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| **UNITED                  STATES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SECURITIES                  AND EXCHANGE COMMISSION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Washington,                  D.C. 20549                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| **FORM                  10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| (Mark                  One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| [X]                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| SECURITIES                  EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **For                  the quarterly period ended****June                  30, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| -                  OR                  -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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| [                  ]                  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF                  THE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| SECURITIES                  EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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| For                  the transition period from _______________ to                  _________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |
| **Commission**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | **Name                  of Registrants, State of Incorporation,** |   | **I.R.S.                  Employer** |
| **File                  Number**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | **Address                  and Telephone Number** |   | **Identification                  No.** |
| 001-32462                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | PNM                  Resources, Inc. |   | 85-0468296 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (A                  New Mexico Corporation) |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Alvarado                  Square |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Albuquerque,                  New Mexico 87158 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (505)                  241-2700 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |
| 001-06986                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Public                  Service Company of New Mexico |   | 85-0019030 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (A                  New Mexico Corporation) |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Alvarado                  Square |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Albuquerque,                  New Mexico 87158 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (505)                  241-2700 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |
| 002-97230                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Texas-New                  Mexico Power Company |   | 75-0204070 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (A                  Texas Corporation) |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 4100                  International Plaza, |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | P.O.                  Box 2943 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Fort                  Worth, Texas 76113 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (817)                  731-0099 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Indicate                  by check mark whether PNM Resources, Inc. (“PNMR”) and Public Service                  Company of New Mexico (“PNM”) (1) have 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) have                  been subject to such filing requirements for the past 90 days.                  YES                  üNO                      Indicate                  by check mark whether Texas New Mexico Power Company (“TNMP”) (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                                        NOü  (NOTE:                  As a voluntary filer, not subject to the filing requirements, TNMP                  filed                  all reports under Section 13 or 15(d) of the Securities Exchange                  Act of                  1934 during the preceding 12                  months.) |

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| Large                  accelerated filer ü | Accelerated                  filer                        | Non-accelerated                  filer         |
|-------------------------------------------------|-------------------------------------------------------------------------------|----------------------------------------------------------------------------------------|

| Large                  accelerated filer         | Accelerated                  filer          | Non-accelerated                  filer ü |
|------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|-----------------------------------------------|

**PNM        AND TNMP MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS (H) (1) (a)        AND        (b) OF FORM 10-Q AND ARE THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE        FORMAT PURSUANT TO GENERAL INSTRUCTION (H) (2).**

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**PNM      RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC      SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW      MEXICO POWER COMPANY AND SUBSIDIARIES**

**INDEX**

|                                                                                             | **Page                No.** |
|--------------------------------------------------------------------------------------------------|-----------------------------|
| GLOSSARY                                                                                         | 1                           |
|                                                                                             |                        |
| **PART                I. FINANCIAL INFORMATION:**                                                |                        |
|                                                                                             |                        |
| ITEM                1. FINANCIAL STATEMENTS (Unaudited)                                          |                        |
|                                                                                             |                        |
| PNM                Resources, Inc. and Subsidiaries                                              |                        |
| Condensed                Consolidated Statements of Earnings                                     |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 3                           |
| Condensed                Consolidated Balance Sheets                                             |                        |
| June                30, 2006 and December 31, 2005                                               | 4                           |
| Condensed                Consolidated Statements of Cash Flows                                   |                        |
| Six                Months Ended June 30, 2006 and 2005                                           | 6                           |
| Condensed                Consolidated Statements of Comprehensive Income                         |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 8                           |
| Public                Service Company of New Mexico and Subsidiary                               |                        |
| Condensed                Consolidated Statements of Earnings                                     |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 9                           |
| Condensed                Consolidated Balance Sheets                                             |                        |
| June                30, 2006 and December 31, 2005                                               | 10                          |
| Condensed                Consolidated Statements of Cash Flows                                   |                        |
| Six                Months Ended June 30, 2006 and 2005                                           | 12                          |
| Condensed                Consolidated Statements of Comprehensive Income                         |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 14                          |
| Texas-New                Mexico Power Company and Subsidiaries                                   |                        |
| Condensed                Consolidated Statements of Earnings                                     |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 15                          |
| Condensed                Consolidated Balance Sheets                                             |                        |
| June                30, 2006 and December 31, 2005                                               | 17                          |
| Condensed                Consolidated Statements of Cash Flows                                   |                        |
| Six                Months Ended June 30, 2006 and 2005                                           | 19                          |
| Condensed                Consolidated Statements of Comprehensive Income                         |                        |
| Three                and Six Months Ended June 30, 2006 and 2005                                 | 21                          |
| Notes                to Condensed Consolidated Financial Statements                              | 23                          |
|                                                                                             |                        |
| ITEM                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL                   | 68                          |
| CONDITION                AND RESULTS OF OPERATIONS                                               |                        |
|                                                                                             |                        |
| ITEM                3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK | 106                         |
|                                                                                             |                        |
| ITEM                4. CONTROLS AND PROCEDURES                                                   | 112                         |
|                                                                                             |                        |
| **PART                II. OTHER INFORMATION:**                                                   |                        |
|                                                                                             |                        |
| ITEM                1. LEGAL PROCEEDINGS                                                         | 114                         |
|                                                                                             |                        |
| ITEM                1A. RISK FACTORS                                                             | 114                         |
|                                                                                             |                        |
| ITEM                4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                        | 114                         |
|                                                                                             |                        |
| ITEM                5. OTHER EVENTS                                                              | 114                         |
|                                                                                             |                        |
| ITEM                6. EXHIBITS                                                                  | 115                         |
|                                                                                             |                        |
| Signature                                                                                        | 116                         |

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**GLOSSARY**

| Afton                             | Afton                Generating Station                                                                                                                         |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ALJ                               | Administrative                Law Judge                                                                                                                         |
| Altura                            | Altura                Power L.P.                                                                                                                                |
| APB                               | Accounting                Principles Board                                                                                                                      |
| APS                               | Arizona                Public Service Company                                                                                                                   |
| Avistar                           | Avistar,                Inc.                                                                                                                                    |
| Board                             | Board                of Directors                                                                                                                               |
| BTU                               | British                Thermal Unit                                                                                                                             |
| Cal                PX             | California                Power Exchange                                                                                                                        |
| Cal                ISO            | California                Independent System Operator                                                                                                           |
| Company                           | PNM                Resources, Inc. and Subsidiaries                                                                                                             |
| Constellation                     | Constellation                Energy Commodities Group, Inc.                                                                                                     |
| Decatherm                         | 1,000,000                BTUs                                                                                                                                   |
| Delta                             | Delta-Person                Limited Partnership                                                                                                                 |
| EaR                               | Earnings                at Risk                                                                                                                                 |
| EIP                               | Eastern                Interconnection Project                                                                                                                  |
| EITF                              | Emerging                Issues Task Force                                                                                                                       |
| EPA                               | United                States Environmental Protection Agency                                                                                                    |
| EPE                               | El                Paso Electric Company                                                                                                                         |
| ERCOT                             | Electric                Reliability Council of Texas                                                                                                            |
| ESPP                              | Employee                Stock Purchase Plan                                                                                                                     |
| FASB                              | Financial                Accounting Standards Board                                                                                                             |
| FCPSP                             | First                Choice Power Special Purpose, L.P.                                                                                                         |
| Federal                Funds Rate | Overnight                Rate on Federal funds transactions with members of the Federal Reserve                System, as published by the Federal Reserve Bank |
| FERC                              | Federal                Energy Regulatory Commission                                                                                                             |
| First                Choice       | First                Choice Power, L. P. and Subsidiaries                                                                                                       |
| Four                Corners       | Four                Corners Power Plant                                                                                                                         |
| GAAP                              | Generally                Accepted Accounting Principles in the United States                of America                                                          |
| LIBOR                             | London                Interbank Offered Rate                                                                                                                    |
| Lordsburg                         | Lordsburg                Generating Station                                                                                                                     |
| Luna                              | Luna                Energy Facility                                                                                                                             |
| MMBTUs                            | Million                British Thermal Units                                                                                                                    |
| Moody's                           | Moody’s                Investor Services, Inc.                                                                                                            |
| MW                                | Megawatt                                                                                                                                                        |
| MWh                               | Megawatt                Hour                                                                                                                                    |
| NMPRC                             | New                Mexico Public Regulation Commission                                                                                                          |
| NSPS                              | New                Source Performance Standards                                                                                                                 |
| NSR                               | New                Source Review                                                                                                                                |
| OASIS                             | Open                Access Same Time Information System                                                                                                         |
| OATT                              | Open                Access Transmission Tariff                                                                                                                  |
| OMOI                              | Office                of Market Oversight and Investigation                                                                                                     |
| O&M                           | Operations                and Maintenance                                                                                                                       |
| PEP                               | PNMR                Omnibus Performance Equity Plan                                                                                                             |
| PGAC                              | Purchased                Gas Adjustment Clause                                                                                                                  |
| PNM                               | Public                Service Company of New Mexico and Subsidiary                                                                                              |
| PNMR                              | PNM                Resources, Inc. and Subsidiaries                                                                                                             |
| PPA                               | Power                Purchase Agreement                                                                                                                         |
| PUCT                              | Public                Utility Commission of Texas                                                                                                               |

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| PVNGS                    | Palo                Verde Nuclear Generating Station                         |
|--------------------------|------------------------------------------------------------------------------|
| Reeves                   | Reeves                Generating Station                                     |
| REP                      | Retail                Electricity Provider                                   |
| RMC                      | Risk                Management Committee                                     |
| RMRR                     | Routine                Maintenance, Repair or Replacement                    |
| SDG&E                | San                Diego Gas and Electric Company                            |
| SEC                      | United                States Securities and Exchange Commission              |
| Sempra                   | Sempra                Generation, a subsidiary of Sempra Energy              |
| SESCO                    | San                Angelo Electric Service Company                           |
| SFAS                     | Statement                of Financial Accounting Standards                   |
| SJCC                     | San                Juan Coal Company                                         |
| SJGS                     | San                Juan Generating Station                                   |
| S&P                  | Standard                and Poors Ratings Services                           |
| SPS                      | Southwestern                Public Service Company                           |
| TCEQ                     | Texas                Commission on Environmental Quality                     |
| TECA                     | Texas                Electric Choice Act                                     |
| TNMP                     | Texas-New                Mexico Power Company and Subsidiaries               |
| TNP                      | TNP                Enterprises, Inc. and Subsidiaries                        |
| Throughput               | Volumes                of gas delivered, whether or not owned by the Company |
| Twin                Oaks | Assets                of Twin Oaks Power, L.P. and Twin Oaks Power III, L.P. |
| VaR                      | Value                at Risk                                                 |
| WSPP                     | Western                Systems Power Pool                                    |

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**ITEM        1. FINANCIAL STATEMENTS**

