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 **June 30, 2000
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 registrantwas 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. has no publicly traded shares of common stock outstanding.**
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 registrantwas 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.

TNP Enterprises, Inc. And Subsidiaries

Texas-New Mexico Power Company and Subsidiaries**
Combined Quarterly Report on Form 10-Q for the period ended June 30, 2000

     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 informationrelating 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 (Loss) 
     Three Month Periods Ended June 30, 2000, and 1999
3  
     Consolidated Statements of Income (Loss) 
     Six Month Periods Ended June 30, 2000, and 1999
4  
     Consolidated Statements of Cash Flows 
     Six Month Periods Ended June 30, 2000, and 1999
5  
     Consolidated Balance Sheets 
     June 30, 2000, and December 31, 1999
6  
Texas-New Mexico Power Company (TNMP) and Subsidiaries: 
     Consolidated Statements of Income 
     Three and Six Month Periods Ended June 30, 2000, and 1999
7  
     Consolidated Statements of Cash Flows 
     Six Month Periods Ended June 30, 2000, and 1999
8  
     Consolidated Balance Sheets 
     June 30, 2000, and December 31, 1999
9  
     Notes to Consolidated Financial Statements
10  **Item 2.     Management's Discussion and Analysis of Financial Condition and                    Results of Operations.
15**PART II.  OTHER INFORMATION
**Item 1.      Legal Proceedings.
21  **Item 6.     Exhibits and Reports on Form 8-K.
21
             (a)     Exhibit Index
21
             (b)     Reports on Form 8-K
21  **Statement Regarding Forward Looking Information
21  **Signature page
21*** ***TNP ENTERPRISES, INC. AND SUBSIDIARIES**CONSOLIDATED STATEMENTS OF INCOME (LOSS)**(Unaudited)**Predecessor**Three Months Ended**Three Months Ended**June 30, 2000**June 30, 1999*(In thousands)**OPERATING REVENUES **$                 155,931 **$                   144,027 **OPERATING EXPENSES:
       Purchased power and fuel
                         81,314 
                           66,982 
       Other operating and maintenance
                        25,703 
                           28,608 
       Depreciation and amortization
                        12,975 
                             9,513 
       Charge for recovery of stranded plant
                          3,396 
                             1,903 
       Taxes other than income taxes
                         9,142 
                             8,285 
       Income taxes
                         1,395 
                           6,561 **          Total operating expenses**133,925 **121,852 **NET OPERATING INCOME**22,006 **22,175 **OTHER INCOME:
       Other income and deductions, net
                            328 
                              777 
       Income taxes
                           (76)
                              180 **          Other income, net of taxes**252 **957 **INCOME BEFORE INTEREST CHARGES **22,258 **23,132 **INTEREST CHARGES:
       Interest on long-term debt
                        19,617 
                            9,688 
       Other interest and amortization of debt-related costs
                          2,109 
                             1,041 
          **Total interest charges****21,726 **10,729 **NET INCOME**532 **12,403 
Dividends on preferred stock and other
                         3,314 
                               (94)**INCOME (LOSS) APPLICABLE TO COMMON STOCK**$                 (2,782)**$                    12,497 
 

The accompanying notes are an integral part of these consolidated financial statements.
****TNP ENTERPRISES, INC. AND SUBSIDIARIES**CONSOLIDATED STATEMENTS OF INCOME (LOSS)**(Unaudited)**Predecessor**Three Months Ended**Three Months Ended**Six Months Ended**June 30, 2000**March 31, 2000**June 30, 1999*(In thousands)**OPERATING REVENUES **$                   155,931 **$                 124,526 **$                262,153 **OPERATING EXPENSES:
       Purchased power and fuel
                         81,314 
                        59,550 
124,354 
       Other operating and maintenance
                          25,703 
                        29,398 
                         52,432 
       Depreciation and amortization
                          12,975 
                       10,230 
                       19,487 
       Charge for recovery of stranded plant
                           3,396 
                       1,629 
                        5,653 
       Taxes other than income taxes
                            9,142 
                        7,941 
                     16,285 
       Income taxes
                           1,395 
                                1,745 
                          7,274 **          Total operating expenses**133,925 **110,493 **225,485 **NET OPERATING INCOME**22,006 **14,033 **36,668 **OTHER INCOME:
       Other income and deductions, net
                              328 
                              465 
                             939 
       Income taxes
                             (76)
                                 (131)
                            298 **          Other income, net of taxes**252 **334 **1,237 **INCOME BEFORE INTEREST CHARGES **22,258 **14,367 **37,905 **INTEREST CHARGES:
       Interest on long-term debt
                        19,617 
                           9,626 
                      19,912 
       Other interest and amortization of 
           debt-related costs
                          2,109 
                                   888 
                           2,457 
          **Total interest charges****21,726 **10,514 **22,369 **NET INCOME**532 **3,853 **15,536
Dividends on preferred stock and other
                          3,314 
                                     5 
                            (58)**INCOME (LOSS) APPLICABLE TO COMMON STOCK**COMMON STOCK**$                    (2,782)**$                     3,848**$                 15,594
 

The accompanying notes are an integral part of these consolidated financial statements.
**
 
