UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-Q

(Mark One)
(X)      COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended September 30, 1997

                                       or

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

--------------------------------------------------------------------------------
                         Commission File Number: 1-8847

                             TNP ENTERPRISES, INC. 
             (Exact name of registrant as specified in its charter)

        Texas                                           75-1907501 
________________________                 _______________________________________
(State of incorporation)                 (I.R.S. employer identification number)

        4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
              (Address and zip code of principal executive offices)

         Registrant's telephone number, including area code 817-731-0099

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

TNP Enterprises,  Inc. had 13,127,377  shares of common stock  outstanding as of
October 28, 1997.

--------------------------------------------------------------------------------
                         Commission File Number: 2-97230

                         TEXAS-NEW MEXICO POWER COMPANY 
             (Exact name of registrant as specified in its charter)

        Texas                                           75-0204070              
(State of incorporation)                 (I.R.S. employer identification number)

        4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
              (Address and zip code of principal executive offices)

         Registrant's telephone number, including area code 817-731-0099

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

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

<PAGE>

                     TNP Enterprises, Inc. And Subsidiaries
                 Texas New-Mexico Power Company And Subsidiaries
 Combined Quarterly Report on Form 10-Q for the periods ended September 30, 1997

     This  Combined  Quarterly  Report on Form 10-Q is filed  separately  by TNP
Enterprises,  Inc., and Texas-New  Mexico Power Company.  Texas-New Mexico Power
Company makes no representation  as to information  relating to TNP Enterprises,
Inc., except as it may relate to Texas-New Mexico Power Company, or to any other
affiliate or subsidiary of TNP Enterprises, Inc.

                                TABLE OF CONTENTS

                          PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements
 
     TNP Enterprises, Inc. (TNP) and Subsidiaries:
       
       Consolidated Statements of Income
       Three and Nine Month Periods Ended September 30, 1997, and 1996         3

       Consolidated Statements of Cash Flows
       Nine Month Periods Ended September 30, 1997, and 1996                   4

       Consolidated Balance Sheets
       September 30, 1997, and December 31, 1996                               5

     Texas-New Mexico Power Company (TNMP) and Subsidiaries:

       Consolidated Statements of Income
       Three and Nine Month Periods Ended September 30, 1997, and 1996         6

       Consolidated Statements of Cash Flows
       Nine Month Periods Ended September 30, 1997, and 1996                   7

       Consolidated Balance Sheets
       September 30, 1997, and December 31, 1996                               8

     Notes to Consolidated Financial Statements                                9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            10


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                    14

Item 5.  Other Information                                                    14

Item 6.  Exhibits and Reports on Form 8-K                                     14
         (a)   Exhibit Index                                                  14
         (b)   Reports on Form 8-K                                            14
         Signature page                                                       15


<PAGE>
<TABLE>
<CAPTION>
                     TNP ENTERPRISES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                   Three Months Ended                  Nine Months Ended
                                                     September 30,                       September 30,
                                           -----------------------------------------------------------------------
                                                1997              1996               1997              1996
                                           ----------------  ----------------   ----------------  ----------------
                                                           (In thousands except per share amounts)

<S>                                        <C>               <C>                <C>               <C>            
OPERATING REVENUES                         $       197,558   $       159,280    $       461,981   $       381,127
                                           ----------------  ----------------   ----------------  ----------------

OPERATING EXPENSES:
  Purchased power                                   81,372            63,904            194,591           137,865
  Fuel                                              15,398            15,167             35,251            38,404
  Other operating and maintenance                   36,660            23,468             87,286            65,986
  Depreciation                                       9,860             9,580             29,307            28,584
  Taxes other than income taxes                      9,710             9,634             25,676            25,109
  Income taxes                                      10,173             7,790             15,444            12,329
                                           ----------------  ----------------   ----------------  ----------------
       Total operating expenses                    163,173           129,543            387,555           308,277
                                           ----------------  ----------------   ----------------  ----------------

NET OPERATING INCOME                                34,385            29,737             74,426            72,850
                                           ----------------  ----------------   ----------------  ----------------

OTHER INCOME:
  Other income and deductions, net                     511               905                956               852
  Income taxes                                         (22)              864                  1               910
                                           ----------------  ----------------   ----------------  ----------------
       Other income, net of taxes                      489             1,769                957             1,762
                                           ----------------  ----------------   ----------------  ----------------

INCOME BEFORE INTEREST CHARGES                      34,874            31,506             75,383            74,612
                                           ----------------  ----------------   ----------------  ----------------
INTEREST CHARGES:
  Interest on long-term debt                        13,075            16,256             39,989            49,380
  Other interest and amortization of 
    debt-related costs                               1,105               958              3,159             2,547
                                           ----------------  ----------------   ----------------  ----------------
       Total interest charge                        14,180            17,214             43,148            51,927
                                           ----------------  ----------------   ----------------  ----------------

NET INCOME                                          20,694            14,292             32,235            22,685
Dividends on preferred stock                            40                42                120               126
                                           ----------------  ----------------   ----------------  ----------------

INCOME APPLICABLE TO COMMON STOCK          $        20,654   $        14,250    $        32,115   $        22,559
                                           ================  ================   ================  ================


EARNINGS PER SHARE OF COMMON STOCK         $          1.57   $          1.29    $          2.44   $          2.05
                                           ================  ================   ================  ================

DIVIDENDS PER SHARE OF COMMON STOCK        $         0.245   $         0.245    $         0.735   $         0.685
                                           ================  ================   ================  ================

WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING                13,188            11,080             13,164            11,029
                                           ================  ================   ================  ================



