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

                                    FORM 10-Q

(Mark One)
     (X)  COMBINED  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE
SECURITIES  EXCHANGE ACT OF 1934 
               For the quarterly period ended September 30, 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 13,281,874 shares of common stock outstanding as
of November 4, 1998.
--------------------------------------------------------------------------------

                         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 September 30, 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 and Nine Month Periods Ended September 30, 1998, and 1997   3

           Consolidated Statements of Cash Flows
           Nine Month Periods Ended September 30, 1998, and 1997             4

           Consolidated Balance Sheets
           September 30, 1998, and December 31, 1997                         5

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

           Consolidated Statements of Income
           Three and Nine Month Periods Ended September 30, 1998, and 1997   6

           Consolidated Statements of Cash Flows
           Nine Month Periods Ended September 30, 1998, and 1997             7

           Consolidated Balance Sheets
           September 30, 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 1.  Legal Proceedings.                                               14

  Item 6.  Exhibits and Reports on Form 8-K.                                14
           (a)   Exhibit Index                                              14
           (b)   Reports on Form 8-K                                        14
  Statement Regarding Forward Looking Information                           15
  Signatures                                                                15




<PAGE>
<TABLE>
<CAPTION>

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

                                                            Three Months Ended                 Nine Months Ended
                                                              September 30,                      September 30,
                                                    ---------------------------------  ----------------------------------
                                                        1998              1997              1998              1997
                                                    --------------  -----------------  ---------------   ----------------
                                                                       (In thousands except per share
                                                                                  amounts)
<S>                                                 <C>             <C>                <C>               <C>        
OPERATING REVENUES (Note 3)                         $     189,439   $        187,034   $      457,131     $      445,619
                                                    --------------  -----------------  ---------------   ----------------

OPERATING EXPENSES:
  Purchased power                                          91,486             81,371          214,241            194,591
  Fuel                                                     13,467             15,398           31,751             35,251
  Other operating and maintenance                          22,419             21,749           68,287             63,016
  Depreciation                                              8,957              9,765           28,994             29,100
  Taxes other than income taxes                            10,913              9,704           27,489             25,582
  Income taxes                                              9,078             11,538           15,657             18,115
                                                    --------------  -----------------  ---------------   ----------------
       Total operating expenses                           156,320            149,524          386,419            365,655
                                                    --------------  -----------------  ---------------   ----------------

NET OPERATING INCOME                                       33,119             37,510           70,712             79,964
                                                    --------------  -----------------  ---------------   ----------------

OTHER INCOME:
  Other income and deductions, net                            391                431              859                890
  Income taxes                                                407                (22)             462                  1
                                                    --------------  -----------------  ---------------   ----------------
       Other income, net of taxes                             798                409            1,321                891
                                                    --------------  -----------------  ---------------   ----------------

INCOME BEFORE INTEREST CHARGES                             33,917             37,919           72,033             80,855
                                                    --------------  -----------------  ---------------   ----------------
INTEREST CHARGES:
  Interest on long-term debt                               11,835             13,075           36,875             39,989
  Other interest and amortization of
   debt-related costs                                       1,192              1,103            3,306              3,157
                                                    --------------  -----------------  ---------------   ----------------
                                                    
       Total interest charges                              13,027             14,178           40,181             43,146
                                                    --------------  -----------------  ---------------   ----------------

INCOME FROM CONTINUING OPERATIONS                          20,890             23,741           31,852             37,709



Loss from discontinued nonregulated operations              2,329              3,047            9,432              5,474
(Note 2)                                            --------------  -----------------  ---------------   ----------------

NET INCOME                                                 18,561             20,694           22,420             32,235
Dividends on preferred stock                                   38                 40              114                120
                                                    --------------  -----------------  ---------------   ----------------

INCOME APPLICABLE TO COMMON STOCK                   $      18,523   $         20,654   $       22,306    $        32,115
                                                    ==============  =================  ===============   ================


EARNINGS PER SHARE OF COMMON STOCK
Earnings from continuing operations                 $        1.58   $           1.81   $         2.40    $          2.88
Loss from discontinued nonregulated operations              (0.18)             (0.23)           (0.71)             (0.42)
                                                    ==============  =================  ===============   ================
EARNINGS PER SHARE                                  $        1.40   $           1.58   $         1.69    $          2.46
                                                    ==============  =================  ===============   ================

DIVIDENDS PER SHARE OF COMMON STOCK                 $        0.27   $          0.245   $         0.81    $         0.735
                                                    ==============  =================  ===============   ================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                 13,263             13,092           13,231             13,068
                                                    ==============  =================  ===============   ================