**PNM        RESOURCES, INC. AND SUBSIDIARIES**

**CONDENSED        CONSOLIDATED STATEMENTS OF EARNINGS**

|                                                                                                                                             |   | **Three                Months Ended**                   |    | **Six                Months Ended** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|---------|-------------------------------------|--------|
|                                                                                                                                             |   | **June                30,**                             |    | **June                30,**         |   |
|                                                                                                                                             |   | **2006**                                                |    | **2005**                            |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands, except per share amounts) |    |
| **Operating                Revenues:**                                                                                                           |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| Electric                                                                                                                                         |   | $                                                       | 477,603 |                                | $      | 322,676 |   | $ | 925,819 |   | $ | 585,119 |   |
| Gas                                                                                                                                              |   |                                                    | 68,869  |                                |   | 82,261 |   |   | 276,345 |   |   | 247,494 |   |
| Other                                                                                                                                            |   |                                                    | 197     |                                |   | 317 |   |   | 306 |   |   | 554 |   |
| Total                operating revenues                                                                                                          |   |                                                    | 546,669 |                                |   | 405,254 |   |   | 1,202,470 |   |   | 833,167 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Operating                Expenses:**                                                                                                           |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| Cost                of energy sold                                                                                                               |   |                                                    | 306,500 |                                |   | 238,191 |   |   | 732,472 |   |   | 485,669 |   |
| Administrative                and general                                                                                                        |   |                                                    | 66,311  |                                |   | 52,786 |   |   | 131,616 |   |   | 94,095 |   |
| Energy                production costs                                                                                                           |   |                                                    | 43,714  |                                |   | 39,805 |   |   | 81,301 |   |   | 75,838 |   |
| Depreciation                and amortization                                                                                                     |   |                                                    | 37,953  |                                |   | 35,637 |   |   | 72,283 |   |   | 64,464 |   |
| Transmission                and distribution costs                                                                                               |   |                                                    | 21,314  |                                |   | 15,051 |   |   | 40,364 |   |   | 29,113 |   |
| Taxes,                other than income taxes                                                                                                    |   |                                                    | 18,261  |                                |   | 10,571 |   |   | 35,225 |   |   | 19,442 |   |
| Income                taxes                                                                                                                      |   |                                                    | 6,190   |                                |   | (3,367 | ) |   | 16,437 |   |   | 10,024 |   |
| Total                operating expenses                                                                                                          |   |                                                    | 500,243 |                                |   | 388,674 |   |   | 1,109,698 |   |   | 778,645 |   |
| Operating                income                                                                                                                  |   |                                                    | 46,426  |                                |   | 16,580 |   |   | 92,772 |   |   | 54,522 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Other                Income and Deductions:**                                                                                                  |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                                   |   |                                                    | 8,916   |                                |   | 11,622 |   |   | 19,067 |   |   | 20,922 |   |
| Other                income                                                                                                                      |   |                                                    | 1,922   |                                |   | 2,634 |   |   | 5,089 |   |   | 6,344 |   |
| Carrying                charges on regulatory assets                                                                                             |   |                                                    | 2,004   |                                |   | 525 |   |   | 3,977 |   |   | 525 |   |
| Other                deductions                                                                                                                  |   |                                                    | (2,497  | )                                   |   | (1,542 | ) |   | (4,013 | ) |   | (3,678 | ) |
| Other                income taxes                                                                                                                |   |                                                    | (3,834  | )                                   |   | (4,677 | ) |   | (8,935 | ) |   | (8,561 | ) |
| Net                other income and deductions                                                                                                   |   |                                                    | 6,511   |                                |   | 8,562 |   |   | 15,185 |   |   | 15,552 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Interest                Charges**                                                                                                              |   |                                                    | 36,498  |                                |   | 21,533 |   |   | 65,061 |   |   | 35,824 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Preferred                Stock Dividend Requirements of**                                                                                      |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Subsidiary**                                                                                                                                   |   |                                                    | 132     |                                |   | 2,068 |   |   | 264 |   |   | 2,200 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $                                                       | 16,307  |                                | $      | 1,541 |   | $ | 42,632 |   | $ | 32,050 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Net                Earnings per Common Share (see Note 5):**                                                                                   |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Basic**                                                                                                                                        |   | $                                                       | 0.24    |                                | $      | 0.02 |   | $ | 0.62 |   | $ | 0.51 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Diluted**                                                                                                                                      |   | $                                                       | 0.23    |                                | $      | 0.02 |   | $ | 0.61 |   | $ | 0.50 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| **Dividends                Declared per Common Share**                                                                                           |   | $                                                       | 0.22    |                                | $      | 0.19 |   | $ | 0.44 |   | $ | 0.37 |   |
|                                                                                                                                             |   |                                                    |    |                                |   |   |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES**                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                         |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **ASSETS**                                                                                                                                       |   |   |   |   |   |
| **Utility                Plant:**                                                                                                                |   |   |   |   |   |
| Electric                plant in service                                                                                                         |   | $ | 4,020,138 |   | $ | 3,315,642 |   |
| Gas                plant in service                                                                                                              |   |   | 728,494 |   |   | 711,823 |   |
| Common                plant in service and plant held for future use                                                                             |   |   | 144,764 |   |   | 135,849 |   |
|                                                                                                                                             |   |   | 4,893,396 |   |   | 4,163,314 |   |
| Less                accumulated depreciation and amortization                                                                                    |   |   | 1,428,793 |   |   | 1,374,599 |   |
|                                                                                                                                             |   |   | 3,464,603 |   |   | 2,788,715 |   |
| Construction                work in progress                                                                                                     |   |   | 144,514 |   |   | 168,195 |   |
| Nuclear                fuel, net of accumulated amortization of $13,758 and                $14,679                                               |   |   | 28,086 |   |   | 27,182 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Net                utility plant                                                                                                                 |   |   | 3,637,203 |   |   | 2,984,092 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Other                Property and Investments:**                                                                                               |   |   |   |   |   |   |   |
| Investment                in lessor notes                                                                                                        |   |   | 271,000 |   |   | 286,678 |   |
| Other                investments                                                                                                                 |   |   | 137,020 |   |   | 180,013 |   |
| Non-utility                property, net of accumulated depreciation of $2,372 and                $22                                            |   |   | 7,898 |   |   | 4,214 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                other property and investments                                                                                              |   |   | 415,918 |   |   | 470,905 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Current                Assets:**                                                                                                               |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                         |   |   | 73,890 |   |   | 68,199 |   |
| Special                deposits                                                                                                                  |   |   | 5,159 |   |   | 534 |   |
| Accounts                receivable, net of allowance for uncollectible accounts of $4,856                and                $3,653               |   |   | 127,726 |   |   | 128,834 |   |
| Unbilled                revenues                                                                                                                 |   |   | 100,900 |   |   | 151,773 |   |
| Other                receivables                                                                                                                 |   |   | 64,296 |   |   | 64,285 |   |
| Inventories                                                                                                                                      |   |   | 60,547 |   |   | 52,037 |   |
| Regulatory                assets                                                                                                                 |   |   | 830 |   |   | 28,058 |   |
| Other                current assets                                                                                                              |   |   | 108,087 |   |   | 102,577 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                current assets                                                                                                              |   |   | 541,435 |   |   | 596,297 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Deferred                Charges:**                                                                                                             |   |   |   |   |   |   |   |
| Regulatory                assets                                                                                                                 |   |   | 357,106 |   |   | 347,279 |   |
| Prepaid                pension cost                                                                                                              |   |   | 93,471 |   |   | 91,444 |   |
| Goodwill                                                                                                                                         |   |   | 495,441 |   |   | 499,155 |   |
| Other                intangible assets, net of accumulated amortization of $1,397 and                $742                                        |   |   | 102,857 |   |   | 78,512 |   |
| Other                deferred charges                                                                                                            |   |   | 94,112 |   |   | 57,025 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                deferred charges                                                                                                            |   |   | 1,142,987 |   |   | 1,073,415 |   |
|                                                                                                                                             |   | $ | 5,737,543 |   | $ | 5,124,709 |   |
|                                                                                                                                             |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES**                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                         |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |   |   |
|                                                                                                                                             |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **CAPITALIZATION                AND LIABILITIES**                                                                                                |   |   |   |   |   |
| **Capitalization:**                                                                                                                              |   |   |   |   |   |
| Common                stockholders’ equity:                                                                                                |   |   |   |   |   |
| Common                stock outstanding (no par value, 120,000,000 shares authorized:                issued                                      |   |   |   |   |   |
| 69,216,719                and 68,786,286 at June 30, 2006 and December 31, 2005,                respectively)                                    |   | $ | 826,899 |   | $ | 813,425 |   |
| Accumulated                other comprehensive loss, net of tax                                                                                  |   |   | (99,168 | ) |   | (91,589 | ) |
| Retained                earnings                                                                                                                 |   |   | 592,115 |   |   | 564,623 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                common stockholders’ equity                                                                                           |   |   | 1,319,846 |   |   | 1,286,459 |   |
| Cumulative                preferred stock of subsidiary without mandatory redemption                                                             |   |   |   |   |   |   |   |
| ($100                stated value, 10,000,000 shares authorized: issued 115,293                at                                                |   |   |   |   |   |   |   |
| June                30, 2006 and December 31, 2005)                                                                                              |   |   | 11,529 |   |   | 11,529 |   |
| Long-term                debt                                                                                                                    |   |   | 1,743,555 |   |   | 1,746,395 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                capitalization                                                                                                              |   |   | 3,074,930 |   |   | 3,044,383 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Current                Liabilities:**                                                                                                          |   |   |   |   |   |   |   |
| Short-term                debt                                                                                                                   |   |   | 842,500 |   |   | 332,200 |   |
| Accounts                payable                                                                                                                  |   |   | 136,504 |   |   | 206,648 |   |
| Accrued                interest and taxes                                                                                                        |   |   | 63,720 |   |   | 27,815 |   |
| Regulatory                liabilities                                                                                                            |   |   | 1,600 |   |   | 7,085 |   |
| Other                current liabilities                                                                                                         |   |   | 259,554 |   |   | 149,748 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                current liabilities                                                                                                         |   |   | 1,303,878 |   |   | 723,496 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Long-Term                Liabilities:**                                                                                                        |   |   |   |   |   |   |   |
| Accumulated                deferred income taxes                                                                                                 |   |   | 433,049 |   |   | 451,263 |   |
| Accumulated                deferred investment tax credits                                                                                       |   |   | 31,989 |   |   | 33,806 |   |
| Regulatory                liabilities                                                                                                            |   |   | 395,000 |   |   | 402,253 |   |
| Asset                retirement obligations                                                                                                      |   |   | 58,175 |   |   | 55,646 |   |
| Accrued                pension liability and postretirement benefit cost                                                                         |   |   | 223,930 |   |   | 227,202 |   |
| Other                deferred credits                                                                                                            |   |   | 216,592 |   |   | 186,660 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                long-term liabilities                                                                                                       |   |   | 1,358,735 |   |   | 1,356,830 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Commitments                and Contingencies (see Note 9)                                                                                        |   |   | - |   |   | - |   |
|                                                                                                                                             |   | $ | 5,737,543 |   | $ | 5,124,709 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES**                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                               |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |   |   |   |   |
|                                                                                                                                             |   | **Six                Months Ended** |   |
|                                                                                                                                             |   | **June                30,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **Cash                Flows From Operating Activities:**                                                                                         |   |   |   |   |   |
| Net                earnings                                                                                                                      |   | $ | 42,632 |   | $ | 32,050 |   |
| Adjustments                to reconcile net earnings to net cash flows from operating                activities:                                 |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                     |   |   | 81,465 |   |   | 69,510 |   |
| Allowance                for equity funds used during construction                                                                               |   |   | (73 | ) |   | (1,196 | ) |
| Accumulated                deferred income tax                                                                                                   |   |   | (7,920 | ) |   | 4,381 |   |
| Net                unrealized (gains)/losses on trading and marketing                securities                                                  |   |   | 1,864 |   |   | (812 | ) |
| Realized                gains on investment securities                                                                                           |   |   | (1,839 | ) |   | (2,229 | ) |
| Carrying                charges on deferred stranded costs                                                                                       |   |   | (3,978 | ) |   | (525 | ) |
| Interest                on retail competition transition obligation                                                                              |   |   | 885 |   |   | - |   |
| Carrying                charges on other regulatory assets and liabilities                                                                       |   |   | (1,829 | ) |   | (1,317 | ) |
| Amortization                of fair value of acquired Twin Oaks sales contract                                                                   |   |   | (16,878 | ) |   | - |   |
| Amortization                of emissions allowances                                                                                              |   |   | 832 |   |   | - |   |
| Amortization                of fair value of acquired First Choice contracts                                                                     |   |   | (2,780 | ) |   | (370 | ) |
| Stock                based compensation expense                                                                                                  |   |   | 5,513 |   |   | - |   |
| Excess                tax benefits from stock-based payment arrangements                                                                         |   |   | (908 | ) |   | - |   |
| Other,                net                                                                                                                        |   |   | 1,203 |   |   | 318 |   |
| Changes                in certain assets and liabilities, net of amounts                acquired:                                                |   |   |   |   |   |   |   |
| Accounts                receivable - customer                                                                                                    |   |   | 25,314 |   |   | 23,046 |   |
| Accounts                receivable - other                                                                                                       |   |   | (4,888 | ) |   | (5,918 | ) |
| Unbilled                revenues                                                                                                                 |   |   | 46,947 |   |   | 36,661 |   |
| Regulatory                assets                                                                                                                 |   |   | 21,120 |   |   | (9,087 | ) |
| Other                assets                                                                                                                      |   |   | (4,445 | ) |   | (1,561 | ) |
| Accrued                postretirement benefit costs                                                                                              |   |   | (5,299 | ) |   | (1,091 | ) |
| Accounts                payable                                                                                                                  |   |   | (88,241 | ) |   | (44,382 | ) |
| Accrued                interest and taxes                                                                                                        |   |   | 36,812 |   |   | 41,880 |   |
| Other                liabilities                                                                                                                 |   |   | (13,884 | ) |   | (25,921 | ) |
| Net                cash flows from operating activities                                                                                          |   |   | 111,625 |   |   | 113,437 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Cash                Flows From Investing Activities:**                                                                                         |   |   |   |   |   |   |   |
| Utility                plant additions                                                                                                           |   |   | (123,288 | ) |   | (74,790 | ) |
| Nuclear                fuel additions                                                                                                            |   |   | (5,280 | ) |   | (5,159 | ) |
| Proceeds                from sales of securities                                                                                                 |   |   | 45,322 |   |   | 41,910 |   |
| Purchases                of securities                                                                                                           |   |   | (45,738 | ) |   | (42,693 | ) |
| Return                of principal PVNGS lessor notes                                                                                            |   |   | 11,297 |   |   | 10,681 |   |
| Cash                acquired from purchase of TNP, net of cash paid                                                                              |   |   | - |   |   | 34,531 |   |
| Twin                Oaks business acquisition                                                                                                    |   |   | (481,015 | ) |   | - |   |
| Other,                net                                                                                                                        |   |   | 2,309 |   |   | 4,061 |   |
| Net                cash flows used for investing activities                                                                                      |   |   | (596,393 | ) |   | (31,459 | ) |
|                                                                                                                                             |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES**                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                               |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |   |   |   |   |
|                                                                                                                                             |   | **Six                Months Ended** |   |
|                                                                                                                                             |   | **June                30,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **Cash                Flows From Financing Activities:**                                                                                         |   |   |   |   |   |
| Short-term                borrowings (repayments), net                                                                                           |   |   | 30,300 |   |   | (74,000 | ) |
| Short-term                bridge loan for Twin Oaks acquisition                                                                                  |   |   | 480,000 |   |   | - |   |
| Long-term                debt borrowings                                                                                                         |   |   | - |   |   | 239,832 |   |
| Long-term                debt repayments                                                                                                         |   |   | - |   |   | (110,532 | ) |
| Issuance                of common stock                                                                                                          |   |   | 9,281 |   |   | 101,231 |   |
| Repurchase                of common stock-based payments                                                                                         |   |   | (1,965 | ) |   | (10,263 | ) |
| Excess                tax benefits from stock-based payment arrangements                                                                         |   |   | 908 |   |   | - |   |
| Dividends                paid                                                                                                                    |   |   | (29,029 | ) |   | (25,299 | ) |
| Other,                net                                                                                                                        |   |   | 964 |   |   | 2,820 |   |