**TNP ENTERPRISES, INC. AND SUBSIDIARIES**CONSOLIDATED STATEMENTS OF CASH FLOWS**(Unaudited)**Predecessor**Three**Three   **Six **Months Ended**Months Ended **Months Ended **June 30, 2000**March 31, 2000**June 30, 1999*(In  thousands) **CASH FLOWS FROM OPERATING ACTIVITIES:
       Cash received from sales to customers
$             139,920 
$                 102,091 
$              235,599 
       Purchased power and fuel costs paid
(69,107)
(63,613)
(125,301)
       Cash paid for payroll and to other suppliers 
(24,686)
(24,234)
(51,345)
       Interest paid, net of amounts capitalized
(8,954)
(14,690)
(16,507)
       Income taxes (paid) refunded
(801)
5,500 
3,391 
       Other taxes paid
(6,083)
(17,089)
(22,886)
       Other operating cash receipts and payments, net
                 (200)
                  147 
                 (7)**NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES**30,089 **(11,888)**22,944 **CASH FLOWS FROM INVESTING ACTIVITIES:
       Merger costs, net of cash acquired
(604,968) 
                            - 
                          - 
       Additions to utility plant
(10,588) 
(9,200)
(21,327)
       Withdrawals from escrow account
                               -  
                          - 
1,902 
       Proceeds from other investments
                     702 
                     - 
                100 **NET CASH USED IN INVESTING ACTIVITIES**(614,854) **(9,200)**(19,325)**CASH FLOWS FROM FINANCING ACTIVITIES:
     Dividends paid on preferred and common stocks
(1,826)
(3,926)
(7,817)
     Borrowings from (repayments to) revolving credit            facilities - net
(13,000)
21,000 
(43,500)
     Issuances:
          TNP senior subordinated notes
275,000
                     - 
                         - 
          TNP term loan
160,000 
                               - 
                           - 
          TNMP senior notes, net of discount
                      - 
                               - 
174,164 
          TNMP backstop facility
203,000 
                            - 
                           - 
          TNP preferred stock, net of discount
99,000 
                            - 
                           - 
          TNP common stock
100,000
                     1,202 
                   3,956 
          Financing costs
(21,596) 
                          - 
(1,577)
     Redemptions:
          TNMP secured debentures
(112,776) 
                               - 
(130,000)
          TNMP first mortgage bonds
(90,506) 
                          - 
                           - 
          TNP term loan
(400)
                              - 
                           - 
          TNMP preferred stock, net of gain
                         -  
(117)
(1,100)**NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES**596,896**18,159 **(5,874)**NET CHANGE IN CASH AND CASH EQUIVALENTS**12,131 **(2,929)**(2,255)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                          - 
                  14,456 
               12,216 **CASH AND CASH EQUIVALENTS AT END OF PERIOD**$              12,131 **$              11,527 **$              9,961 **RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income
 $                        532  
 $                   3,853 
 $               15,536 
Adjustments to reconcile net income to net cash 
   provided by (used in) operating activities:
     Depreciation and amortization
12,975 
                     10,230 
                19,487 
     Charge for recovery of stranded plant
3,396
                     1,629 
                  5,653 
     Purchased power settlement adjustment
                              - 
                     (2,425)
                   - 
     Amortization of debt-related costs and other deferred          charges
2,129
957 
2,370 
     Allowance for funds used during construction
(96)
                        (82)
                   (382)
     Deferred income taxes 
551
                      2,541 
                (1,896)
     Investment tax credits
                       (400) 
                      (401)
                 3,599 
     Deferred purchased power and fuel costs
                   (7,280)
                   (2,535)
               (4,830)
Cash flows impacted by changes in current assets and liabilities:
Accounts payable
11,481
                   (2,740)
                (1,862)
     Accrued interest
10,787
                   (4,990)
                   3,648 
     Accrued taxes
4,304
                   (3,825)
                     856 
     Reserve for customer refund
639
                       838 
             (10,725)
     Changes in other current assets and liabilities
(6,511)
                 (15,320)
               (8,921)
Other, net
                 (2,418)
                        382 
                    411 **NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES**$                       30,089 **$                (11,888)**$                22,944 
The accompanying notes are an integral part of these consolidated financial statements.** 
**TNP ENTERPRISES, INC. AND SUBSIDIARIES**CONSOLIDATED BALANCE SHEETS**June 30, 2000**Predecessor**(Unaudited)**December 31, 1999***ASSETS*(In thousands)**UTILITY PLANT:
     Electric plant
$                     645,499 
$                 1,288,104 
     Construction work in progress
                                 4,866 
                                2,501 
          Total**650,365 **1,290,605 
     Less accumulated depreciation
                                 7,879 
                           382,627 **          Net utility plant**642,486 **907,978 **OTHER PROPERTY AND INVESTMENTS, at cost**3,636 **4,243 **CURRENT ASSETS:
     Cash and cash equivalents
                          12,131 
                               14,456 
     Accounts receivable
                         12,675 
                                8,384 
     Inventories, at lower of average cost or market:
          Fuel
                            1,123 
                                  575 
          Materials and supplies 
                           4,001 
                               3,834 
     Other current assets
                              2,177 
                                   939 **         Total current assets**32,107 **28,188 **LONG-TERM AND OTHER ASSETS:
     Goodwill
                       285,549 
-
     Recoverable stranded costs
                       281,074 
                          19,256 
     Deferred purchased power and fuel costs
                         31,612 
       21,797 
     Deferred charges
                             28,912 
                             19,737 **          Total long-term and other assets**627,147 **60,790 **$                     1,305,376 **$                     1,001,199 ***CAPITALIZATION AND LIABILITIES**CAPITALIZATION:
     Common shareholders' equity:
     Common stock, no par value per share - Authorized 
        1,000,000 and 50,000,000 shares, issued 100 and
        13,416,556 shares
 $                       100,000 
 $                      196,685 
     Other paid-in-capital
                         (3,245)
                                 -   
     Retained earnings (accumulated deficit)
                            (2,782)
                            130,425 
          Total common shareholders' equity
                         93,973 
                       327,110 
     Redeemable cumulative preferred stock
                         98,269 
                          1,664 
     Long-term debt, less current maturities
                          634,509 
                           340,244 **          Total capitalization**826,751 **669,018 **CURRENT LIABILITIES:
     Current maturities of long-term debt
                     248,094 
                           100,000 
     Accounts payable
                       29,041 
                             20,300 
     Accrued interest
                       14,217 
                               8,420 
     Accrued taxes
                       13,297 
                            12,818 
     Customers' deposits
                         4,214 
                              3,786 
     Accumulated deferred income taxes
                       10,315 
                              7,543 
     Reserve for customer refund
                         2,159 
                                 682 
     Other current liabilities
                           13,665 
                             29,720 
          **Total current liabilities****335,002 **183,269 **LONG-TERM AND OTHER LIABILITIES:
     Regulatory tax liabilities
                        6,460 
                             6,633 
     Accumulated deferred income taxes
                      97,728 
                          97,196 
     Accumulated deferred investment tax credits
                      23,177 
                         23,978 
     Deferred credits
                           16,258 
                             21,105 
          **Total long-term and other liabilities****143,623 **148,912 **COMMITMENTS AND CONTINGENCIES (Note 6)**$                  1,305,376 **$                   1,001,199 
The accompanying notes are an integral part of these consolidated financial statements.
**TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES**(a wholly owned subsidiary of TNP Enterprises, Inc.)**CONSOLIDATED STATEMENTS OF INCOME**(Unaudited)**Three Months Ended

June 30,**Six Months Ended**June 30,**2000**1999**2000**1999*(In thousands)*(In thousands)**OPERATING REVENUES **$                  155,918 **$          144,014 **$          280,430 **$           262,125 **OPERATING EXPENSES:
  Purchased power and fuel
                           81,314 
               66,982 
             140,864 
              124,354 
  Other operating and maintenance
                           24,093 
               26,321 
              47,699 
               49,344 
  Depreciation of utility plant
                           10,281 
                9,513 
             20,512 
               19,487 
  Charge for recovery of stranded plant
                             3,396 
              1,903 
               5,025 
                  5,653 
  Taxes other than income taxes
                             8,907 
               8,172 
           16,729 
               16,052 
  Income taxes
                  5,787 
                  7,540 
               9,414 
                 8,584 **Total operating expenses**133,778 **120,431 **240,243 **223,474 **NET OPERATING INCOME**22,140 **23,583 **40,187 **38,651 **OTHER INCOME:
  Other income and deductions, net
                                 198 
                 1,026 
                     528 
                  1,100 
  Income taxes
                    (76)
                      90 
                  (207)
                     232 **Other income, net of taxes**122 **1,116 **321 **1,332 **INCOME BEFORE INTEREST CHARGES **22,262 **24,699 **40,508 **39,983 **INTEREST CHARGES:
  Interest on long-term debt
                             9,333 
                9,462 
                18,927 
               19,516 
  Other interest and amortization of 
     debt-related costs
                  1,726 
                 1,041 
                  2,615 
                  2,457 
**Total interest charges****11,059 **10,503 **21,542 **21,973 **NET INCOME**11,203 **14,196 **18,966 **18,010 
Dividends on preferred stock and other
     other
                        18 
                   (94)
                     23 
                   (58)**INCOME APPLICABLE TO COMMON STOCK **$                  11,185  **$            14,290  **$            18,943  **$             18,068  
The accompanying notes are an integral part of these consolidated financial statements.
 