</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
<CAPTION>

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

                                                                                           Nine Months Ended
                                                                                            September 30,
                                                                             ---------------------------------------------
                                                                                    1998                    1997
                                                                             --------------------  -----------------------
                                                                                                      (In thousands)
<S>                                                                          <C>                   <C>                  
CASH FLOWS FROM OPERATING ACTIVITIES:
  Cash received from customers                                                 $         467,232     $            438,252
  Purchased power                                                                       (210,270)                (183,025)
  Fuel costs paid                                                                        (26,953)                 (29,367)
  Cash paid for payroll and to other suppliers                                           (89,771)                 (82,066)
  Interest paid, net of amounts capitalized                                              (42,232)                 (46,345)
  Income taxes paid                                                                       (3,000)                  (3,698)
  Other taxes paid                                                                       (28,032)                 (26,870)
  Other operating cash receipts and payments, net                                          1,002                    1,636
                                                                             --------------------  -----------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                                 67,976                   68,517
                                                                             --------------------  -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                                             (27,324)                 (20,100)
  Additions to other property and nonregulated investments                                  (554)                  (2,017)
                                                                             --------------------  -----------------------
NET CASH USED IN INVESTING ACTIVITIES                                                    (27,878)                 (22,117)
                                                                             --------------------  -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                                          (10,841)                  (9,733)
  Common stock issuances                                                                   4,647                    3,212
  Borrowings from (repayments to) revolving credit facilities - net                      (38,000)                  64,000
     Other long-term debt                                                                   (104)                     (61)
     Obligation - FWI investment aquisition                                                    -                     (300)
     First mortgage bonds                                                                   (100)                (100,900)
                                                                             --------------------  -----------------------
NET CASH USED IN FINANCING ACTIVITIES                                                    (44,398)                 (43,782)
                                                                             --------------------  -----------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                   (4,300)                   2,618
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          15,877                    8,387
                                                                             --------------------  -----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $          11,577     $             11,005
                                                                             ====================  =======================

RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income                                                                   $          22,420     $             32,235
  Adjustments  to  reconcile  net  income  to net  cash  provided  by
   operating activities:
     Depreciation                                                                         28,994                   29,307
     Amortization of debt-related costs and other deferred charges                         2,749                    2,861
     Allowance for borrowed funds used during construction                                   (99)                     (30)
     Deferred income taxes                                                                 4,525                    9,187
     Investment tax credits                                                                 (133)                  (1,509)

Cash flows impacted by changes in current assets and liabilities:
     Deferred fuel costs                                                                     765                    6,239
     Accounts payable                                                                     11,453                   17,120
     Accrued interest                                                                     (4,669)                  (2,472)
     Accrued taxes                                                                         2,711                    4,119
     Changes in other current assets and liabilities                                        (816)                 (32,167)
Other, net                                                                                    76                    3,627
                                                                             --------------------  -----------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                      $          67,976     $             68,517
                                                                             ====================  =======================


</TABLE>


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

                     TNP ENTERPRISES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                              September 30, 1998        December 31,
                                                                              (Unaudited)                   1997
                                                                           -------------------      ----------------------

                                                                                          (In thousands)
<S>                                                                        <C>                      <C>                          

ASSETS

UTILITY PLANT:
  Electric plant                                                             $        1,249,247       $         1,235,257
  Construction work in progress                                                           5,196                     2,281
                                                                           ---------------------    ----------------------
            Total                                                                     1,254,443                 1,237,538
  Less accumulated depreciation                                                         332,315                   314,270
                                                                           ---------------------    ----------------------
            Net utility plant                                                           922,128                   923,268
                                                                           ---------------------    ----------------------
OTHER PROPERTY AND INVESTMENTS, at cost                                                   5,913                     5,704
                                                                           ---------------------    ----------------------
CURRENT ASSETS:
  Cash and cash equivalents                                                              11,577                    15,877
  Accounts receivable                                                                     6,745                     8,585
  Inventories, at lower of average cost or market:
       Fuel                                                                                 877                       483
       Materials and supplies                                                             4,598                     4,440
  Deferred fuel costs                                                                     1,805                     2,570
  Accumulated deferred income taxes                                                       3,095                     1,707
  Other current assets                                                                    5,518                       982
                                                                           ---------------------    ----------------------
            Total current assets                                                         34,215                    34,644
                                                                           ---------------------    ----------------------

REGULATORY TAX ASSETS                                                                     2,034                       -  
DEFERRED CHARGES                                                                         24,301                    28,310
                                                                           ---------------------    ----------------------
                                                                             $          988,591       $           991,926
                                                                           =====================    ======================
CAPITALIZATION AND LIABILITIES

CAPITALIZATION:
  Common shareholders' equity:
       Common stock - no par value per share.  Authorized 50,000,000
            shares; issued 13,274,866 shares in 1998 and 13,126,447 in 1997  $          191,810       $           187,163
       Retained earnings                                                                122,657                   111,078
                                                                           ---------------------    ----------------------
            Total common shareholders' equity                                           314,467                   298,241

  Preferred stock                                                                         3,240                     3,240
  Long-term debt, less current maturities                                               302,034                   478,041
                                                                           ---------------------    ----------------------
            Total capitalization                                                        619,741                   779,522
                                                                           ---------------------    ----------------------

CURRENT LIABILITIES:
  Current maturities of long-term debt                                                  137,900                       100
  Accounts payable                                                                       38,488                    27,035
  Accrued interest                                                                        2,654                     7,323
  Accrued taxes                                                                          20,300                    17,589
  Customers' deposits                                                                     3,598                     3,249
  Other current liabilities                                                              28,748                    26,665
                                                                           ---------------------    ----------------------
            Total current liabilities                                                   231,688                    81,961
                                                                           ---------------------    ----------------------