| Net                cash flows from financing activities                                                                                          |   |   | 490,459 |   |   | 123,789 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Increase                in Cash and Cash Equivalents                                                                                             |   |   | 5,691 |   |   | 205,767 |   |
| Beginning                of Period                                                                                                               |   |   | 68,199 |   |   | 17,195 |   |
| End                of Period                                                                                                                     |   | $ | 73,890 |   | $ | 222,962 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Supplemental                Cash Flow Disclosures:**                                                                                           |   |   |   |   |   |   |   |
| Interest                paid, net of capitalized interest                                                                                        |   | $ | 67,495 |   | $ | 13,541 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Income                taxes paid (refunded), net                                                                                                 |   | $ | (11,586 | ) | $ | (16,176 | ) |
|                                                                                                                                             |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PNM                RESOURCES, INC. AND SUBSIDIARIES**                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONDENSED                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                                                                     |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |   |   |   |   |
|                                                                                                                                             |   | **Three                Months Ended** |   | **Six                Months Ended** |   |
|                                                                                                                                             |   | **June                30,** |   | **June                30,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   |   |   | (In                thousands) |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $ | 16,307 |   | $ | 1,541 |   | $ | 42,632 |   | $ | 32,050 |   |
| Other                Comprehensive Income (Loss):                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Unrealized                gain (loss) on securities**:                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gains (losses) arising during                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| the                period, net of tax (expense) benefit                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $154, $(437), $(6,953) and $(402)                                                                                              |   |   | (236 | ) |   | 667 |   |   | 10,610 |   |   | 612 |   |
| Reclassification                adjustment for gains included in                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                income, net of tax expense                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $606, $134, $427 and $662                                                                                                      |   |   | (924 | ) |   | (204 | ) |   | (652 | ) |   | (1,010 | ) |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Fair                value adjustment for certain**                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **derivative                transactions:**                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                in fair market value of designated                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash                flow hedges, net of tax (expense) benefit                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $2,557, $(1,996), $8,177 and $(3,975)                                                                                          |   |   | (5,130 | ) |   | 3,098 |   |   | (13,612 | ) |   | 6,118 |   |
| Reclassification                adjustment for (gains) losses                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| included                in net income, net of tax expense                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (benefit)                of $(2,059), $23, $2,619 and $849                                                                                       |   |   | 3,723 |   |   | (35 | ) |   | (3,925 | ) |   | (1,295 | ) |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Other Comprehensive Income (Loss)**                                                                                       |   |   | (2,567 | ) |   | 3,526 |   |   | (7,579 | ) |   | 4,425 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Comprehensive Income**                                                                                                    |   | $ | 13,740 |   | $ | 5,067 |   | $ | 35,053 |   | $ | 36,475 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNMR, are an integral part                of these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF EARNINGS**                                                                                |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |
|                                                                                                                                            |   | **Three                Months Ended** |   | **Six                Months Ended** |   |
|                                                                                                                                            |   | **June                30,** |   | **June                30,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   |   |   | (In                thousands) |   |   |   |
| **Operating                Revenues:**                                                                                                          |   |   |   |   |   |   |   |   |   |
| Electric                                                                                                                                        |   | $ | 259,298 |   | $ | 270,005 |   | $ | 570,765 |   | $ | 532,448 |   |
| Gas                                                                                                                                             |   |   | 68,869 |   |   | 82,261 |   |   | 276,345 |   |   | 247,494 |   |
| Total                operating revenues                                                                                                         |   |   | 328,167 |   |   | 352,266 |   |   | 847,110 |   |   | 779,942 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                Expenses:**                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                of energy sold                                                                                                              |   |   | 185,410 |   |   | 206,798 |   |   | 524,672 |   |   | 454,210 |   |
| Administrative                and general                                                                                                       |   |   | 40,520 |   |   | 42,496 |   |   | 81,648 |   |   | 82,975 |   |
| Energy                production costs                                                                                                          |   |   | 42,080 |   |   | 39,806 |   |   | 79,667 |   |   | 75,839 |   |
| Depreciation                and amortization                                                                                                    |   |   | 24,289 |   |   | 32,417 |   |   | 49,144 |   |   | 60,362 |   |
| Transmission                and distribution costs                                                                                              |   |   | 15,916 |   |   | 13,898 |   |   | 30,223 |   |   | 27,961 |   |
| Taxes,                other than income taxes                                                                                                   |   |   | 8,414 |   |   | 7,459 |   |   | 17,727 |   |   | 15,751 |   |
| Income                taxes                                                                                                                     |   |   | (1,254 | ) |   | (1,677 | ) |   | 13,708 |   |   | 12,966 |   |
| Total                operating expenses                                                                                                         |   |   | 315,375 |   |   | 341,197 |   |   | 796,789 |   |   | 730,064 |   |
| Operating                income                                                                                                                 |   |   | 12,792 |   |   | 11,069 |   |   | 50,321 |   |   | 49,878 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                Income and Deductions:**                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                                                                  |   |   | 8,670 |   |   | 9,097 |   |   | 18,023 |   |   | 18,303 |   |
| Other                income                                                                                                                     |   |   | 1,705 |   |   | 2,185 |   |   | 3,533 |   |   | 5,461 |   |
| Other                deductions                                                                                                                 |   |   | (1,504 | ) |   | (864 | ) |   | (2,355 | ) |   | (2,028 | ) |
| Other                income taxes                                                                                                               |   |   | (3,444 | ) |   | (4,220 | ) |   | (7,455 | ) |   | (8,061 | ) |
| Net                other income and deductions                                                                                                  |   |   | 5,427 |   |   | 6,198 |   |   | 11,746 |   |   | 13,675 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                Charges**                                                                                                             |   |   | 14,899 |   |   | 13,137 |   |   | 28,319 |   |   | 26,937 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                Earnings**                                                                                                                 |   |   | 3,320 |   |   | 4,130 |   |   | 33,748 |   |   | 36,616 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Preferred                Stock Dividend Requirements**                                                                                        |   |   | 132 |   |   | 132 |   |   | 264 |   |   | 264 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                Earnings Available for Common Stock**                                                                                      |   | $ | 3,188 |   | $ | 3,998 |   | $ | 33,484 |   | $ | 36,352 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                        |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |
|                                                                                                                                            |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   | (In                thousands) |   |
| **ASSETS**                                                                                                                                      |   |   |   |   |   |
| **Utility                Plant:**                                                                                                               |   |   |   |   |   |
| Electric                plant in service                                                                                                        |   | $ | 2,673,780 |   | $ | 2,576,182 |   |
| Gas                plant in service                                                                                                             |   |   | 728,494 |   |   | 711,823 |   |
| Common                plant in service and plant held for future use                                                                            |   |   | 72,806 |   |   | 74,857 |   |
|                                                                                                                                            |   |   | 3,475,080 |   |   | 3,362,862 |   |
| Less                accumulated depreciation and amortization                                                                                   |   |   | 1,241,740 |   |   | 1,205,386 |   |
|                                                                                                                                            |   |   | 2,233,340 |   |   | 2,157,476 |   |
| Construction                work in progress                                                                                                    |   |   | 115,161 |   |   | 137,663 |   |
| Nuclear                fuel, net of accumulated amortization of $13,758 and                $14,679                                              |   |   | 28,086 |   |   | 27,182 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Net                utility plant                                                                                                                |   |   | 2,376,587 |   |   | 2,322,321 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Other                Property and Investments:**                                                                                              |   |   |   |   |   |   |   |
| Investment                in lessor notes                                                                                                       |   |   | 271,000 |   |   | 286,678 |   |
| Other                investments                                                                                                                |   |   | 127,097 |   |   | 170,422 |   |
| Non-utility                property                                                                                                             |   |   | 966 |   |   | 966 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                other property and investments                                                                                             |   |   | 399,063 |   |   | 458,066 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Current                Assets:**                                                                                                              |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                        |   |   | 2,720 |   |   | 12,690 |   |
| Special                deposits                                                                                                                 |   |   | 376 |   |   | 263 |   |
| Accounts                receivable, net of allowance for uncollectible accounts of $1,440                and                $1,435              |   |   | 68,805 |   |   | 108,569 |   |
| Unbilled                revenues                                                                                                                |   |   | 55,907 |   |   | 121,453 |   |
| Other                receivables                                                                                                                |   |   | 60,630 |   |   | 53,546 |   |
| Affiliate                accounts receivable                                                                                                    |   |   | 8,613 |   |   | - |   |
| Inventories                                                                                                                                     |   |   | 49,017 |   |   | 50,411 |   |
| Regulatory                assets                                                                                                                |   |   | 830 |   |   | 28,058 |   |
| Other                current assets                                                                                                             |   |   | 69,184 |   |   | 75,885 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                current assets                                                                                                             |   |   | 316,082 |   |   | 450,875 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Deferred                Charges:**                                                                                                            |   |   |   |   |   |   |   |
| Regulatory                assets                                                                                                                |   |   | 226,130 |   |   | 223,325 |   |
| Prepaid                pension cost                                                                                                             |   |   | 93,471 |   |   | 91,444 |   |
| Other                deferred charges                                                                                                           |   |   | 44,984 |   |   | 41,720 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                deferred charges                                                                                                           |   |   | 364,585 |   |   | 356,489 |   |
|                                                                                                                                            |   | $ | 3,456,317 |   | $ | 3,587,751 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                        |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |
|                                                                                                                                            |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   | (In                thousands) |   |
| **CAPITALIZATION                AND LIABILITIES**                                                                                               |   |   |   |   |   |
| **Capitalization:**                                                                                                                             |   |   |   |   |   |
| Common                stockholder’s equity:                                                                                               |   |   |   |   |   |
| Common                stock outstanding (no par value, 40,000,000 shares authorized:                                                            |   |   |   |   |   |
| issued                39,117,799 at June 30, 2006 and December 31, 2005)                                                                        |   | $ | 765,500 |   | $ | 765,500 |   |
| Accumulated                other comprehensive loss, net of tax                                                                                 |   |   | (94,950 | ) |   | (90,515 | ) |
| Retained                earnings                                                                                                                |   |   | 366,025 |   |   | 332,542 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                common stockholder’s equity                                                                                          |   |   | 1,036,575 |   |   | 1,007,527 |   |
| Cumulative                preferred stock without mandatory redemption ($100 stated                value,                                       |   |   |   |   |   |   |   |
| 10,000,000                shares authorized: issued 115,293 at June 30, 2006 and                                                                |   |   |   |   |   |   |   |
| December                31, 2005)                                                                                                               |   |   | 11,529 |   |   | 11,529 |   |
| Long-term                debt                                                                                                                   |   |   | 986,377 |   |   | 987,068 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                capitalization                                                                                                             |   |   | 2,034,481 |   |   | 2,006,124 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Current                Liabilities:**                                                                                                         |   |   |   |   |   |   |   |
| Short-term                debt                                                                                                                  |   |   | 100,200 |   |   | 128,200 |   |
| Accounts                payable                                                                                                                 |   |   | 70,385 |   |   | 170,517 |   |
| Affiliate                accounts payable                                                                                                       |   |   | 61,274 |   |   | 50,070 |   |
| Accrued                interest and taxes                                                                                                       |   |   | 49,898 |   |   | 15,951 |   |
| Regulatory                liabilities                                                                                                           |   |   | 1,600 |   |   | 7,085 |   |
| Other                current liabilities                                                                                                        |   |   | 84,537 |   |   | 91,668 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                current liabilities                                                                                                        |   |   | 367,894 |   |   | 463,491 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Long-Term                Liabilities:**                                                                                                       |   |   |   |   |   |   |   |
| Accumulated                deferred income taxes                                                                                                |   |   | 278,693 |   |   | 300,752 |   |
| Accumulated                deferred investment tax credits                                                                                      |   |   | 30,842 |   |   | 32,266 |   |
| Regulatory                liabilities                                                                                                           |   |   | 338,258 |   |   | 346,007 |   |
| Asset                retirement obligations                                                                                                     |   |   | 57,438 |   |   | 54,940 |   |
| Accrued                pension liability and postretirement benefit cost                                                                        |   |   | 214,834 |   |   | 217,092 |   |
| Other                deferred credits                                                                                                           |   |   | 133,877 |   |   | 167,079 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Total                long-term liabilities                                                                                                      |   |   | 1,053,942 |   |   | 1,118,136 |   |
| Commitments                and Contingencies (see Note 9)                                                                                       |   |   | - |   |   | - |   |
|                                                                                                                                            |   | $ | 3,456,317 |   | $ | 3,587,751 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                              |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |   |   |   |   |
|                                                                                                                                            |   | **Six                Months Ended** |   |
|                                                                                                                                            |   | **June                30,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   | (In                thousands) |   |
| **Cash                Flows From Operating Activities:**                                                                                        |   |   |   |   |   |
| Net                earnings                                                                                                                     |   | $ | 33,748 |   | $ | 36,616 |   |
| Adjustments                to reconcile net earnings to net cash flows from operating                activities:                                |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                    |   |   | 57,771 |   |   | 66,868 |   |
| Allowance                for equity funds used during construction                                                                              |   |   | 1 |   |   | (1,163 | ) |
| Accumulated                deferred income tax                                                                                                  |   |   | (15,001 | ) |   | 3,720 |   |
| Net                unrealized (gains)/losses on trading securities                                                                              |   |   | 1,965 |   |   | (812 | ) |
| Realized                gains on investment securities                                                                                          |   |   | (1,842 | ) |   | (2,229 | ) |
| Carrying                charges on other regulatory assets and liabilities                                                                      |   |   | (1,829 | ) |   | (1,317 | ) |
| Changes                in certain assets and liabilities:                                                                                       |   |   |   |   |   |   |   |
| Accounts                receivable - customer                                                                                                   |   |   | 39,764 |   |   | 28,184 |   |
| Accounts                receivable - other                                                                                                      |   |   | (7,084 | ) |   | (3,296 | ) |
| Unbilled                revenues                                                                                                                |   |   | 65,547 |   |   | 40,143 |   |
| Regulatory                assets                                                                                                                |   |   | 22,846 |   |   | (10,069 | ) |
| Other                assets                                                                                                                     |   |   | (7,384 | ) |   | 3,738 |   |
| Accrued                postretirement benefit costs                                                                                             |   |   | (4,285 | ) |   | (3,983 | ) |
| Accounts                payable                                                                                                                 |   |   | (100,132 | ) |   | (68,594 | ) |
| Accrued                interest and taxes                                                                                                       |   |   | 33,570 |   |   | 11,745 |   |
| Other                liabilities                                                                                                                |   |   | (16,914 | ) |   | (16,376 | ) |
| Net                cash flows from operating activities                                                                                         |   |   | 100,741 |   |   | 83,175 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Cash                Flows From Investing Activities:**                                                                                        |   |   |   |   |   |   |   |
| Utility                plant additions                                                                                                          |   |   | (94,728 | ) |   | (54,728 | ) |
| Nuclear                fuel additions                                                                                                           |   |   | (5,280 | ) |   | (5,159 | ) |
| Proceeds                from sales of securities                                                                                                |   |   | 45,322 |   |   | 41,910 |   |
| Purchases                of securities                                                                                                          |   |   | (45,738 | ) |   | (42,693 | ) |
| Return                of principal PVNGS lessor notes                                                                                           |   |   | 11,297 |   |   | 10,681 |   |
| Other,                net                                                                                                                       |   |   | 6,601 |   |   | 472 |   |
| Net                cash flows used for investing activities                                                                                     |   |   | (82,526 | ) |   | (49,517 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                              |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |   |   |   |   |
|                                                                                                                                            |   | **Six                Months Ended** |   |
|                                                                                                                                            |   | **June                30,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   | (In                thousands) |   |
| **Cash                Flows From Financing Activities:**                                                                                        |   |   |   |   |   |
| Short-term                borrowings (repayments), net                                                                                          |   |   | (28,000 | ) |   | (41,600 | ) |
| Long-term                debt repayments                                                                                                        |   |   | (298 | ) |   | - |   |
| Dividends                paid                                                                                                                   |   |   | (264 | ) |   | (264 | ) |
| Change                in affiliate borrowings                                                                                                   |   |   | - |   |   | (300 | ) |
| Other,                net                                                                                                                       |   |   | 377 |   |   | (228 | ) |
| Net                cash flows used for financing activities                                                                                     |   |   | (28,185 | ) |   | (42,392 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Decrease                in Cash and Cash Equivalents                                                                                            |   |   | (9,970 | ) |   | (8,734 | ) |
| Beginning                of Period                                                                                                              |   |   | 12,690 |   |   | 16,448 |   |
| End                of Period                                                                                                                    |   | $ | 2,720 |   | $ | 7,714 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| **Supplemental                Cash Flow Disclosures:**                                                                                          |   |   |   |   |   |   |   |
| Interest                paid, net of capitalized interest                                                                                       |   | $ | 30,193 |   | $ | 25,680 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| Income                taxes paid, net                                                                                                           |   | $ | 457 |   | $ | 3 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