 
**TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES**(a wholly owned subsidiary of TNP Enterprises, Inc.)**CONSOLIDATED STATEMENTS OF CASH FLOWS**(Unaudited)**Six Months Ended **June 30**2000**1999*(In thousands) **CASH FLOWS FROM OPERATING ACTIVITIES:
  Cash received from sales to customers
 $               241,932 
 $                   233,573 
  Purchased power and fuel costs paid
                   (132,720)
                  (125,301)
  Cash paid for payroll and to other suppliers
                (41,074)
                     (41,398)
  Interest paid, net of amounts capitalized
               (20,668)
                     (16,166)
  Income taxes (paid) refunded
                      (50)
                          3,391 
  Other taxes paid
               (22,731)
                     (22,409)
  Other operating cash receipts and payments, net
                    (319)
                           (36)**NET CASH PROVIDED BY OPERATING ACTIVITIES**                 24,370 **                   31,654 **CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant
                (19,778)
                 (21,050)
  Withdrawal from escrow account
                                - 
                      1,902 
  Proceeds from other investments
                         102 
                                  - **CASH FLOWS USED IN INVESTING ACTIVITIES**(19,676)**(19,148)**CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks
                 (7,536)
                            (61)
  Borrowings from (repayments to) revolving credit           facilities - net
8,000 
(54,000)
  Issuances:
     Senior notes, net of discount
-
                     174,164 
     Backstop facility
                203,000 
                                 - 
  Deferred expenses associated with financings
                 (3,048)
                       (1,577)
  Redemptions:
     Secured debentures
             (112,776)
                 (130,000)
     First mortgage bonds
                (90,506)
                                - 
     Preferred stock, net of gain
                     (117)
                      (1,100)**NET CASH USED IN  FINANCING ACTIVITIES**(2,983)**(12,574)**NET CHANGE IN CASH AND CASH EQUIVALENTS**1,711 **(68)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
                     4,002 
                        7,977 **CASH AND CASH EQUIVALENTS AT END OF PERIOD**$                   5,713 **$                     7,909 **RECONCILIATION OF NET INCOME TO NET**CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income
 $                18,966 
 $                   18,010 
  Adjustments to reconcile net income to net cash provided

  by operating activities:
     Depreciation of utility plant
                  20,512 
                       19,487 
     Charge for recovery of stranded plant
5,025
                          5,653 
     Purchased power settlement adjustment
                    (2,425)
                                - 
     Amortization of debt-related costs and other deferred          charges
                       2,703 
                      3,756 
     Allowance for funds used during construction
                           (178) 
                       (382)
     Deferred income taxes 
                         5,494 
                        (317)
     Investment tax credits
                          (801) 
                      3,543 
     Deferred purchased power and fuel costs
                       (9,815)   
                     (4,830)
Cash flows impacted by changes in current assets and liabilities:
     Accounts payable
                         8,789  
                       (1,258)
     Accrued interest
                       (1,543) 
                         3,593 
     Accrued taxes
                          (425) 
                        2,707 
     Reserve for customer refund
                          1,477 
                   (10,725)
     Changes in other current assets and liabilities
                     (21,882) 
                      (4,822)
Other, net
                  (1,527)
                      (2,761)**NET CASH PROVIDED BY OPERATING ACTIVITIES**$                 24,370 **$                   31,654 **The accompanying notes are an integral part of these consolidated financial statements.
******TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES**(a wholly owned subsidiary of TNP Enterprises, Inc.)**CONSOLIDATED BALANCE SHEETS**June 30, 2000**December 31,**(Unaudited)**1999*(In thousands)***ASSETS**UTILITY PLANT:
  Electric plant
 $        1,302,234 
 $          1,288,080 
  Construction work in progress
                4,866 
                  2,501 
            Total
         1,307,100 
            1,290,581 
  Less accumulated depreciation
            399,054 
              382,627 
**Net utility plant****908,046 **907,954 **OTHER PROPERTY AND INVESTMENTS, at cost**206 **213 **CURRENT ASSETS:
  Cash and cash equivalents
               5,713 
                    4,002 
  Accounts receivable
             10,689 
                     6,347 
  Inventories, at lower of average cost or market:
       Fuel
               1,123 
                        575 
       Materials and supplies 
               4,001 
                     3,834 
  Other current assets
               1,825 
                   660 
**Total current assets****23,351 **15,418 **LONG-TERM AND OTHER ASSETS:
  Recoverable stranded costs
            15,481 
               19,256 
  Deferred purchased power and fuel costs
             31,612 
                21,797 
  Deferred charges
              17,645 
              19,757 
**Total long-term and other assets****64,738 **60,810 **$        996,341 **$         984,395 ***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 
       Other paid-in-capital
          222,149 
             222,149 
       Retained earnings
          101,746 
                 90,302 
            Total common shareholder's equity
          324,002 
                312,558 
  Redeemable cumulative preferred stock
             1,534 
                    1,664 
  Long-term debt, less current maturities
           201,509 
               340,244 
**Total capitalization****527,045 **654,466 **CURRENT LIABILITIES:
  Current maturities of long-term debt
           246,494 
                 100,000 
  Accounts payable
            28,863 
                   20,074 
  Accrued interest
              6,845 
                           8,388 
  Accrued taxes
            13,764 
                        14,189 
  Customers' deposits
               4,214 
                           3,786 
  Accumulated deferred income taxes
           11,166 
                         8,434 
  Reserve for customer refund
              2,159 
                           682 
  Other current liabilities
             11,927 
                     28,015 
**Total current liabilities****325,432 **183,568 **LONG-TERM AND OTHER LIABILITIES:
  Regulatory tax liabilities
              6,460 
                       6,633 
  Accumulated deferred income taxes
            98,100 
                    95,165 
  Accumulated deferred investment tax credits
            23,177 
                        23,978 
  Deferred credits
            16,127 
             20,585 
**Total long-term and other liabilities****143,864 **146,361 **COMMITMENTS AND CONTINGENCIES (Note 6)

**$             996,341 **$                  984,395 
The accompanying notes are an integral part of these consolidated financial statements.** 

TNP Enterprises Inc. and Subsidiaries (TNP)

Texas-New Mexico Power Company and Subsidiaries (TNMP)

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 fora 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.  Itis 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 1999 *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.  Acquisition and Basis of Accounting**
     On April 7, 2000, pursuant to an Agreement and Plan of Merger dated May 24, 1999, between TNP, ST Acquisition Corp. (ST Corp.) and SW Acquisition, L.P. (SW Acquisition), the parent of ST Corp., ST Corp.merged with and into TNP, the parent of TNMP (the Merger).  TNP is the surviving corporation in the Merger.  SW Acquisition now holds all outstanding common stock of TNP.  Upon closing, each outstanding share of TNP's common stock that was outstanding atthe effective time of the merger was automatically converted into the right to receive $44.00 in cash.  Prior to the merger, TNP common stock was traded on the New York Stock Exchange.  As a result of the Merger, TNP is no longer publicly held.