REGULATORY TAX LIABILITIES                                                                  -                       6,318
ACCUMULATED DEFERRED INCOME TAXES                                                        98,339                    85,250
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                                              22,223                    21,149
DEFERRED CREDITS                                                                         16,600                    17,726
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 5)
                                                                           ---------------------    ----------------------
                                                                             $          988,591       $           991,926
                                                                           =====================    ======================

</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
<CAPTION>

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

                                                 Three Months Ended                             Nine Months Ended
                                                   September 30,                                  September 30,
                                   --------------------------------------------   ----------------------------------------------
                                           1998                   1997                    1998                    1997
                                   ---------------------   --------------------   ---------------------  -----------------------
                                                                           (In thousands)
<S>                                <C>                     <C>                    <C>                    <C>
OPERATING REVENUES (Note 3)          $          189,425      $         187,035      $          457,097     $            445,619
                                   ---------------------   --------------------   ---------------------  -----------------------

OPERATING EXPENSES:
  Purchased power                                91,486                 81,372                 214,241                  194,591
  Fuel                                           13,467                 15,398                  31,751                   35,251
  Other operating and maintenance                21,420                 21,155                  65,229                   61,373
  Depreciation of utility plant                   8,957                  9,764                  28,993                   29,099
  Taxes other than income taxes                  10,812                  9,541                  27,934                   25,149
  Income taxes                                    9,676                 11,771                  16,622                   18,808
                                   ---------------------   --------------------   ---------------------  -----------------------
       Total operating expenses                 155,818                149,001                 384,770                  364,271
                                   ---------------------   --------------------   ---------------------  -----------------------
NET OPERATING INCOME                             33,607                 38,034                  72,327                   81,348
                                   ---------------------   --------------------   ---------------------  -----------------------
OTHER INCOME:
  Other income and deductions, net                  354                    322                     524                      674
  Income taxes                                      407                    (22)                    535                        1
                                   ---------------------   --------------------   ---------------------  -----------------------
       Other income, net of taxes                   761                    300                   1,059                      675
                                   ---------------------   --------------------   ---------------------  -----------------------

INCOME BEFORE INTEREST CHARGES                   34,368                 38,334                  73,386                   82,023
                                   ---------------------   --------------------   ---------------------  -----------------------

INTEREST CHARGES:
  Interest on long-term debt                     11,835                 13,075                  36,875                   39,989
  Other interest and amortization
   of debt-related costs                          1,192                  1,103                   3,306                    3,157
                                   ---------------------   --------------------   ---------------------  -----------------------
       Total interest charges                    13,027                 14,178                  40,181                   43,146
                                   ---------------------   --------------------   ---------------------  -----------------------

NET INCOME                                       21,341                 24,156                  33,205                   38,877
Dividends on preferred stock                         38                     40                     114                      120
                                   ---------------------   --------------------   ---------------------  -----------------------

INCOME APPLICABLE TO COMMON STOCK    $           21,303      $          24,116      $           33,091     $             38,757
                                   =====================   ====================   =====================  =======================

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
<CAPTION>

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

                                                                                        Nine Months Ended
                                                                                          September 30,
                                                                          ----------------------------------------------
                                                                                  1998                     1997
                                                                          ----------------------   ---------------------
                                                                                          (In thousands)
<S>                                                                       <C>                      <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
  Cash received from customers                                              $           448,945      $          428,961
  Purchased power                                                                      (210,270)               (183,025)
  Fuel costs paid                                                                       (26,953)                (29,367)
  Cash paid for payroll and to other suppliers                                          (53,959)                (58,413)
  Interest paid, net of amounts capitalized                                             (42,222)                (46,343)
  Income taxes paid                                                                       1,039                  (3,187)
  Other taxes paid                                                                      (28,452)                (26,845)
  Other operating cash receipts and payments, net                                           611                   1,354
                                                                          ----------------------   ---------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                                88,739                  83,135
                                                                          ----------------------   ---------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to utility plant                                                            (27,221)                (20,083)
  Withdrawal from escrow account                                                              -                   1,670
                                                                          ----------------------   ---------------------

CASH FLOWS USED IN INVESTING ACTIVITIES                                                ( 27,221)                (18,413)
                                                                          ----------------------   ---------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid on preferred and common stocks                                         (17,296)                (30,420)
  Borrowings from (repayments to) revolving credit facilities - net                     (38,000)                 64,000
  First mortgage bond redemption                                                          (100)                (100,900)
                                                                          ----------------------   ---------------------

NET CASH USED IN FINANCING ACTIVITIES                                                   (55,396)                (67,320)
                                                                          ----------------------   ---------------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                                   6,122                  (2,598)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          2,772                   5,115
                                                                          ----------------------   ---------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $             8,894      $            2,517
                                                                          ======================   =====================

RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES:
  Net income                                                                $            33,205      $           38,877
  Adjustments to reconcile net income to net cash provided by 
   operating activities:
     Depreciation of utility plant                                                       28,993                  29,099
     Amortization of debt-related costs and other deferred charges                        2,749                   2,861
     Allowance for borrowed funds used during construction                                  (99)                    (30)
     Deferred income taxes                                                                8,282                  10,538
     Investment tax credits                                                                (224)                 (1,510)

