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

                                    FORM 10-Q

(MarkOne)
(X)  COMBINED QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998

                                       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 13,234,258  shares of common stock  outstanding as of
April 27, 1998.

--------------------------------------------------------------------------------
                         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 period ended March 31, 1998

     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 Month Periods Ended March 31, 1998, and 1997           3

             Consolidated Statements of Cash Flows
             Three Month Periods Ended March 31, 1998, and 1997           4

             Consolidated Balance Sheets
             March 31, 1998, and December 31, 1997                        5

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

             Consolidated Statements of Income
             Three Month Periods Ended March 31, 1998, and 1997           6

             Consolidated Statements of Cash Flows
             Three Month Periods Ended March 31, 1998, and 1997           7

             Consolidated Balance Sheets
             March 31, 1998, and December 31, 1997                        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 6.    Exhibits and Reports on Form 8-K.                             13
           (a)   Exhibit Index                                           13
           (b)   Reports on Form 8-K                                     13
           Signature page                                                13




<PAGE>

<TABLE>
<CAPTION>

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


                                                                                  Three Months Ended
                                                                                       March 31,
                                                                       --------------------------------------
                                                                             1998                 1997
                                                                       -----------------    -----------------
                                                                       (In thousands except per share amounts)
<S>                                                                    <C>                  <C>    
OPERATING REVENUES                                                      $       125,399      $       126,847
                                                                       -----------------    -----------------

OPERATING EXPENSES:
  Purchased power                                                                57,510               58,347
  Fuel                                                                            7,959                9,969
  Other operating and maintenance                                                21,969               19,737
  Depreciation                                                                    9,877                9,627
  Taxes other than income taxes                                                   7,730                7,940
  Income taxes                                                                    2,366                1,879
                                                                       -----------------    -----------------
       Total operating expenses                                                 107,411              107,499
                                                                       -----------------    -----------------
NET OPERATING INCOME                                                             17,988               19,348
                                                                       -----------------    -----------------
OTHER INCOME:
  Other income and deductions, net                                                  364                  204
  Income taxes                                                                     (166)                  (1)
                                                                       -----------------    -----------------
       Other income, net of taxes                                                   198                  203
                                                                       -----------------    -----------------
INCOME BEFORE INTEREST CHARGES                                                   18,186               19,551
                                                                       -----------------    -----------------
INTEREST CHARGES:
  Interest on long-term debt                                                     12,498               13,506
  Other interest and amortization of debt-related costs                           1,063                1,005
                                                                       -----------------    -----------------
       Total interest charges                                                    13,561               14,511
                                                                       -----------------    -----------------
INCOME FROM CONTINUING OPERATIONS                                                 4,625                5,040
Loss from discontinued nonregulated operations, net of taxes (note 2)                 -                  930
                                                                       -----------------    -----------------
NET INCOME                                                                        4,625                4,110
Dividends on preferred stock                                                         38                   40
                                                                       -----------------    -----------------
INCOME APPLICABLE TO COMMON STOCK                                       $         4,587      $         4,070
                                                                       =================    =================
EARNINGS PER SHARE OF COMMON STOCK:
  Earnings from continuing operations                                   $          0.35      $          0.38
  Loss from discontinued nonregulated operations                                      -                (0.07)
                                                                       -----------------    -----------------
  EARNINGS PER SHARE                                                    $          0.35      $          0.31
                                                                       =================    =================
DIVIDENDS PER SHARE OF COMMON STOCK                                     $          0.27      $         0.245
                                                                       =================    =================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                       13,188               13,025
                                                                       =================    =================