The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                     TNP ENTERPRISES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                                        Nine Months Ended
                                                                           September 30,
                                                               ----------------------------------------
                                                                    1997                  1996
                                                               -----------------    -------------------
                                                                          (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>                  <C>               
  Cash received from customers                                 $        438,252     $          374,529
  Purchased power                                                      (183,025)              (138,326)
  Fuel costs paid                                                       (29,367)               (37,292)
  Cash paid for payroll and to other suppliers                          (82,066)               (63,226)
  Interest paid, net of amounts capitalized                             (46,345)               (62,137)
  Income taxes paid                                                      (3,698)               (11,596)
  Other taxes paid                                                      (26,870)               (23,777)
  Other operating cash receipts and payments, net                         1,636                  2,579
                                                               -----------------    -------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                68,517                 40,754
                                                               -----------------    -------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                            (20,100)               (20,563)
  Additions to other property and nonregulated investments               (2,017)                     -
                                                               -----------------    -------------------
NET CASH USED IN INVESTING ACTIVITIES                                   (22,117)               (20,563)
                                                               -----------------    -------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                          (9,733)                (7,644)
  Common stock issuances                                                  3,212                  1,410
  Borrowings from (repayments to) revolving credit 
    facilities - net                                                     64,000                (10,000)
  Redemptions:
     Other long-term debt                                                  (161)                   835
     Obligation - FWI investment aquisition                                (300)                     -
     First mortgage bonds                                              (100,800)               (10,550)
                                                               -----------------    -------------------

NET CASH USED IN FINANCING ACTIVITIES                                   (43,782)               (25,949)
                                                               -----------------    -------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                   2,618                 (5,758)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                          8,387                 21,105
                                                               -----------------    -------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $         11,005     $           15,347
                                                               =================    ===================

RECONCILIATION OF NET INCOME TO NET
     CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income                                                   $         32,235     $          22,685
  Adjustments to reconcile net income to net cash 
    provided by operating activities:
     Depreciation                                                        29,307                28,566
     Amortization of debt-related costs and other 
       deferred charges                                                   2,861                 3,390
     Allowance for borrowed funds used during 
       construction                                                         (30)                  (78)
     Deferred income taxes                                                9,187                 4,711
     Investment tax credits                                              (1,509)                  926

Cash flows impacted by changes in current assets 
    and liabilities:
     Deferred purchased power and fuel costs                              7,234                (6,859)
     Accounts payable                                                    15,709                 8,893
     Accrued interest                                                    (6,028)               (7,739)
     Accrued taxes                                                        2,875                (4,468)
     Changes in other current assets and liabilities                    (20,683)               (8,721)
Other, net                                                               (2,641)                 (552)
                                                               -----------------    -------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                      $         68,517     $          40,754
                                                               =================    ===================


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                     TNP ENTERPRISES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                September 30, 1997     December 31,
                                                                  (Unaudited)              1996
                                                                 ---------------    ----------------
                                                                         (In thousands)
ASSETS

UTILITY PLANT:
<S>                                                               <C>               <C>            
  Electric plant                                                 $    1,230,228     $     1,215,355
  Construction work in progress                                           1,250                 906
                                                                 ---------------    ----------------
            Total                                                     1,231,478           1,216,261
  Less accumulated depreciation                                         306,508             282,322
                                                                 ---------------    ----------------
            Net utility plant                                           924,970             933,939
                                                                 ---------------    ----------------

OTHER PROPERTY AND INVESTMENTS, at cost                                   5,736               3,927
                                                                 ---------------    ----------------

CURRENT ASSETS:
  Cash and cash equivalents                                              11,005               8,387
  Receivables:
       Customer                                                          27,487              16,362
       Other                                                             13,715                 594
  Inventories, at lower of average cost or market:
       Fuel                                                                 519                 367
       Materials and supplies                                             5,048               6,384
  Deferred purchased power and fuel costs                                     -               3,565
  Accumulated deferred income taxes                                       1,831               1,937
  Other current assets                                                    2,008                 527
                                                                 ---------------    ----------------
            Total current assets                                         61,613              38,123
                                                                 ---------------    ----------------

DEFERRED CHARGES                                                         27,917              30,795
                                                                 ---------------    ----------------
                                                                 $    1,020,236     $     1,006,784
                                                                 ===============    ================
CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
  Common shareholders' equity:
       Common stock - no par value per share.  
         Authorized 50,000,000 shares; issued 
         13,126,477 shares in 1997 and 
         13,006,492 in 1996                                      $      186,983     $       183,771
       Retained earnings                                                117,204              94,703
                                                                 ---------------    ----------------
            Total common shareholders' equity                           304,187             278,474
 
  Preferred stock                                                         3,420               3,420
  Long-term debt, less current maturities                               497,041             533,964
                                                                 ---------------    ----------------
            Total capitalization                                        804,648             815,858
                                                                 ---------------    ----------------

CURRENT LIABILITIES:
  Current maturities of long-term debt                                      100                 138
  Accounts payable                                                       44,155              28,446
  Accrued interest                                                        4,851              10,879
  Accrued taxes                                                          21,708              18,833
  Customers' deposits                                                     3,179               2,662
  Deferred purchased power and fuel costs                                 3,669                   -
  Other current liabilities                                              11,117              11,797
                                                                 ---------------    ----------------
            Total current liabilities                                    88,779              72,755
                                                                 ---------------    ----------------