Cash flows impacted by changes in current assets and liabilities:
     Deferred fuel costs                                                                    765                   7,234
     Accounts payable                                                                    12,902                  15,016
     Accrued interest                                                                    (4,669)                 (6,028)
     Accrued taxes                                                                        8,044                   5,014
     Changes in other current assets and liabilities                                      8,767                 (15,200)
Other, net                                                                               (9,976)                 (2,736)
                                                                          ----------------------   ---------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                   $            88,739      $           83,135
                                                                          ======================   =====================


</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

<PAGE>
<TABLE>
<CAPTION>

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


                                                                          September 30, 1998    December 31,
                                                                            (Unaudited)             1997
                                                                          ----------------    -----------------
                                                                                     (In thousands)
<S>                                                                       <C>                 <C>  
ASSETS

UTILITY PLANT:                                                                                                          
  Electric plant                                                            $   1,249,191       $    1,235,239             
  Construction work in progress                                                     5,196                2,281              
                                                                          ----------------    -----------------
            Total                                                               1,254,387            1,237,520
  Less accumulated depreciation                                                   332,315              314,270             
                                                                          ----------------    -----------------
            Net utility plant                                                     922,072              923,250               
                                                                          ----------------    -----------------

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

CURRENT ASSETS:
  Cash and cash equivalents                                                         8,894                2,772              
  Accounts receivable                                                               1,209                2,342              
  Inventories, at lower of average cost or market:
       Fuel                                                                           877                  483              
       Materials and supplies                                                       4,598                4,440              
  Deferred fuel costs                                                               1,805                2,570              
  Accumulated deferred income taxes                                                 3,095                1,707              
  Other current assets                                                              4,723                  222              
                                                                          ----------------    -----------------
            Total current assets                                                   25,201               14,536
                                                                          ----------------    -----------------

REGULATORY TAX ASSETS                                                               2,034                    -              
DEFERRED CHARGES                                                                   22,756               29,006              
                                                                          ----------------    -----------------
                                                                            $     972,277       $      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                                                           69,259               64,768                
                                                                          ----------------    -----------------
            Total common shareholder's equity                                     291,512              287,021                   
  Redeemable cumulative preferred stock                                             3,240                3,240                   
  Long-term debt, less current maturities                                         302,000              477,900            
                                                                          ----------------    -----------------
            Total capitalization                                                  596,752              768,161
                                                                          ----------------    -----------------

CURRENT LIABILITIES:
  Current maturities of long-term debt                                            137,900                  100
  Accounts payable                                                                 37,761               24,859               
  Accrued interest                                                                  2,654                7,323              
  Accrued taxes                                                                    25,795               17,751              
  Customers' deposits                                                               3,598                3,249              
  Other current liabilities                                                        31,486               19,148              
                                                                          ----------------    -----------------
            Total current liabilities                                             239,194               72,430
                                                                          ----------------    -----------------

REGULATORY TAX LIABILITIES                                                              -                6,318              
ACCUMULATED DEFERRED INCOME TAXES                                                  93,846               81,085               
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS                                        25,970               21,286                
DEFERRED CREDITS                                                                   16,515               17,726              
COMMITMENTS AND CONTINGENCIES (Notes 2, 4 and 5)
                                                                          ----------------    -----------------
                                                                            $     972,277       $      967,006
                                                                          ================    =================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.



<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

         During  the third  quarter of 1998,  TNP  elected  to  discontinue  all
remaining   operations  of  Facility  Works  Inc.  (FWI),   TNP's  wholly  owned
nonregulated subsidiary.  TNP previously decided, in the fourth quarter of 1997,
to discontinue FWI's  construction  operations.  TNP's results of operations for
the quarter  ended  September  30, 1998,  include a charge of $3.6 million ($2.3
million, net of tax, or $0.18 per share). The charge (net of tax) includes a net
loss incurred by the service operations of $0.5 million,  and a one-time loss of
$1.8 million, to satisfy remaining contractual  obligations and costs to dispose
of the service operations. TNP expects that FWI service operations will be fully
discontinued  within three to six months.  In the quarter  ended  September  30,
1997,  FWI,  both service and  construction  segments,  lost $4.4 million  ($3.0
million, net of tax, or $0.23 per share).

         For the  nine  months  ended  September  30,  1998,  the  loss on FWI's
discontinued  operations was $14.5 million ($9.4  million,  net of tax, or $0.71
per share), as compared to a loss of $8.1 million ($5.5 million,  net of tax, or
$0.42 per share), in the corresponding  1997 period. All losses incurred by FWI,
both  construction  and service,  for the first three quarters of 1997 have been
reclassified as losses from discontinued operations.