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)
                                                                                                Three Months Ended
                                                                                                    March 31,
                                                                                    ------------------------------------------
                                                                                          1998                   1997
                                                                                    ------------------    --------------------
                                                                                                  (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                 <C>                   <C> 
  Cash received from sales to customers                                                      130,245                 130,089
  Purchased power                                                                            (61,749)                (55,719)
  Fuel costs paid                                                                             (8,010)                 (9,503)
  Cash paid for payroll and to other suppliers                                               (38,062)                (33,494)
  Interest paid, net of amounts capitalized                                                  (15,592)                (20,828)
  Income taxes paid                                                                           (1,739)                     874
  Other taxes paid                                                                           (16,431)                (16,110)
  Other operating cash receipts and payments, net                                                375                     882
                                                                                    ------------------    --------------------
NET CASH USED IN OPERATING ACTIVITIES                                                        (10,963)                 (3,809)
                                                                                    ------------------    --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                                                  (7,791)                 (5,818)
  Additions to other property and nonregulated investments                                       360                 (2,806)
                                                                                    ------------------    --------------------
NET CASH USED IN INVESTING ACTIVITIES                                                         (7,431)                 (8,624)
                                                                                    ------------------    --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                                               (3,607)                 (3,238)
  Common stock issuances                                                                       3,104                   1,678
  Borrowings from (repayments to) revolving credit facilities - net                           26,500                 120,000
  Redemptions:
     Other long-term debt                                                                       (105)                    (19)
     First mortgage bonds                                                                          -                (100,800)
                                                                                    ------------------    --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                      25,892                  17,621
                                                                                    ------------------    --------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                         7,498                   5,188
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                               15,877                   8,387
                                                                                    ------------------    --------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           $         23,375      $           13,575
                                                                                    ==================    ====================

RECONCILIATION OF NET INCOME TO NET
     CASH USED IN OPERATING ACTIVITIES:
  Net income                                                                         $          4,625      $            4,110
  Adjustments to reconcile net income to net cash used in operating activities:
     Depreciation                                                                               9,877                   9,665
     Amortization of debt-related costs and other deferred charges                                940                     967
     Allowance for borrowed funds used during construction                                        (36)                    (13)
     Deferred income taxes                                                                      3,180                     290
     Investment tax credits                                                                    (1,086)                    241

  Cash flows impacted by changes in current assets and liabilities:
     Deferred purchased power and fuel costs                                                   (1,043)                  2,072
     Accrued interest                                                                          (2,933)                 (7,271)
     Accrued taxes                                                                            (11,322)                 (6,394)
     Changes in other current assets and liabilities                                           (8,447)                 (9,722)
  Other, net                                                                                   (4,718)                  2,246
                                                                                    ------------------    --------------------

NET CASH USED IN OPERATING ACTIVITIES                                                $        (10,963)     $           (3,809)
                                                                                    ==================    ====================


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

                                      TNP ENTERPRISES, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS

                                                                               March 31, 1998        December 31,
                                                                                (Unaudited)              1997
                                                                               ---------------     -----------------
                                                                                          (In thousands)
ASSETS

UTILITY PLANT:
<S>                                                                            <C>                 <C>             
  Electric plant                                                                $   1,240,719       $     1,235,257
  Construction work in progress                                                         2,691                 2,281
                                                                               ---------------     -----------------
            Total                                                                   1,243,410             1,237,538
  Less accumulated depreciation                                                       322,162               314,270
                                                                               ---------------     -----------------
            Net utility plant                                                         921,248               923,268
                                                                               ---------------     -----------------
OTHER PROPERTY AND INVESTMENTS, at cost                                                 5,344                 5,704
                                                                               ---------------     -----------------
CURRENT ASSETS:
  Cash and cash equivalents                                                            23,375                15,877
  Accounts receivable                                                                   6,301                 8,585
  Inventories, at lower of average cost or market:
       Fuel                                                                               534                   483
       Materials and supplies                                                           4,355                 4,440
  Deferred purchased power and fuel costs                                               3,613                 2,570
  Accumulated deferred income taxes                                                       -                   1,707
  Other current assets                                                                    921                   982
                                                                               ---------------     -----------------
            Total current assets                                                       39,099                34,644
                                                                               ---------------     -----------------
DEFERRED CHARGES                                                                       27,119                28,310
                                                                               ---------------     -----------------
                                                                                $     992,810       $       991,926
                                                                               ===============     =================
CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
  Common shareholders' equity:
       Common stock - no par value per share.  Authorized 50,000,000
            shares; issued 13,228,931 shares in 1998 and 13,132,821 in 1997     $     190,267       $       187,163
       Retained earnings                                                              112,096               111,078
                                                                               ---------------     -----------------
            Total common shareholders' equity                                         302,363               298,241
   Preferred stock                                                                      3,240                 3,240
   Long-term debt, less current maturities                                            374,436               478,041
                                                                               ---------------     -----------------
            Total capitalization                                                      680,039               779,522
                                                                               ---------------     -----------------

CURRENT LIABILITIES:                                                                                               
                                                                                                                   