     SW Acquisition and ST Corp. funded the merger using a combination of debt and equity financing.  SW Acquisition contributed $100 million in equity funding to ST Corp.  ST Corp. secured financing for themerger through sales of debt and equity securities as discussed in Note 4.

     The Merger was accounted for under the purchase method of accounting, as prescribed in Accounting Principles Board Opinion No. 16, "Business Combinations" (APB 16).  Accordingly, TNP allocated thepurchase price of approximately $591.6 million to the acquired assets and assumed liabilities based on their fair values and recorded the unallocated amount of approximately $288.2 million as goodwill.  For convenience, purchase accounting has beenapplied as of April 1, 2000.  The consolidated financial statements of TNP for the periods ended before April 1, 2000 were prepared using TNP's historical basis of accounting and are designated as "predecessor."  Predecessor TNP's ConsolidatedStatement of Income (loss) for the three months ended March 31, 2000 includes a net-of-tax charge of approximately $3.4 million for pre-merger severance and retirement benefits recorded between April 1, 2000 and April 7, 2000.  The comparability of thefinancial position and operating results of the predecessor and the periods subsequent to the merger are affected by the purchase accounting adjustments including the revaluation of TNP One (discussed hereinafter) and amortization of goodwill over aperiod of twenty-five years.

     If the Merger had occurred at the beginning of the six-month periods ended June 30, 2000 and 1999, the pro forma loss applicable to common stock would have been approximately $13.4 million and $11.4million, respectively.  However, these results are not necessarily indicative of the results which would have been obtained had the Merger actually taken place on the dates indicated.

     Amounts shown in the consolidated financial statements of TNMP continue to present the financial position and results of operations based on historical cost.

     The assets of TNP, with the exception of TNP One, its sole generating plant, are accounted for under the provisions of Statement of Financial Accounting Standards No. 71 (SFAS 71), "Accounting for theEffects of Certain Types of Regulation."  Based on the regulated nature of the business in which these assets are employed, the historical cost of these assets is equal to their fair value.

     As discussed in TNP's 1999 Annual Report on Form 10-K, TNP One is no longer accounted for under the provisions of SFAS 71.  TNP, with the assistance of an independent third party, has preliminarilyestimated the fair value of TNP One to be approximately $166.3 million.  The difference between the fair value of TNP One and its carrying amount is recoverable from TNMP's transmission and distribution customers under the provisions of the Texas SenateBill 7, which established retail competition for generation operations.  Accordingly, TNP has recorded a regulatory asset for recoverable stranded costs associated with TNP One of approximately $265.6 million.

     The estimate of TNP One's fair value is dependent on a number of assumptions, including the future price of energy, and the future supply and demand for electricity.  The amounts discussed above are theresult of the initial assessment of the fair values of TNP's assets and liabilities.  The process of determining the fair values of TNP's assets and liabilities continues, and the final results will not be completed until certain information aboutpre-acquisition contingencies is fully assessed.  The most significant items to be finalized include the appropriate value to assign to TNP One and the appropriate amount of regulatory assets to record for stranded cost recovery allowed under Texas SenateBill 7.
**Note 3.     Regulatory Matters**
     During 1999, legislation was passed in both Texas and New Mexico that establishes retail competition for generation operations.  Retail competition is scheduled to begin in both New Mexico and Texas onJanuary 1, 2002.  The legislation in both states contains provisions that affect TNMP's operations, as discussed below.  
*Texas**     Excess Earnings.  As discussed in TNMP's 1999 Annual Report on Form 10-K, TNMP has operated since 1998 with an earnings cap that provided for excess earnings to be used, in part, to recover strandedcosts.  During 1998, TNMP's Transition Plan directed the method for sharing of excess earnings.  In 1999, legislation was passed in Texas, which also provides for stranded cost recovery through use of earnings in excess of an allowed rate of return.
*     1998 Excess Earnings.  In its original 1998 earnings report filing, TNMP reported that it had not earned in excess of the 11.25% return on equity established in the Transition Plan.  On May 3, 2000,the Public Utility Commission of Texas (PUCT) issued a final order resolving two issues raised by the PUCT's Office of Regulatory Affairs on August 16, 1999.  The PUCT held in favor of TNMP that the effects of a 1999 refinancing should not beretroactively applied to 1998, but should be applied starting with the 1999 earnings report.  However, the PUCT ordered TNMP to defer a $4.8 million purchased power dispute payment it made in 1998, and to amortize it over a four-year period, beginning in1998 and ending in 2001.  Accordingly, in March 2000 TNMP recorded a regulatory asset of $2.4 million, the unamortized balance of the $4.8 million payment and a corresponding reduction to purchased power expense.

     Based on the adjustment discussed above, TNMP earned $1.2 million more than the earnings cap for 1998.  In accordance with the Transition Plan, the excess earnings will be shared equally between customerrefunds and stranded cost recovery.
*     1999 Excess Earnings.     On March 30, 2000, TNMP filed its Annual Report pursuant to  Section 39.257 of the Public Utility Regulatory Act.  The Annual Report details TNMP'scalculation of excess earnings under the provisions of the legislation passed in 1999.  The Annual Report showed that TNMP earned $22.0 million in excess of the 10.53% return on rate base established in the legislation.  That amount is $1.4 million lowerthan the $23.4 million TNMP had accrued for excess earnings as of December 31, 1999.  The difference is attributable to the amortization of the 1998 purchased power settlement described above.
*     2000 Excess Earnings.     TNMP has recorded estimated excess earnings of $3.6 million and $5.6 million for the three and six months ended June 30, 2000, respectively.
*     Unbundled Cost of Service Filing.     The legislation required TNMP to file a rate case that will set rates for the transmission and distribution company that will provideregulated services once competition begins in 2002.  On March 31, 2000, TNMP filed its Unbundled Cost of Service Filing (UCOS) with the PUCT.  The filing proposes tariffs under which Retail Electric Providers (REPs) will be able to purchase transmissionand distribution services after December 31, 2001, in TNMP's service area.  The tariffs are based upon a projected cost of service of $150.3 million.  The cost of service includes TNMP's projected reasonable and necessary expenses, and return on itstransmission and distribution rate base at a 9.11% weighted average cost of capital.

