LLC, as initial holder.                                                                                                                                                                                                                                                                                                         |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.13                              | PNM    | Dividend,                Assignment and Assumption Agreement, dated November 18, 2005 between                PNMR                Development and Management Corporation and PNM                                                                                                                                                                                                                                                                                                          |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.24**                            | PNMR   | Form                of the award agreement for restricted stock rights granted after                2005                under the Omnibus Performance Equity Plan                                                                                                                                                                                                                                                                                                                        |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.31**                            | PNMR   | 2006                Officer Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.43**                            | PNMR   | Third                Amendment to the PNM Resources, Inc. Non-Union Severance Pay Plan                effective October 1, 2005                                                                                                                                                                                                                                                                                                                                                          |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.132                             | PNM    | Stipulation                in the matter of PNM’s application for approval of a certificate of public                convenience and necessity for the Afton Generating Station, Case                No.                05-00275-UT, dated November 30, 2005                                                                                                                                                                                                                       |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 12.1                               | PNMR   | Ratio                of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 12.2                               | PNMR   | Ratio                of Earnings to Combined Fixed Charges and Preferred Stock                Dividends                                                                                                                                                                                                                                                                                                                                                                                  |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 21                                 | PNMR   | Certain                subsidiaries of PNM Resources, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 23.1                               | PNMR   | Consent                of Deloitte & Touche LLP for PNM Resources, Inc.                                                                                                                                                                                                                                                                                                                                                                                                              |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 23.2                               | PNM    | Consent                of Deloitte & Touche LLP for Public Service Company of New                Mexico                                                                                                                                                                                                                                                                                                                                                                              |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 23.3                               | TNMP   | Consent                of Deloitte & Touche LLP for Texas-New Mexico Power                Company                                                                                                                                                                                                                                                                                                                                                                                    |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.1                               | PNMR   | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                            |
|                               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.2                               | PNMR   | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                            |

----

| **Exhibit                No****.** |   | **Description**                                                                                                                              |
|------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
| 31.3                               | PNM    | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley                Act of 2002 |
|                               |   |                                                                                                                                         |
| 31.4                               | PNM    | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley                Act of 2002 |
|                               |   |                                                                                                                                         |
| 31.5                               | TNMP   | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 31.6                               | TNMP   | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.1                               | PNMR   | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.2                               | PNMR   | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.3                               | PNM    | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.4                               | PNM    | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.5                               | TNMP   | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |
| 32.6                               | TNMP   | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                |
|                               |   |                                                                                                                                         |

| **Exhibit                No.**                           | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Filed                as Exhibit:**                                                                                       | **Registrant(s)File                No:** |
|----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|------------------------------------------|
|                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                       |                                     |
| **Plan                of Acquisition**                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                       |
| 2.0                                                      | Stock                Purchase Agreement, dated as of July 24, 2004 by and between PNM                Resources                and SW Acquisition, L.P                                                                                                                                                                                                                                                                                                                                    |   | 2.0                to PNM Resources’ Current Report on Form 8-K filed July 28,                2004                   | 333-32170PNMR                            |
|                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                       |                                     |
| 2.1                                                      | Purchase                and Sale Agreement, dated as of January 14, 2006 among Twin Oaks                Power LP,                Twin Oaks Power III, LP, Sempra Energy, Altura Power L.P. and PNM                Resources (Confidential treatment was requested for portions of the                exhibit, and such portions were omitted from this exhibit filed and                were                filed separately with the Securities and Exchange                Commission) |   | 2.1                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2005   | 1-32462PNMR                              |
|                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                       |                                     |
| **Articles                of Incorporation and By-laws** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                       |
| 3.1                                                      | Articles                of Incorporation of PNM Resources, as amended through June 27,                2005                                                                                                                                                                                                                                                                                                                                                                               |   | 3.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005 | 1-32462PNMR                              |

----

| **Exhibit                No.** | ** Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | ** Filed                as Exhibit:**                                                                                       | ** Registrant(s)                File No:** |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| 3.2                            | Restated                Articles of Incorporation of PNM, as amended through May 31,                2002                                                                                                                                                                                                                                                                                                                                                                             |   | 3.1.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2002     | 1-6986PNM                                       |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 3.3                            | Articles                of Incorporation of TNMP, as amended through July 7, 2005                                                                                                                                                                                                                                                                                                                                                                                                    |   | 3.1.2                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005     | 2-97230TNMP                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 3.4                            | Bylaws                of PNM Resources, Inc. with all amendments to and including February                14,                2006                                                                                                                                                                                                                                                                                                                                                    |   | 3.1                to the Company’s Current Report on Form 8-K filed February 17,                2006.                     | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 3.5                            | Bylaws                of PNM with all amendments to and including May 31, 2002                                                                                                                                                                                                                                                                                                                                                                                                       |   | 3.1.2                to the Company’s Report on Form 10-Q for the fiscal quarter ended June 30,                2002        | 1-6986PNM                                       |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 3.6                            | Bylaws                of TNMP as adopted on August 4, 2005                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 3.2.3                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005     | 2-97230TNMP                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| **Indentures**‡          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| **PNMR**                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 4.1                            | Purchase                Contract and Pledge Agreement, dated as of March 30, 2005, among                PNMR,                JPMorgan Chase Bank, N.A., as Purchase Contract Agent, and U.S. Bank                Trust                National Association, as Collateral Agent, Custodial Agent and Securities                Intermediary, with Form of Corporate Unit included as Exhibit A and                Form                of Treasury Unit included as Exhibit B thereto |   | 10.1                to PNMR’s Current Report on Form 8-K filed March 31, 2005                                              | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 4.2                            | Indenture,                dated as of March 15, 2005, between PNMR and JPMorgan Chase Bank,                N.A., as                Trustee                                                                                                                                                                                                                                                                                                                                           |   | 10.2                to PNMR’s Current Report on Form 8-K filed March 31, 2005                                              | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 4.3                            | Supplemental                Indenture No. 1, dated as of March 30, 2005, between the Company                and                JPMorgan Chase Bank, N.A. as Trustee, with Form of Senior Note included                as                Exhibit A thereto                                                                                                                                                                                                                            |   | 10.3                to PNMR’s Current Report on Form 8-K filed March 31, 2005                                              | 333-32170PNMR                                   |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 4.4                            | Remarketing                Agreement, dated as of March 30, 2005, among PNMR, Banc of America                Securities LLC, as Remarketing Agent, and JPMorgan Chase Bank, N.A.,                as                Purchase Contract Agent                                                                                                                                                                                                                                           |   | 10.4                to PNMR’s Current Report on Form 8-K filed March 31, 2005                                              | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                             |                                            |
| 4.5                            | Purchase                Contract Agreement, dated as of October 7, 2005, between PNMR and                U.S.                Bank National Association, as purchase contract agent, with Form                of                Corporate Unit included as Exhibit A and Form of Treasury Unit included                as                Exhibit B thereto                                                                                                                            |   | 4.10                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005 | 1-32462PNMR                                     |

----

| **Exhibit                No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ** ** | ** Filed                as Exhibit:**                                                                                       | ** Registrant(s)                File No:** |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| 4.6                            | Pledge                Agreement, dated as of October 7, 2005, between PNMR and U.S. Bank                National Association                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |       | 4.6                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005               | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.7                            | Indenture,                dated as of October 7, 2005, between PNMR and U.S. Bank National                Association, as trustee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |       | 4.11                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005 | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.8                            | Supplemental                Indenture, dated as of October 7, 2005, between PNMR and U.S. Bank                National Association, as trustee, with Form of Senior Note included                as                Exhibit A thereto                                                                                                                                                                                                                                                                                                                                                                                                                                               |       | 4.12                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005 | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.9                            | Remarketing                Agreement, dated as of October 7, 2005, among PNMR, Banc of America                Securities LLC, as remarketing agent and U.S. Bank National Association                as                purchase contract agent.                                                                                                                                                                                                                                                                                                                                                                                                                                    |       | 4.9                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005               | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.10                           | Registration                Rights Agreement, dated as of October 7, 2005, between PNMR, as issuer                and                Cascade Investment, LLC, as initial holder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       | 4.10                to the Company's Annual Report on Form 10-K for the year ended December                31, 2005              | 1-32462PNMR                                     |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| **PNM**                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.11                           | Indenture                of Mortgage and Deed of Trust dated as of June 1, 1947, between PNM                and                The Bank of New York (formerly Irving Trust Company), as Trustee,                together                with the Ninth Supplemental Indenture dated as of January 1, 1967,                the                Twelfth Supplemental Indenture dated as of September 15, 1971, the                Fourteenth Supplemental Indenture dated as of December 1, 1974 and                the                Twenty-Second Supplemental Indenture dated as of October 1, 1979                thereto                relating to First Mortgage Bonds of PNM |       | 4-(d)                to PNM’s Registration Statement No. 2-99990                                                           | 2-99990PNM                                      |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.12                           | Fifty-third                Supplemental Indenture, dated as of March 11, 1998, supplemental                to                Indenture of Mortgage and Deed of Trust, dated as of June 1, 1947,                between                PNM and The Bank of New York(formerly Irving Trust Company), as                trustee                                                                                                                                                                                                                                                                                                                                                       |       | 4.3                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1998              | 1-6986PNM                                       |
|                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |       |                                                                                                                             |                                            |
| 4.13                           | Indenture                (for Senior Notes), dated as of March 11, 1998, between PNM and The                Chase                Manhattan Bank, as Trustee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |       | 4.4                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1998              | 1-6986PNM                                       |