Note 3.  Regulatory Matters

   Texas Transition Plan

         On September 4, 1998,  the Public  Utility  Commission  of Texas (PUCT)
issued a final order approving TNMP's transition-to-competition plan (Transition
Plan).  On November 3, 1998,  the PUCT issued an order on rehearing,  clarifying
various provisions of its final order, but making no substantive  changes to its
original order.  The Transition Plan includes a number of provisions that impact
TNMP's financial results. First, TNMP will implement a series of residential and
commercial rate reductions totaling 9% and 3%, respectively,  during a five-year
transition  period.  The first rate  reductions for  residential  and commercial
customers of 3% and 1%,  respectively,  are effective  retroactive to January 1,
1998.  Second,  TNMP's earnings on its Texas  operations are capped at an 11.25%
return on equity,  less assumed discounts on industrial rates,  which, for 1998,
are $4.1 million. Texas earnings in excess of the cap will be applied by TNMP to
recover  stranded  costs  related  to its  generation  investment  (TNP  One) or
refunded to customers,  according to guidelines set by the PUCT. Third, the Plan
includes a cap on operating and maintenance  expenses applicable to TNMP's Texas
operations based on cost incurred per customer in 1996. Fourth, TNMP will record
$15 million of  additional  depreciation  annually  during  1999-2003 to recover
stranded costs. Finally, the manner in which TNMP recovers,  from its customers,
the cost of fuel and  purchased  power has  changed.  In the past,  all of these
costs were passed directly  through to TNMP's  customers via adjustment  factors
that  could  change  as often  as  monthly.  Under  this  methodology,  fuel and
purchased  power expense had no impact on operating  income.  Effective with the
new rates  under the  Transition  Plan,  only the fuel  costs of TNP One and the
energy-related  portion of purchased  power will be  passed-through  directly to
customers  via an adjustment  clause.  The  demand-related  portion of purchased
power will be recovered  through base rates and is not subject to  adjustment or
future  reconciliation.   Therefore,  any  difference,  between  the  amount  of
demand-related  purchased  power  recovered  through TNMP's rates and the actual
cost of such, will affect operating income.

         Absent legislation  implementing retail competition prior to the end of
the five-year  transition  period,  TNMP shall file with the PUCT, at the end of
the  transition  period,  a proposal to  voluntarily  implement  retail  access,
contingent  upon the approval of an  appropriate  mechanism  for recovery of any
remaining stranded costs.


<PAGE>



         During  the nine  months  ended  September  30,  1998,  the  results of
operations  are  affected by both  one-time and ongoing  charges  related to the
implementation of the Transition Plan. The effect of the Transition Plan reduced
TNMP earnings by $13.0 million or $0.98 per share.  The one-time charges consist
of the  write-off  of  previously  deferred  Transition  Plan  expenses  of $2.2
million,  net of taxes, ($0.17 per share), and customer refunds of $0.9 million,
net of taxes ($0.06 per share). The ongoing charges include the following net of
tax amounts:

                 - Effects of implementing  the Transition Plan rate structure -
                   $5.2  million   ($0.39  per  share)   
                 - Adjustments to demand  purchased power expenses-$4.0 million,
                   ($0.31 per share)
                 - Excess  earnings  calculated  under the  earnings  cap - $0.7
                   million ($0.05 per share)

         The  combination  of the one-time  customer  refund,  implementing  the
Transition  Plan rate  structure,  and excess  earnings,  allocated  to customer
refunds, reduced operating revenue by $10.0 million (pre-tax).

Note 4.           Accounting for the Effects of Regulation

         TNMP's financial  statements  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,  TNMP  discontinued  the  application  of SFAS 71 to its  generation/power
supply operations in New Mexico during 1997, following adoption of the Community
Choice(R)  program.  This  discontinuation  had no effect  on  TNMP's  financial
condition.  As discussed in Note 3, the PUCT issued a final order  approving the
Transition  Plan on  September  4, 1998.  Had the PUCT  adopted  TNMP's  plan as
originally proposed,  TNMP would have discontinued the application of SFAS 71 to
its  generation/power  supply  operations in Texas.  However,  the PUCT modified
TNMP's filed plan to the extent that SFAS 71 remains  applicable to TNMP's Texas
generation/power  supply operations.  TNMP will continue to apply SFAS 71 to its
Texas  generation/power  supply  operations  until  it  requests,  and the  PUCT
approves  authority to implement,  retail  competition,  as described in Note 3.
Management  believes  that,  as of September 30, 1998,  and for the  foreseeable
future, TNMP's transmission and distribution  operations continue to follow SFAS
71.


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,  pending in the 234th District
Court in Harris  County,  Texas.  The court heard  motions for summary  judgment
filed by both parties on October 12, 1998. On November 2, 1998,  the court ruled
on these motions, granting TNMP's motion for summary judgment on certain issues,
denying motions by both parties relating to the material issues in the case, and
granting Clear Lake leave to amend its summary  judgment  motion with respect to
certain issues.  The lawsuit is in an active discovery phase, and TNMP continues
to vigorously contest the remaining issues.

         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,  pending in the 149th District Court in Brazoria
County,  Texas.  As of the date of this  report,  there  have  been no  material
developments in this matter, which is in the discovery phase.



<PAGE>



     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 had earnings  applicable  to common stock of $18.5  million for the
quarter ended September 30, 1998 (current  quarter),  as compared to earnings of
$20.7 million for the quarter ended September 30, 1997.  Excluding the effect of
discontinued  operations  at FWI,  earnings  for the current  quarter were $20.8
million, as compared to $23.7 million for the corresponding 1997 quarter.

         TNP had earnings  applicable  to common stock of $22.3  million for the
nine months ended September 30, 1998 (current nine months), as compared to $32.1
million for the nine months ended  September  30, 1997.  Excluding the effect of
discontinued  operations at FWI, earnings for the current nine months were $31.7
million as compared to $37.6 million for the corresponding 1997 period.