  Current maturities of long-term debt                                                130,100                   100
  Accounts payable                                                                     22,680                27,035
  Accrued interest                                                                      4,390                 7,323
  Accrued taxes                                                                         6,267                17,589
  Customers' deposits                                                                   3,424                 3,249
  Accumulated deferred income taxes                                                       587                   -
  Other current liabilities                                                            15,255                26,665
                                                                               ---------------     -----------------
            Total current liabilities                                                 182,703                81,961
                                                                               ---------------     -----------------

REGULATORY TAX LIABILITIES                                                              4,931                 6,318
ACCUMULATED DEFERRED INCOME TAXES                                                      88,526                85,250
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                                            20,011                21,149
DEFERRED CREDITS                                                                       16,600                17,726
COMMITMENTS AND CONTINGENCIES (Notes 3, 4, and 5)
                                                                               ---------------     -----------------
                                                                                $     992,810       $       991,926
                                                                               ===============     =================


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
                                                                                              March 31,
                                                                               ---------------------------------------
                                                                                      1998                 1997
                                                                               ------------------   ------------------
                                                                                           (In thousands)
<S>                                                                            <C>                  <C>
OPERATING REVENUES                                                              $        124,575     $        126,223
                                                                               ------------------   ------------------
OPERATING EXPENSES:
  Purchased power                                                                         57,510               58,347
  Fuel                                                                                     7,959                9,969
  Other operating and maintenance                                                         19,270               18,770
  Depreciation of utility plant                                                            9,872                9,610
  Taxes other than income taxes                                                            8,384                7,795
  Income taxes                                                                             2,804                2,065
                                                                               ------------------   ------------------
       Total operating expenses                                                          105,799              106,556
                                                                               ------------------   ------------------
NET OPERATING INCOME                                                                      18,776               19,667
                                                                               ------------------   ------------------
OTHER INCOME:
  Other income and deductions, net                                                           195                  159
  Income taxes                                                                               (93)                  (1)
                                                                               ------------------   ------------------
       Other income, net of taxes                                                            102                  158
                                                                               ------------------   ------------------
INCOME BEFORE INTEREST CHARGES                                                            18,878               19,825
                                                                               ------------------   ------------------
INTEREST CHARGES:
  Interest on long-term debt                                                              12,498               13,506
  Other interest and amortization of debt-related costs                                    1,061                1,005
                                                                               ------------------   ------------------
       Total interest charges                                                             13,559               14,511
                                                                               ------------------   ------------------
NET INCOME                                                                                 5,319                5,314
Dividends on preferred stock                                                                  38                   40
                                                                               ------------------   ------------------
INCOME APPLICABLE TO COMMON STOCK                                                $         5,281     $          5,274
                                                                               ==================   ==================


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)
                                                                                        Three Months Ended
                                                                                              March 31,
                                                                               -------------------------------------
                                                                                       1998              1997
                                                                               -----------------   -----------------
                                                                                          (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                            <C>                  <C>
  Cash received from sales to customers                                         $       125,267      $      129,737
  Purchased power                                                                       (61,749)            (55,719)
  Fuel costs paid                                                                        (8,010)             (9,503)
  Cash paid for payroll and to other suppliers                                          (28,072)            (27,548)
  Interest paid, net of amounts capitalized                                             (15,588)            (20,828)
  Income taxes paid                                                                           -                   3
  Other taxes paid                                                                      (17,486)            (16,852)
  Other operating cash receipts and payments, net                                           193                 846
                                                                               -----------------   -----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                      (5,445)                 136
                                                                               -----------------   -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                                             (7,694)             (5,818)
  Additions to other property and investments                                                 -                   -
                                                                               -----------------   -----------------
CASH FLOWS USED IN INVESTING ACTIVITIES                                                  (7,694)             (5,818)
                                                                               -----------------   -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                                         (10,038)             (9,040)
  Borrowings from (repayments to) revolving credit facilities - net                      26,500             120,000
  Redemptions:
    First mortgage bonds                                                                      -           (100,800)
                                                                               -----------------   -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                16,462              10,160
                                                                               -----------------   -----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                   3,323               4,478
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          2,772               5,115
                                                                               -----------------   -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $         6,095     $         9,593
                                                                               =================   =================
RECONCILIATION OF NET INCOME TO NET
     CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
  Net income                                                                    $         5,319     $         5,314
  Adjustments to reconcile net income to net cash provided by
   (used in) operating activities:
     Depreciation of utility plant                                                        9,872               9,610
     Amortization of debt-related costs and other deferred charges                          940                 967
     Allowance for borrowed funds used during construction                                  (36)                (13)
     Deferred income taxes                                                                3,846                (467)
     Investment tax credits                                                              (1,085)                334