----

|  **Exhibit              No.** | ** Description                of Exhibit**                                                                                                                                                                                                                     | ** ** | ** Filed                as Exhibit:**                                                                                | ** Registrant(s)                File No:** |
|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| 4.14                               | First                Supplemental Indenture, dated as of March 11, 1998, supplemental                to                Indenture, dated as of March 11, 1998, Between PNM and The Chase                Manhattan                Bank, as Trustee                    |       | 4.5                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1998       | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.15                               | Second                Supplemental Indenture, dated as of March 11, 1998, supplemental                to                Indenture, dated as of March 11, 1998, Between PNM and The Chase                Manhattan                Bank, as Trustee                   |       | 4.6                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1998       | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.16                               | Third                Supplemental Indenture, dated as of October 1, 1999 to Indenture                dated as                of March 11, 1998, between PNM and The Chase Manhattan Bank, as                Trustee                                                 |       | 4.6.1                to PNM’s Annual Report on Form 10-K for the fiscal year ended December 31,                1999 | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.17                               | Fourth                Supplemental Indenture, dated as of May 1, 2003 to Indenture dated                as of                March 11, 1998, between PNM and JPMorgan Chase Bank (formerly The                Chase                Manhattan Bank), as Trustee      |       | 4.6.2                to PNM’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2003      | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.18                               | Fifth                Supplemental Indenture, dated as of May 1, 2003 to Indenture dated                as of                March 11, 1998, between PNM and JPMorgan Chase Bank, as                Trustee                                                          |       | 4.6.3                to PNM’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2003      | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.19                               | Sixth                Supplemental Indenture, dated as of May 1, 2003 to Indenture dated                as of                March 11, 1998, between PNM and JPMorgan Chase Bank, as                Trustee                                                          |       | 4.6.4                to PNM’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2003      | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.20                               | Indenture                (for Senior Notes), dated as of August 1, 1998, between PNM and The                Chase                Manhattan Bank, as Trustee                                                                                                         |       | 4.1                to PNM’s Registration Statement No. 33-53367                                                     | 333-53367PNM                                    |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.21                               | First                Supplemental Indenture, dated August 1, 1998, supplemental to Indenture,                dated as of August 1, 1998, between PNM and The Chase Manhattan Bank,                as                Trustee                                         |       | 4.3                to PNM’s Current Report on Form 8-K Dated August 7, 1998                                         | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.22                               | Second                Supplemental Indenture, dated September 1, 2003, supplemental to                Indenture, dated as of August 1, 1998, between PNM and JPMorgan Chase                Bank                (formerly, The ChaseManhattan Bank), as Trustee      |       | 4.7.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                2003 | 1-6986PNM                                       |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| **TNMP**                           |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.23                               | Indenture,                dated January 1, 1999 between TNMP and JPMorgan Chase Bank (successor                to                The Chase Bank of Texas, N. A.), as Trustee                                                                                        |       | 4(w)                to TNMP’s Annual Report on Form 10-K for the year ended December 31,                1998        | 2-97230TNMP                                     |
|                               |                                                                                                                                                                                                                                                                |       |                                                                                                                      |                                            |
| 4.24                               | First                Supplemental Indenture, dated January 1, 1999, to Indenture, dated                January                1, 1999, between TNMP and JPMorgan Chase Bank (successor to The Chase                Bank                of Texas, N. A.), as Trustee |       | 4(x)                to TNMP’s Annual Report on Form 10-K for the year ended December 31,                1998        | 2-97230TNMP                                     |