         Losses from FWI discontinued  operations included in the quarters ended
September 30, 1998 and 1997 were $2.3 million and $3.0 million, respectively. In
the  nine-month  periods  ended  September  30,  1998 and 1997,  losses from FWI
discontinued operations were $9.4 million and $5.5 million, respectively.  Refer
to Note 2 for additional discussion of discontinued operations at FWI.

         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  components  of TNMP's  operating  revenues are  summarized  in the
following tables (in thousands).
<TABLE>
<CAPTION>

                                                Three Months Ended September 30,       Nine Months Ended September 30,
                                                                         Increase                              Increase
                                                 1998         1997      (Decrease)        1998       1997     (Decrease)
                                              ---------    ----------   ---------     ----------- ---------   ---------
<S>                                           <C>          <C>          <C>           <C>         <C>         <C>      
         Operating revenues                   $ 189,425    $  187,035   $   2,390     $  457,097  $ 445,619   $  11,478
                                              =========    ==========   =========     =========== =========   =========


                           Operating revenues
                           ------------------
                           Weather related                              $  10,738                             $  20,948
                           Customer growth                                  2,880                                 6,325
                           Industrial - economy rate sales                  4,034                                 7,239
                           Industrial - firm rate sales                    (8,212)                              (18,996)
                           Transmission revenue                               626                                   626
                           Texas base rate reductions                      (4,566)                               (9,982)
                           Other revenue                                   (3,110)                                5,318
                                                                      -----------                           -----------
                              Operating revenues increase               $   2,390                             $  11,478
                                                                        =========                             =========

</TABLE>


         Current quarter and current nine months  operating  revenues  increased
$2.4 million and $11.5 million,  respectively  as compared to the  corresponding
1997 periods.  Operating  revenue increased due to  hotter-than-normal  weather,
increased economy  industrial sales,  customer growth,  and increased prices for
recovery  of  purchased  power  passed  through  to  customers.  The  loss  of a
significant  industrial customer to  self-generation,  decreased power marketing
sales in the third  quarter,  and the effects of the  approved  Transition  Plan
partially offset the increase.  The Transition Plan effects are identified above
as "Texas base rate reductions",  and include $7.9 million recorded to implement
the Transition  plan rate structure,  $0.6 million to recognize  excess earnings
under the  earnings  cap,  and $1.5  million to provide for a one-time  customer
refund.
<PAGE>

         The following table  summarizes the components of  gigawatt-hour  (GWH)
sales.
<TABLE>
<CAPTION>

                                                Three Months Ended September 30,       Nine Months Ended September 30,
                                                                         Increase                               Increase
                                                 1998         1997      (Decrease)         1998       1997     (Decrease)
                                               --------     ---------   ----------     ----------  ---------   ----------
<S>                                            <C>          <C>         <C>            <C>         <C>         <C>
         GWH sales:
         Residential                                897           796         101          1,917      1,741        176
         Commercial                                 590           538          52          1,435      1,339         96
         Industrial:
           Firm                                     108           315        (207)           406        869       (463)
           Economy                                1,155         1,115          40          3,384      3,260        124
         Other                                      106           296        (190)           429        389         40
                                               --------     ---------    --------     ----------    -------   --------

               Total GWH sales                    2,856         3,060        (204)         7,571      7,598        (27)
                                               ========     =========    ========     ==========    =======   ========
</TABLE>

         Current quarter sales decreased 204 GWHs (or 7%), from 1997 levels, due
to the movement of a  significant  industrial  customer to  self-generation  and
decreased  off-system  sales.  This decrease was  partially  offset by increased
residential and commercial sales due to hotter-than-normal  weather and customer
growth.  Sales for the current nine months were comparable to the same period in
1997.

   Operating Expenses

         The following table summarizes the components of TNMP's total operating
expenses (in thousands).
<TABLE>
<CAPTION>
                                                Three Months Ended September 30,       Nine Months Ended September 30,
                                                                         Increase                                Increase
                                                 1998         1997      (Decrease)          1998      1997      (Decrease)
                                              ---------     ---------   ----------     ----------- ----------   ----------
<S>                                           <C>           <C>         <C>            <C>         <C>          <C>
         Direct expenses:
           Purchased power                    $  91,486     $  81,372   $  10,114      $  214,241  $  194,591    $ 19,650
           Fuel                                  13,005        14,577      (1,572)         30,507      33,486      (2,979)
                                              ---------     ---------   ----------     ----------  ----------   ----------
         Total direct items                     104,491        95,949       8,542         244,748     228,077      16,671


         Other operating expenses                30,839        31,740        (901)         95,466      92,237       3,229

         Income and other tax expenses           20,488        21,312        (824)         44,556      43,957         599
                                            -----------  ------------    --------    ------------------------  ----------

         Operating expenses                   $ 155,818    $  149,001   $   6,817      $  384,770  $  364,271    $ 20,499
                                              =========    ==========   =========      ==========  ==========    ========
</TABLE>
     Overall,  current  quarter  and  current  nine  months  operating  expenses
increased  by $6.8 million and $20.5  million,  respectively,  due  primarily to
increased purchased power expenses.

