Exhibit 10.1





PNM
RESOURCES, INC.
 2008
OFFICER INCENTIVE PLAN











INTRODUCTION




This
document serves as a comprehensive source of information about the PNM
Resources, Inc. Officer Incentive Plan (the “Plan”), an annual cash-based
incentive plan.  This document describes the objectives and elements
of the Plan for the plan year 2008.  If you have questions that are
not addressed by this document, please direct them to the PNMR Services Company
Compensation Department.




PLAN
OBJECTIVES




The Plan
is designed to motivate and reward Participants for benefiting our customers and
shareholders by achieving and exceeding business unit (workgroup) goals and
financial targets.




EFFECTIVE
DATES




The Plan
is effective from January 1, 2008 through December 31, 2008 (the “Plan
Year”).   The Human Resources and Compensation Committee (the
“Committee”) of the PNM Resources, Inc. Board of Directors (the “Board”)
reserves the right, however, to adjust, amend or suspend the Plan at its
discretion during the Plan Year.




ADMINISTRATION




·
            Plan Year
      Goals




Business
Unit (workgroup) goals and individual goals will be established for each
Officer.  After considering the recommendations of management, the
Committee will approve the financial goals against which performance will be
measured for the Plan Year.




·
            Incentive Award
      Approvals and Payout Timing




Shortly
after the end of the Plan Year, the Committee or the Board will, in its sole
discretion, determine the final performance results, which will be used to
calculate awards, if any.  The Board will also approve awards, if
applicable.    The payment, generally, will be made by March
15 following the end of the Plan Year.  If it is administratively
impractical to make the payment by March 15, the payment shall be made as soon
as reasonably practical following March 15.  The payments also may be
delayed in accordance with regulations issued pursuant to Section 409A of the
Internal Revenue Code of 1986.  Awards will be issued to Participants
in the form of cash.




·
            Provisions for a
      Change in Control




Pursuant
to the PNM Resources, Inc. Officer Retention Plan, if a Participant’s employment
is terminated during a “Protection Period” (as defined in the Officer Retention
Plan), the Participant may be entitled to a pro-rata award equal to 50% of the
maximum award available under this Plan as in effect during the Protection
Period.  Please refer to the Officer Retention Plan for additional
information.




1


If a
Participant’s employment is not terminated prior to the end of the Plan Year in
which a “Change in Control” occurs, the Participant shall receive an award for
that Plan Year determined in accordance with the provisions of this
Plan.  If the Plan is modified in any way as to change the amounts
paid under the Plan, the Participant shall receive an award equal to 50% of the
maximum award available under this Plan as in effect during the Protection
Period.   Please refer to the Officer Retention Plan for
additional information.  For purposes of this Plan, the term “Change
in Control” shall mean and refer to any “change in control event” within the
meaning of Prop. Treas. Reg. § 1.409A-3(g)(5).  The payments due
pursuant to this paragraph shall be paid at the same time as incentive awards
under the Plan normally are paid.




ETHICS




The
purpose of the Plan is to fairly reward performance achievement.  Any
Participant who manipulates or attempts to manipulate the Plan for personal gain
at the expense of customers, other employees or company objectives will be
subject to appropriate disciplinary action, up to and including termination of
employment, and will forfeit any bonus under the Plan.




ELIGIBILITY




All
officers of PNM Resources, Inc. and its affiliates are eligible to participate
in the Plan with the exception of the First Choice Power officers, who will
participate in the First Choice Power, L.P. Incentive Plan.  For
purposes of this Plan, “officer” means any employee of the company named by the
Board with the title of Chief Executive Officer, President, Executive Vice
President, Senior Vice President or Vice President and who is in salary grade
H18 or higher.




·
            Pro-Rata Awards for
      Partial Service Periods




Pro-rata
awards for the number of months actively employed at each eligibility level
during the Plan Year will be paid to the following Participants at the time
awards are paid to all Participants:  (Note:  Any month in
which a Participant is actively on the payroll for at least one day will count
as a full month.)




-
            Participants
      who are newly hired during the Plan
Year.




-
            Participants
      who are promoted, transferred or demoted during the Plan
    Year.




-
            Participants
      who are on leave of absence for any full months during the Plan
      Year.




-
            Participants
      who are Impacted (as defined under the PNM Resources, Inc. Non-Union
      Severance Pay Plan) or leave the Company due to Retirement or Disability
      (as defined under the PNM Resources, Inc. Long-Term Disability Plan)
      during the Plan Year.  For purposes of the Plan, “Retirement”
      means termination of employment with the Company and all affiliates after
      the employee has attained:  (1) age forty-five and twenty years
      of service; (2) age fifty-five and ten years of service; (3) age 591⁄2 and
      five years of service; or (4) any age and thirty years of
      service.




-
            Participants
      who die during the Plan Year, in which case the award will be paid to the
      spouse of a married Participant or the estate of an unmarried
      Participant.




·
            Forfeiture of
      Awards




Any
Participant who terminates employment on or before awards are distributed for
the Plan Year for any reason other than death, Impaction, Disability or
Retirement will not be eligible for payment of an award.  (Any
Participant who elects voluntary separation or retirement in lieu of termination
for performance or misconduct will not be eligible for payment of a Plan
award.)