  Cash flows impacted by changes in current assets and liabilities:
     Deferred purchased power and fuel costs                                             (1,043)              2,072
     Accrued interest                                                                    (2,933)             (7,271)
     Accrued taxes                                                                       (8,994)             (6,855)
     Changes in other current assets and liabilities                                     (5,098)             (6,319)
  Other, net                                                                             (6,233)              2,764
                                                                               -----------------   -----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                             $        (5,445)    $           136
                                                                               =================   =================


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

                                                                                March 31, 1998         December 31,
                                                                                  (Unaudited)              1997
                                                                               ----------------      ---------------
                                                                                          (In thousands)
ASSETS

UTILITY PLANT:
<S>                                                                            <C>                   <C>
  Electric plant                                                                $    1,240,671        $   1,235,239
  Construction work in progress                                                          2,691                2,281
                                                                               ----------------      ---------------
            Total                                                                    1,243,362            1,237,520
  Less accumulated depreciation                                                        322,162              314,270
                                                                               ----------------      ---------------
            Net utility plant                                                          921,200              923,250
                                                                               ----------------      ---------------
OTHER PROPERTY AND INVESTMENTS, at cost                                                    214                  214
                                                                               ----------------      ---------------
CURRENT ASSETS:
  Cash and cash equivalents                                                              6,095                2,772
  Accounts receivable                                                                      278                2,342
  Inventories, at lower of average cost or market:
       Fuel                                                                                534                  483
       Materials and supplies                                                            4,355                4,440
  Deferred purchased power and fuel costs                                                3,613                2,570
  Accumulated deferred income taxes                                                        -                  1,707
  Other current assets                                                                     356                  222
                                                                               ----------------      ---------------
            Total current assets                                                        15,231               14,536
                                                                               ----------------      ---------------
DEFERRED CHARGES                                                                        29,716               29,006
                                                                               ----------------      ---------------
                                                                                $      966,361        $     967,006
                                                                               ================      ===============
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                                                  222,146              222,146
       Retained earnings                                                                60,049               64,768
                                                                               ----------------      ---------------
            Total common shareholder's equity                                          282,302              287,021
  Redeemable cumulative preferred stock                                                  3,240                3,240
  Long-term debt, less current maturities                                              374,400              477,900
                                                                               ----------------      ---------------
            Total capitalization                                                       659,942              768,161
                                                                               ----------------      ---------------
CURRENT LIABILITIES:
  Current maturities of long-term debt                                                 130,100                  100
  Accounts payable                                                                      21,908               24,859
  Accrued interest                                                                       4,390                7,323
  Accrued taxes                                                                          8,757               17,751
  Customers' deposits                                                                    3,424                3,249
  Accumulated deferred income taxes                                                        587                  -  
  Other current liabilities                                                             11,502               19,148
                                                                               ----------------      ---------------
            Total current liabilities                                                  180,668               72,430
                                                                               ----------------      ---------------
REGULATORY TAX LIABILITIES                                                               4,931                6,318
ACCUMULATED DEFERRED INCOME TAXES                                                       84,011               81,085
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                                             20,239               21,286
DEFERRED CREDITS                                                                        16,570               17,726
COMMITMENTS AND CONTINGENCIES (Notes 3, 4, and 5)
                                                                               ----------------      ---------------
                                                                                $      966,361        $     967,006
                                                                               ================      ===============


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 1997 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.  Discontinued Nonregulated Operations

     As discussed in TNP's and TNMP's 1997 Combined  Annual Report on Form 10-K,
management authorized a plan to discontinue the construction  activities segment
of Facility Works Inc. (FWI), TNP's wholly owned unregulated subsidiary, in late
1997.  FWI is continuing to operate its service and  maintenance  segment of its
business.  The loss  incurred  by FWI's  construction  segment  during the first
quarter of 1997 has been  reclassified as a loss from  discontinued  operations.
The construction segment is expected to be fully disposed by the end of 1998.