----

| **Exhibit                No.**        | ** Description                of Exhibit**                                                                                                                                                                                                                                                                                   |   | ** Filed                as Exhibit:**                                                                                                | ** Registrant(s)                File No:** |
|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
| 4.25                                  | Second                Supplemental Indenture, dated June 1, 2003, to Indenture, dated January                1,                1999, between TNMP and JPMorgan Chase Bank (successor to The Chase                Bank of                Texas, N. A.), as Trustee                                                                 |   | 4                to TNMP’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2003                         | 2-97230TNMP                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| **Material                Contracts** |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.1                                  | Amended                and Restated Credit Agreement, dated as of August 15, 2005, among                PNM                Resources, Inc., the lenders party thereto, Bank of America, N.A.,                as                administrative agent and Wachovia Bank, National Association, as                syndication agent. |   | 10.1                to the Company’s Current Report on Form 8-K filed August 19,                2005                                | 1-32462PNMR                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.2                                  | Amended                and Restated Guaranty Agreement, dated as of August 15, 2005, executed                by                PNM Resources, Inc., as Guarantor.                                                                                                                                                                 |   | 10.1                to the Company’s Current Report on Form 8-K filed August 19,                2005                                | 1-32462PNMR                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.3                                  | Joinder                Agreement, dated as of September 30, 2005, between TNMP, as borrower                and                Bank of America, as administrative agent                                                                                                                                                            |   | 10.3                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005          | 2-97230TNMP                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.4                                  | Old                Credit Agreement, dated as of November 15, 2004, among PNM Resources,                the                lenders party thereto, Bank of America, N.A., as administrative agent                and                Wachovia Bank National Association, as syndication agent                                       |   | 10.1                to PNM Resources’ Current Report on Form 8-K filed November 18,                2004                             | 333-32170PNMR                                   |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.5                                  | Unit                Purchase Agreement dated as of August 13, 2004 between PNM Resources                and                Cascade Investment, L.L.C.                                                                                                                                                                             |   | 99                to PNM Resources’ Current Report on Form 8-K filed August 19,                2004                                 | 333-32170PNMR                                   |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.6                                  | First                Supplement to Unit Purchase Agreement, dated as of June 4, 2005,                between                PNMR and Cascade                                                                                                                                                                                      |   | 99.2                to the Company’s Current Report on Form 8-K filed June 10,                2005                                  | 1-32462PNMR                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.7                                  | Second                Supplement to Unit Purchase Agreement, dated as of July 1, 2005,                between                PNMR and Cascade                                                                                                                                                                                     |   | 99.1                to the Company’s Current Report on Form 8-K filed July 8,                2005                                   | 1-32462PNMR                                     |
|                                  |                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                      |                                            |
| 10.8                                  | Third                Supplement to Unit Purchase Agreement, dated as of August 12, 2005,                between PNMR and Cascade and Fourth Supplement to Unit Purchase Agreement,                dated as of September 30, 2005, between PNMR and Cascade                                                                        |   | 10.4                and 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter                ended September 30, 2005 | 1-32462PNMR                                     |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | **Filed                as Exhibit:**                                                                                           | **Registrant(s)                File No:** |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.9                         | Investment                Agreement dated as of June 6, 2005, between PNMR and TNP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 10.1                to PNMR’s Current Report on Form 8-K filed June 10, 2005                                             | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.10                        | PNM                Resources, Inc.  3,400,000 Shares of Common Stock Underwriting                Agreement dated March 23, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 10.1                to PNMR’s Current Report on Form 8-K filed March 29, 2005                                            | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.11                        | PNM                Resources, Inc. 4,300,000, 6.75% Equity Units Underwriting Agreement                dated                March 23, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 10.2                to PNMR’s Current Report on Form 8-K filed March 29, 2005                                            | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.12                        | Credit                Agreement dated as of August 17, 2005, among PNM, the lenders party                thereto, Wachovia Bank, National Association, as administrative agent                and                Union Bank of California, N.A., as syndication agent                                                                                                                                                                                                                                                                                                                                                                                          |   | 10.3                to the Company’s Current Report on Form 8-K filed August 19,                2005                     | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.13                        | Dividend,                Assignment and Assumption Agreement, dated November 18, 2005 between                PNMR                Development and Management Corporation and PNM (Luna Energy                Facility)                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 10.13                to the Company’s Annual Report on form 10-K for the year ended December                31, 2005     | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.14                        | Purchase                and Sale Agreement by and between Duke Energy North America, LLC,                as                seller, and PNM Resources, Phelps Dodge Energy Services, LLC and                Tucson                Electric Power Company, as purchasers dated as of November 12,                2004                                                                                                                                                                                                                                                                                                                                            |   | 10.5                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2004      | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.15                        | Distribution,                Assignment and Assumption Agreement dated February 24, 2005 among                PNMR                Development and Management Corporation, Luna Power, LLC, Tucson Electric                Power Company ("TEP") and Phelps Dodge Energy Services, LLC                ("Phelps")                                                                                                                                                                                                                                                                                                                                                |   | 10.136                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2005 | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.16                        | Engineering,                Procurement and Construction Agreement, dated as of February 24,                2005,                among Fluor Enterprises, Inc., as contractor and PNMR Development                and                Management Corporation, Tucson Electric Power Company  and Phelps                Dodge Energy Services, LLC (collectively referred to as  owner).                (Confidential treatment was requested for portions of this exhibit,                and                such portions were omitted from this exhibit filed and were filed                separately with the Securities and Exchange Commission) |   | 10.137                to the Company’s Current Report on Form 8-K filed October 12,                2005                  | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                           |                                      |
| 10.17                        | Receivables                Sale Agreement, dated as of April 8, 2003, between PNM Receivables                Corp.,                as buyer and PNM as originator                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 10.89                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2003   | 1-6986PNM                            |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | **Filed                as Exhibit:**                                                                                                        | **Registrant(s)                File No:** |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.18                        | Receivables                Purchase Agreement, dated as of April 8, 2003, among PNM Receivables                Corp., as seller, PNM, as servicer, EagleFunding Capital Corporation,                as                conduit investor, Fleet National Bank, as an alternate investor and                Fleet                Securities, Inc., as managing agent and deal agent.                                                                                                                                                                                                   |   | 10.90                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2003                | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.19                        | Amendment                No.1 to Receivables Purchase Agreement dated June 19, 2003; Amendment                No.                2 to Receivables Purchase Agreement dated April 6, 2004 and Amendment                No.                3 to Receivables Purchase Agreement dated October 15, 2004, among                PNM                Receivables Corp., as seller, PNM, as servicer, the Investors, Bank                of                America, N.A., as successor in interest to Fleet Securities, Inc.,                as                managing agent and deal agent |   | 10.90.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                2004                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.20                        | Consent                and Waiver Dated as of April 5, 2005 to Receivables Purchase Agreement                Dated as of April 8, 2003 among PNM Receivables Corp., as seller,                PNM, as                servicer, the Investors, Bank of America, N.A., as successor-in-interest                to Fleet Securities, Inc., as managing agent and deal                agent                                                                                                                                                                                             |   | 10.9                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.21**                      | PNM                Resources, Inc. Amended and Restated Omnibus Performance Equity Plan                dated                May 17, 2005 (“PEP”)                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 4.1                to PNM Resources’ Form S-8 Registration Statement filed May 17,                2005                                | 333-125010PNMR                            |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.22**                      | Form                of the award agreement for non-qualified stock options granted under                the                PEP                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 10.1                to the Company’s Current Report on Form 8-K filed February 17,                2006                                | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.23**                      | Form                of the award agreement for restricted stock rights granted in 2004                and                2005 under the PEP                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | 10.2                to the Company’s Current Report on Form 8-K filed February 17,                2006                                | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.24**                      | Form                of award agreement for restricted stock rights granted after 2005                under                the PEP                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 10.24                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2005                  | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.25**                      | Changes                in Director Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | 10.138                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2005              | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.26**                      | PNM                Resources, Inc. Executive Savings Plan dated December 29,                2003                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 10.75                to PNM Resources and PNM’s Annual Report on Form 10-K for the fiscal year                ended December 31, 2003 | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                        |                                      |
| 10.27**                      | PNM                Resources, Inc. Executive Savings Plan II dated December 15,                2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | 4                to PNM Resources’ Registration Statement on Form S-8, File No. 333-12391,                filed December 17, 2004     | 333-12391PNMR                             |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                   |   | **Filed                as Exhibit:**                                                                                                | **Registrant(s)                File No:** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.28**                      | First                Amendment to the PNM Resources, Inc. Executive Savings Plan II effective                June 3, 2005                                                                                                                   |   | 10.56.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005      | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.29**                      | Texas-New                Mexico Company Excess Benefit Plan, As Amended and Restated Effective                October 1, 1996.                                                                                                              |   | 10.63                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005        | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.30**                      | Amendment                to TNMP Excess Benefit Plan, effective January 1, 2005                                                                                                                                                             |   | 10.1                to the Company’s Current Report on Form 8-K filed December 14,                2005                        | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.31**                      | 2006                Officer Incentive Plan                                                                                                                                                                                                  |   | 10.31                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2005          | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.32**                      | 2005                Officer Incentive Plan Amended (August 2, 2005)                                                                                                                                                                         |   | 10.30                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005   | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.33**                      | Summary                of Executive Time Off Policy Effective January 1, 2006                                                                                                                                                               |   | 10.31                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2005   | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.34**                      | Restated                and Amended Public Service Company of New Mexico Accelerated Management                Performance Plan (1988) (August 16, 1988) (refiled)                                                                          |   | 10.23                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1998               | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.35**                      | First                Amendment to Restated and Amended Public Service Company of New Mexico                Accelerated Management Performance Plan (1988) (August 30, 1988)                (refiled)                                        |   | 10.23.1                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1998             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.36**                      | Second                Amendment to Restated and Amended Public Service Company of New Mexico                Accelerated Management Performance Plan (1988) (December 29, 1989)                (refiled)                                     |   | 10.23.2                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1998             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.37**                      | Second                [Third] Amendment to the Restated and Amended Public Service Company                of                New Mexico Accelerated Management Performance Plan (1988) dated December                8, 1992                 |   | 10.22.1                to PNM's Annual Report on Form 10-K for fiscal year ended December                31,                2004.   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.38**                      | Fourth                Amendment to the Restated and Amended Public Service Company of New                Mexico                Accelerated Management Performance Plan, as amended effective December                7,                1998 |   | 10.23.4                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1999             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                        |   |                                                                                                                                |                                      |
| 10.39**                      | Fifth                Amendment dated November 27, 2002 to the Restated and Amended PNM                Resources, Inc. Accelerated Performance Management Plan                                                                               |   | 10.23.5                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2002 | 333-32170PNMR                             |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                        |   | **Filed                as Exhibit:**                                                                                                       | **Registrant(s)                File No:** |
|------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.40**                      | Sixth                Amendment dated December 9, 2003 to the PNM Resources, Inc. Restated                and                Amended Accelerated Performance Management Plan                                                                                      |   | 10.23.6                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2003        | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.41**                      | Non-Union                Severance Pay Plan of PNM Resources, Inc. dated November 19,                2004                                                                                                                                                        |   | 10.31                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2004          | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.42**                      | First                Amendment to the PNM Resources, Inc. Non-Union Severance Pay Plan                effective April 1, 2005 and Second Amendment to the PNM Resources,                Inc.                Non-Union Severance Pay Plan effective June 6, 2005. |   | 10.31.1                and 10.31.2 to the Company’s Quarterly Report on Form 10-Q for the quarter                ended June 30, 2005 | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.43**                      | Third                Amendment to the PNM Resources, Inc. Non-Union Severance Pay Plan                effective October 1, 2005                                                                                                                                  |   | 10.43                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2005          | 1-32462PNM                                |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.44**                      | PNM                Service Bonus Plan dated October 23, 1984                                                                                                                                                                                                     |   | 19.4                to PNM’s Quarterly Report on Form 10-Q or the quarter ended September 30,                1988                    | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.45**                      | First                Amendment dated November 20, 1985 to PNM Service Bonus                Plan                                                                                                                                                                  |   | 10.11.1                to PNM’s Annual Report on Form 10-K for the fiscal year ending December                31, 1985               | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.46**                      | Second                Amendment dated December 29, 1989 to PNM Service Bonus                Plan                                                                                                                                                                 |   | 10.27.2                to PNM’s Annual Report on Form 10-K for the fiscal year ending December                31, 1989               | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.47**                      | Second                [Third] Amendment dated December 7, 1998 to PNM Service Bonus                Plan                                                                                                                                                          |   | 10.45                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1999                      | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.48**                      | Fourth                Amendment dated November 27, 2002 to PNM Resources, Inc. Service                Bonus                Plan                                                                                                                                  |   | 10.45.4                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2002        | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.49**                      | Fifth                Amendment dated December 9, 2003 to PNM Resources, Inc. Service Bonus                Plan                                                                                                                                                   |   | 10.45.5                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2003        | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.50**                      | Public                Service Company of New Mexico OBRA ‘93 Retirement Planeffective                November 15, 1993                                                                                                                                     |   | 10.4                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                1993                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.51**                      | First                Amendment to the Public Service Company of New Mexico OBRA ’93 Retirement                Plan, as amended effective December 7, 1998                                                                                                  |   | 10.48.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1999                    | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.52**                      | Second                Amendment dated November 27, 2002 to the PNM Resources, Inc. OBRA’93                Retirement Plan                                                                                                                                  |   | 10.48.2                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2002               | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                             |   |                                                                                                                                       |                                      |