| **PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**                                                                          |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                             |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                                                                    |   |
| (Unaudited)                                                                                                                                     |   |
|                                                                                                                                            |   |
|                                                                                                                                            |   | **Three                Months Ended** |   | **Six                Months Ended** |   |
|                                                                                                                                            |   | **June                30,** |   | **June                30,** |   |
|                                                                                                                                            |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |
| **Net                Earnings Available for Common Stock**                                                                                      |   | $ | 3,188 |   | $ | 3,998 |   | $ | 33,484 |   | $ | 36,352 |   |
| Other                Comprehensive Income (Loss):                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Unrealized                gain (loss) on securities**:                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gains (losses) arising during                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| the                period, net of tax (expense) benefit                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $154, $(437), $(6,953) and $(402)                                                                                             |   |   | (236 | ) |   | 667 |   |   | 10,610 |   |   | 612 |   |
| Reclassification                adjustment for gains included in                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net                income, net of tax expense                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $606, $134, $427 and $662                                                                                                     |   |   | (924 | ) |   | (204 | ) |   | (652 | ) |   | (1,010 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Fair                value adjustment for certain**                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **derivative                transactions:**                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change                in fair market value of designated                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| cash                flow hedges, net of tax (expense) benefit                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $606, $(1,469), $6,563 and $(3,448)                                                                                           |   |   | (926 | ) |   | 2,242 |   |   | (10,015 | ) |   | 5,262 |   |
| Reclassification                adjustment for gains included                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| in                net income, net of tax expense                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                $3, $23 and $2,869 and $849                                                                                                   |   |   | (4 | ) |   | (35 | ) |   | (4,378 | ) |   | (1,295 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Other Comprehensive Income (Loss)**                                                                                      |   |   | (2,090 | ) |   | 2,670 |   |   | (4,435 | ) |   | 3,569 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Comprehensive Income**                                                                                                   |   | $ | 1,098 |   | $ | 6,668 |   | $ | 29,049 |   | $ | 39,921 |   |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to PNM, are an integral part of                these                financial statements. |