     The filing also includes a proposed Competition Transition Charge (CTC), as required by the legislation.  The CTC is designed to recover stranded costs related to TNMP's generation assets and purchasedpower contracts, as determined by a PUCT-established model.  In its filing, TNMP calculated Economic Cost over Market (ECOM) in the amount of $194.4 million would remain at January 1, 2002.  In addition, TNMP expects the PUCT to address certain issuesrelated to its January 2000 Business Separation Plan filing in the UCOS.
*     Fuel Reconciliation.     At June 30, 2000, TNMP had an under-recovered balance of fuel and the energy-related portion of purchased power costs of $31.6 million.  PUCT rulesrequire TNMP to reconcile its fuel and energy-related purchased power costs at least every three years.  On June 5, 2000, TNMP filed applications with the PUCT seeking approval to 1) increase its fuel factor to recover projected fuel and energy-relatedpurchased power costs and 2) implement an interim surcharge effective September 1, 2000 to recover under-recovered fuel and energy-related purchased power costs of $24.7 million as of March 31, 2000, including $1.0 million of interest on theunder-recovered balance through December 31, 2001.  The interim surcharge would be effective through December 31, 2001, the end of the surcharge period.  

     On June 30, 2000, TNMP also filed an application with the PUCT seeking to reconcile its eligible fuel and energy-related purchased power expenses for the three-year period ended December 31, 1999.Management believes the ultimate outcome of this fuel reconciliation will not have a material adverse effect on TNP's or TNMP's consolidated financial position.

     As the result of a July 2000 hearing, TNMP implemented a new fuel factor that is approximately 20 percent higher than its previous factor.  In September 2000, TNMP will implement an interim surcharge tobegin collecting its under-recovered fuel and energy-related purchased power costs.

     *New Mexico**     1999 Rate Case.     TNMP and the NMPRC Staff reached a settlement in this case, which was filed in June 1999, and have submitted the settlement to the NMPRC for approval.The settlement calls for a decrease in TNMP's base rates of $1.8 million, or 6%, effective October 1, 1999.  TNMP has reserved $1.3 million related to the base rate reductions through June 30, 2000.  TNMP expects the NMPRC to act on the proposedsettlement during the third quarter of 2000.
*     Restructuring.     The New Mexico Legislature opened the state's electric power market to consumer choice with the passage of the Electric Utility Industry Restructuring Actof 1999 (the Act) in April 1999.  The Act guarantees recovery of at least 50 percent of a utility's stranded costs over a five-year period, and originally provided for the phase-in of retail choice beginning January 1, 2001.  On May 17, 2000, the NMPRCdelayed the date for retail electric competition for residential, school, and small commercial customers by one year to January 1, 2002.  At the same time the NMPRC moved the date for open access for large commercial and industrial customers back sixmonths, from January 1, 2002 to July 1, 2002.

     During the second quarter of 2000, TNMP revised its reserve for stranded costs associated with purchased power contracts, as a result of the NMPRC action to delay the start of competition.  The reserve wasreduced by $1.2 million, from $2.1 million to $0.9 million.

     The Act also requires utilities to disaggregate their regulated transmission and distribution business activities from their generation operations, which will be subject to competition.  TNMP filed its planfor complying with the Act on June 1, 2000.  The filing explained TNMP's intention to separate its New Mexico operations into a transmission and distribution affiliate and a competitive power supply affiliate.  The filing also contains a timetable forachieving the various tasks necessary to comply with the Act.

 
**Note 4.     Financings***     TNMP*
     In connection with the Merger, TNMP entered into a Backstop Credit Facility (Backstop Facility) in the amount of $240 million on April 17, 2000 so that it could repurchase up to $100 million of its 9.25percent Series U First Mortgage Bonds and up to $140 million of its 10.75 percent Series A Secured Debentures.  As required by its first mortgage bond and secured debenture indentures, TNMP was required to offer to repurchase this debt at 101 percent ofpar value due to the change in control of TNP resulting from the Merger.  

     On June 1, 2000, TNMP repurchased approximately $112.8 million of its Series A Secured Debentures and approximately $90.5 million of its Series U First Mortgage bonds at 101 percent of par plus accruedinterest.  TNMP borrowed $203 million of the approximately $209.6 million needed to repurchase the tendered securities from the Backstop Facility and obtained the remainder from its existing bank facility.  Commitments associated with the unused portionof the Backstop Facility terminated on June 1, 2000, and are no longer available to TNMP.  The Backstop Facility is secured by a new series of first mortgage bonds and a new series of secured debentures, each in the same amount of the securities that wererepurchased pursuant to the tender offer.  The Backstop Facility matures in May 2001, and bears interest at a variable rate based on LIBOR.  As of July 3, 2000, the interest rate on the Backstop Facility was 7.895 percent.

     TNMP incurred a loss of approximately $1.6 million associated with the retirement of the Series U First Mortgage Bonds and Series A Secured Debentures.  In accordance with SFAS 71, TNMP deferredapproximately $0.9 million of the loss and will amortize that amount in future periods.  Approximately $0.7 million of the loss, associated with the portion of TNMP's business no longer accounted for under regulated accounting principles, was expensed inthe second quarter of 2000.  

     *TNP*
     ST Corp. financed the merger through the sale of various debt and equity securities, as discussed below.  
*     Senior Subordinated Notes.     On April 7, 2000, ST Corp. issued $275 million of 10.25% senior subordinated notes (Notes) due 2010 in a private offering.  The Notes payinterest semi-annually, and are unsecured.  TNP can redeem up to 35 percent of the Notes at specified prices before April 1, 2003, but cannot otherwise redeem the Notes before April 1, 2005.  In July 2000, TNP issued an offer to exchange the privatelyplaced Senior Subordinated Notes for registered Senior Subordinated Notes with terms substantially identical to the old notes except for transfer restrictions, registration rights and liquidated damages.
*     Senior Secured Credit Facility.	ST Corp. established a senior secured credit facility (Senior Credit Facility) in the amount of $185 million.  The Senior Credit Facility consists of a $160 millionterm loan due 2006 and a $25 million revolving credit facility that expires in 2003.  TNP may request that the revolving credit facility be extended to 2006.  As of June 30, 2000, the term loan had an outstanding balance of $159.6 million, while noamounts were borrowed under the revolving credit facility.  The term loan bears interest at a variable rate that was 9.385 percent as of June 30, 2000.

     The Senior Credit Facility contains a number of financial covenants and includes a number of covenants restricting various transactions.  The Senior Credit Facility is secured by a pledge of all TNMP commonstock held by TNP.  
*     Senior Redeemable Preferred Stock.     On April 7, 2000, ST Corp. issued $100 million of senior preferred stock under a bridge preferred stock commitment.  In May 2000, TNPreplaced the bridge preferred stock with $100 million of senior redeemable preferred stock (Preferred Stock) and 100,000 warrants to purchase limited partnership interests of SW Acquisition, together comprising 100,000 units issued in a private placement. The Preferred Stock pays a dividend of 14.50 percent and must be redeemed by April 1, 2011.  Through April 1, 2005, dividends on the Preferred Stock will be paid by issuing additional shares of Preferred Stock having an aggregate liquidation preferenceequal to the amount of the dividends to be paid.  After April 1, 2005, TNP has the option to pay dividends in cash or by issuing additional shares of Preferred Stock as previously described.