REGULATORY TAX LIABILITIES                                                1,006              10,963
ACCUMULATED DEFERRED INCOME TAXES                                        87,801              74,844
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                              24,305              19,734
DEFERRED CREDITS                                                         13,697              12,630
COMMITMENTS AND CONTINGENCIES (Notes 2 and 4)
                                                                 ---------------    ----------------
                                                                 $    1,020,236     $     1,006,784
                                                                 ===============    ================


 
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                 TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
              (a wholly owned subsidiary of TNP Enterprises, Inc.)
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

                                                  Three Months Ended                 Nine Months Ended
                                                    September 30,                     September 30,
                                           ---------------------------------------------------------------------
                                                 1997              1996              1997             1996
                                           ----------------  ---------------    ---------------  ---------------
                                                                        (In thousands)

<S>                                        <C>               <C>                <C>              <C>           
OPERATING REVENUES                         $       187,035   $      157,453     $      445,619   $      379,300
                                           ----------------  ---------------    ---------------  ---------------

OPERATING EXPENSES:
  Purchased power                                   81,372           63,904            194,591          137,865
  Fuel                                              15,398           15,167             35,251           38,404
  Other operating and maintenance                   21,155           20,139             61,373           62,657
  Depreciation of utility plant                      9,764            9,562             29,099           28,566
  Taxes other than income taxes                      9,541            9,195             25,149           24,670
  Income taxes                                      11,771            8,249             18,808           12,788
                                           ----------------  ---------------    ---------------  ---------------
       Total operating expenses                    149,001          126,216            364,271          304,950
                                           ----------------  ---------------    ---------------  ---------------

NET OPERATING INCOME                                38,034           31,237             81,348           74,350
                                           ----------------  ---------------    ---------------  ---------------

OTHER INCOME:
  Other income and deductions, net                     322              226                674              584
  Income taxes                                         (22)           1,008                  1              910
                                           ----------------  ---------------    ---------------  ---------------
       Other income, net of taxes                      300            1,234                675            1,494
                                           ----------------  ---------------    ---------------  ---------------

INCOME BEFORE INTEREST CHARGES                      38,334           32,471             82,023           75,844
                                           ----------------  ---------------    ---------------  ---------------

INTEREST CHARGES:
  Interest on long-term debt                        13,075           16,256             39,989           49,380
  Other interest and amortization of 
    debt-related costs                               1,103              958              3,157            2,547
                                           ----------------  ---------------    ---------------  ---------------
       Total interest charges                       14,178           17,214             43,146           51,927
                                           ----------------  ---------------    ---------------  ---------------

NET INCOME                                          24,156           15,257             38,877           23,917
Dividends on preferred stock                            40               42                120              126
                                           ----------------  ---------------    ---------------  ---------------

INCOME APPLICABLE TO COMMON STOCK          $        24,116   $       15,215     $       38,757   $       23,791
                                           ================  ===============    ===============  ===============



The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                 TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
              (a wholly owned subsidiary of TNP Enterprises, Inc.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                                        Nine Months Ended
                                                                          September 30,
                                                               -----------------------------------
                                                                      1997               1996
                                                               -----------------   ---------------
                                                                        (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                            <C>                 <C>           
  Cash received from customers                                 $        428,961    $      376,235
  Purchased power                                                      (183,025)         (138,326)
  Fuel costs paid                                                       (29,367)          (37,292)
  Cash paid for payroll and to other suppliers                          (58,413)          (64,594)
  Interest paid, net of amounts capitalized                             (46,343)          (57,247)
  Income taxes paid                                                      (3,187)          (10,538)
  Other taxes paid                                                      (26,845)          (24,887)
  Other operating cash receipts and payments, net                         1,354              (349)
                                                               -----------------   ---------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                83,135            43,002
                                                               -----------------   ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                            (20,083)          (20,563)
  Withdrawal from escrow account                                          1,670                 -
                                                               -----------------   ---------------

CASH FLOWS USED IN INVESTING ACTIVITIES                                 (18,413)          (20,563)
                                                               -----------------   ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                         (30,420)           (7,626)
  Borrowings from (repayments to) revolving credit 
    facilities - net                                                     64,000           (10,000)
  First mortgage bond redemption                                       (100,900)          (10,550)
                                                               -----------------   ---------------

NET CASH USED IN FINANCING ACTIVITIES                                   (67,320)          (28,176)
                                                               -----------------   ---------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                  (2,598)           (5,737)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                          5,115            14,450
                                                               -----------------   ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                     $          2,517    $        8,713
                                                               =================   ===============

RECONCILIATION OF NET INCOME TO NET
     CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income                                                   $         38,877    $       23,917
  Adjustments to reconcile net income to net cash 
    provided by operating activities:
     Depreciation of utility plant                                       29,099            28,566
     Amortization of debt-related costs and other 
       deferred charges                                                   2,861             3,390
     Allowance for borrowed funds used during construction                  (30)              (78)
     Deferred income taxes                                               10,538             4,787
     Investment tax credits                                              (1,510)              947

Cash flows impacted by changes in current assets and liabilities:
     Deferred purchased power and fuel costs                              7,234            (6,859)
     Accounts payable                                                    15,016             8,077
     Accrued interest                                                    (6,028)           (7,739)
     Accrued taxes                                                        5,014            (4,415)
     Changes in other current assets and liabilities                    (15,200)           (7,415)
Other, net                                                               (2,736)             (176)
                                                               -----------------   ---------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                      $         83,135    $       43,002
                                                               =================   ===============


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                 TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
              (a wholly owned subsidiary of TNP Enterprises, Inc.)
                           CONSOLIDATED BALANCE SHEETS


                                                                September 30, 1997      December 31,
                                                                    (Unaudited)            1996
                                                                 ---------------     ----------------
                                                                            (In thousands)
ASSETS