----

**TEXAS-NEW      MEXICO POWER COMPANY AND SUBSIDIARIES**

**A      WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**

**CONDENSED        CONSOLIDATED STATEMENTS OF EARNINGS**

|                                                                                                                                             |   | **Post-Acquisition**                  |   | **Post-Acquisition**               |   | **Pre-Acquisition**                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|------------------------------------|--------|------------------------------------|--------|
|                                                                                                                                             |   | **Three                months ended** |   | **For                the period**  |   | **For                the period**  |   |
|                                                                                                                                             |   | **June                30,**           |   | **June                6-June 30,** |   | **April                1-June 6,** |   |
|                                                                                                                                             |   | **2006**                              |   | **2005**                           |   | **2005**                           |   |
|                                                                                                                                             |   |                                  |   | (In                thousands)      |   |                               |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |
| **Operating                Revenues:**                                                                                                           |   |                                  |   |                               |   |                               |   |
| Electric                                                                                                                                         |   | $                                     | 61,456 |                               | $      | 19,235                             |   | $ | 46,938 |   |
| Total                operating revenues                                                                                                          |   |                                  | 61,456 |                               |   | 19,235                             |   |   | 46,938 |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |   |   |   |
| **Operating                Expenses:**                                                                                                           |   |                                  |   |                               |   |                               |   |   |   |   |
| Cost                of energy sold                                                                                                               |   |                                  | 22,651 |                               |   | 6,702                              |   |   | 16,793 |   |
| Administrative                and general                                                                                                        |   |                                  | 9,688  |                               |   | 2,183                              |   |   | 4,551 |   |
| Depreciation                and amortization                                                                                                     |   |                                  | 7,832  |                               |   | 2,085                              |   |   | 5,436 |   |
| Transmission                and distribution costs                                                                                               |   |                                  | 5,399  |                               |   | 1,150                              |   |   | 3,944 |   |
| Taxes,                other than income taxes                                                                                                    |   |                                  | 5,872  |                               |   | 1,885                              |   |   | 3,195 |   |
| Income                taxes                                                                                                                      |   |                                  | 1,238  |                               |   | 1,125                              |   |   | 2,808 |   |
| Total                operating expenses                                                                                                          |   |                                  | 52,680 |                               |   | 15,130                             |   |   | 36,727 |   |
| Operating                income                                                                                                                  |   |                                  | 8,776  |                               |   | 4,105                              |   |   | 10,211 |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |   |   |   |
| **Other                Income and Deductions:**                                                                                                  |   |                                  |   |                               |   |                               |   |   |   |   |
| Interest                income                                                                                                                   |   |                                  | 81     |                               |   | 87                                 |   |   | 360 |   |
| Other                income                                                                                                                      |   |                                  | 125    |                               |   | 111                                |   |   | 252 |   |
| Carrying                charges on regulatory assets                                                                                             |   |                                  | 2,004  |                               |   | 525                                |   |   | 1,394 |   |
| Other                deductions                                                                                                                  |   |                                  | (32    | )                                  |   | (11                                | )      |   | (30 | ) |
| Other                income taxes                                                                                                                |   |                                  | (847   | )                                  |   | (314                               | )      |   | (715 | ) |
| Net                other income and deductions                                                                                                   |   |                                  | 1,331  |                               |   | 398                                |   |   | 1,261 |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |   |   |   |
| **Interest                Charges**                                                                                                              |   |                                  | 7,271  |                               |   | 1,956                              |   |   | 5,088 |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $                                     | 2,836  |                               | $      | 2,547                              |   | $ | 6,384 |   |
|                                                                                                                                             |   |                                  |   |                               |   |                               |   |   |   |   |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