Note 3.  Regulatory Matters

   Texas Transition to Competition Plan

     As discussed in TNP's and TNMP's 1997 Combined  Annual Report on Form 10-K,
TNMP and the staff of the Public Utility Commission of Texas (PUCT),  along with
other  signatories,  reached  an  agreement  on TNMP's  proposed  transition  to
competition  plan on  December  22,  1997.  The  agreement  proposes a five-year
transition  period and allows TNMP's customers to choose their electric supplier
at the end of the transition  period. The agreement provides the opportunity for
TNMP to recover a portion of its stranded costs during the transition period and
establishes a competitive  transition  charge to recover any stranded costs that
remain at the end of the  transition  period  over the  subsequent  five  years.
Hearings conducted by the State Office of Administrative Hearings were completed
during the first quarter of 1998. PUCT approval is expected by mid-1998.

   Fuel Reconciliation

     On April 21, 1998,  the PUCT issued a final order to approve the stipulated
agreement  regarding  TNMP's  filed  fuel  reconciliation  for the  period  from
September  30, 1993 to December 31, 1996.  As discussed in TNP's and TNMP's 1997
Combined  Annual  Report on Form 10-K,  the  agreement  specifies all fuel costs
incurred during the  reconciliation  period should be approved as reasonable and
necessary costs. Also, the agreement does not propose a change to the fixed fuel
factor; however, it specifies the fuel factor is expected to be addressed in the
"Texas Transition to Competition Plan" described above.

Note 4.  Accounting for the Effects of Regulation
 
     TNMP's  financial  statements  currently  reflect assets and costs based on
current  cost-based  ratemaking  regulations  in  accordance  with  Statement of
Financial  Accounting  Standards No. 71 (SFAS 71), Accounting for the Effects of
Certain  Types  of  Regulation.  Continued  applicability  of SFAS 71 to  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.

     As discussed in TNP's and TNMP's 1997 Combined  Annual Report on Form 10-K,
as a result of the Community Choice program in New Mexico, TNMP discontinued the
application of SFAS 71 to its  generation/power  supply operations in New Mexico
during 1997. The discontinuing of regulatory accounting principles had no effect
on TNMP's  financial  condition.  As  discussed  in Note 3, TNMP has  reached an
agreement  with the staff of the PUCT and  other  signatories  regarding  TNMP's
proposed  transition  to  competition  plan.  This  agreement,  subject  to PUCT
approval,  would result in TNMP  discontinuing the application of SFAS 71 to its
generation/power  supply  operations in Texas.  If the plan is approved  without
significant modification,  the discontinuing of regulatory accounting principles
is not  expected  to have a  material  effect  on  TNMP's  financial  condition.
Management  believes that, as of March 31, 1998, and for the foreseeable future,
TNMP's transmission and distribution operations continue to follow SFAS 71.

<PAGE>

Note 5.  Commitments and Contingencies
 
   Legal Actions

     As discussed in TNP's and TNMP's 1997 Combined  Annual Report on Form 10-K,
TNMP  is  the  defendant  in a  suit  styled  Clear  Lake  Cogeneration  Limited
Partnership vs. Texas-New  Mexico Power Company.  As of filing date of this Form
10-Q, no changes to this matter have occurred.

     As discussed in TNP's and TNMP's 1997 Combined  Annual Report on Form 10-K,
TNMP is the defendant in a suit styled Phillips  Petroleum Company vs. Texas-New
Mexico  Power  Company.  As of the filing date of this Form 10-Q,  no changes to
this matter have occurred.

 
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.

Results Of Operations

   Overall Results

     TNP's earnings applicable to common stock were $4.6 million for the quarter
ended March 31, 1998 as compared to $4.1 million for the quarter ended March 31,
1997. Excluding the loss on FWI's discontinued  operations incurred during 1997,
earnings for the first  quarter of 1997 were $5.0  million.  Earnings  decreased
slightly as compared to the  corresponding  1997 quarter primarily due to losses
associated with FWI's service and maintenance activities.

     As  discussed  in Note 2, FWI  adopted a revised  strategy  in late 1997 to
concentrate  on  service  and   maintenance   activities  and   discontinue  its
construction  segment.  For the first  quarter of 1998,  FWI's  service  segment
incurred a net loss of $0.5 million on revenues of $0.8 million as compared to a
1997 first quarter net loss of $0.1 million on revenues of $0.6  million.  FWI's
1998 operating results were comparable to management's forecasted expectations.

     Since the operations of TNMP (the principal subsidiary) currently represent
most of TNP's operations,  the following discussion focuses on TNMP's operations
unless noted otherwise.