   Direct Expenses

         Direct expenses consist of purchased power and pass-through fuel costs.
Purchased  power  costs  include  both  demand  and  energy  charges.  Under the
Transition Plan,  demand charges for purchased power are in base rates. See Note
3. Those demand charges are no longer passed directly through to customers.

         Purchased  Power.  Purchased  power costs increased by $10.1 million in
the  current  quarter,  and by $19.7  million in the  current  nine  months,  as
compared  to the same  periods  in 1997.  The  increases  were due to  increased
purchased   power  expenses  during  the   hotter-than-normal   summer  weather,
recognition  of demand  expenses in compliance  with the  Transition  Plan,  and
settlement  of a  billing  dispute.  Effective  with  the new  rates  under  the
Transition Plan, approximately half of the $214.2 million of purchased power for
the current  nine months will be  passed-through  directly to  customers  via an
adjustment  clause.  The remaining half will be recovered through base rates and
is  not  subject  to  adjustment  or  future  reconciliation.   Therefore,   any
difference,  between the remaining half, and the amount recovered through TNMP's
rates related to it, has affected operating income.

         Fuel.  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.  Fuel expense for the current quarter was
$1.6 million  lower as compared to the  corresponding  1997 quarter due to lower
firm  industrial  sales,  partially  offset by increases in recovery from higher
residential and commercial  sales.  The decrease of $3.0 million in fuel expense
for the current nine months occurred for the same reasons.
<PAGE>

   Other Operating Expenses, Income and Other Tax Expenses

         Other operating  expenses for the current quarter decreased slightly as
compared to the prior year  quarter.  Other  operating  expenses for the current
nine months increased by $3.2 million due to the write-off in the second quarter
of previously  deferred  Transition Plan expenses of $3.3 million ($2.2 million,
net of  taxes),  and  additional  depreciation,  recorded  as a result of excess
earnings under the earnings cap, of $0.6 million ($0.4 million, net of tax). See
Note 3.

         Current  quarter  income and other tax expenses were $0.8 million lower
than the corresponding 1997 period, due to greater utilization of investment tax
credits and larger tax deductions for dividends received. Income and other taxes
increased  $0.6  million  during the current nine months over the same period in
1997, due to higher state income taxes and franchise taxes.

   Interest Expense

         Interest  charges  decreased by $1.2 million for the quarter,  and $3.0
million for the nine months ended September 30, 1998, due to reduced debt levels
under the credit facilities discussed below.

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 higher for the nine months ended  September 30, 1998, as compared
to the  corresponding  1997 period.  Cash flow from operations  increased due to
higher receipts from customers and lower payments for interest, offset by higher
payments for purchased power.  TNP's  consolidated cash flow from operations for
the current  nine months was  comparable  to 1997,  as  increased  expenses  for
nonregulated activities offset increased cash flow from TNMP.

         In November 1998,  TNP entered into a new credit  facility with a total
commitment  of $50  million.  Borrowings  under  this  facility  can be used for
investing in TNP's  subsidiaries,  payment of  dividends to TNP's  shareholders,
investing in nonregulated businesses, and other general corporate purposes.

         TNMP has two credit facilities, which originally had a total commitment
of $250 million - the 1995 Facility  ($150  million) and the 1996 Facility ($100
million).  As of September 16, 1998, TNMP permanently reduced the commitments on
both  facilities  - the 1995  Facility  commitment  is $100 million and the 1996
Facility is $80 million. As of September 30, 1998, available unused credit under
the  1995  Facility  was  $100  million,   subject  to  interest   coverage  and
capitalization  tests.  Available credit under the 1996 Facility is $18 million.
The  interest  rates  under both  facilities  are based on the London  Interbank
Offered  Rate  (LIBOR).  The  interest  rate  margins  on both  facilities  have
decreased  since the ratings on TNMP's First  Mortgage Bonds have improved based
on recent announcements by the rating agencies.

         TNMP has $130  million of secured  debentures  which  mature in January
1999. TNMP has filed a shelf registration with the SEC authorizing TNMP to issue
up to $200 million of new debt.  Management  believes that this new debt,  along
with cash flow from  operations  and  periodic  borrowings  under its  revolving
credit facilities, should be sufficient to meet working capital requirements and
planned capital expenditures at least through 1999.

Other Matters

   Year 2000

         TNP is actively  addressing  the Year 2000 Issue (Y2K)  throughout  its
operating and office environments. Many existing computer programs were designed
and  developed  to use only two digits to identify a year in the date field.  If
not addressed, these computer systems could fail, with possible material adverse
effects on TNP's operations.

         TNP's  information  technology staff and a team of  professionals  from
throughout  the company have been  working for over a year to identify,  assess,
correct,  and test these  software  applications  and  embedded  systems.  TNP's
project to analyze Y2K has included the following phases: awareness, assessment,
renovation and validation, and implementation.

         Awareness  and  Assessment.  In its analysis to identify and assess Y2K
impact on company systems,  TNP has conducted  extensive  studies to analyze the
impact of Y2K to all operating  systems.  As a result of these studies,  TNP has
developed a Y2K  mitigation  plan. The plan requires TNP to amend,  replace,  or
upgrade most of its primary corporate  information  systems,  some of which were
already  being  replaced or upgraded  pursuant to a previously  approved plan to
replace or upgrade such systems.