     Before April 1, 2003, TNP can redeem all, but not less than all, of the Preferred Stock at a specified price, plus accumulated dividends, out of the net proceeds of a TNP common equity offering.  BeforeApril 1, 2005, TNP can redeem all, but not less than all, of the Preferred Stock at a specified price, plus accumulated dividends, in the event of a change in control.  After April 1, 2005, TNP may redeem any amount of the Preferred Stock at specifiedprices.

     The warrants issued as part of the units as described above had an aggregate fair market value of approximately $3.8 million at issue.  The warrants expire on April 1, 2011.

     The Preferred Stock has been recorded at its fair market value, which was approximately $95.2 million at issue, reflecting the value of the warrants described above and the issuance discount of $1 million.TNP will accrete the Preferred Stock to its redemption value of $100 million, through periodic charges against income applicable to common stock.

     On July 24, 2000, TNP filed a registration statement with the Securities and Exchange Commission which, when effective, will issue an offer to exchange the privately placed preferred stock for registeredpreferred stock with terms substantially identical to the Preferred stock except for transfer restrictions, registration rights and liquidated damages.  TNP filed the registration statement to comply with terms of a registration rights agreement that alsowould require TNP to pay dividends on the Preferred Stock at a higher rate if the registration statement had not been timely filed, and if it is not declared effective on or before October 22, 2000.

 
**Note 5.     Segment and Related Information**
     TNP's principal subsidiary, TNMP, has two reportable segments, Texas and New Mexico.  TNMP manages the segments separately to respond to the differing operational and regulatory climates in the two states.

     The following tables present information about profits, losses and assets of TNMP's reportable segments (in thousands).  In the tables below, "Total assets" for Texas and New Mexico includes onlynet utility plant.  All other assets are included in All Other and Eliminations.
 **Three Months Ended June 30,**Six Months Ended June 30, **2000**1999**2000**1999     
Texas    
Operating revenues
$   130,261
$   122,152
$   234,710
$   221,146
Net income
10,367
11,438
17,473
14,633
Total assets at June 30, 2000    
     and December 31, 1999
   823,700
   823,565
   823,700
   823,565     
New Mexico    
Operating revenues
$    25,657
$    21,862
$   45,720
$   40,979
Net income
836
2,758
1,493
3,377
Total assets at June 30, 2000    
     and December 31, 1999
84,346
   84,389
   84,346
   84,389     
All Other and Eliminations         
Operating revenues
$         -    
$        -    
$        -    
$      -    
Net income
-    
-    
-    
-    
Total assets at June 30, 2000    
     and December 31, 1999
    88,295
    76,441
    88,295
    76,441     
TNMP Consolidated         
Operating revenues
$  155,918
$  144,014
$  280,430
$  262,125
Net income
11,203
14,196
18,966
18,010
Total assets at June 30, 2000    
     and December 31, 1999
  996,341
  984,395
  996,341
  984,395**Note 6.     Commitments and Contingencies**
     *Legal Actions*
     *Phillips Petroleum.*TNMP is the defendant in a suit styled *Phillips Petroleum Company vs. Texas-New Mexico Power Company*, filed on October 1, 1997 and pending in the 149th StateDistrict Court of Brazoria County, Texas.  The suit, which is in the discovery stage, is based on events surrounding an interruption of electricity to a petroleum refinery and related facilities that occurred in May 1997.  Phillips Petroleum Company isseeking the recovery of damages arising from the interruption and in May 1999 demanded payment in the amount of $47.1 million.  TNMP's tariff approved by the PUCT contains limitations against recovery of the great majority of Phillips' alleged damages.The Texas Supreme Court, in another matter, has recently upheld the enforceability of such tariff limitations in litigation of this type; TNMP believes the ruling will operate to substantially limit any recovery by Phillips to the cost of its electricalequipment, in the event that any damages are awarded in this matter.  Discovery has not sufficiently progressed to quantify any damages to Phillips' electrical equipment; however, Phillips has previously reported to the SEC that it incurred costs ofapproximately $2.0 million in this interruption.  In May 1999, TNMP filed a Third Party Petition naming Sweeny Cogeneration Limited Partnership, the operator of cogeneration and related facilities at the Phillips refinery, as a defendant.  TNMP haspreviously charged to earnings the deductible amount of its insurance coverage, $500,000.
*     Power Resource Group.     TNMP is a defendant in a suit styled *Power Resource Group, Inc. v. Public Utility Commission of Texas and Texas-New Mexico Power Company*,pending in the 345th District Court of Travis County, Texas. This lawsuit, which was originally filed on May 21, 1999, challenges the PUCT's dismissal of a regulatory case that Power Resource Group, Inc. (PR Group) had filed against TNMP.  PR Group is adeveloper of electric generating plants that are intended to be qualifying cogeneration facilities.  This lawsuit and the regulatory case it appeals both stem from discontinued negotiations for power supply.  PR Group alleged that TNMP was required to buypower to be generated from an as-yet-unbuilt cogeneration facility.  TNMP filed its original answer with the court on June 28, 1999. 

     In an amended petition filed January 13, 2000, PR Group asserts a claim of damages of at least $158 million.  It bases its claim on the assertion that it was damaged when TNMP refused to execute anagreement after the aforementioned discontinued negotiations, that TNMP profited significantly from PR Group's work, that TNMP is in error when it relies on a PUCT order dismissing PR Group's petition before the PUCT on substantially the same facts, andthat TNMP misrepresented that it would enter into a contract with PR Group to purchase energy and capacity at rates equal to or below TNMP's avoided costs.  TNMP believes that PR Group's claims are without merit and intends to contest this claim vigorously.

     TNMP is involved in various claims and other legal proceedings arising in the ordinary course of business.  In the opinion of management, the ultimate dispositions of these matters will not have a materialadverse effect on TNMP's and TNP's consolidated financial position or results of operations. 
** 

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.

     The Merger was accounted for under the purchase method of accounting; accordingly, purchase accounting adjustments have been reflected in the financial statements of TNP for all periods subsequent to March31, 2000.  Financial statements for periods prior to that date were prepared using TNP's historical basis of accounting and are designated as "predecessor."  For purposes of the discussion of quarterly and year-to-date operating results providedherein, the pre-merger financial information of the predecessor has been combined with the post-merger financial information.  The business operations of TNP were not significantly changed as a result of the merger, and post-merger and pre-mergeroperating results, except as noted in the discussion, are comparable.
**Results of Operations
*     Overall Results

     TNP
*****
     TNP incurred a loss applicable to common stock of $2.8 million for the quarter ended June 30, 2000 (current quarter) as compared to earnings of $12.5 million for the quarter ended June 30, 1999.TNP's reduced earnings reflect goodwill amortization, interest expense and preferred dividends related to the Merger.

     TNP had earnings applicable to common stock of $1.1 million for the six months ended June 30, 2000 (year-to-date), as compared to $15.6 million for the six months ended June 30, 1999.  Income declined forthe same reasons cited above for the quarter in addition to one-time charges associated with the Merger.***     TNMP
*****
     TNMP's earnings applicable to common stock were $11.2 million for the quarter ended June 30, 2000, as compared to $14.3 million for the quarter ended June 30, 1999.  For the six months ended June30, TNMP's earnings applicable to common stock were $18.9 million in 2000 as compared to $18.1 million in 1999.