   Operating Revenues

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

                                                Three Months Ended March 31,
                                                ---------------------------
                                                                      Increase
                                               1998          1997    (Decrease)
                                             -------       -------   ----------
         Operating revenues                $ 124,575    $  126,223   $  (1,648)
 
         Less pass-through items              64,128        67,542      (3,414)
                                             -------       -------    ---------
         Base revenues                     $  60,447    $   58,681   $   1,766
                                             =======       =======    =========
     Pass-through  items are the portion of operating  revenues that recover the
costs of purchased  power and fuel from  customers.  These items affect customer
rates but do not affect  operating  income.  Explanations  for the first quarter
variance are discussed under "Results of Operations -- Operating Expenses."

   The following table summarizes the components of the base revenues increase
                     from the 1997 to 1998 (in thousands).

                       Base revenues 
                       -------------
                       Weather related                              $    (596)
                       Reserve for rate refund                           (779)
                       Customer growth                                    910
                       Industrial - economy rate sales                    382
                       Industrial - firm rate sales                      (760)
                       Transmission revenue                             2,114
                       Price / sales mix and other                        495
                                                                      --------
                          Base revenues increase                    $   1,766
                                                                      ========
<PAGE>

     Current quarter base revenues increased $1.8 million,  or 1.3%, compared to
the  corresponding  1997  period.  The  base  revenues  increase  resulted  from
increased  transmission  revenues and were partially offset by reserve for Texas
rate refund, loss of a significant  industrial customer, and mild weather during
the first quarter of 1998 as discussed below.

     Transmission  revenues  increased as a result of the first  quarter of 1998
being  recorded  under a different  methodology  than the first quarter of 1997.
During  1996,  the PUCT  passed  a  wholesale  transmission  access  rule  which
established a regional method of transmission  pricing,  terms,  and conditions.
This 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 filed an appeal in
a state district court.  On April 20, 1998, the court dismissed the appeal,  and
affirmed the validity and  constitutionality of Texas transmission access rules.
TNMP did not begin recording its transmission revenues and expense in accordance
with the new rules until the second quarter of 1997.

     During the first quarter of 1998, TNMP reserved $779,000 for potential rate
reductions  for its Texas  customers.  As  discussed in Note 3, TNMP has filed a
Transition  to  Competition  Plan with the PUCT that  proposes  rate  reductions
retroactively to January 1, 1998.

   The following table summarizes the components of gigawatt-hour (GWH) sales.

                                               Three Months Ended March 31,
                                               ----------------------------
                                                                      Increase
                                             1998          1997      (Decrease)
                                            -----         -----       --------
   GWH sales:
   Residential                                478           494         (16)
   Commercial                                 382           380           2
   Industrial:
     Firm                                     175           267         (92)
     Economy                                1,061         1,061          -
   Power marketing                            113            30          83
   Other                                       25            25          -
                                            -----         -----       --------
         Total GWH sales                    2,234         2,257         (23)
                                            =====         =====       ========

     Current  quarter  sales  of  2,234  GWHs  decreased  by 23 GWHs  (or 1%) as
compared to the  corresponding  1997 quarter  sales of 2,257 GWHs.  The decrease
resulted from the loss of a significant  industrial customer and the unfavorable
impact of extremely mild weather to residential sales.  Partially offsetting the
decrease were increased sales from power marketing activities.

   Operating Expenses

The following table summarizes the components of TNMP's total operating expenses
                                 (in thousands).

                                               Three Months Ended March 31,
                                               ----------------------------
                                                                     Increase
                                            1998          1997      (Decrease)
                                           ------        ------      --------
   Pass-through expenses:
     Purchased power                    $  56,464     $  58,347   $  (1,883)
     Fuel                                   7,664         9,195      (1,531)
                                          -------       -------      --------
   Total pass-through items                64,128        67,542      (3,414)
 

   Purchased power costs in excess
    of revenue recovery                     1,046        -            1,046

   Other operating expenses                29,437        29,154         283

   Income and other tax expenses           11,188         9,860       1,328
                                          -------       -------      --------
   Operating expenses                    $105,799     $ 106,556   $    (757)
                                          =======       =======      ========
     Overall,  current quarter operating expenses were slightly lower than prior
quarter as reduced  pass-through costs were offset by incurring  purchased power
costs in excess of revenue recovery and increased income and other tax expenses.