<PAGE>



         Renovation  and Validation of Information  Technology  Systems.  TNP is
currently  implementing its Y2K mitigation plan. To date,  approximately  75% of
TNP's  infrastructure  supporting  its  business  systems  has been  tested  and
verified as Y2K compliant.  TNP expects to have the remaining infrastructure Y2K
compliant  by the end of the first  quarter of 1999.  TNP expects the  financial
management systems to be renovated, tested and implemented by the fourth quarter
of 1998. A new customer  information  system is expected to be  implemented  and
tested  by  mid-third  quarter  1999 and  other  corporate  information  systems
directly  related to TNP's operations are expected to be installed and tested by
September  1999. TNP  incorporates  unit testing,  system  testing,  integration
testing and acceptance testing into the verification methodology.

         Cost.  The  incremental   cost  of  compliance  of  TNP's   information
technology  systems with respect to Y2K is approximately  $8.7 million,  but TNP
does not expect this incremental cost to have a material impact on its financial
position  or results of  operations.  TNP  continues  to work with key  software
vendors and outside consultants to validate its Y2K compliance project. To date,
TNP has spent approximately $2.7 million on Y2K remediation. With respect to its
information  technology  system,  5% of the cost to date was to repair  software
systems and 95% was to replace non-compliant systems or hardware. TNP has in the
past used,  and expects to continue to use,  cash flow from  operations  to fund
costs associated with Y2K.

         Non-information Technology Systems. TNP conducted an initial assessment
of its  non-information  technology  systems  in  August  1998.  The  assessment
included those systems related to the production,  transmission and distribution
of electric  power.  In October  1998,  TNP hired an  engineering  consultant to
reassess all of its non-information  technology systems.  This reassessment will
ensure that TNP has  identified all of its critical  system  components and will
determine  the need for and the extent of any  necessary  modifications  to such
systems. Until such studies have been completed,  TNP cannot estimate the timing
of, or costs associated with, any potential future renovations,  validations and
implementations.

         Third Party  Vendors.  In addition to its own  mitigation  plan, TNP is
actively working with its key vendors and other third parties with which TNP has
a material  relationship  to assist such  parties in achieving  compliance  with
respect to Y2K in those systems affecting TNP's operations. Such parties include
electric power  providers in Texas and New Mexico;  the fuel, ash disposal,  and
limestone  contractors  at  TNP  One;  transmission  and  distribution  material
suppliers;  and banking  partners.  Although TNP believes  that such persons are
working  diligently  to properly  address Y2K, TNP cannot  guarantee  that these
third-party  systems will be timely  converted,  or that a failure to convert by
another company or a conversion that is incompatible  with TNP's systems,  would
not have a material adverse effect on TNP.

         Contingency  Plans. The primary  operating  processes of TNP's business
(e.g.,  the production,  transmission,  and  distribution of electric power) are
subject  to  contingencies  related to  weather,  equipment  failure,  and other
factors.  TNP has in place a number of contingency  plans for dealing with these
circumstances,  and believes that many of the plans are readily  adaptable  Y2K.
TNP expects to adapt those plans to Y2K by March 1999.


                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

Regulatory Matters

         See Note 3.

Legal Proceedings

         See Note 5.

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

(a)      Exhibits

         The following exhibits are filed with this report:

                  10(a)  Amendment  No. 1, dated  October 28, 1998, to Revolving
                  Credit Facility Agreement, dated as of November 3, 1995, among
                  TNMP,  certain  lenders,  and  The  Chase  National  Bank  (as
                  successor by merger to Chemical Bank), as Administrative Agent
                  and Collateral Agent.


<PAGE>



                  10(b) Credit Agreement dated as of November 6, 1998, among TNP
                  Enterprises, Inc., NationsBank, N. A., as Administrative Agent
                  and  a  Lender,   The  First   National  Bank  of  Chicago  as
                  Syndication Agent and a Lender,  and Union Bank of California,
                  N. A., as a Lender.

         27(a)    Financial Data Schedule for TNP.

         27(b)    Financial Data Schedule for TNMP.


(b)      Reports  on Form 8-K:  TNP filed a report on Form 8-K dated  October 9,
         1998, to disclose and file TNP's Amended & Restated  Shareholder Rights
         Plan.


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,  the  potential  recovery of stranded  costs and
implementation  of the  transition  plan,  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's  and  TNMP's  businesses;  results  of  regulatory
proceedings  affecting  TNP's and  TNMP's  operations;  future  acquisitions  or
strategic  partnerships;  changes in general  business and economic  conditions,
particularly  in the geographic  areas in which TNMP does  business;  changes in
plans to refinance  maturing  debt;  the  effectiveness  of TNP's Y2K mitigation
plan, and the timely Y2K compliance by TNP's and TNMP's vendors;  changes in the
availability  and  pricing  of  purchased  power  supplies;  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.


                                   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


                              By \s\ MANJIT S. CHEEMA
                               Manjit S. Cheema
Date: November 13, 1998        Senior Vice President and Chief Financial Officer


                              By \s\ MICHAEL J. RICKETTS
                               Michael J. Ricketts
Date: November 13, 1998        Controller and as Chief Accounting Officer