UTILITY PLANT:
<S>                                                              <C>                 <C>            
  Electric plant                                                 $    1,230,211      $     1,215,355
  Construction work in progress                                           1,250                  906
                                                                 ---------------     ----------------
            Total                                                     1,231,461            1,216,261
  Less accumulated depreciation                                         306,508              282,322
                                                                 ---------------     ----------------
            Net utility plant                                           924,953              933,939
                                                                 ---------------     ----------------

OTHER PROPERTY AND INVESTMENTS, at cost                                     214                1,884
                                                                 ---------------     ----------------

CURRENT ASSETS:
  Cash and cash equivalents                                               2,517                5,115
  Receivables:
       Customer                                                          19,869               15,521
       Other                                                             14,023                1,196
  Inventories, at lower of average cost or market:
       Fuel                                                                 519                  367
       Materials and supplies                                             5,048                6,384
  Deferred purchased power and fuel costs                                     -                3,565
  Accumulated deferred income taxes                                       1,831                1,937
  Other current assets                                                      678                  128
                                                                 ---------------     ----------------
            Total current assets                                         44,485               34,213
                                                                 ---------------     ----------------

DEFERRED CHARGES                                                         29,057               32,121
                                                                 ---------------     ----------------
                                                                 $      998,709      $     1,002,157
                                                                 ===============     ================
CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
  Common shareholder's equity:
       Common stock, $10 par value per share.
            Authorized 12,000,000 shares; issued 10,705 shares   $          107      $           107
       Capital in excess of par value                                   222,133              222,133
       Retained earnings                                                 73,765               65,308
                                                                 ---------------     ----------------
            Total common shareholder's equity                           296,005              287,548
 
  Redeemable cumulative preferred stock                                   3,420                3,420
  Long-term debt, less current maturities                               496,900              533,800
                                                                 ---------------     ----------------
            Total capitalization                                        796,325              824,768
                                                                 ---------------     ----------------

CURRENT LIABILITIES:
  Current maturities of long-term debt                                      100                  100
  Accounts payable                                                       42,270               27,254
  Accrued interest                                                        4,851               10,879
  Accrued taxes                                                          21,915               16,901
  Customers' deposits                                                     3,179                2,662
  Deferred purchased power and fuel costs                                 3,669                    -
  Other current liabilities                                               7,794               10,993
                                                                 ---------------     ----------------
            Total current liabilities                                    83,778               68,789
                                                                 ---------------     ----------------

REGULATORY TAX LIABILITIES                                                1,006               10,963
ACCUMULATED DEFERRED INCOME TAXES                                        79,948               65,860
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                              23,955               19,164
DEFERRED CREDITS                                                         13,697               12,613
COMMITMENTS AND CONTINGENCIES (Notes 2 and 4)
                                                                 ---------------     ----------------
                                                                 $      998,709      $     1,002,157
                                                                 ===============     ================


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

<PAGE>

                     TNP Enterprises Inc. and Subsidiaries
                 Texas-New Mexico Power Company and Subsidiaries
                   Notes to Consolidated Financial Statements


Note 1.  Interim Financial Statements

     The interim consolidated financial statements of TNP and subsidiaries,  and
TNMP and  subsidiaries  are unaudited,  and contain all adjustments  (consisting
primarily of normal  recurring  accruals)  necessary for a fair statement of the
results for the interim periods  presented.  Results for interim periods are not
necessarily  indicative  of  results  to be  expected  for a  full  year  or for
previously reported periods due in part to seasonal revenue fluctuations.  It is
suggested that these  consolidated  financial  statements be read in conjunction
with the audited consolidated financial statements and notes thereto included in
TNP's and TNMP's 1996 Combined Annual Report on Form 10-K.

     Prior period  statements  have been  reclassified in order to be consistent
with current  period  presentation.  The  reclassification  had no effect on net
income or common shareholders equity.

Note 2.  Income Taxes

     As indicated in the 1996  Combined  Annual Report on Form 10-K, an Internal
Revenue  Service (IRS) revenue  agent  involved in auditing  TNP's 1990 and 1991
consolidated  fedIeral  income tax returns  recommended,  in March 1995,  that a
private letter ruling concerning eligibility of the TNP One generating plant for
investment  tax credit (ITC) be revoked  retroactively.  On July 29,  1997,  TNP
received  notification  from the IRS that  revoked  the private  letter  ruling.
However, the IRS has granted full relief from the effects of this revocation and
has  allowed  TNP to rely on the private  letter  ruling as issued.  The current
ruling will have no material effect on the amount of ITC previously recognized.

Note 3.  Regulatory Matters

Texas Rate Filing and Transition to Competition Plan

     In December  1996,  certain cities in the Texas gulf coast area (Gulf Coast
Cities) served by TNMP passed  resolutions  requiring TNMP to file complete rate
information  with  those  cities.  On July 31,  1997,  TNMP  filed the  required
traditional  rate  information,  based on the test year ended December 31, 1996,
with the Gulf Coast  Cities.  Agreements  with the cities  provide that any rate
reduction  resulting from the city  ordinances  requiring the  traditional  rate
filing will be placed  into effect  retroactive  to May 15,  1997.  Based on its
analysis, TNMP believes the filing supports the reasonableness of TNMP's current
rates.