| 10.53**                      | Third                Amendment dated December 9, 2003 to the PNM Resources, Inc. OBRA’93                Retirement Plan                                                                                                                                    |   | 10.48.3                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2003               | 333-32170PNMR                             |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                   |   | **Filed                as Exhibit:**                                                                                                                  | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.54**                      | Public                Service Company of New Mexico Section 415 Plan dated January 1,                1994                                                                                                                                                                   |   | 10.50                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1993                                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.55**                      | First                Amendment dated December 7, 1998 and Second Amendment dated August                7, 1999                to PNM Section 415 Plan and Third Amendment dated November 27, 2002                to the                PNM Resources, Inc. Section 415 Plan |   | 10.50.1                to the Company’s Annual Report in Form 10-K for the fiscal year ended                December 31, 2002                   | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.56**                      | Fourth                Amendment dated December 9, 2003 to the PNM Resources, Inc. Section                415                Plan                                                                                                                                            |   | 10.50.2                to the Company’s Annual Report in Form 10-K for the fiscal year ended                December 31, 2003                   | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.57**                      | PNM                Resources, Inc. Officer Retention Plan dated October 21,                2003                                                                                                                                                                             |   | 10.51                to the Company’s Annual Report in Form 10-K for the fiscal year ended                December 31, 2003                     | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.58**                      | First                Amendment to PNM Resources, Inc. Officer Retention Plan dated December                16,                2004                                                                                                                                          |   | 10.46                to the Company’s Annual Report in Form 10-K for the fiscal year ended                December 31, 2004                     | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.59*                       | PNM                Resources Executive Spending Account Plan dated December 9,                2003                                                                                                                                                                          |   | 10.52                to the Company’s Annual Report on Form 10-K for fiscal year ended December                31, 2003                         | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.60**                      | First                Amendment to PNM Resources Executive Spending Account Plan effective                January 1, 2004                                                                                                                                                    |   | 10.52.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                2004                               | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.61**                      | Third                Restated and Amended Public Service Company of New Mexico Performance                Stock Plan effective March 10, 1998                                                                                                                               |   | 10.74                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                1998                        | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.62**                      | First                Amendment to the Third Restated and Amended Public Service Company                of New                Mexico Performance Stock Plan Dated February 7, 2000                                                                                           |   | 10.74.1                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                2000                      | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.63**                      | Second                Amendment to the Third Restated and Amended Public Service Company                of New                Mexico Performance Stock Plan, effective December 7, 1998                                                                                     |   | 10.74.2                to PNM's Annual Report on Form 10-K for the fiscal year ended December                31,                2000                  | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.64**                      | Third                Amendment to the Third Restated and Amended Public Service Company                of New                Mexico Performance Stock Plan, effective December 10, 2000                                                                                     |   | 10.74.3                to PNM’s Annual Report on Form 10-K for the fiscal year ended December 31,                2000                           | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.65**                      | Fourth                Amendment to Third Restated and Amended Public Service Company of                New                Mexico Performance Stock Plan dated December 31, 2001                                                                                             |   | 4.3.5                to PNM Resources’ Post-Effective Amendment No. 1 to Form S-8 Registration                Statement filed December 31, 2001 | 333-03303PNMR                             |
|                         |                                                                                                                                                                                                                                                                        |   |                                                                                                                                                  |                                      |
| 10.66**                      | Fifth                Amendment to the Third Restated and Amended PNM Resources, Inc.                Performance Stock Plan dated September 6, 2002                                                                                                                          |   | 10.74.5                to the Company’s Quarterly Report on Form 10-Q for the quarter ended                September 30, 2002                   | 333-32170PNMR                             |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | **Filed                as Exhibit:**                                                                                                                                            | **Registrant(s)                File No:** |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.67**                      | PNM                Resources, Inc.Director                Retainer Plan, dated                December 31, 2001                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 4.3                to PNM Resources, Inc.Post-Effective                Amendment No. 1 to Form S-8 Registration Statement filed December                31,                2001 | 333-03289PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.68**                      | First                Amendment dated February                17, 2003 to PNM                Resources, Inc. Director Retainer Plan                                                                                                                                                                                                                                                                                                                                                                                                   |   | 10.40.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2003                                                 | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.69**                      | Supplemental                Employee Retirement Agreement, dated March 14, 2000 for Patrick T.                Ortiz                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 10.80                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                2000                                                  | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.70**                      | Supplemental                Employee Retirement Agreement, dated March 22, 2000 for Jeffry E.                Sterba                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 10.81                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                2000                                                  | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.71**                      | Retention                Bonus Agreement executed October 31, 2003 for Jeffry                Sterba                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 10.83                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2003                                                      | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.72**                      | PNM                Resources Officer Life Insurance Plan dated April 28, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 10.24.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2004                                                 | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.73**                      | First                Amendment to PNM Resources Officer Life Insurance Plan dated December                16,                2004                                                                                                                                                                                                                                                                                                                                                                                                    |   | 10.27                to the Company’s Annual Report on Form 10-K for the fiscal year ended                December 31, 2004.                                              | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.74**                      | Long                Term Care Insurance Plan effective January 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 10.87                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2002                                                      | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.75**                      | Executive                Long Term Disability effective January 1, 2003                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 10.88                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2002                                                      | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.76                        | Supplemental                Indenture of Lease dated                as of July 19, 1966 between PNM and other participants in the Four                Corners                Project and the Navajo Indian Tribal Council                                                                                                                                                                                                                                                                                                            |   | 4-D                to PNM’s Registration Statement No. 2-26116                                                                                                            | 2-26116PNM                                |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                            |                                      |
| 10.77                        | Amendment                and Supplement No. 1 to Supplemental and Additional Indenture of                Lease                dated April 25, 1985 between the Navajo Tribe of Indians and Arizona                Public Service Company, El Paso Electric Company, Public Service                Company                of New Mexico, Salt River Project Agricultural Improvement and Power                District, Southern California Edison Company, and Tucson Electric                Power                Company (refiled) |   | 10.1.1                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1995                                                          | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                           |   | **Filed                as Exhibit:**                                                                                                                                                                                                                                                                                                                                                     | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.78                        | Water                Supply Agreement between the Jicarilla Apache Tribe and Public Service                Company of New Mexico, dated July 20, 2000                                                                                                                                                                                               |   | 10.5                to PNM’s Quarterly Report of Form 10-Q for the quarter ended September 30,                2001                                                                                                                                                                                                                                                                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.79                        | Arizona                Nuclear Power Project Participation Agreement among PNM and Arizona                Public                Service Company, Salt River Project Agricultural Improvement and                Power                District, Tucson Gas & Electric Company and El Paso Electric Company,                dated August 23, 1973 |   | 5-T                to PNM’s Registration Statement No. 2-50338                                                                                                                                                                                                                                                                                                                     | 2-50338PNM                                |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.80                        | Amendments                No. 1 through No. 6 to Arizona Nuclear Power Project Participation                Agreement                                                                                                                                                                                                                               |   | 10.8.1                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1991                                                                                                                                                                                                                                                                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.81                        | Amendment                No. 7 effective April 1, 1982, to the Arizona Nuclear Power Project                Participation Agreement (refiled)                                                                                                                                                                                                       |   | 10.8.2                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1991                                                                                                                                                                                                                                                                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.82                        | Amendment                No. 8 effective September 12, 1983, to the Arizona Nuclear Power                Project                Participation Agreement (refiled)                                                                                                                                                                                   |   | 10.58                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1993                                                                                                                                                                                                                                                                    | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.83                        | Amendment                No. 9 to Arizona Nuclear Power Project Participation Agreement dated                as of                June 12, 1984 (refiled)                                                                                                                                                                                           |   | 10.8.4                to PNM’s Annual Report of the Registrant on Form 10-K for fiscal year                ended December 31, 1994                                                                                                                                                                                                                                                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.84                        | Amendment                No. 10 dated as of November 21, 1985 and Amendment No. 11 dated as                of June                13, 1986 and effective January 10, 1987 to Arizona Nuclear Power                Project                Participation Agreement (refiled)                                                                          |   | 10.8.5                to PNM’s Annual Report of the Registrant on Form 10-K for fiscal year                ended December 31, 1994                                                                                                                                                                                                                                                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.85                        | Amendment                No. 12 to Arizona Nuclear Power Project Participation Agreement dated                June                14, 1988, and effective August 5, 1988                                                                                                                                                                            |   | 19.1                to PNM's Quarterly Report on Form 10-Q for the quarter ended September                30,                1990                                                                                                                                                                                                                                                        | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.86                        | Amendment                No. 13 to the Arizona Nuclear Power Project Participation Agreement                dated                April 4, 1990, and effective June 15, 1991                                                                                                                                                                         |   | 10.8.10                to PNM’s Annual Report on Form 10-K for the fiscal year ended December 31,                1990                                                                                                                                                                                                                                                              | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.87                        | Amendment                No. 14 to the Arizona Nuclear Power Project Participation Agreement                effective June 20, 2000                                                                                                                                                                                                                 |   | 10.8.9                to PNM’s Annual Report on Form 10-K for the fiscal year ended December 31,                2000                                                                                                                                                                                                                                                               | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                     |                                      |
| 10.88                        | Underground                Coal Sales Agreement, dated August 31, 2001 among San Juan Coal Company,                PNM and Tucson Electric Power Company                                                                                                                                                                                            |   | 10.85                to PNM’s Quarterly Report on Form 10-Q for the quarter ending September                31, 2001 (Confidential treatment was requested for portions of this                exhibit, and such portions were omitted from this exhibit filed and                were                filed separately with the Securities and Exchange                Commission) | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                |   | **Filed                as Exhibit:**                                                                                                                                                                                                                                                                                                                    | **Registrant(s)                File No:** |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.89                        | Amendment                One to Underground Coal Sales Agreement dated December 15, 2003 among                San                Juan Coal Company, PNM and Tucson Electric Coal Company                                                                                                                                                                                                                                                                 |   | 10.9.1                to PNM’s Amended Report on Form 10-K for fiscal year ended December 31,                2003 (Confidential treatment was requested for portions of this exhibit,                and such portions were omitted from this exhibit filed and were filed                separately with the Securities and Exchange Commission) | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                                                                                                                                                    |                                      |
| 10.90                        | Amendment                Two to Underground Coal Sales Agreement effective September 15, 2004                among                San Juan Coal Company, PNM and Tucson Electric Coal                Company                                                                                                                                                                                                                                             |   | 10.9.2                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                2004                                                                                                                                                                                                                              | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                                                                                                                                                    |                                      |
| 10.91                        | Amendment                Three to Underground Coal Sales Agreement executed April 29, 2005                among                San Juan Coal Company, PNM and Tucson Electric Coal Company (Confidential                treatment was requested for portions of this exhibit, and such portions                were omitted from this exhibit filed and were filed separately with                the                Securities and Exchange Commission) |   | 10.86.1                to the Company’s Quarterly Report on Form 10-Q for the quarter ended June                30, 2005                                                                                                                                                                                                                          | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                                                                                                                                                    |                                      |
| 10.92                        | San                Juan Unit 4 Early Purchase and Participation Agreement dated as of                September 26, 1983 between PNM and M-S-R Public Power Agency, and                Modification No. 2 to the San Juan Project Agreements dated December                31,                1983 (refilled)                                                                                                                                             |   | 10.11                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1994                                                                                                                                                                                                                                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                                                                                                                                                                                                                                                    |                                      |
| 10.93                        | Amendment                No. 1 to the Early Purchase and Participation Agreement between Public                Service Company of New Mexico and M-S-R Public Power Agency, executed                as                of December 16, 1987, for San Juan Unit 4 (refiled)                                                                                                                                                                                |   | 10.11.1                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1997                                                                                                                                                                                                                                 | 1-6986PNM                                 |