2


·
            Eligible Base for
      Incentive Purposes




The award
payable under the Plan is calculated by multiplying the Participant’s annual
base rate of pay times the applicable award percentage set forth in the table
below under Award Determination, subject to further adjustment by the
Committee.  For the purpose of incentive award calculations, the
Participant’s annual base rate of pay effective December 31 of the Plan Year
will be used unless the Participant has been demoted during the Plan
Year.  In this event, the Participant’s annual base rate of pay may be
pro-rated based on the period of time worked at each level.




AWARD
DETERMINATION




For 2008,
Plan awards will be based on a combination of Business Unit (workgroup),
corporate (financial) and individual performance.  A baseline award
will be calculated for each eligible Participant using a formula based on
Business Unit (workgroup) and financial performance, which can then be modified
up or down based on individual performance at the Committee’s
discretion.




·
            Performance
      Thresholds




Business
Unit /Individual Goal Set performance that meets or exceeds the threshold
performance level will be eligible for a Plan award.





·
            Performance Award
      Opportunity




Award
      Eligibility Level
            Business
      Unit / Individual Goal SetThreshold*
            Stretch*
            Optimal*Chairman,
      President, and CEO
            16.0%
            28.0%
            40.0%President,
      Utilities
            9.6%
            16.8%
            24.0%EVP,
      Chief Financial Officer
            9.6%
            16.8%
            24.0%SVP,
      Chief Administrative Officer
            8.0%
            14.0%
            20.0%All
      Other Senior Vice-Presidents
            6.4%
            11.2%
            16.0%VP,
      Corporate Controller
              VP,
      Treasurer
              VP,
      Power Production
              VP,
      CIO
              VP,
      People Services
            5.6%
            9.8%
            14.0%All
      Other Vice-Presidents
            4.0%
            7.0%
            10.0%





·
            Corporate Financial
      Performance Award
Opportunity




For the
2008 Plan Year, the Committee has the discretion to increase the amount of the
incentive award pool if financial performance exceeds threshold
projections.  When the Committee calculates the actual 2008 financial
performance to determine if threshold has been met, the financial performance
will be adjusted to eliminate the effect of recent rate relief in New
Mexico.




·
            Individual Performance
      Award Opportunity




For the
2008 Plan Year, the Committee has the discretion to adjust individual awards up
or down based on individual performance.  Participants may be eligible
for an Individual Performance Award even if his/her Business Unit/Individual
Goal Set does not achieve the threshold target.




3


·
            Award
      Calculation




1.
            Individual
      Officer Goal Set / Business Unit performance that meets or exceeds the
      threshold target will be eligible for a Plan award.  The amount
      of each Officer’s award is determined by the Officer’s award eligibility
      level and the level of Individual Goal performance met by him/her as
      determined in accordance with the “Individual Goal Set” table
      above.





2.
            At
      the Committee’s discretion, the incentive award pool may be increased if
      company financial performance meets or exceeds the threshold target
      projections.





3.
            At
      the Committee’s discretion, each individual award resulting from steps 1
      and 2 may be adjusted up or down based on individual
      performance





Award
Example:  Assume a Vice President (all Other) with Individual
Goal Set results at the Stretch performance level.  At the
Vice-President (all Other) eligibility level, the VP would receive an award of
7.0% of annual salary. Assuming the participant’s annual base salary at year-end
is $185,000 the award would be $12,950, which is calculated as
follows:




Step 1:
Individual Goal Set results = 7.0%




Step
2:  $185,000 (base salary) x 7.0% = $12,950




This
award can then be modified up of down by the Committee based on the assessment
of the individual performance.







NONTRANSFERABLE





No award
may be assigned or transferred by a Participant other than by will or the laws
of descent and distribution.





WITHHOLDING





PNM
Resources, Inc. and its affiliates (“PNM Resources”) have the authority and the
right to deduct or withhold, or require a Participant to remit to PNM Resources,
an amount sufficient to satisfy Federal, state, and local and foreign taxes
(including the Participant’s FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this
Plan.  Any potential payment to the Participant under the terms of
this Plan is also subject to withholdings and deductions by PNM Resources, and
the Participant hereby authorizes PNM Resources to apply such withholdings and
deductions to liquidate and reduce any outstanding debt or unpaid sums owed by
the Participant to PNM Resources or its successor.





NO RIGHTS OF
OWNERSHIP





While the
Plan is intended to provide Participants with the opportunity to share in the
success of PNM Resources, Inc. and its affiliates, the Plan is merely a bonus
plan and does not give any Participant any of the rights of ownership of PNM
Resources or provide any security interest in any assets of PNM Resources or any
of its affiliates.





CONTINUATION OF
EMPLOYMENT





This Plan
shall not be construed to confer upon any Participant any right to continue in
the employment of PNM Resources and shall not limit the right of PNM Resources
at its sole discretion, to terminate the employment of a Participant at any
time.








4











Approved
by:








/s/ Alice A.
Cobb





Alice A.
Cobb, SVP and Chief Administrative Officer








08/01/08


Date