**Exhibit
      10.3**





SECOND
      AMENDMENT TO CREDIT AGREEMENT








THIS
      SECOND AMENDMENT TO CREDIT AGREEMENT (this “ Amendment ”)
      is
      entered into as of December 20, 2006 among PNM RESOURCES, INC., a New Mexico
      corporation (the “ Company ”),
      FIRST
      CHOICE POWER, L.P., a Texas limited partnership (“ FCP ”), TEXAS-NEW
      MEXICO POWER COMPANY, a Texas
      corporation (“ TNMP ”,
      collectively with the Company and FCP, the “ Borrowers ”),
      the
      Lenders party hereto, and BANK OF AMERICA, N.A., as Administrative Agent for
      the
      Lenders (in such capacity, the “ Administrative
      Agent ”).
      Capitalized terms used herein and not otherwise defined shall have the meanings
      ascribed thereto in the Credit Agreement (as defined below).








R
      E C
      I T A L S





WHEREAS,
      the Borrowers, the Lenders party thereto and the Administrative Agent are
      parties to that certain Amended and Restated Credit Agreement, dated as of
      August  15, 2005 (as amended or modified from time to time, the
“ Credit
      Agreement ”);
      and





WHEREAS,
      the Borrowers have requested that the Administrative Agent and Lenders agree
      to
      certain changes to the Credit Agreement.





NOW,
      THEREFORE, in consideration of the premises and the mutual covenants contained
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the parties hereto agree as
      follows:





A
      G R
      E E M E N T





1 .  Amendments .





( a )  Section
      1.1 .
      The
      definition of "Affiliate" appearing in Section 1.1 of the Credit Agreement
      is
      hereby amended and restated in its entirety to read as follows:





" Affiliate "
      means,
      with respect to any Person, any other Person directly or indirectly controlling
      (including but not limited to all directors and officers of such Person),
      controlled by or under direct or indirect common control with such Person.
      A
      Person shall be deemed to control another Person if such Person possesses,
      directly or indirectly, the power (a) to vote 10% or more of the securities
      having ordinary voting power for the election of directors of such other Person
      or (b) to direct or cause direction of the management and policies of such
      other
      Person, whether through the ownership of voting securities, by contract or
      otherwise.








( b )  Section
      8.3 .
      Section
      8.3 of the Credit Agreement is hereby amended and restated in its entirety
      to
      read as follows:





**8.3**  **Sale
      or Lease of Assets** **.**





Such
      Borrower will not (nor will it permit its Subsidiaries to)
      sell,
      lease, transfer or otherwise dispose of, any of its assets (including, without
      limitation, all or substantially all of its assets, whether in one transaction
      or a series of related transactions) except (a) with respect to the Company,
      sales of accounts receivable and energy services contract revenues by PSNM
      in
      connection with the PSNM Accounts Receivable Securitization and other sales
      of
      accounts receivable and energy services contract revenues so long as such other
      sales are non-recourse to the Company and are otherwise on customary market
      terms; (b) with respect to First Choice, the sales of accounts receivable in
      connection with the First Choice Securitization, (c) with respect to the
      Company, transfers of assets to PNMR Services Company, a wholly-owned
      operational services company, in the ordinary course of business, (d) sales
      or
      other transfers of assets (excluding those permitted in clauses (a), (b)
      and (c) hereof) for fair value, if the aggregate value of all such transactions
      in any calendar year, does not exceed 25% ** of
      the
      book value of Total Assets of such Borrower, as calculated as of the end of
      the
      most recent Fiscal **** Quarter,
      and (e) sale, lease, transfer or other disposition, at less than fair
      value, of any other assets of such Borrower and its Subsidiaries, provided that the
      aggregate book value of such assets shall not exceed $10,000,000 in any calendar
      year.




2 .  Conditions
      Precedent .
      This
      Amendment shall be effective upon receipt by the Administrative Agent of copies
      of this Amendment duly executed by each Borrower and the Required
      Lenders.