| 10.94  | Amendment                No. 3 to the San Juan Unit 4 Early Purchase and Participation Agreement                between Public Service Company of New Mexico and M-S-R Public Power                Agency, dated as of October 27, 1999            |   | 10.11.3                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1999 | 1-6986PNM |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------|-----------|
|   |                                                                                                                                                                                                                                               |   |                                                                                                                    |      |
| 10.95  | Amended                and Restated San Juan Unit 4 Purchase and Participation Agreement                dated as                of December 28, 1984 between PNM and the Incorporated County of Los                Alamos                (refiled) |   | 10.12                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1994   | 1-6986PNM |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                             |   | **Filed                as Exhibit:**                                                                                              | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.96                        | Amendment                No. 1 to the Amended and Restated San Juan Unit 4 Purchase and                Participation Agreement between Public Service Company of New Mexico                and                M-S-R Public Power Agency, dated as of October 27, 1999                                                                                                                                                                                                 |   | 10.12.1                to PNM’s Annual Report Form 10-K for fiscal year ended December 31,                1999              | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.97                        | Amendment                No. 2 to the San Juan Unit 4 Purchase Agreement and Participation                Agreement between Public Service Company of New Mexico and The                Incorporated County of Los Alamos, New Mexico, dated October 27,                1999                                                                                                                                                                                          |   | 10.13                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1999             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.98                        | Participation                Agreement among PNM, Tucson Electric Power Company and certain financial                institutions relating to the San Juan Coal Trust dated as of December                31,                1981 (refiled)                                                                                                                                                                                                                           |   | 10.14                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1992             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.99                        | Interconnection                Agreement dated November 23, 1982, between PNM and Southwestern Public                Service Company (refiled)                                                                                                                                                                                                                                                                                                                        |   | 10.16                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1992             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.100*                      | Facility                Lease dated as of December 16, 1985 between The First National Bank                of                Boston, as Owner Trustee, and Public Service Company of New Mexico                together with Amendments No. 1, 2 and 3 thereto (refiled)                                                                                                                                                                                              |   | 10.18                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1995             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.101*                      | Amendment                No. 4 dated as of March 8, 1995, to Facility Lease between Public                Service                Company of New Mexico and the First National Bank of Boston, dated                as of                December 16, 1985                                                                                                                                                                                                             |   | 10.18.5                to the PNM's Quarter Report on Form10-Q for the quarter ended March                31,                1995 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.102                       | Facility                Lease dated as of July 31, 1986, between the First National Bank                of                Boston, as Owner Trustee, and Public Service Company of New Mexico                together with Amendments No. 1, 2 and 3 thereto (refiled)                                                                                                                                                                                                 |   | 10.19                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.103                       | Facility                Lease dated as of August 12, 1986, between The First National Bank                of                Boston, as Owner Trustee, and Public Service Company of New Mexico                together with Amendments No. 1 and 2 thereto (refiled)                                                                                                                                                                                                  |   | 10.20                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                              |                                      |
| 10.104                       | Amendment                No. 2 dated as of April 10, 1987 to Facility Lease dated as of August                12,                1986, as amended, between The First National Bank of Boston, not                in its                individual capacity, but solely as Owner Trustee under a Trust Agreement,                dated as of August 12, 1986, with MFS Leasing Corp., Lessor and Public                Service Company of New Mexico, Lessee (refiled) |   | 10.20.2                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1998           | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **Filed                as Exhibit:**                                                                                                    | **Registrant(s)                File No:** |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.105                       | Amendment                No. 3 dated as of March 8, 1995, to Facility Lease between Public                Service                Company of New Mexico and the First National Bank of Boston, dated                as of                August 12, 1986                                                                                                                                                                                                                                                                                      |   | 10.20.4                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1995                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.106                       | Facility                Lease dated as of December 15, 1986, between The First National Bank                of                Boston, as Owner Trustee, and Public Service Company of New Mexico                (Unit 1                Transaction) together with Amendment No. 1 thereto                (refiled)                                                                                                                                                                                                                           |   | 10.21                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.107                       | Facility                Lease dated as of December 15, 1986, between The First National Bank                of                Boston, as Owner Trustee, and Public Service Company of New Mexico                Unit 2                Transaction) together with Amendment No. 1 thereto                (refiled)                                                                                                                                                                                                                            |   | 10.22                to PNM’s Annual Report of the Registrant on Form 10-K for fiscal year                ended December 31, 1996 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.108                       | Amendment                No. 2 dated as of April 10, 1987 to the Facility Lease dated as of                August                12, 1986 between The First National bank of Boston, as Owner Trustee,                and                PNM. (Unit 2 transaction.) (This is an amendment to a Facility Lease                which                is substantially similar to the Facility Lease filed as Exhibit 28.1                to                the Company’s Current Report on Form 8-K dated August 18,                1986) |   | 10.53                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1987                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.109                       | San                Juan Unit 4 Purchase and Participation Agreement Public Service Company                of                New Mexico and the City of Anaheim, California dated April 26,                1991                                                                                                                                                                                                                                                                                                                               |   | 19.2                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1991                    | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.110                       | Amendment                No. 1 to the San Juan Unit 4 Purchase and Participation Agreement                between                Public Service Company of New Mexico and The City of Anaheim, California,                dated October 27, 1999                                                                                                                                                                                                                                                                                             |   | 10.36.1                to Annual Report PNM’s on Form 10-K for fiscal year ended December 31,                1999                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.111                       | Restated                and Amended San Juan Unit 4 Purchase and Participation Agreement                between                Public Service Company of New Mexico and Utah Associated Municipal                Power                Systems                                                                                                                                                                                                                                                                                                |   | 10.2.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                1993              | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                                                    |                                      |
| 10.112                       | Amendment                No. 1 to the Restated and Amended San Juan Unit 4 Purchase And                Participation Agreement between Public Service Company of New Mexico                And                Utah Associated Municipal Power Systems, dated October 27,                1999                                                                                                                                                                                                                                                 |   | 10.38.1                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1999                 | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                          |   | **Filed                as Exhibit:**                                                                                             | **Registrant(s)                File No:** |
|------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.113                       | Participation                Agreement dated as of June 30, 1983 among Security Trust Company,                as                Trustee, PNM, Tucson Electric Power Company and certain financial                institutions relating to the San Juan Coal Trust (refiled)        |   | 10.61                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1993            | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                               |   |                                                                                                                             |                                      |
| 10.114                       | Master                Decommissioning Trust Agreement for Palo Verde Nuclear Generating                Station                dated March 15, 1996, between Public Service Company of New Mexico                and                Mellon Bank, N.A.                               |   | 10.68                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                1996   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                               |   |                                                                                                                             |                                      |
| 10.115                       | Amendment                Number One to the Master Decommissioning Trust Agreement for Palo                Verde                Nuclear Generating Station dated January 27, 1997, between Public                Service                Company of New Mexico and Mellon Bank, N.A. |   | 10.68.1                to PNM's Annual Report on Form 10-K for fiscal year ended December                31,                1997 | 1-6986PNM                                 |