     Simultaneous  with the Gulf Coast Cities rate filing,  the company  filed a
transition to  competition  plan with the PUCT and all of its Texas cities.  The
transition to competition  plan proposes a five year transition  period,  with a
series of rate reductions for  residential,  commercial and municipal  customers
beginning in 1998. At the end of the transition  period,  TNMP's Texas customers
would be  allowed  to  choose  their  energy  supplier.  The plan  provides  the
opportunity  for TNMP to recover an estimate of its  stranded  costs  during the
transition  period,  and  establishes a Competitive  Transition  Charge (CTC) to
recover any stranded cost that remains at the end of the transition  period over
the subsequent five years.

     TNMP does not  expect a final  resolution  of the Gulf  Coast  Cities  rate
filing or the transition to competition plan before the first quarter of 1998.
 
Texas Transmission Access

     During  1996,  the PUCT passed a wholesale  transmission  access rule which
established a regional method of transmission  pricing,  terms,  and conditions.
The purpose of this rule is to increase  competition  in wholesale  energy sales
within  Texas and  establish  an  Independent  System  Operator for the Electric
Reliability  Council of Texas  transmission  system.  The new  transmission  fee
structure  was  scheduled  to start in early  1997.  However,  during  the first
quarter of 1997 several Texas  utilities  unsuccessfully  petitioned the PUCT to
revise the new transmission  rules, and subsequently  filed an appeal in a state
district  court.  During the second quarter of 1997,  TNMP  implemented  the new
rules upon the PUCT's  approval of  tariffs.  Implementation  has  resulted in a
favorable earnings impact as reported under "MD&A - Results Of Operations".


<PAGE>

Fuel Reconciliation Filing

     On June 30,  1997,  TNMP filed a  reconciliation  of fuel  expenses for the
period September 30, 1993, to December 31, 1996, with the PUCT. At the beginning
of  the  reconciliation  period  TNMP  had a  cumulative  under-recovery  of $11
million,  and  had  a  $4.4  million   under-recovery  as  of  the  end  of  the
reconciliation  period.  TNMP believes that the total fuel costs incurred during
the  reconciliation  period were  reasonable  and necessary to provide  reliable
electric  service.  In the  filing,  TNMP  proposed  no change to the fixed fuel
factor,  and plans to collect the  under-recovery  that existed as of the end of
the reconciliation period through the existing fixed fuel factor.

Note 4.  Accounting for the Effects of Regulation
 
     TNP's and TNMP's consolidated  financial statements reflect the application
of certain accounting  standards,  including  Statement of Financial  Accounting
Standard (SFAS) 71, "Accounting for the Effects of Certain Types of Regulation,"
which provide for recognition of the economic effects of rate regulation. On May
1, 1997,  TNMP placed  into effect its  transition  to  competition  plan in New
Mexico.  On July 31, 1997,  TNMP filed a new plan for  transition to competition
with the PUCT.  Additional  information  regarding these two transition plans is
provided under "MD&A--Regulatory Matters." Continued applicability of SFAS 71 to
TNP's and TNMP's financial  statements requires that rates set by an independent
regulator on a  cost-of-service  basis can actually be charged to and  collected
from customers.  Management  believes that as of September 30, 1997, and for the
foreseeable  future,  TNP and  TNMP  satisfy  the  criteria  for  accounting  in
accordance with SFAS 71.

 
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations (MD&A)

     The following  discussion  should be read in  conjunction  with the related
interim consolidated financial statements and notes.

     TNP is a holding company, in which TNMP currently  represents most of TNP's
operations.  Additionally,  Facility  Works Inc.,  (Facility  Works) is a wholly
owned  subsidiary of TNP, that began  operations in early 1996.  Facility  Works
provides  facility-related services and products to commercial and institutional
customers.  The following  discussion  focuses on TNMP's operations except where
otherwise noted.

Results Of Operations

   Overall Results

     TNP's income applicable to common stock was $20.7 million and $32.1 million
for the three and nine months  ended  September  30, 1997,  respectively.  TNP's
income  applicable to common stock  increased  $6.4 million for the three months
ended  September 30, 1997,  and increased $9.6 million for the nine months ended
September 30, 1997, when compared to the same periods of last year.

     TNMP's  income  applicable  to common stock was $24.1 million for the three
months ended  September  30, 1997,  an increase of $8.9 million when compared to
the same period of last year, due to increased base revenues, as detailed below,
in addition to a reduction  in interest  expense.  Facility  Works  incurred net
operating  losses of $3.0 million  during the three months ended  September  30,
1997,  compared to losses of $0.9  million  for the same  period  last year.  In
addition,  TNP's earnings per share were reduced due to a 19 percent increase in
the number of weighted average common shares outstanding, that resulted from the
issuance of two million shares of common stock in October 1996.

     TNMP's  income  applicable  to common stock was $38.8  million for the nine
months ended September 30, 1997, an increase of $15.0 million due to a reduction
in interest expense, increased base revenues as detailed below, and the benefits
from the  implementation  in  August  1996 of a  control  area.  Facility  Works
incurred  $5.5  million of net  operating  losses  during the nine months  ended
September  30, 1997,  compared to $1.0  million of losses for the  corresponding
period last year.  Weighted  average common shares  increased 19 percent for the
nine months ended September 30, 1997, which reduced TNP's earnings per share.


<PAGE>

   Operating Revenues

     TNMP's operating  revenues increased $29.6 million for the third quarter of
1997,  and $66.3  million for the nine months ended  September  30,  1997,  when
compared to the  corresponding  periods of 1996.  Third  quarter  base  revenues
increased  $12.2  million,  while  year-to-date  base revenues  increased  $15.0
million.