**TEXAS-NEW        MEXICO POWER COMPANY AND SUBSIDIARIES**

**A          WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**

**CONDENSED          CONSOLIDATED STATEMENTS OF EARNINGS**

|                                                                                                                                             |   | **Post-Acquisition**                |    | **Post-Acquisition**               |   |   | **Pre-Acquisition**                  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------|------------------------------------|--------|--------|--------------------------------------|--------|
|                                                                                                                                             |   | **Six                months ended** |    | **For                the period**  |   |   | **For                the period**    |   |
|                                                                                                                                             |   | **June                30,**         |    | **June                6-June 30,** |   |   | **January                1-June 6,** |   |
|                                                                                                                                             |   | **2006**                            |    | **2005**                           |   |   | **2005**                             |   |
|                                                                                                                                             |   |                                |    | (In                thousands)      |   |   |                                 |   |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |
| **Operating                Revenues:**                                                                                                           |   |                                |    |                               |   |   |                                 |   |
| Electric                                                                                                                                         |   | $                                   | 124,141 |                               | $      | 19,235 |                                 |   | $ | 112,820 |   |
| Total                operating revenues                                                                                                          |   |                                | 124,141 |                               |   | 19,235 |                                 |   |   | 112,820 |   |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |   |   |   |
| **Operating                Expenses:**                                                                                                           |   |                                |    |                               |   |   |                                 |   |   |   |   |
| Cost                of energy sold                                                                                                               |   |                                | 49,823  |                               |   | 6,702  |                                 |   |   | 43,885 |   |
| Administrative                and general                                                                                                        |   |                                | 20,919  |                               |   | 2,183  |                                 |   |   | 11,048 |   |
| Depreciation                and amortization                                                                                                     |   |                                | 15,563  |                               |   | 2,085  |                                 |   |   | 12,954 |   |
| Transmission                and distribution costs                                                                                               |   |                                | 10,112  |                               |   | 1,150  |                                 |   |   | 9,111 |   |
| Taxes,                other than income taxes                                                                                                    |   |                                | 11,479  |                               |   | 1,885  |                                 |   |   | 9,228 |   |
| Income                taxes                                                                                                                      |   |                                | 558     |                               |   | 1,125  |                                 |   |   | 5,055 |   |
| Total                operating expenses                                                                                                          |   |                                | 108,454 |                               |   | 15,130 |                                 |   |   | 91,281 |   |
| Operating                income                                                                                                                  |   |                                | 15,687  |                               |   | 4,105  |                                 |   |   | 21,539 |   |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |   |   |   |
| **Other                Income and Deductions:**                                                                                                  |   |                                |    |                               |   |   |                                 |   |   |   |   |
| Interest                income                                                                                                                   |   |                                | 336     |                               |   | 87     |                                 |   |   | 650 |   |
| Other                income                                                                                                                      |   |                                | 311     |                               |   | 111    |                                 |   |   | 523 |   |
| Carrying                charges on regulatory assets                                                                                             |   |                                | 3,977   |                               |   | 525    |                                 |   |   | (1,407 | ) |
| Other                deductions                                                                                                                  |   |                                | (62     | )                                  |   | (11    | )                                    |   |   | (79 | ) |
| Other                income taxes                                                                                                                |   |                                | (1,759  | )                                  |   | (314   | )                                    |   |   | 154 |   |
| Net                other income and deductions                                                                                                   |   |                                | 2,803   |                               |   | 398    |                                 |   |   | (159 | ) |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |   |   |   |
| **Interest                Charges**                                                                                                              |   |                                | 14,498  |                               |   | 1,956  |                                 |   |   | 12,120 |   |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $                                   | 3,992   |                               | $      | 2,547  |                                 |   | $ | 9,260 |   |
|                                                                                                                                             |   |                                |    |                               |   |   |                                 |   |   |   |   |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                         |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **ASSETS**                                                                                                                                       |   |   |   |   |   |
| **Utility                Plant:**                                                                                                                |   |   |   |   |   |
| Electric                plant in service                                                                                                         |   | $ | 893,196 |   | $ | 877,893 |   |
| Construction                work in progress                                                                                                     |   |   | 6,683 |   |   | 7,138 |   |
| Common                plant in service and plant held for future use                                                                             |   |   | 589 |   |   | 589 |   |
|                                                                                                                                             |   |   | 900,468 |   |   | 885,620 |   |
| Less                accumulated depreciation and amortization                                                                                    |   |   | 308,383 |   |   | 296,611 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Net                utility plant                                                                                                                 |   |   | 592,085 |   |   | 589,009 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Other                Property and Investments:**                                                                                               |   |   |   |   |   |   |   |
| Other                investments                                                                                                                 |   |   | 548 |   |   | 548 |   |
| Non-utility                property, net of accumulated depreciation of $3 and $3                                                                |   |   | 2,120 |   |   | 2,120 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                other property and investments                                                                                              |   |   | 2,668 |   |   | 2,668 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Current                Assets:**                                                                                                               |   |   |   |   |   |   |   |
| Cash                and cash equivalents                                                                                                         |   |   | 18,732 |   |   | 16,228 |   |
| Accounts                receivable, net of allowance for uncollectible accounts of $79 and                $100                                   |   |   | 11,058 |   |   | 13,191 |   |
| Federal                income tax refund                                                                                                         |   |   | 33,671 |   |   | 36,392 |   |
| Unbilled                revenues                                                                                                                 |   |   | 5,962 |   |   | 6,679 |   |
| Affiliate                accounts receivable                                                                                                     |   |   | 10,809 |   |   | - |   |
| Other                receivables                                                                                                                 |   |   | 720 |   |   | 6,087 |   |
| Inventories                                                                                                                                      |   |   | 1,495 |   |   | 1,478 |   |
| Other                current assets                                                                                                              |   |   | 794 |   |   | 1,211 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                current assets                                                                                                              |   |   | 83,241 |   |   | 81,266 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Deferred                Charges:**                                                                                                             |   |   |   |   |   |   |   |
| Stranded                costs                                                                                                                    |   |   | 87,316 |   |   | 87,316 |   |
| Carrying                charges on stranded costs                                                                                                |   |   | 37,895 |   |   | 33,918 |   |
| Other                regulatory assets                                                                                                           |   |   | 5,765 |   |   | 2,720 |   |
| Goodwill                                                                                                                                         |   |   | 363,763 |   |   | 367,245 |   |
| Other                deferred charges                                                                                                            |   |   | 3,339 |   |   | 4,948 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                deferred charges                                                                                                            |   |   | 498,078 |   |   | 496,147 |   |
|                                                                                                                                             |   | $ | 1,176,072 |   | $ | 1,169,090 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY AND SUBSIDIARIES**                                                                               |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED BALANCE SHEETS**                                                                                         |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |   |   |   |   |
|                                                                                                                                             |   | **June                30,** |   | **December                31,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |
|                                                                                                                                             |   | (In                thousands) |   |
| **CAPITALIZATION                AND LIABILITIES**                                                                                                |   |   |   |   |   |
| **Capitalization:**                                                                                                                              |   |   |   |   |   |
| Common                stockholder’s equity:                                                                                                |   |   |   |   |   |
| Common                stock outstanding ($10 par value, 12,000,000 shares authorized:                                                            |   |   |   |   |   |
| issued                9,615 at June 30, 2006 and December 31, 2005)                                                                              |   | $ | 96 |   | $ | 96 |   |
| Paid-in-capital                                                                                                                                  |   |   | 492,812 |   |   | 494,287 |   |
| Accumulated                other comprehensive loss, net of tax                                                                                  |   |   | (29 | ) |   | (29 | ) |
| Retained                earnings                                                                                                                 |   |   | 9,442 |   |   | 5,450 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                common stockholder’s equity                                                                                           |   |   | 502,321 |   |   | 499,804 |   |
| Long-term                debt                                                                                                                    |   |   | 416,012 |   |   | 415,864 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                capitalization                                                                                                              |   |   | 918,333 |   |   | 915,668 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Current                Liabilities:**                                                                                                          |   |   |   |   |   |   |   |
| Accounts                payable                                                                                                                  |   |   | 11,833 |   |   | 11,913 |   |
| Affiliate                accounts payable                                                                                                        |   |   | 17,545 |   |   | - |   |
| Accrued                interest and taxes                                                                                                        |   |   | 13,459 |   |   | 24,250 |   |
| Accrued                payroll and benefits                                                                                                      |   |   | 671 |   |   | 3,268 |   |
| Other                current liabilities                                                                                                         |   |   | 6,824 |   |   | 5,516 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                current liabilities                                                                                                         |   |   | 50,332 |   |   | 44,947 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| **Long-Term                Liabilities:**                                                                                                        |   |   |   |   |   |   |   |
| Accumulated                deferred income taxes                                                                                                 |   |   | 139,669 |   |   | 139,405 |   |
| Accumulated                deferred investment tax credits                                                                                       |   |   | 1,147 |   |   | 1,540 |   |
| Regulatory                liabilities                                                                                                            |   |   | 56,742 |   |   | 56,246 |   |
| Accrued                pension liability                                                                                                         |   |   | 2,202 |   |   | 3,585 |   |
| Accrued                postretirement benefit cost                                                                                               |   |   | 6,894 |   |   | 6,525 |   |
| Other                deferred credits                                                                                                            |   |   | 753 |   |   | 1,174 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| Total                long-term liabilities                                                                                                       |   |   | 207,407 |   |   | 208,475 |   |
| Commitments                and Contingencies (see Note 9)                                                                                        |   |   | - |   |   | - |   |
|                                                                                                                                             |   | $ | 1,176,072 |   | $ | 1,169,090 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY**                                                                                                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                               |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **Post-Acquisition** |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   |
|                                                                                                                                             |   | **Six                months ended** |   | **For                the period** |   |   | **For                the period** |   |
|                                                                                                                                             |   | **June                30,** |   | **June                6-June 30,** |   |   | **January                1-June 6,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |   | **2005** |   |
|                                                                                                                                             |   |   |   | (In                thousands) |   |   |   |   |
| **Cash                Flows From Operating Activities:**                                                                                         |   |   |   |   |   |   |   |   |
| Net                earnings                                                                                                                      |   | $ | 3,992 |   | $ | 2,547 |   |   | $ | 9,260 |   |
| Adjustments                to reconcile net earnings to net cash flows from                                                                      |   |   |   |   |   |   |   |   |   |   |   |
| operating                activities:                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                                     |   |   | 15,712 |   |   | 2,261 |   |   |   | 14,042 |   |
| Allowance                for equity funds used during construction                                                                               |   |   | (74 | ) |   | (8 | ) |   |   | (60 | ) |
| Accumulated                deferred income tax                                                                                                   |   |   | 1,877 |   |   | 75 |   |   |   | (1,267 | ) |
| Carrying                charges on deferred stranded costs                                                                                       |   |   | (3,978 | ) |   | (525 | ) |   |   | 1,407 |   |
| Interest                on retail competition transition obligation                                                                              |   |   | 885 |   |   | - |   |   |   | - |   |
| Other,                net                                                                                                                        |   |   | (21 | ) |   | (1 | ) |   |   | (120 | ) |
| Changes                in certain assets and liabilities:                                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                receivable                                                                                                               |   |   | 2,154 |   |   | 823 |   |   |   | 149 |   |
| Unbilled                revenues                                                                                                                 |   |   | 717 |   |   | (139 | ) |   |   | (106 | ) |
| Other                assets                                                                                                                      |   |   | 7,053 |   |   | (1,468 | ) |   |   | (3,800 | ) |
| Accrued                postretirement benefit costs                                                                                              |   |   | (1,014 | ) |   | (2,583 | ) |   |   | 495 |   |
| Accounts                payable                                                                                                                  |   |   | (79 | ) |   | 652 |   |   |   | (5,379 | ) |
| Accrued                interest and taxes                                                                                                        |   |   | (10,872 | ) |   | 1,586 |   |   |   | (4,134 | ) |
| Change                in affiliate accounts                                                                                                      |   |   | 6,736 |   |   | 1,249 |   |   |   | 47 |   |
| Other                liabilities                                                                                                                 |   |   | (2,583 | ) |   | 2,180 |   |   |   | 4,819 |   |
| Net                cash flows from operating activities                                                                                          |   |   | 20,505 |   |   | 6,649 |   |   |   | 15,353 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Cash                Flows From Investing Activities:**                                                                                         |   |   |   |   |   |   |   |   |   |   |   |
| Utility                plant additions                                                                                                           |   |   | (18,152 | ) |   | (1,685 | ) |   |   | (17,822 | ) |
| Other,                net                                                                                                                        |   |   | 69 |   |   | 840 |   |   |   | (242 | ) |
| Acquisition                costs                                                                                                                 |   |   | - |   |   | (3,473 | ) |   |   | - |   |
| Net                cash flows used for investing activities                                                                                      |   |   | (18,083 | ) |   | (4,318 | ) |   |   | (18,064 | ) |
|                                                                                                                                             |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY**                                                                                                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                               |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **Post-Acquisition** |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   |
|                                                                                                                                             |   | **Six                months ended** |   | **For                the period** |   |   | **For                the period** |   |
|                                                                                                                                             |   | **June                30,** |   | **June                6-June 30,** |   |   | **January                1-June 6,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |   | **2005** |   |
|                                                                                                                                             |   |   |   | (In                thousands) |   |   |   |   |
| **Cash                Flows From Financing Activities:**                                                                                         |   |   |   |   |   |   |   |   |
| Other,                net                                                                                                                        |   |   | 82 |   |   | - |   |   |   | 127 |   |
| Net                cash flows from financing activities                                                                                          |   |   | 82 |   |   | - |   |   |   | 127 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Increase/(Decrease)                in Cash and Cash Equivalents                                                                                  |   |   | 2,504 |   |   | 2,331 |   |   |   | (2,584 | ) |
| Beginning                of Period                                                                                                               |   |   | 16,228 |   |   | 63,175 |   |   |   | 65,759 |   |
| End                of Period                                                                                                                     |   | $ | 18,732 |   | $ | 65,506 |   |   | $ | 63,175 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Supplemental                Cash Flow Disclosures:**                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
| Interest                paid, net of capitalized interest                                                                                        |   | $ | 18,439 |   | $ | 1 |   |   | $ | 12,868 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Income                taxes paid, net                                                                                                            |   | $ | - |   | $ | - |   |   | $ | 2,456 |   |
|                                                                                                                                             |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY**                                                                                                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                                                                     |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **Post-Acquisition** |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   |
|                                                                                                                                             |   | **Three                months ended** |   | **For                the period** |   |   | **For                the period** |   |
|                                                                                                                                             |   | **June                30,** |   | **June                6-June 30,** |   |   | **April                1-June 6,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |   | **2005** |   |
|                                                                                                                                             |   |   |   | (In                thousands) |   |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $ | 2,836 |   | $ | 2,547 |   |   | $ | 6,384 |   |
| Other                Comprehensive Income:                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest                rate hedge net of reclassification adjustment, net of                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| income                tax benefit (expense) of $0 , $0 and $1,004                                                                                |   | $ | - |   | $ | - |   |   | $ | 1,632 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Other Comprehensive Income**                                                                                              |   | $ | - |   | $ | - |   |   | $ | 1,632 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Comprehensive Income**                                                                                                    |   | $ | 2,836 |   | $ | 2,547 |   |   | $ | 8,016 |   |
|                                                                                                                                             |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

| **TEXAS-NEW                MEXICO POWER COMPANY**                                                                                                |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **A                WHOLLY OWNED SUBSIDIARY OF PNM RESOURCES, INC.**                                                                              |   |
| **CONDENSED                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                                                                     |   |
| (Unaudited)                                                                                                                                      |   |
|                                                                                                                                             |   |
|                                                                                                                                             |   | **Post-Acquisition** |   | **Post-Acquisition** |   |   | **Pre-Acquisition** |   |
|                                                                                                                                             |   | **Six                months ended** |   | **For                the period** |   |   | **For                the period** |   |
|                                                                                                                                             |   | **June                30,** |   | **June                6-June 30,** |   |   | **January                1-June 6,** |   |
|                                                                                                                                             |   | **2006** |   | **2005** |   |   | **2005** |   |
|                                                                                                                                             |   |   |   | (In                thousands) |   |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |
| **Net                Earnings**                                                                                                                  |   | $ | 3,992 |   | $ | 2,547 |   |   | $ | 9,260 |   |
| Other                Comprehensive Income:                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest                rate hedge net of reclassification adjustment, net of                                                                    |   |   |   |   |   |   |   |   |   |   |   |
| income                tax benefit (expense) of $0 , $0 and $1,084                                                                                |   | $ | - |   | $ | - |   |   | $ | 1,761 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Other Comprehensive Income**                                                                                              |   | $ | - |   | $ | - |   |   | $ | 1,761 |   |
|                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
| **Total                Comprehensive Income**                                                                                                    |   | $ | 3,992 |   | $ | 2,547 |   |   | $ | 11,021 |   |
|                                                                                                                                             |
| The                accompanying notes, as they relate to TNMP, are an integral part                of these                financial statements. |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(1)             **
**Significant        Accounting Policies and Responsibility for Financial        Statements**