| 10.116 | Amendment                Number Two to the Master Decommissioning Trust Agreement for Palo                Verde                Nuclear Generating Station between Public Service Company of New                Mexico                and Mellon Bank, N.A.                                                                                                                                                                                                                                                                                                                                               |   | 10.68.2                to PNM's Annual Report on Form 10-K for fiscal year ended December                31,                2003   | 1-6986PNM |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|-----------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                               |      |
| 10.117 | Refunding                Agreement No. 8A, dated as of December 23, 1997, among PNM, the Owner                Participant Named Therein, State Street Bank and Trust Company, as                Owner                Trustee, The Chase Manhattan Bank, as Indenture Trustee, and First                PV                Funding Corporation                                                                                                                                                                                                                                                             |   | 10.73                to PNM's Quarterly Report on Form 10-Q for the quarter ended March                31,                1998     | 1-6986PNM |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                               |      |
| 10.118 | PVNGS                Capital Trust—Variable Rate Trust Notes—PVNGS Note Agreement dated as of                July 31, 1998                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 10.76                to PNM's Quarterly Report on Form 10-Q for the quarter ended September                30,                1998 | 1-6986PNM |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                               |      |
| 10.119 | San                Juan Project Participation Agreement dated as of October 27, 1999,                among                Public Service Company of New Mexico, Tucson Electric Power Company,                The                City of Farmington, New Mexico, M-S-R Public Power Agency, The                Incorporated County of Los Alamos, New Mexico, Southern California                Public                Power Authority, City of Anaheim, Utah Associated Municipal Power                System                and Tri-State Generation and Transmission Association,                Inc. |   | 10.77                to PNM's Quarterly Report on Form 10-Q for the quarter ended September                30,                1999 | 1-6986PNM |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                               |      |
| 10.120 | January                12, 1994 Stipulation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 10.53                to PNM’s Annual Report on form 10-K for fiscal year ended December 31,                1993              | 1-6986PNM |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                                                                                                                               |      |
| 10.121 | New                Mexico Public Service Commission Order dated July 30, 1987, and Exhibit                I                thereto, in NMPUC Case No. 2004, regarding the PVNGS decommissioning                trust                fund (refiled)                                                                                                                                                                                                                                                                                                                                                       |   | 10.67                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1997              | 1-6986PNM |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | **Filed                as Exhibit:**                                                                                                 | **Registrant(s)                File No:** |
|------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.122                       | Stipulation                in the matter of the Commission’s investigation of the rates for electric                service of Public Service Company of New Mexico, Rate Case No. 2761,                dated                May 21, 1999                                                                                                                                                                                                                                                                         |   | 10.78                to PNM's Quarterly Report on Form 10-Q for the quarter ended September                30,                1999   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.123                       | Stipulation                in the matter of the Commission’s investigation of the rates for electric                service of Public Service Company of New Mexico, Rate Case No. 2761,                dated                May 27, 1999                                                                                                                                                                                                                                                                         |   | 10.78.1                to PNM's Quarterly Report on Form 10-Q for the quarter ended September                30,                1999 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.124                       | Stipulation                in the matter of PNM’s transition plan Utility Case No. 3137, dated                October 10, 2002 as amended by Amendment to Stipulated Agreement                dated                October 18, 2002                                                                                                                                                                                                                                                                               |   | 10.86                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2002           | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.125                       | Settlement                Agreement between Public Service Company of New Mexico and Creditors                of                Meadows Resources, Inc. dated November 2, 1989 (refiled)                                                                                                                                                                                                                                                                                                                                |   | 10.34                to PNM’s Quarterly Report on Form 10-Q for quarter ended June 30,                2000                     | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.126                       | First                Amendment dated April 24, 1992 to the Settlement Agreement dated                November                2, 1989 among Public Service Company of New Mexico, the lender parties                thereto and collateral agent (refiled)                                                                                                                                                                                                                                                               |   | 10.34.1                to PNM’s Quarterly Report on Form 10-Q for quarter ended June 30,                2000                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.127                       | Amendment                dated April 11, 1991 among Public Service Company of New Mexico,                certain                banks and Chemical Bank and Citibank, N.A., as agents for the                banks                                                                                                                                                                                                                                                                                                      |   | 19.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                1991             | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.128                       | Agreement                of PNM pursuant to Item 601(b)(4)(iii) of Regulation S-K                (refiled)                                                                                                                                                                                                                                                                                                                                                                                                              |   | 10.62                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1993                | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.129                       | Stipulation                dated February 28, 2005 in NMPRC Case No. 04-00315-UT regarding the                application of PNM Resources and TNMP for approval of the TNP                acquisition                                                                                                                                                                                                                                                                                                                  |   | 10.134                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2005       | 1-32462PNMR/TNMP                          |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                 |                                      |
| 10.130                       | Settlement                Agreement dated February 3, 2005, between PNM Resources, Inc. and                Texas-New Mexico Power Company, the cities of Dickenson, Lewisville,                La                Marque, Ft. Stockton and Friendswood, Texas, the Legal and Enforcement                Division of the Public Utility Commission of Texas, the Office of                Public                Utility Counsel, the Texas Industrial Energy Consumers and the Alliance                for Retail Markets |   | 10.1-10.1.7                to the Company’s Current Report on Form 8-K filed February 7, 2005                                  | 1-32462PNMR/TNMP                          |