     The components of TNMP's  operating and base revenues are summarized in the
following tables (in thousands):

<TABLE>
<CAPTION>


                                  Three Months Ended September 30,                       Nine Months Ended September 30,
                           ----------------------------------------------     -------------------------------------------------
                                                              Increase                                             Increase
                              1997            1996           (Decrease)          1997              1996           (Decrease)
                           ------------    ------------     -------------     ------------     --------------    --------------
<S>                        <C>             <C>              <C>               <C>              <C>               <C>          
Operating revenues         $   187,035     $   157,453      $     29,582      $   445,619      $     379,300     $      66,319

Less pass-through items         95,770          78,372            17,398          227,897            176,577            51,320
                           ------------    ------------     -------------     ------------     --------------    --------------
Base revenues              $    91,265     $    79,081      $     12,184      $   217,722      $     202,723     $      14,999
                           ============    ============     =============     ============     ==============    ==============
</TABLE>


<TABLE>
<CAPTION>

                 Base Revenues
                 <S>                                        <C>                                                  <C>           
                 Weather related                            $       2,455                                        $      (3,063)
                 Price - sales mix and other                           41                                                  317
                 Customer growth                                    1,250                                                3,042
                 Industrial - economy rate sales                      896                                                5,016
                 Industrial - firm rate sales                        (960)                                              (2,350)
                 Unbilled revenue                                   4,535                                                2,283
                 Non industrial standby revenues                      247                                                1,882
                 Transmission revenue                               2,598                                                6,724
                 Other electric revenue                             1,122                                                1,148
                                                             -------------                                       --------------
                                                             $     12,184                                        $      14,999
                                                             =============                                       ==============


</TABLE>

     Pass-through  items are the portion of operating  revenues that recover the
costs of purchased  power,  fuel, and standby power from customers.  These items
affect customer rates but do not affect operating  income.  Explanations for the
third  quarter  and  year-to-date  variances  are  discussed  under  "Results of
Operations -- Operating Expenses."


<TABLE>
<CAPTION>

         The components of GWH sales are summarized in the following table:


                                  Three Months Ended September 30,                 Nine Months Ended September 30,
                             --------------------------------------------     -------------------------------------------
                                                               Increase                                       Increase
GWH Sales                         1997            1996        (Decrease)         1997           1996        (Decrease)
                               ------------    -----------    ------------    -----------    ------------   ------------
<S>                                  <C>            <C>               <C>          <C>             <C>            <C> 
Residential                            797            749              48          1,741           1,764            (23)
Commercial                             538            516              22          1,339           1,315             24
Industrial
        Firm                           315            309               6            869           1,010           (141)
        Economy                      1,115            696             419          3,260           1,475          1,785
Other   (including off-system)         296             28             268            389              87            302
                               ------------    -----------    ------------    -----------    ------------   ------------
        Total GWH Sales              3,061          2,298             763          7,598           5,651          1,947
                               ============    ===========    ============    ===========    ============   ============
</TABLE>


     The increases in the three and nine month ended periods September 30, 1997,
resulted primarily from increased industrial economy sales and off-system sales.
Economy  industrial sales increased due to contractual  agreements  entered into
with two existing cogeneration customers in mid-1996, whereby TNMP purchases the
output  from  those  cogeneration  facilities  and  resells  the  power to those
customers.  Three month ended sales also reflect  increases in  residential  and
commercial GWH due to customer growth and the favorable impact of hotter weather
when compared to the same period in 1996.  Nine month ended sales  increases are
offset in part by weather-related sales reductions to residential and commercial
customers  during the second quarter of 1997, and reductions in firm  industrial
sales.  Over  the  last  several  years,   cogeneration  projects  developed  or
considered by certain  industrial  customers  resulted in TNMP offering  economy
rates to qualifying  customers.  Economy  rates are  generally low margin,  high
volume and short term in nature. Previously, those industrial customers had paid
firm rates.  The economy  rates are  designed  to retain such  customers  and to
compete for and develop new loads.

     Beginning  in  mid-1997   TNMP   significantly   increased  the  resale  of
electricity  to  off-system  customers.  These sales are  generally  made at low
margins.

   Operating Expenses

     Total operating  expenses increased $22.8 million and $59.3 million for the
three and nine months ended  September 30, 1997, as compared to the same periods
of last  year  due  primarily  to an  increase  in  pass-through  expenses.  The
components of TNMP's  operating  expenses are summarized in the following  table
(in thousands):


<TABLE>
<CAPTION>
                                     Three Months Ended September 30,                Nine Months Ended September 30,
                               ---------------------------------------------   -----------------------------------------------
                                                                  Increase                                        Increase
                                   1997             1996         (Decrease)       1997             1996          (Decrease)
                               -------------   ---------------   --------------------------     -----------      -------------
Pass-through expenses
<S>                            <C>             <C>               <C>           <C>              <C>              <C>         
     Purchased power           $     81,192    $       63,904    $   17,288    $   194,411      $  137,865       $     56,546
     Standby power                        -               336          (336)             -           3,108             (3,108)
     Fuel                            14,578            14,132           446         33,486          35,604             (2,118)
                               -------------   ---------------   -----------   ------------     -----------      -------------
Total pass-through items             95,770            78,372        17,398        227,897         176,577             51,320
Other operating expenses             31,919            30,400         1,519         92,417          90,915              1,502
Income and other taxes               21,312            17,444         3,868         43,957          37,458              6,499
                               -------------   ---------------   -----------   ------------     -----------      -------------
Operating expenses             $    149,001    $      126,216    $   22,785    $   364,271      $  304,950       $     59,321
                               =============   ===============   ===========   ============     ===========      =============
</TABLE>

   Pass-through Expenses

     Pass-through  expenses  consist of  purchased  power,  standby  power,  and
certain  fuel costs.  Current  quarter and  year-to-date  pass-through  expenses
increased due to higher purchased power costs.