3 .  Ratification
      of Credit Agreement .
      The
      term “Credit Agreement” as used in each of the Credit Documents shall hereafter
      mean the Credit Agreement as amended by this Amendment. Except as herein
      specifically agreed, the Credit Agreement is hereby ratified and confirmed
      and
      shall remain in full force and effect according to its terms.





4 .  Authority/Enforceability .
      Each
      Borrower represents and warrants as follows:





( a )  It
      has
      taken all necessary action to authorize the execution, delivery and performance
      of this Amendment.





( b )  This
      Amendment has been duly executed and delivered by such Person and constitutes
      such Person’s legal, valid and binding obligations, enforceable in accordance
      with its terms, except as such enforceability may be subject to (i) bankruptcy,
      insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
      similar laws affecting creditors’ rights generally and (ii) general principles
      of equity (regardless of whether such enforceability is considered in a
      proceeding at law or in equity).





( c )  No
      consent, approval, authorization or order of, or filing, registration or
      qualification with, any court or governmental authority or third party is
      required in connection with the execution, delivery or performance by such
      Person of this Amendment.





5 .  Representations
      and Warranties .
      Each
      Borrower represents and warrants to the Lenders that ( a ) the
      representations and warranties of such Borrower set forth in Section 6 of
      the Credit Agreement are true and correct as of the date hereof, unless they
      specifically refer to an earlier date, ( b ) no
      event has occurred and is continuing which constitutes a Default or an Event
      of
      Default, and ( c ) it
      has no claims, counterclaims, offsets, credits or defenses to its obligations
      under the Credit Documents or to the extent it has any they are hereby released
      in consideration of the Lenders entering into this Amendment.





2


6 .  No
      Conflicts .
      Neither
      the execution and delivery of this Amendment, nor the consummation of the
      transactions contemplated herein, nor performance of and compliance with the
      terms and provisions hereof by any Borrower will ( a ) violate,
      contravene or conflict with any provision of its respective articles or
      certificate of incorporation, bylaws or other organizational or governing
      document, ( b ) violate,
      contravene or conflict with any law, rule, regulation, order, writ, judgment,
      injunction, decree or permit applicable to a Borrower, ( c ) violate,
      contravene or conflict with contractual provisions of, or cause an event of
      default under, any indenture, loan agreement, mortgage, deed of trust, contract
      or other agreement or instrument to which a Borrower is a party or by which
      it
      or its properties may be bound or ( d ) result
      in or require the creation of any Lien upon or with respect to a Borrower’s
      properties.





7 .  Counterparts/Telecopy .
      This
      Amendment may be executed in any number of counterparts, each of which when
      so
      executed and delivered shall be an original, but all of which shall constitute
      one and the same instrument. Delivery of executed counterparts by telecopy
      shall
      be effective as an original and shall constitute a representation that an
      original will be delivered if requested.





8 .  **GOVERNING
      LAW** . **THIS
      AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
      GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
      STATE OF NEW YORK.**




















[remainder
      of page intentionally left blank]











3


Each
      of
      the parties hereto has caused a counterpart of this Amendment to be duly
      executed and delivered as of the date first above written.