     Under legislation passed in 1999, TNMP's earnings on its Texas operations are capped at a 10.53% return on rate base adjusted for discounted rates to industrial customers, which are expected to beapproximately $2.7 million in 2000.  TNMP will apply Texas earnings in excess of the cap to recover its stranded costs.  TNMP recorded pre-tax excess earnings of $3.6 million ($2.2 million after tax) and $5.6 million ($3.5 million after tax) for the threeand six months ended June 30, 2000.  Those amounts included an adjustment to the excess earnings recorded in 1998 and 1999 due to the resolution of a purchased power dispute discussed in Note 3 - *1998 Excess Earnings*.

     The changes in TNP's and TNMP's earnings for the quarter and the year-to-date are attributable to the factors listed below (in millions):
 **Three Months**Six Months **Ended**Ended **June 30, 2000**June 30, 2000   **Factors affecting TNMP:  
    Changes in base revenues
$     1.9 
$     3.4 
    Non-pass through purchased power and fuel expenses
(4.3)
(1.6)
    Transmission expenses
2.8 
4.0 
    Other operating expenses
(0.6)
(2.3)
    Charge for recovery of stranded plant
(1.5)
0.6 
    All other (including income tax effects on the items above)
     (1.4)
     (3.3)
         TNMP earnings increase (decrease)
(3.1)
0.8    **Factors affecting TNP:     
    Other operating expenses
0.7 
(4.3)
    Depreciation and amortization
(2.7)
(2.7)
    Interest
(10.4)
(10.3)
    Dividends on preferred stock
(3.3)
(3.3)
    All other (including income tax effects on the items above)
      3.5 
       5.3 
         TNP earnings decrease
   (12.2)
    (15.3)
         Consolidated earnings decrease
$  (15.3)
$  (14.5)*** 

TNMP Operating Revenues*
     The components of TNMP's base revenues are summarized in the following tables (in thousands).
  **Three Months Ended 

June 30,  **Six Months Ended June 30,    **Increase  **Increase **2000**1999**(Decrease)**2000**1999**(Decrease)       
Operating revenues
$  155,918
$  144,014
$   11,904
$   280,430
$  262,125
$  18,305
Pass-through expenses
    60,175
    50,154
    10,021
    108,070
    93,187
   14,883
Base revenues
$   95,743
$   93,860
$    1,883
$   172,360
$  168,938
$   3,422
     Pass-through expenses in Texas include fuel and the energy-related portion of purchased power.  In New Mexico, pass-through expenses include all purchased power costs.  Details of pass-through expenses arediscussed under "Results of Operations -- Operating Expenses."

     The following table summarizes the components of the changes in base revenues for the three and six months ended June 30, 2000 compared to the same period in 1999 (in thousands).
 **Three Months**Six Months **Ended June 30,**Ended June 30, **2000 v. 1999**2000 v. 1999
Base revenues  
Weather related
$    6,568 
$    8,439 
Customer growth
906 
1,788 
Price/sales mix (includes base rate reductions)
(4,798)
(7,216)
Transmission revenue
893 
2,235 
Industrial sales
(2,012)
(2,235)
Other
        326 
        411 
     Base revenues increase
$    1,883
$    3,422 
     Current quarter base revenues increased $1.9 million, or 2.0%, compared to the corresponding 1999 period.  The increase resulted from higher weather-related sales in the residential and commercial classes,higher transmission revenues, and growth in the number of residential and commercial customers.  These increases were offset in part by a rate reduction in Texas pursuant to the Transition Plan and reduced sales to industrial customers.

     Transmission revenues increased due to a change in the method of allocating Texas transmission costs that the PUCT approved as of September 1, 1999.  The PUCT adopted the new method to comply with therestructuring legislation passed in 1999.

     Effective January 1, 2000, TNMP implemented base rate reductions of 3% and 1% for residential and commercial customers, respectively, under the terms of a Declaratory Order issued by the PUCT on December 6,1999.  Similar rate reductions will take effect January 1, 2001.

     Year-to-date base revenues increased $3.4 million, or 2.0% from the same period in 1999.  The same factors discussed above for the current quarter affected year-to-date base revenues.

     The following table summarizes the components of gigawatt-hour (GWH) sales.
  **Three Months Ended June 30,  **Six Months Ended June 30,    **Increase  **Increase **2000**1999**(Decrease)**2000**1999**(Decrease)
GWH sales:      
Residential
     588 
     549 
        39 
    1,090 
   1,041
     49 
Commercial
516 
472 
44 
950 
874
76 
Industrial:      
    Firm
152 
132 
20 
282 
244
38 
    Economy
1,008 
1,153 
(145)
2,031 
2,197
(166)
Power marketing
32 
27 
5 
100 
48
52 
Other	
      25 
       26 
       (1)
        48 
      53
      (5)       
    Total GWH sales
  2,321 
   2,359 
     (38)
    4,501 
   4,457
    44 
     Current quarter sales decreased 38 GWHs (or 2%) as compared to the corresponding quarter of 1999.  The current quarter decrease resulted primarily from reduced sales to a significant industrial customerunder an economy sales arrangement.  This was partially offset by higher weather-related sales to commercial and residential customers and growth in the number of commercial and residential customers.  Year-to-date sales increased 44 GWHs (or 1%) ascompared to the corresponding 1999 period.  Higher off-system sales combined with the factors noted for the quarter accounted for the increase.
***     Operating Expenses

     Factors Affecting TNMP*
     TNMP incurred operating expenses of $133.8 million in the quarter ended June 30, 2000, an increase of $13.4 million over the amount incurred during the corresponding period of 1999.  The increasereflects higher costs for purchased power and fuel, and increased charges for the recovery of stranded plant partially offset by lower transmission expenses.  For the six months ended June 30, 2000, TNMP incurred operating expenses of $240.2 million, anincrease of $16.7 million over 1999 levels.  The year-to-date increase reflects higher costs for purchased power, fuel, and other operating expenses partially offset by lower transmission expenses.
**     Purchased Power and Fuel Expenses**
     The following table summarizes the components of TNMP's purchased power and fuel expenses (in thousands).
****  **Three Months Ended June 30, **Six Months Ended June 30,   **Increase  **Increase **2000**1999**(Decrease)**2000**1999**(Decrease)
Purchased power and fuel expenses:      
Pass through expenses:      
    Purchased power
$   50,772 
$   41,942
$   8,830 
$   90,183
$  78,013
$  12,170
    Fuel
      9,403 
      8,212
     1,191 
     17,887
    15,174
     2,713 
     60,175 
     50,154
    10,021 
    108,070
    93,187
    14,883       
Non-pass through expenses:      
    Texas purchased power
    20,750 
   16,437
   4,313 
   31,965
   30,529
    1,436
    Fuel
         389 
         391
         (2)
         829
        638
        191 
    21,139 
     16,828
    4,311 
    32,794
   31,167
     1,627
Total purchased power and fuel
$   81,314 
$  66,982
$ 14,332 
$ 140,864
$124,354
$  16,510***     In the second quarter of 2000, purchased power and fuel expenses increased $14.3 million from the level incurred during the second quarter of 1999.  Pass-through expenses increased $10.0 million,reflecting increased purchases caused by higher sales overall and price increases in New Mexico.  Non pass-through expenses increased $4.3 million due to higher costs incurred on sales to an industrial customer under a replacement power contract.