     Purchased Power.  Purchased power costs,  including  standby,  increased by
$17.0  million and $53.4  million for the three and nine months ended  September
30, 1997,  when compared to the same periods of 1996, due primarily to increased
power  requirements  to meet higher  economy sales to  industrial  customers and
increased  levels  of  off-system  sales.  During  the  first  quarter  of 1996,
purchased  power  supplier  refunds of $6.7 million were passed through to Texas
customers,  which  reduced  purchased  power  expense for the nine months  ended
September 30, 1996.

     Fuel. Fuel expense increased  slightly for the three months ended September
30, 1997, due to increases in GWH sales in all rate classes. For the nine months
ended September 30, 1997, fuel expense decreased slightly due primarily to lower
industrial  firm sales when  compared to the same  period in 1996.  No fuel cost
recovery is included in  industrial  economy rate sales.  The majority of TNMP's
monthly fuel costs are recovered in revenues through a fixed fuel factor per KWH
approved by the PUCT. TNMP records as fuel expense the amount collected  through
this fixed fuel factor.  Any difference  between the amount collected and actual
cost is  deferred  for  collection/refund  in  future  periods.  See Note 3, for
information  regarding the June 30, 1997,  fuel  reconciliation  filing with the
PUCT.

   Other Operating Expenses, Income and Other Tax Expenses

     TNMP's  other  operating  expenses  for the  three  and nine  months  ended
September 30, 1997, were slightly  higher due in part to increased  transmission
costs associated with the transmission  rules discussed in Note 3.  Transmission
expenses increased $0.8 million and $1.7 million respectively,  when compared to
the same periods last year.

     TNP's other operating  expenses  increased  significantly for the three and
nine months ended  September  30, 1997,  when  compared to the same periods last
year, due to the inclusion of Facility Works  operations  during 1997.  Facility
Works had virtually no activity during the first three quarters of 1996.

     TNP's and TNMP's income and other tax expenses  increased for the three and
nine  months  ended  September  30,  1997,  due to  higher  pre-tax  income  and
additional gross receipts taxes.

   Interest Expense

     Interest charges  decreased $3.0 million and $8.8 million for the three and
nine months ended  September  30, 1997.  The decrease is  attributed  to reduced
long-term debt levels and refinancing of debt at lower levels.  Borrowings under
the revolving  credit  facilities  and an equity  contribution  from TNP in late
1996,  resulting  from a common stock sale,  were used to redeem  TNMP's  higher
interest rate bonds.

Financial Condition

   Liquidity

     The main sources of liquidity  for TNMP are cash flow from  operations  and
borrowings from credit facilities. TNMP's cash flow from operations increased by
$40.1 million for the nine months ended September 30, 1997, compared to the nine
months ended September 30, 1996, due to higher  receipts from customers,  net of
fuel and purchased power payments,  and lower interest  payments.  As previously
discussed,  during the first  quarter of 1996,  TNMP  refunded  $6.7  million to
customers.  TNP's  consolidated  cash flow from operations also improved for the
nine months ended  September 30, 1997, for the same reasons as discussed  above;
however,  they were offset  somewhat  by $12.2  million of cash used by Facility
Works in its  operations.  Currently,  TNP's primary source of cash is dividends
from TNMP.

     TNMP has two credit  facilities  with a total  commitment of $250 million -
the 1995 Facility  ($150 million) and the 1996 Facility  ($100  million).  As of
September  30, 1997,  available  unused  credit under the 1995 Facility was $131
million,  subject to interest coverage and capitalization  tests. Under the 1995
Facility,  TNMP can borrow up to $81  million of the unused  commitment  with no
additional  collateral  and borrow the remainder of the unused  commitment  ($50
million) by pledging first  mortgage bonds (FMBs) equal to the principal  amount
of such borrowings.

     There  is  currently  no  available  credit  under  the $100  million  1996
Facility.  The  interest  rates  under both  facilities  are based on the London
Interbank  Offered Rate (LIBOR).  The interest  rate margins on both  facilities
will decrease as the ratings on TNMP's FMBs improve.

     In January,  TNMP used the credit  facilities to retire  $100.8  million of
11.25% Series T FMBs.

     TNMP has sufficient  liquidity to satisfy the possibility of existing known
contingencies.  Management  believes  cash flow  from  operations  and  periodic
borrowings  under its two revolving  credit  facilities  should be sufficient to
meet working  capital  requirements  and planned  capital  expenditures at least
through 1998.

Regulatory Matters

   Community Choice R

     New Mexico. On May 1, 1997, TNMP implemented Community Choice, its plan for
transition  to  competition  for its New  Mexico  service  territory.  The  plan
provides  TNMP's  customers  the right to choose their energy  provider  after a
three-year  transition period. The plan freezes rates (including the recovery of
purchased  power)  during  the  transition   period,  and  allows  for  customer
aggregation  based on market  forces.  TNMP  believes  the plan will allow it to
recover  most,  if not all,  of its  potential  stranded  costs  in New  Mexico;
however,  the actual recovery of stranded costs will depend on the future market
and price for energy through May 1, 2000.

   Transition to Competition

     Texas.  On  July  31,  1997,  TNMP  filed  a new  plan  for  transition  to
competition  with the PUCT and the  communities  within  the  company's  service
territory in Texas. TNMP does not expect a final resolution of the transition to
competition plan before the first quarter of 1998, however,  due to the numerous
issues involved, no assurance can be provided as to the timing or outcome of the
new transition to competition plan in Texas. As discussed previously in Note 3 -
Texas Rate Filing and Transition to Competition Plan, TNMP has filed traditional
rate  information  with certain  cities  served by the company in the Texas gulf
coast area, due to their request,  in order to determine the  reasonableness  of
TNMP's current rates.