**BORROWERS** **:**    **PNM
      RESOURCES, INC.,**


a New Mexico corporation








By:  /s/
      Wendy A. Carlson


Name: Wendy
      A. Carlson____________________


Title: Vice
      President and Treasurer___________








**FIRST
      CHOICE POWER, L.P.** ,


a
      Texas
      limited partnership


By:
      First
      Choice Power GP, LLC,


its
      general partner








By:  /s/
      Wendy A. Carlson


Name:  Wendy
      A. Carlson


Title:  Vice
      President and Treasurer








**TEXAS-NEW
      MEXICO POWER COMPANY** **,**


a
      Texas
      corporation








By:  /s/
      Tom Sategna


Name: Thomas
      G. Sategna___________________


Title:  Vice
      President, Controller and Treasurer











**ADMINISTRATIVE**


**AGENT:**     **BANK
      OF AMERICA, N.A.** ,


as Administrative Agent








By:  /s/
      Maria A. McClain


Name:  Maria
      A. McClain


Title:  Vice
      President


4


**LENDERS:**     **BANK
      OF AMERICA, N.A.** ,


as a Lender and L/C Issuer








By:  /s/Kevin
      Bertelsen


Name:  Kevin
      Bertelsen


Title:  Senior
      Vice President








**WACHOVIA
      BANK, NATIONAL ASSOCIATION** ,


as
      a
      Lender and L/C Issuer








By:  /s/
      Frederick W. Price


Name:  Frederick
      W. Price


Title:  Managing
      Director








**UNION
      BANK OF CALIFORNIA, N.A.**








By:  /s/
      Efrain Soto


Name:  Efrain
      Soto


Title:  Vice
      President








**JPMORGAN
      CHASE BANK, N.A.**








By:  /s/Michael
      DeForge


Name:  Michael
      DeForge


Title:  Vice
      President








**CITIBANK,
      N.A.**








By:  /s/Scott
      Hancock


Name:  Scott
      Hancock


Title:  Vice
      President








**WELLS
      FARGO BANK, N.A.**








By:  /s/
      Daniel A. Conklin


Name:  Daniel
      A. Conklin


Title:  V.P.





5





**MERRILL
      LYNCH BANK USA**








By:  /s/Louis
      Alder


Name:  Louis
      Alder


Title:  Director








**MORGAN
      STANLEY BANK**








By:  /s/Daniel
      Twenge


Name:  Daniel
      Twenge


Title:  Authorized
      Signatory


Morgan
      Stanley Bank








**UBS
      LOAN FINANCE LLC**








By:  /s/Irja
      R. Otsa   /s/Marie
      Haddad


Name:  Irja
      R. Otsa   Marie
      A. Haddad


Title:  Associate
      Director  Associate
      Director


Banking
      Products  Banking
      Products


Services,
      US   Services,
      U.S.








**LEHMAN
      BROTHERS BANK, FSB**








By:  /s/Janine
      M. Shugan


Name:  Janine
      M. Shugan


Title:  Authorized
      Signatory








**WILLIAM
      STREET COMMITMENT CORPORATION**








By:  /s/Mark
      Walton


Name:  Mark
      Walton


Title:  Assistant
      Vice President








**CREDIT
      SUISSE, CAYMAN ISLANDS BRANCH**








By:  /s/Sarah
      Wu


Name:  Sarah
      Wu


Title:  Director





6


By:  /s/Shaheen
      Malik


Name:  Shaheen
      Malik


Title:  Associate








**U
      S BANK NATIONAL ASSOCIATION**








By:  /s/James
      W. Henken


Name:  James
      W. Henken


Title:  Vice
      President








**HSBC
      BANK USA, NATIONAL ASSOCIATION**








By:  /s/Richard
      J. Ward


Name:  Richard
      J. Ward


Title:  First
      Vice President








**MELLON
      BANK, N.A.**








By:  /s/Mark
      W. Rogers


Name:  Mark
      W. Rogers


Title:  Vice
      President








**ROYAL
      BANK OF CANADA**








By:  /s/David
      A. McCluskey


Name:  David
      A. McCluskey


Title:  Authorized
      Signatory








**COMPASS
      BANK**








By:  /s/


Name:


Title:





7





**SOUTHWEST
      SECURITIES BANK; FSB**


formerly
      Southwest Securities Bank





By:  /s/Lonnie
      Warren


Name:  Lonnie
      Warren


Title:  President,
      North Arlington


Banking
      Center








**BANK
      OF ALBUQUERQUE, N.A.**








By:  /s/Myka
      C. Gentry


Name:  Myka
      C. Gentry


Title:  Vice
      President





**BANK
      HAPOALIM BM**





By: /s/Helen
      H. Gateson   /s/Charles
      McLaughlin


Name:  Helen
      H. Gateson  Charles
      McLaughlin


Title:  President   Senior
      Vice President








8