     For the six months ended June 30, 2000, purchased power and fuel expenses increased $16.5 million from the level incurred during the same period of 1999.  Pass-through expenses increased $14.9 million forthe reasons cited above for the quarter.  Non pass-through expenses increased $1.6 million due to higher costs incurred on sales to an industrial customer under a replacement power contract, partially offset by the deferral of a $2.4 million payment madein 1998 to resolve a billing dispute as described in Note 3 - *1998 Excess Earnings*.
**     Transmission Expenses**
          Transmission expenses decreased by $2.8 million and $4.0 million for the three and six months ended June 30, 2000, respectively, compared to the corresponding periods in1999, due to the change in cost allocation described in *"Operating Revenues,"*above*.***     Other Operating Expenses**
          Other operating expenses were $0.6 million and $2.3 million higher for the current quarter and year-to-date periods, respectively, than in the same periods of 1999.  Thisincrease is primarily due to higher payroll costs, an increase in the proportion of total payroll charged to operating expenses, and a payment to the Texas Department of Housing for programs to assist low-income customers.
**     Charge for Recovery of Stranded Plant**
          Charge for recovery of stranded plant increased $1.5 million in the second quarter of 2000 compared to the same period in 1999.  During the second quarter of 2000, TNMPrecorded a charge for recovery of stranded plant of $3.4 million.  In the second quarter of 1999, TNMP recorded $1.9 million in charges for recovery of stranded plant, including adjustments to reflect the adoption of Texas Senate Bill 7, the 1999 retailcompetition legislation.

          For the year-to-date, charges for recovery of stranded plant are comparable to amounts recorded in 1999.
***     Factors Affecting TNP*
     Other Operating Expenses**
          Other operating expenses for the current quarter were comparable to 1999.  Year-to-date other operating expenses were $4.3 million higher than in the same period of 1999.This increase is primarily due to a one-time charge of approximately $5.6 million for severance and retirement benefits due to the change in control resulting from the Merger.
**     Depreciation and Amortization**
          Beginning in the second quarter of 2000, TNP began amortizing goodwill associated with the Merger over 25 years.  Goodwill amortization was $2.7 million for both the three andsix months ended June 30, 2000.
**     Interest Expense
**
          TNP incurred interest expense of $10.7 million in both the three and six months ended June 30, 2000 on the debt issued in connection with the Merger.  Those amountsincreased by $10.4 and $10.3 million compared to amounts incurred in the three and six months ended June 30, 1999, respectively.
**     Dividends on Preferred Stock
**
          As discussed in Note 4, TNP issued preferred stock under a bridge commitment, and subsequently replaced the bridge preferred stock with senior redeemable preferredstock, to finance the Merger.  Dividends on the preferred stock issues were $3.3 million in both the second quarter and year-to-date periods of 2000.
**Financial Condition*****TNMP Liquidity*
          The main sources of liquidity for TNMP are cash flow from operations and borrowings from its credit facility.  TNMP's cash flow from operations was $7.3 million lower for thefirst six months of 2000 as compared to the same period 1999 due to higher payments for fuel and purchased power costs, payments of interest on debt repurchases related to the Merger, and funding to TNP under a tax sharing agreement between TNP and TNMP.Lower cash flows from the factors above were partially offset by higher receipts from customers.

          As discussed in Note 4, TNMP repurchased approximately $112.8 million of its Series A Secured Debentures and approximately $90.5 million ofits Series U First Mortgage bonds during the second quarter of 2000, using funds from the Backstop Facility and an existing bank facility.  TNMP intends to establish a new credit facility that will enable it to refinance the amounts outstanding on thesecured debentures, first mortgage bonds, Backstop Facility, and existing bank facility.  At June 30, 2000, the amount outstanding on those obligations was approximately $273.7 million, of which approximately $246.5 million is due within one year.  TNMPexpects to close the new credit facility by the end of 2000.
          TNMP has sufficient liquidity to satisfy the possibility of any known contingencies.  Management believes cash flow from operations and periodic borrowings under the plannedcredit facility described above should be sufficient to meet working capital requirements at least through 2001.
***TNP Liquidity*
          TNP's main sources of liquidity, and its ability to service the debt issued to finance the Merger, depend primarily on the earnings of TNMP and the distribution of thoseearnings in the form of cash dividends, as well as tax payments from TNMP due under a tax sharing agreement between TNP and TNMP.  TNP has a $25 million revolving credit facility that will be used to provide working capital and meet other requirements.The revolving credit facility was put in place at the time of the Merger.  As of June 30, 2000, TNP had no borrowings against the revolving credit facility, and the entire $25 million was available to TNP.

          Cash dividends from TNMP to TNP are limited by restrictions included in TNMP's debt indentures and bank agreements.  In addition, the regulatory orders from the PUCT and theNMPRC approving the Merger contain additional restrictions on TNMP's ability to pay cash dividends to TNP.  During the second quarter of 2000, TNMP paid a dividend of $7.5 million to TNP.

          During the first six months of 2000, TNP's cash flow from operations was $4.7 million lower than in the first six months of 1999 due to TNMP's lower cash flow from operationsas discussed above, offset by reduced expenditures for non-regulated activities and tax payments from TNMP under the tax sharing agreement described above.

          Management believes that dividends from TNMP, payments from TNMP under the tax sharing agreement, and periodic borrowings under its revolving credit facility should besufficient to meet TNP's working capital requirements at least through 2001.
** 

PART II - OTHER INFORMATION
**Item 1.    Legal Proceedings.****           See Note 6 for information regarding material legal proceedings.**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.
**Statement Regarding Forward Looking Information
     The discussions in this document that are not historical facts, including, but not limited to, the continued application of regulatory accounting principles, future cash flows and the potential recovery ofstranded 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: our ability to adapt to open market competition enacted byour legislators and regulators; the effects of accounting pronouncements that may be issued periodically; changes in regulations affecting TNP's and TNMP's businesses; insurance coverage available for claims made in litigation; the effect of a TexasSupreme Court decision on the limitations of any actual damages awarded in currently ongoing litigation;future acquisitions or strategic partnerships; general business and economic conditions, and price fluctuations in the electric power market; and other factors described from time totime 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 LitigationReform 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.    
Date: August 11, 2000
By \s\ THEODORE A. BABCOCK                 
     Theodore A. Babcock 
     Chief Financial Officer     
TEXAS-NEW MEXICO POWER COMPANY    
Date: August 11, 2000
By \s\ MANJIT S. CHEEMA                        
     Manjit S. Cheema 
     Senior Vice President and Chief Financial Officer    
Date: August 11, 2000
By \s\ SCOTT FORBES                             
     Scott Forbes 
     Chief Accounting Officer*************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************