*TNP      Acquisition*

*Presentation*

*Change      in Presentation*

*Principles      of Consolidation*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Financial        Statement Preparation*

*Goodwill      and Other Intangible Assets*

*“Goodwill      and Other Intangible Assets”*
*“Accounting      for the Impairment or Disposal of Long-Lived Assets”*

*Decommissioning      Costs*

*"Accounting      for Asset Retirement Obligations”*

*Stock-Based      Compensation *

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Carrying      Charges on Stranded Costs*

**(2)            **
**Acquisitions**

*Twin      Oaks*

| **At                April 18, 2006**     |   |
|------------------------------------------|--------|
| (In                thousands)            |   |
| Net                utility plant         |   | $ | 595,336 |   |
| Other                current assets      |   |   | 10,341 |   |
| Other                intangible assets   |   |   | 25,000 |   |
| Other                deferred charges    |   |   | 99,598 |   |
| Total                assets acquired     |   |   | 730,275 |   |
|                                     |   |   |   |   |
| Other                current liabilities |   |   | 96,088 |   |
| Other                deferred credits    |   |   | 153,173 |   |
| Total                liabilities assumed |   |   | 249,261 |   |
|                                     |   |   |   |   |
| Net                assets acquired       |   | $ | 481,014 |   |

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*“Business      Combinations”*

|                                              |   | **For                the Three****Months                Ended** |    | **For                the Six****Months                Ended** |   |
|---------------------------------------------------|--------|-----------------------------------------------------------------|---------|---------------------------------------------------------------|--------|
|                                              |   | **June                30,**                                     |    | **June                30,**                                   |   |
|                                              |   | **2006**                                                        |    | **2005**                                                      |   | **2006** |   | **2005** |   |
|                                              |   | (In                thousands, except per share amounts)         |    |
| Operating                revenues                 |   | $                                                               | 559,375 |                                                          | $      | 452,788 |   | $ | 1,262,178 |   | $ | 928,771 |   |
| Operating                expenses                 |   | $                                                               | 506,659 |                                                          | $      | 418,032 |   | $ | 1,146,775 |   | $ | 836,894 |   |
| Earnings                before extraordinary item |   | $                                                               | 21,631  |                                                          | $      | 12,927 |   | $ | 57,512 |   | $ | 55,826 |   |
| Net                earnings                       |   | $                                                               | 21,631  |                                                          | $      | 12,927 |   | $ | 57,512 |   | $ | 55,826 |   |
| Net                earnings per common share:     |   |                                                            |    |                                                          |   |   |   |   |   |   |   |   |   |
| Basic                                             |   | $                                                               | 0.31    |                                                          | $      | 0.20 |   | $ | 0.84 |   | $ | 0.89 |   |
| Diluted                                           |   | $                                                               | 0.31    |                                                          | $      | 0.19 |   | $ | 0.83 |   | $ | 0.87 |   |

*TNP*

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(3)            **
**Segment      Information**

**REGULATED      OPERATIONS**

**PNM      Electric **

**TNMP      Electric**

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**PNM      Gas**

**UNREGULATED      OPERATIONS **

**Wholesale**

*Reporting      Realized Gains and Losses on Derivative Instruments that are Subject to FASB      Statement No. 133 and Not Held for Trading Purposes*

**First      Choice**

**CORPORATE      AND OTHER**

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**PNMR      Segment Information**