----

| **Exhibit              No.** | ** Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **Filed                as Exhibit:**                                                                                                   | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.131                       | Consent                Decree entered into by PNM on March 9, 2005 relating to the citizen                suit                under the Clean Air Act and the excess emissions report matter for                SJGS                                                                                                                                                                                                                                                                                                              |   | 10.135                to the Company’s Quarterly Report on Form 10-Q for the quarter ended March                31, 2005         | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.132                       | Stipulation                in the matter of PNM’s application for approval of a certificate of public                convenience and necessity for the Afton Generating Station, Case                No.                05-00275-UT, dated November 30, 2005                                                                                                                                                                                                                                                                |   | 10.132                to the Company’s Annual report on Form 10-K for the year ended December                31, 2005            | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.133                       | Contract                dated April 29, 1987 between TNMP and El Paso Electric                Company                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 10(f),                Form 8 applicable to TNMP’s Annual Report on Form 10-K for the year ended                December 31, 1986 | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.134                       | Interconnection                Agreement between TNMP and Plains Electric Generation and Transmission                Cooperative, Inc. dated July 19, 1984                                                                                                                                                                                                                                                                                                                                                                        |   | 10(j),                Form 8 applicable to TNMP’s Annual Report on Form 10-K for the year ended                December 31, 1986 | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.135                       | Interchange                Agreement between TNMP and El Paso Electric Company dated April 29,                1987                                                                                                                                                                                                                                                                                                                                                                                                                |   | 10(l),                Form 8 applicable to TNMP’s Annual Report on Form 10-K for the year ended                December 31, 1986 | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.136                       | Amendment                No.1, dated November 21, 1994, to Interchange Agreement between TNMP                and                El Paso Electric Company                                                                                                                                                                                                                                                                                                                                                                          |   | 10(nn)1                to TNMP’s Annual Report on Form 10-K for the year ended December 31,                1994                  | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.137                       | DC                Terminal Participation Agreement between TNMP and El Paso Electric                Company                dated December 8, 1981 as amended                                                                                                                                                                                                                                                                                                                                                                      |   | 10(m),                Form 8 applicable to TNMP’s Annual Report on Form 10-K for the year ended                December 31, 1986 | 2-97230TNMP                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.138                       | Wholesale                Requirements Power Sale and Services Agreement between PNM and TNMP                dated                June 29, 2001                                                                                                                                                                                                                                                                                                                                                                                    |   | 10(i)                to TNMP’s Form S-4/A filed November 4, 2003                                                                 | 333-108522TNMP                            |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.139                       | Power                Supply Service Agreement dated December 22, 2003 between First Choice                Power Special Purpose, L.P. (as assignee of First Choice Power, L.P.,                f/k/a First Choice Power, Inc.) and Constellation Power Source, Inc.                (Confidential treatment was requested for portions of this exhibit,                and                such portions were omitted from this exhibit filed and were filed                separately with the Securities and Exchange Commission) |   | 10.1                to TNP’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2004                    | 2-89800                                   |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                   |                                      |
| 10.140                       | Amendment                No. 1 to Power and Services Agreement dated June 1, 2004 between                First                Choice Power Special Purpose, L.P. and Constellation Power Services,                Inc.                (Confidential treatment was requested for portions of this exhibit,                and                such portions were omitted from this exhibit filed and were filed                separately with the Securities and Exchange Commission)                                              |   | 10.2                to TNP’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2004                    | 2-89800                                   |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Filed                as Exhibit:**                                                                                                  | **Registrant(s)                File No:** |
|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 10.141                       | Amendment                No.2 to Power and Services Agreement dated August 25th,                2004, between First Choice Power Special Purpose and Constellation                Energy                Commodities Group (Confidential                treatment was requested for portions of this exhibit, and such portions                were omitted from this exhibit filed and were filed separately with                the                Securities and Exchange Commission)                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 10.1                to TNP’s Quarterly Report on Form 10-Q for the quarter ended March 31,                2005                  | 2-89800                                   |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                  |                                      |
| 10.142                       | Amendment                No.3 to Power and Services Agreement dated March 7th,                2005, between First Choice Power Special Purpose and Constellation                Energy                Commodities Group (Confidential                treatment was requested for portions of this exhibit, and such portions                were omitted from this exhibit filed and were filed separately with                the                Securities and Exchange Commission)                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 10.2                to TNP’s Quarterly Report on Form 10-Q for the quarter ended March 31,                2005                  | 2-89800                              |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                  |                                      |
| 18.1                         | Letter                from Deloitte & Touche LLP regarding change in accounting principle                for PNM Resources, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 18.1                to the Company's Annual Report on Form 10-K for fiscal year ended                December                31, 2003 | 333-32170PNMR                             |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                  |                                      |
| 18.2                         | Letter                from Deloitte & Touche LLP regarding change in accounting principle                for Public Service Company of New Mexico                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 18.2                to the Company's Annual Report on Form 10-K for fiscal year ended                December                31, 2003 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                  |                                      |
| 21                           | Certain                subsidiaries of PNM Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 21                to the Company’s Annual Report on Form 10-K for the year ended December                31, 2005               | 1-32462PNMR                               |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                  |                                      |
| 99.2*                        | Participation                Agreement dated as of December 16, 1985, among the Owner Participant                named                therein, First PV Funding Corporation. The First National Bank of                Boston,                in its individual capacity and as Owner Trustee (under a Trust Agreement                dated as of December 16, 1985 with the Owner Participant), Chemical                Bank,                in its individual capacity and as Indenture Trustee (under a Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 16, 1985 with the Owner Trustee), and Public Service                Company                of New Mexico, including Appendix A definitions together with Amendment                No. 1 dated July 15, 1986 and Amendment No. 2 dated November 18,                1986                (refiled) |   | 99.2                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1995                  | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **Filed                as Exhibit:**                                                                                   | **Registrant(s)                File No:** |
|------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 99.3                         | Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 16, 1985, between the First National Bank of Boston,                as Owner                Trustee, and Chemical Bank, as Indenture Trustee together with                Supplemental Indentures Nos. 1 and 2 (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 99.3                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1996   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                   |                                      |
| 99.3.3                       | Supplemental                Indenture No. 3 dated as of March 8, 1995, to Trust Indenture Mortgage,                Security Agreement and Assignment of Rents between The First National                Bank                of Boston and Chemical Bank dated as of December 16, 1985                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 99.3.3                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1995 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                   |                                      |
| 99.4*                        | Assignment,                Assumption and Further Agreement dated as of December 16, 1985, between                Public Service Company of New Mexico and The First National Bank                of                Boston, as Owner Trustee (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 99.4                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1995   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                   |                                      |
| 99.5                         | Participation                Agreement dated as of July 31, 1986, among the Owner Participant                named                herein, First PV Funding Corporation, The First National Bank of                Boston,                in its individual capacity and as Owner Trustee (under a Trust Agreement                dated as of July 31, 1986, with the Owner Participant), Chemical                Bank, in                its individual capacity and as Indenture Trustee (under a Trust Indenture,                Mortgage, Security Agreement and Assignment of Rents dated as of                July 31,                1986, with the Owner Trustee), and Public Service Company of New                Mexico,                including Appendix A definitions together with Amendment No. 1 thereto                (refiled) |   | 99.5                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996   | 1-6986PNM                                 |

| 99.6   | Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of July 31, 1986, between The First National Bank of Boston, as Owner                Trustee, and Chemical Bank, as Indenture Trustee together with                Supplemental Indenture No. 1 thereto (refiled) |   | 99.6                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996 | 1-6986PNM |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|-----------|
|   |                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                 |      |
| 99.7   | Assignment,                Assumption, and Further Agreement dated as of July 31, 1986, between                Public Service Company of New Mexico and The First National Bank                of                Boston, as Owner Trustee (refiled)                                                                                           |   | 99.7                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996 | 1-6986PNM |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Filed                as Exhibit:**                                                                                                   | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 99.8                         | Participation                Agreement dated as of August 12, 1986, among the Owner Participant                named                therein, First PV Funding Corporation. The First National Bank of                Boston,                in its individual capacity and as Owner Trustee (under a Trust Agreement                dated as of August 12, 1986, with the Owner Participant), Chemical                Bank,                in its individual capacity and as Indenture Trustee (under a Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of August 12, 1986, with the Owner Trustee), and Public Service Company                of                New Mexico, including Appendix A definitions (refiled)                                           |   | 99.8                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997                   | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                   |                                      |
| 99.8.1*                      | Amendment                No. 1 dated as of November 18, 1986, to Participation Agreement dated                as                of August 12, 1986 (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 99.8.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                   |                                      |
| 99.9*                        | Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of August 12, 1986, between the First National Bank of Boston, as                Owner                Trustee, and Chemical Bank, as Indenture Trustee together with                Supplemental Indenture No. 1 thereto (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | 99.9                to PNM’s Annual Report of the Registrant on Form 10-K for fiscal year                ended December 31, 1996 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                   |                                      |
| 99.9.2                       | Supplemental                Indenture No. 2 dated as of March 8, 1995, to Trust Indenture, Mortgage,                Security Agreement and Assignment of Rents between The First National                Bank                of Boston and Chemical Bank dated as of August 12, 1986                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 99.9.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1995                 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                   |                                      |
| 99.10*                       | Assignment,                Assumption, and Further Agreement dated as of August 12, 1986,                between Public Service Company of New Mexico and The First National                Bank                of Boston, as Owner Trustee (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 99.10                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997                  | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                   |                                      |
| 99.11*                       | Participation                Agreement dated as of December 15, 1986, among the Owner Participant                named                therein, First PV Funding Corporation, The First National Bank of                Boston,                in its individual capacity and as Owner Trustee (under a Trust Agreement                dated as of December 15, 1986, with the Owner Participant), Chemical                Bank,                in its individual capacity and as Indenture Trustee (under a Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 15, 1986, with the Owner Trustee), and Public Service                Company                of New Mexico, including Appendix A definitions (Unit 1 Transaction)                (refiled) |   | 99.1                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997                   | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **Filed                as Exhibit:**                                                                                  | **Registrant(s)                File No:** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 99.12                        | Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 15, 1986, between The First National Bank of Boston,                as Owner                Trustee, and Chemical Bank, as Indenture Trustee (Unit 1 Transaction)                (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 99.12                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.13                        | Assignment,                Assumption and Further Agreement dated as of December 15, 1986, between                Public Service Company of New Mexico and The First National Bank                of                Boston, as Owner Trustee (Unit 1 Transaction) (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 99.13                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.14                        | Participation                Agreement dated as of December 15, 1986, among the Owner Participant                named                therein, First PV Funding Corporation, The First National Bank of                Boston,                in its individual capacity and as Owner Trustee (under a Trust Agreement                dated as of December 15, 1986, with the Owner Participant), Chemical                Bank,                in its individual capacity and as Indenture Trustee (under a Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 15, 1986, with the Owner Trustee), and Public Service                Company                of New Mexico, including Appendix A definitions (Unit 2 Transaction)                (refiled) |   | 99.14                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.15                        | Trust                Indenture, Mortgage, Security Agreement and Assignment of Rents dated                as                of December 31, 1986, between the First National Bank of Boston,                as Owner                Trustee, and Chemical Bank, as Indenture Trustee (Unit 2 Transaction)                (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 99.15                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.16                        | Assignment,                Assumption, and Further Agreement dated as of December 15, 1986,                between                Public Service Company of New Mexico and The First National Bank                of                Boston, as Owner Trustee (Unit 2 Transaction) (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 99.16                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 31,                1997 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.17*                       | Waiver                letter with respect to “Deemed Loss Event” dated as of August 18, 1986,                between the Owner Participant named therein, and Public Service Company                of                New Mexico (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | 99.17                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                  |                                      |
| 99.18*                       | Waiver                letter with respect to Deemed Loss Event” dated as of August 18, 1986,                between the Owner Participant named therein, and Public Service Company                of                New Mexico (refiled)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 99.18                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996 | 1-6986PNM                                 |