   Pass-through Expenses

     Pass-through  expenses  consist of certain  purchased power and fuel costs.
Current quarter pass-through expenses were $3.4 million lower than prior quarter
due to decreases in both types of costs.

     Purchased  Power.  Purchased  power costs  decreased by $1.9 million in the
current  quarter due primarily to reduced power  requirements  to meet lower GWH
sales as explained above.

     Fuel. The decrease in the current  quarter of $1.5 million is attributed to
the reduction in residential and firm industrial  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.

   Purchased Power Costs in Excess of Revenue Recovery

     TNMP  incurred  $1.0 million of purchased  power costs in excess of revenue
recovery due to the  implementation  of New Mexico Community Choice during 1997.
This plan freezes  customer  rates  (including  the recovery of purchased  power
costs)  during  the  transition  period  that ends on May 1,  2000.  As a direct
result,  purchased power costs incurred in New Mexico are not fully recovered in
customer  rates.  This  additional  cost was offset by  increased  base  revenue
generated from a recently renegotiated  agreement with a significant  industrial
customer in New Mexico. As discussed in Note 4, the  implementation of this plan
resulted in TNMP  discontinuing  the application of SFAS 71 for the power supply
portion of TNMP's New Mexico operations.

   Other Operating Expenses, Income and Other Tax Expenses

     Other  operating  expenses for the current quarter were  approximately  the
same as the prior year quarter.

     Current  quarter  income and other tax expenses  increased by $1.3 million.
The increases are due to higher pre-tax income,  higher state income taxes,  and
franchise taxes.

   Interest Expense

     Interest  charges  decreased  by $1.0 million due to reduced debt levels of
the credit facilities.

Financial Condition

   Liquidity

     Currently,  the main  sources  of  liquidity  for TNMP are cash  flow  from
operations  and  borrowings  from  credit  facilities.  TNMP's  cash  flow  from
operations  was lower for the  current  year  quarter as  compared to prior year
quarter due to lower receipts from  customers and higher  payments for purchased
power costs.  TNP's  consolidated  cash flow from operations also was lower than
the prior year quarter due to the same reasons as discussed above in addition to
$1.6  million of cash used by Facility  Works in winding  down its  construction
business. Currently TNP's primary source of cash are 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
March 31,  1997,  available  unused  credit  under the 1995  Facility was $123.5
million,  subject to interest coverage and capitalization  tests. Under the 1995
Facility,  TNMP can borrow up to $73.5 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.

     TNMP has  sufficient  liquidity  to satisfy  the  possibility  of any 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.

Other Matters

    New Accounting Standards

     The  Financial  Accounting  Standards  Board  issued  SFAS  130,  Reporting
Comprehensive  Income, which became effective January 1, 1998. SFAS 130 requires
companies to report all changes in common  shareholders  equity during a period,
except those resulting from investment by owners and distribution to owners,  in
a  financial  statement  for the  period  in  which  they are  recognized.  This
statement  also requires  prior period  restatement  for the  comparative  years
presented during the period of adoption. Comprehensive income as defined by SFAS
130  will  not  be  materially   different  from  net  income  recorded  on  the
accompanying consolidated statements of income.


<PAGE>

                           PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K.

(a)   Exhibits

      The following exhibits are filed with this report:

      10     Amendment  dated March 31,1998 to Amended and Restated  Agreement
             for Electric  Service (dated May 14, 1990),  as Amended,  Between
             Texas-New  Mexico  Power  Company  and Texas  Utilities  Electric
             Company.

      27(a)  Financial Data Schedule for TNP.

      27(b)  Financial Data Schedule for TNMP.

(b)   Reports on Form 8-K - None

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's  and  TNMP's  operations
(particularly  the transition to competition  proceedings now pending before the
PUCT);  future  acquisitions  or strategic  partnerships;  general  business and
economic conditions; negotiations regarding TNMP's proposal regarding transition
to competition in its Texas service area; and other factors  described from time
to time in TNP's 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.
 





                     TNP ENTERPRISES, INC. AND SUBSIDIARIES
                 TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES





                                   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: May 4, 1998          By \s\ MANJIT S. CHEEMA
                           -----------------------
                           Manjit S. Cheema
                           Senior Vice President and Chief Financial Officer


Date: May 4, 1998          By \s\ SCOTT FORBES
                           -------------------
                           Scott Forbes
                           Controller and as Chief Accounting Officer