   New Accounting Standards

     The Financial  Accounting Standards Board has issued SFAS 128, Earnings per
Share, which will become effective for financial  statements ending December 31,
1997. SFAS 128 requires the calculation of basic and diluted earnings per share.
Basic  earnings per share is computed by dividing  income  applicable  to common
stock by the weighted  average  number of common shares  outstanding  during the
period.  Diluted earnings per share is computed by dividing income applicable to
common stock by the weighted  average  number of common shares  outstanding  and
common stock  equivalents.  SFAS 128 will not  materially  change TNP's reported
earnings per share.


<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

     See Note 3 for  information  regarding  the rate filing with the Texas Gulf
Coast Cities,  the  transition to  competition  plan filed with the PUCT and the
fuel reconciliation with the PUCT.

     TNMP is the  defendant  in a suit styled  Clear Lake  Cogeneration  Limited
Partnership  vs.  Texas-New  Mexico Power  Company,  filed in the 234th District
Court of Harris County,  Texas on October 2, 1997, and served on TNMP on October
21.  The  suit  has  arisen  from  disagreements   between  Clear  Lake  Limited
Partnership  (Clear Lake) and TNMP over the interpretation of certain provisions
of a  purchased  power  agreement  between  Clear Lake and TNMP under which TNMP
purchases  cogenerated  electricity from Clear Lake. Clear Lake disputes several
charges for which TNMP has billed  Clear Lake,  alleges  that TNMP has failed to
abide  by  contractual   language   concerning  several  issues,  and  seeks  an
unspecified  level of damages.  TNMP has not yet  answered  this  lawsuit and is
currently  evaluating its legal position.  TNMP expects,  however,  that it will
vigorously contest the lawsuit.

     TNMP is the  defendant  in a suit  styled  Phillips  Petroleum  Company vs.
Texas-New  Mexico  Power  Company,  filed in the 149th State  District  Court of
Brazoria County, Texas on October 1, 1997, and served on TNMP on October 21. The
suit is  based  on  events  surrounding  an  interruption  of  electricity  to a
petroleum refinery and related facilities that occurred in May 1997. Phillips is
seeking the recovery of damages arising from the interruption.  TNMP has not yet
answered  this  lawsuit and is currently  evaluating  its legal  position.  TNMP
expects, however, that it will vigorously contest this lawsuit.


     TNMP is the  defendant  in a lawsuit  styled El Paso  Electric  Company vs.
Texas-New Mexico Power Company, filed in the Third Judicial District of Dona Ana
County,  New Mexico. The suit was filed on August 29, 1997, after TNMP commenced
proceedings   before  the  New  Mexico  Public  Utility  Commission  to  seek  a
certificate  of  convenience  and  necessity to serve  portions of proposed real
estate  developments  adjacent to and near an  international  border crossing at
Santa Theresa, New Mexico, located near El Paso, Texas. El Paso Electric Company
("EPE"), which has also intervened in the regulatory proceeding, has alleged, in
this suit,  that TNMP has tortiously  interfered  with EPE's contract to provide
electrical  service to a Santa  Theresa  real  estate  development.  EPE did not
specify a damage amount.  TNMP is vigorously  contesting  this lawsuit,  and has
filed a motion to dismiss the suit. The suit is in the discovery phase.

Item 5.  Other Information

     On September 16, 1997, the board of directors appointed Larry G. Wheeler to
the board of TNP and TNMP  effective  October 1,  1997.  Mr.  Wheeler  fills the
position vacated by the resignation of Dwight R. Spurlock on May 1, 1997.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         The following exhibits are filed with this report;

         27(a)    Financial Data Schedule for TNP.

         27(b)    Financial Data Schedule for TNMP.

(b)      Reports on Form 8-K - None


<PAGE>

Statement Regarding Forward Looking Information

     The discussions in this document that are not historical facts,  including,
but  not  limited  to,  the  outcome  of  current  and  future   rate/regulatory
proceedings,  the continued  application  of regulatory  accounting  principles,
future cash flows and the potential  recovery of stranded costs,  are based upon
current expectations. Actual results may differ materially. Among the facts that
could  cause  the  results  to  differ  materially  from  expectations  are  the
following:  legislation  in the states TNMP serves  affecting the  regulation of
TNMP's  business;  changes in regulations  affecting TNP and TNMP's  businesses;
results of regulatory  proceedings  affecting TNP and TNMP's operations;  future
acquisitions   or  strategic   partnerships;   general   business  and  economic
conditions;  negotiations  regarding  TNMP's  proposal  regarding  transition to
competition;  and other  factors  described  from time to time in TNP and TNMP's
reports filed with the Securities and Exchange Commission.  TNP and TNMP wish to
caution  readers  not to  place  undue  reliance  on any  such  forward  looking
statements,  which are made pursuant to the Private Securities Litigation Reform
Act of 1995 and, as such, speak only as of the date made.


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


(Registrant)                                     TNP ENTERPRISES, INC. AND
                                                 TEXAS-NEW MEXICO POWER COMPANY



Date: October 31, 1997      By \s\ MANJIT S. CHEEMA                     
                               -------------------------------------------------
                               Manjit S. Cheema
                               Senior Vice President and Chief Financial Officer


Date: October 31, 1997      By \s\ SCOTT FORBES                                 
                               -------------------------------------------------
                               Scott Forbes
                               Controller and as Chief Accounting Officer