----

| **Exhibit              No.** | **Description                of Exhibit**                                                                                                                                                                                                                                                                                                                                      |   | **Filed                as Exhibit:**                                                                                      | **Registrant(s)                File No:** |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|-------------------------------------------|
| 99.19                        | Agreement                No. 13904 (Option and Purchase of Effluent), dated April 23, 1973,                among                Arizona Public Service Company, Salt River Project Agricultural                Improvement and Power District, the Cities of Phoenix, Glendale,                Mesa,                Scottsdale, and Tempe, and the Town of Youngtown (refiled) |   | 99.19                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996     | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                      |                                      |
| 99.20                        | Agreement                for the Sale and Purchase of Wastewater Effluent, dated June 12,                1981,                Among Arizona Public Service Company, Salt River Project Agricultural                Improvement and Power District and the City of Tolleson, as amended                (refiled)                                                                |   | 99.20                to PNM’s Annual Report on Form 10-K for fiscal year ended December 31,                1996     | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                      |                                      |
| 99.21*                       | 1996                Supplemental Indenture dated as of September 27, 1996 to Trust Indenture,                Mortgage, Security Agreement and Assignment of Rents dated as of                December                16, 1985 between State Street Bank and Trust Company, as Owner Trustee,                and The Chase Manhattan Bank, as Indenture Trustee                 |   | 99.21                to PNM’s Quarterly Report on Form 10-Q for the quarter ended September 30,                1996 | 1-6986PNM                                 |
|                         |                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                      |                                      |
| 99.22                        | 1997                Supplemental Indenture, dated as of December 23, 1997, to Trust Indenture,                Mortgage, Security Agreement and Assignment of Rents, dated as of                August                12, 1986, between State Street Bank and Trust, as Owner Trustee,                and The                Chase Manhattan Bank, as Indenture Trustee         |   | 99.22                to PNM’s Quarterly Report on Form 10-Q for the quarter ended March 30,                1998     | 1-6986PNM                                 |

|  * | One                or more additional documents, substantially identical in all material                respects to this exhibit, have been entered into, relating to one                or more                additional sale and leaseback transactions. Although such additional                documents may differ in other respects (such as dollar amounts and                percentages), there are no material details in which such additional                documents differ from this exhibit. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURES**

|                                  |   | **PNM                  RESOURCES, INC.**                                           |
|---------------------------------------|--------|------------------------------------------------------------------------------------|
|                                  |   | (Registrant)                                                                       |
|                                  |   |                                                                               |
| Date:                  March 14, 2006 | By     | /s/                  J. E. STERBA                                                  |
|                                  |   | J.                  E. Sterba                                                      |
|                                  |   | Chairman,                  President and*Chief                  Executive Officer* |

| Signature                                  |   | Title                                            |   | Date                            |
|--------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------|
|                                       |   |                                             |   |                            |
| /s/                  J. E. STERBA          |   | Principal                  Executive Officer and |   | March                  14, 2006 |
| J.                  E. Sterba              |   | Chairman                  of the Board           |   |                            |
| Chairman,                  President and   |   |                                             |   |                            |
| *Chief                  Executive Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  C. N. ELDRED          |   | Principal                  Financial Officer     |   | March                  14, 2006 |
| C.                  N. Eldred              |   |                                             |   |                            |
| Senior                  Vice President and |   |                                             |   |                            |
| *Chief                  Financial Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  T. G. SATEGNA         |   | Principal                  Accounting Officer    |   | March                  14, 2006 |
| T.                  G. Sategna             |   |                                             |   |                            |
| Vice                  President and        |   |                                             |   |                            |
| *Corporate                  Controller*    |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  A. E. ARCHULETA       |   | Director                                         |   | March                  14, 2006 |
| A.                  E. Archuleta           |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  R. G. ARMSTRONG       |   | Director                                         |   | March                  14, 2006 |
| R.                  G. Armstrong           |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  J. A. DOBSON          |   | Director                                         |   | March                  14, 2006 |
| J.                  A. Dobson              |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  W. L. HUNT            |   | Director                                         |   | March                  14, 2006 |
| W.                  L. Hunt                |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  C. E. MCMAHEN         |   | Director                                         |   | March                  14, 2006 |
| C.                  E. McMahen             |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  M. T. PACHECO         |   | Director                                         |   | March                  14, 2006 |
| M.                  T. Pacheco             |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  R. M. PRICE           |   | Director                                         |   | March                  14, 2006 |
| R.                  M. Price               |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  B. S. REITZ           |   | Director                                         |   | March                  14, 2006 |
| B.                  S. Reitz               |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  J. B. WOODARD         |   | Director                                         |   | March                  14, 2006 |
| J.                  B. Woodard             |   |                                             |   |                            |
|                                       |   |                                             |   |                            |

----

**SIGNATURES**

|                                  |   | **PUBLIC                  SERVICE COMPANY OF NEW MEXICO**                          |
|---------------------------------------|--------|------------------------------------------------------------------------------------|
|                                  |   | (Registrant)                                                                       |
|                                  |   |                                                                               |
| Date:                  March 14, 2006 | By     | /s/                  J. E. STERBA                                                  |
|                                  |   | J.                  E. Sterba                                                      |
|                                  |   | Chairman,                  President and*Chief                  Executive Officer* |

| Signature                                  |   | Title                                            |   | Date                            |
|--------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------|
|                                       |   |                                             |   |                            |
| /s/                  J. E. STERBA          |   | Principal                  Executive Officer and |   | March                  14, 2006 |
| J.                  E. Sterba              |   | Chairman                  of the Board           |   |                            |
| Chairman,                  President and   |   |                                             |   |                            |
| *Chief                  Executive Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  C. N. ELDRED          |   | Principal                  Financial Officer     |   | March                  14, 2006 |
| C.                  N. Eldred              |   |                                             |   |                            |
| Senior                  Vice President and |   |                                             |   |                            |
| *Chief                  Financial Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  T. G. SATEGNA         |   | Principal                  Accounting Officer    |   | March                  14, 2006 |
| T.                  G. Sategna             |   |                                             |   |                            |
| Vice                  President and        |   |                                             |   |                            |
| *Corporate                  Controller*    |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  A. A. COBB            |   | Director                                         |   | March                  14, 2006 |
| A.                  A. Cobb                |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  W. D. HOBBS           |   | Director                                         |   | March                  14, 2006 |
| W.                  D. Hobbs               |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  C. N. ELDRED          |   | Director                                         |   | March                  14, 2006 |
| C.                  N. Eldred              |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  W. J. REAL            |   | Director                                         |   | March                  14, 2006 |
| W.                  J. Real                |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  H. W. SMITH           |   | Director                                         |   | March                  14, 2006 |
| H.                  W. Smith               |   |                                             |   |                            |

----

**SIGNATURES**

|                                    |   | **TEXAS-NEW                    MEXICO POWER COMPANY**                        |
|-----------------------------------------|--------|------------------------------------------------------------------------------|
|                                    |   | (Registrant)                                                                 |
|                                    |   |                                                                         |
| Date:                    March 14, 2006 | By     | /s/                    W. D. HOBBS                                           |
|                                    |   | W.                    D. Hobbs                                               |
|                                    |   | President                    and*Chief                    Executive Officer* |

| Signature                                  |   | Title                                            |   | Date                            |
|--------------------------------------------|--------|--------------------------------------------------|--------|---------------------------------|
|                                       |   |                                             |   |                            |
| /s/                  W. D. HOBBS           |   | Principal                  Executive Officer and |   | March                  14, 2006 |
| W.                  D. Hobbs               |   | Chairman                  of the Board           |   |                            |
| President                  and             |   |                                             |   |                            |
| *Chief                  Executive Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  C. N. ELDRED          |   | Principal                  Financial Officer     |   | March                  14, 2006 |
| C.                  N. Eldred              |   |                                             |   |                            |
| Senior                  Vice President and |   |                                             |   |                            |
| *Chief                  Financial Officer* |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  T. G. SATEGNA         |   | Principal                  Accounting Officer    |   | March                  14, 2006 |
| T.                  G. Sategna             |   |                                             |   |                            |
| Vice                  President and        |   |                                             |   |                            |
| *Corporate                  Controller*    |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  A. A. COBB            |   | Director                                         |   | March                  14, 2006 |
| A.                  A. Cobb                |   |                                             |   |                            |
|                                       |   |                                             |   |                            |
| /s/                  W. D. HOBBS           |   | Director                                         |   | March                  14, 2006 |
| W.                  D. Hobbs               |   |                                             |   |                            |