|                                         |   | **Regulated** |      | **Unregulated** |   |      |   |          |    |       |   |
|----------------------------------------------|--------|---------------|-----------|-----------------|--------|-----------|--------|---------------|---------|------------|--------|
| Segments                of Business          |   | **PNM**       |      | **TNMP**        |   | **PNM**   |   |          |    | **First**  |   | **Corporate** |   |   |   |   |   |
|                                         |   | **Electric**  |      | **Electric**    |   | **Gas**   |   | **Wholesale** |    | **Choice** |   | **&                Other** |   |   |   | **Consolidated** |   |
| **2006:**                                    |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |
| Operating                revenues            |   | $             | 144,080   |            | $      | 43,437    |   | $             | 68,869  |       | $      | 141,820 |   | $ | 154,908 |   | $ | (6,445 | ) |   | (a) |   | $ | 546,669 |   |
| Intersegment                revenues         |   |          | 2,256     |            |   | 18,019    |   |          | 92      |       |   | 12,674 |   |   | - |   |   | (33,041 | ) |   |   |   |   | - |   |
| **Total                revenues**            |   |          | 146,336   |            |   | 61,456    |   |          | 68,961  |       |   | 154,494 |   |   | 154,908 |   |   | (39,486 | ) |   |   |   |   | 546,669 |   |
| Less:                Cost of energy          |   |          | 43,308    |            |   | 22,652    |   |          | 42,168  |       |   | 119,869 |   |   | 118,073 |   |   | (39,570 | ) |   | (a) |   |   | 306,500 |   |
| Intersegment                energy           |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transfer                                     |   |          | 8,524     |            |   | -         |   |          | -       |       |   | (8,524 | ) |   | - |   |   | - |   |   |   |   |   | - |   |
| **Gross                margin**              |   |          | 94,504    |            |   | 38,804    |   |          | 26,793  |       |   | 43,149 |   |   | 36,835 |   |   | 84 |   |   |   |   |   | 240,169 |   |
| Operating                expenses            |   |          | 66,564    |            |   | 20,957    |   |          | 25,881  |       |   | 18,380 |   |   | 15,367 |   |   | 2,451 |   |   | (b) |   |   | 149,600 |   |
| Depreciation                and              |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| amortization                                 |   |          | 14,316    |            |   | 7,831     |   |          | 5,994   |       |   | 7,155 |   |   | 510 |   |   | 2,147 |   |   |   |   |   | 37,953 |   |
| Income                taxes                  |   |          | 1,852     |            |   | 1,239     |   |          | (3,236  | )          |   | 3,219 |   |   | 7,363 |   |   | (4,247 | ) |   | (b) |   |   | 6,190 |   |
| **Operating                income**          |   |          | 11,772    |            |   | 8,777     |   |          | (1,846  | )          |   | 14,395 |   |   | 13,595 |   |   | (267 | ) |   |   |   |   | 46,426 |   |
|                                         |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income               |   |          | 6,626     |            |   | 81        |   |          | 468     |       |   | 1,323 |   |   | 116 |   |   | 302 |   |   |   |   |   | 8,916 |   |
| Other                income/(deductions)     |   |          | 216       |            |   | 2,097     |   |          | (11     | )          |   | 330 |   |   | (225 | ) |   | (1,110 | ) |   |   |   |   | 1,297 |   |
| Other                income taxes            |   |          | (2,709    | )               |   | (847      | )      |          | (181    | )          |   | (654 | ) |   | 42 |   |   | 515 |   |   |   |   |   | (3,834 | ) |
| Interest                charges              |   |          | (8,946    | )               |   | (7,271    | )      |          | (3,091  | )          |   | (9,512 | ) |   | (248 | ) |   | (7,430 | ) |   |   |   |   | (36,498 | ) |
| **Segment                net income (loss)** |   | $             | 6,959     |            | $      | 2,837     |   | $             | (4,661  | )          | $      | 5,882 |   | $ | 13,280 |   | $ | (7,990 | ) |   |   |   | $ | 16,307 |   |
|                                         |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $             | 46,114    |            | $      | 10,936    |   | $             | 9,633   |       | $      | 5,797 |   | $ | - |   | $ | 4,267 |   |   |   |   | $ | 76,747 |   |
|                                         |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                June 30, 2006:**         |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                assets**              |   | $             | 1,935,934 |            | $      | 1,131,593 |   | $             | 616,678 |       | $      | 1,082,632 |   | $ | 374,640 |   | $ | 596,066 |   |   |   |   | $ | 5,737,543 |   |
| **Goodwill**                                 |   | $             | -         |            | $      | 363,763   |   | $             | -       |       | $      | - |   | $ | 131,678 |   | $ | - |   |   |   |   | $ | 495,441 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $6.6 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                TNP and Twin Oaks acquisition integration costs of $1.8 million and                an                income tax benefit of $0.7 million in income                taxes. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                         |   | **Regulated** |      | **Unregulated** |   |      |   |          |    |        |   |
|----------------------------------------------|--------|---------------|-----------|-----------------|--------|-----------|--------|---------------|---------|-------------|--------|
| Segments                of Business          |   | **PNM**       |      | **TNMP**        |   | **PNM**   |   |          |    | **First**   |   | **Corporate** |   |   |   |   |   |
|                                         |   | **Electric**  |      | **Electric***   |   | **Gas**   |   | **Wholesale** |    | **Choice*** |   | **&                Other** |   |   |   | **Consolidated** |   |
| **2005:**                                    |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |
| Operating                revenues            |   | $             | 137,314   |            | $      | 12,684    |   | $             | 82,261  |        | $      | 139,273 |   | $ | 43,031 |   | $ | (9,309 | ) |   | (a) |   | $ | 405,254 |   |
| Intersegment                revenues         |   |          | 1,467     |            |   | 6,551     |   |          | 123     |        |   | 3,009 |   |   | - |   |   | (11,150 | ) |   |   |   |   | - |   |
| **Total                revenues**            |   |          | 138,781   |            |   | 19,235    |   |          | 82,384  |        |   | 142,282 |   |   | 43,031 |   |   | (20,459 | ) |   |   |   |   | 405,254 |   |
| Less:                Cost of energy          |   |          | 44,998    |            |   | 6,702     |   |          | 53,292  |        |   | 119,653 |   |   | 34,083 |   |   | (20,537 | ) |   | (a) |   |   | 238,191 |   |
| Intersegment                energy           |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transfer                                     |   |          | (3,412    | )               |   | -         |   |          | -       |        |   | 3,412 |   |   | - |   |   | - |   |   |   |   |   | - |   |
| **Gross                margin**              |   |          | 97,195    |            |   | 12,533    |   |          | 29,092  |        |   | 19,217 |   |   | 8,948 |   |   | 78 |   |   |   |   |   | 167,063 |   |
| Operating                expenses            |   |          | 65,786    |            |   | 5,086     |   |          | 24,234  |        |   | 11,080 |   |   | 3,197 |   |   | 8,830 |   |   | (b) |   |   | 118,213 |   |
| Depreciation                and              |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| amortization                                 |   |          | 17,495    |            |   | 2,085     |   |          | 5,596   |        |   | 4,041 |   |   | 105 |   |   | 6,315 |   |   | (c) |   |   | 35,637 |   |
| Income                taxes                  |   |          | 2,155     |            |   | 1,175     |   |          | (1,442  | )           |   | 44 |   |   | 2,020 |   |   | (7,319 | ) |   | (b,c,e) |   |   | (3,367 | ) |
| **Operating                income**          |   |          | 11,759    |            |   | 4,187     |   |          | 704     |        |   | 4,052 |   |   | 3,626 |   |   | (7,748 | ) |   |   |  |   | 16,580 |   |
|                                         |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income               |   |          | 6,473     |            |   | 87        |   |          | 487     |        |   | 1,303 |   |   | 161 |   |   | 3,111 |   |   |   |   |   | 11,622 |   |
| Other                income/(deductions)     |   |          | 1,020     |            |   | 625       |   |          | 408     |        |   | 405 |   |   | (15 | ) |   | (2,894 | ) |   | (d) |   |   | (451 | ) |
| Other                income taxes            |   |          | (2,967    | )               |   | (314      | )      |          | (354    | )           |   | (677 | ) |   | (51 | ) |   | (314 | ) |   | (d) |   |   | (4,677 | ) |
| Interest                charges              |   |          | (8,471    | )               |   | (1,956    | )      |          | (2,905  | )           |   | (3,987 | ) |   | (28 | ) |   | (4,186 | ) |   | (e) |   |   | (21,533 | ) |
| **Segment                net income (loss)** |   | $             | 7,814     |            | $      | 2,629     |   | $             | (1,660  | )           | $      | 1,096 |   | $ | 3,693 |   | $ | (12,031 | ) |   |   |   | $ | 1,541 |   |
|                                         |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $             | 26,091    |            | $      | 1,685     |   | $             | 9,774   |        | $      | 2,855 |   | $ | 46 |   | $ | 9,805 |   |   |   |   | $ | 50,256 |   |
|                                         |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                December 31, 2005:**     |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                assets**              |   | $             | 1,937,811 |            | $      | 1,169,090 |   | $             | 721,021 |        | $      | 421,377 |   | $ | 318,820 |   | $ | 556,590 |   |   |   |   | $ | 5,124,709 |   |
| **Goodwill**                                 |   | $             | -         |            | $      | 367,245   |   | $             | -       |        | $      | - |   | $ | 131,910 |   | $ | - |   |   |   |   | $ | 499,155 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $9.6 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                acquisition related costs of $4.6 million and regulatory costs of                $2.3                million in operating expenses and an income tax benefit of $2.7 million                in                income taxes associated with the NMPRC’s approval of the TNP                acquisition. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                a write-off of software costs of $4.5 million in depreciation and                amortization expense and an income tax benefit of $1.8 million in                the                income taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Includes                income from proceeds earned on the TNP debt refinancing of $1.3 million                and an income tax expense of $0.5 million in the income                taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (e)   | Includes              TNP debt refinancing costs of $4.9 million in interest charges and              an              income tax benefit of $1.8 million in income              taxes.     |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *   | Includes results from June 6 through June 30,              2005 |
|----------|-----------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                        |   | **Regulated** |      | **Unregulated** |   |      |   |          |    |       |   |
|---------------------------------------------|--------|---------------|-----------|-----------------|--------|-----------|--------|---------------|---------|------------|--------|
| Segments                of Business         |   | **PNM**       |      | **TNMP**        |   | **PNM**   |   |          |    | **First**  |   | **Corporate** |   |   |   |   |   |
|                                        |   | **Electric**  |      | **Electric**    |   | **Gas**   |   | **Wholesale** |    | **Choice** |   | **&                Other** |   |   |   | **Consolidated** |   |
| **2006:**                                   |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |
| Operating                revenues           |   | $             | 280,676   |            | $      | 90,406    |   | $             | 276,345 |       | $      | 306,131 |   | $ | 259,990 |   | $ | (11,078 | ) |   | (a) |   | $ | 1,202,470 |   |
| Intersegment                revenues        |   |          | 4,438     |            |   | 33,735    |   |          | 141     |       |   | 27,851 |   |   | - |   |   | (66,165 | ) |   |   |   |   | - |   |
| **Total                revenues**           |   |          | 285,114   |            |   | 124,141   |   |          | 276,486 |       |   | 333,982 |   |   | 259,990 |   |   | (77,243 | ) |   |   |   |   | 1,202,470 |   |
| Less:                Cost of energy         |   |          | 88,782    |            |   | 49,823    |   |          | 199,859 |       |   | 262,746 |   |   | 208,408 |   |   | (77,146 | ) |   | (a) |   |   | 732,472 |   |
| Intersegment                energy          |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transfer                                    |   |          | 3,346     |            |   | -         |   |          | -       |       |   | (3,346 | ) |   | - |   |   | - |   |   |   |   |   | - |   |
| **Gross                margin**             |   |          | 192,986   |            |   | 74,318    |   |          | 76,627  |       |   | 74,582 |   |   | 51,582 |   |   | (97 | ) |   |   |   |   | 469,998 |   |
| Operating                expenses           |   |          | 133,718   |            |   | 42,489    |   |          | 50,971  |       |   | 30,165 |   |   | 28,545 |   |   | 2,618 |   |   | (b) |   |   | 288,506 |   |
| Depreciation                and             |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| amortization                                |   |          | 29,288    |            |   | 15,563    |   |          | 11,914  |       |   | 10,316 |   |   | 1,008 |   |   | 4,194 |   |   |   |   |   | 72,283 |   |
| Income                taxes                 |   |          | 4,924     |            |   | 566       |   |          | 3,030   |       |   | 8,233 |   |   | 7,663 |   |   | (7,979 | ) |   | (b) |   |   | 16,437 |   |
| **Operating                income (loss)**  |   |          | 25,056    |            |   | 15,700    |   |          | 10,712  |       |   | 25,868 |   |   | 14,366 |   |   | 1,070 |   |   |   |   |   | 92,772 |   |
|                                        |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income              |   |          | 13,137    |            |   | 336       |   |          | 1,733   |       |   | 2,602 |   |   | 508 |   |   | 751 |   |   |   |   |   | 19,067 |   |
| Other                income/(deductions)    |   |          | 414       |            |   | 4,226     |   |          | 90      |       |   | 1,036 |   |   | (235 | ) |   | (742 | ) |   |   |   |   | 4,789 |   |
| Other                income taxes           |   |          | (5,365    | )               |   | (1,759    | )      |          | (722    | )          |   | (1,440 | ) |   | (97 | ) |   | 448 |   |   |   |   |   | (8,935 | ) |
| Interest                charges             |   |          | (17,543   | )               |   | (14,498   | )      |          | (6,088  | )          |   | (13,333 | ) |   | (472 | ) |   | (13,127 | ) |   |   |   |   | (65,061 | ) |
| **Segment                net income**       |   | $             | 15,699    |            | $      | 4,005     |   | $             | 5,725   |       | $      | 14,733 |   | $ | 14,070 |   | $ | (11,600 | ) |   |   |   | $ | 42,632 |   |
|                                        |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Gross                property additions** |   | $             | 76,430    |            | $      | 18,152    |   | $             | 13,998  |       | $      | 9,548 |   | $ | 297 |   | $ | 10,143 |   |   |   |   | $ | 128,568 |   |
|                                        |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                June 30, 2006:**        |   |          |      |            |   |      |   |          |    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                assets**             |   | $             | 1,935,934 |            | $      | 1,131,593 |   | $             | 616,678 |       | $      | 1,082,632 |   | $ | 374,640 |   | $ | 596,066 |   |   |   |   | $ | 5,737,543 |   |
| **Goodwill**                                |   | $             | -         |            | $      | 363,763   |   | $             | -       |       | $      | - |   | $ | 131,678 |   | $ | - |   |   |   |   | $ | 495,441 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $11.4 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                TNP and Twin Oaks acquisition integration costs of $2.8 million and                an                income tax benefit of $1.1 million in income                taxes. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                        |   | **Regulated** |      | **Unregulated** |   |      |   |          |    |        |   |
|---------------------------------------------|--------|---------------|-----------|-----------------|--------|-----------|--------|---------------|---------|-------------|--------|
| Segments                of Business         |   | **PNM**       |      | **TNMP**        |   | **PNM**   |   |          |    | **First**   |   | **Corporate** |   |   |   |   |   |
|                                        |   | **Electric**  |      | **Electric***   |   | **Gas**   |   | **Wholesale** |    | **Choice*** |   | **&                Other** |   |   |   | **Consolidated** |   |
| **2005:**                                   |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |
| Operating                revenues           |   | $             | 269,805   |            | $      | 12,684    |   | $             | 247,494 |        | $      | 271,277 |   | $ | 43,031 |   | $ | (11,124 | ) |   | (a) |   | $ | 833,167 |   |
| Intersegment                revenues        |   |          | 3,158     |            |   | 6,551     |   |          | 176     |        |   | 3,009 |   |   | - |   |   | (12,894 | ) |   |   |   |   | - |   |
| **Total                revenues**           |   |          | 272,963   |            |   | 19,235    |   |          | 247,670 |        |   | 274,286 |   |   | 43,031 |   |   | (24,018 | ) |   |   |   |   | 833,167 |   |
| Less:                Cost of energy         |   |          | 92,401    |            |   | 6,702     |   |          | 167,727 |        |   | 208,965 |   |   | 34,083 |   |   | (24,209 | ) |   | (a) |   |   | 485,669 |   |
| Intersegment                energy          |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| transfer                                    |   |          | (17,535   | )               |   | -         |   |          | -       |        |   | 17,535 |   |   | - |   |   | - |   |   |   |   |   | - |   |
| **Gross                margin**             |   |          | 198,097   |            |   | 12,533    |   |          | 79,943  |        |   | 47,786 |   |   | 8,948 |   |   | 191 |   |   |   |   |   | 347,498 |   |
| Operating                expenses           |   |          | 129,123   |            |   | 5,086     |   |          | 48,325  |        |   | 21,968 |   |   | 3,197 |   |   | 10,789 |   |   | (b) |   |   | 218,488 |   |
| Depreciation                and             |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| amortization                                |   |          | 35,053    |            |   | 2,085     |   |          | 11,172  |        |   | 8,028 |   |   | 105 |   |   | 8,021 |   |   | (c) |   |   | 64,464 |   |
| Income                taxes                 |   |          | 6,654     |            |   | 1,175     |   |          | 5,787   |        |   | 3,875 |   |   | 2,020 |   |   | (9,487 | ) |   | (b,c,e) |   |   | 10,024 |   |
| **Operating                income (loss)**  |   |          | 27,267    |            |   | 4,187     |   |          | 14,659  |        |   | 13,915 |   |   | 3,626 |   |   | (9,132 | ) |   |   |   |   | 54,522 |   |
|                                        |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                income              |   |          | 13,689    |            |   | 87        |   |          | 1,243   |        |   | 2,647 |   |   | 161 |   |   | 3,095 |   |   |   |   |   | 20,922 |   |
| Other                income/(deductions)    |   |          | 1,577     |            |   | 625       |   |          | 485     |        |   | 1,338 |   |   | (15 | ) |   | (3,019 | ) |   | (d) |   |   | 991 |   |
| Other                income taxes           |   |          | (6,044    | )               |   | (314      | )      |          | (684    | )           |   | (1,578 | ) |   | (51 | ) |   | 110 |   |   | (d) |   |   | (8,561 | ) |
| Interest                charges             |   |          | (17,114   | )               |   | (1,956    | )      |          | (5,829  | )           |   | (8,003 | ) |   | (28 | ) |   | (2,894 | ) |   | (e) |   |   | (35,824 | ) |
| **Segment                net income**       |   | $             | 19,375    |            | $      | 2,629     |   | $             | 9,874   |        | $      | 8,319 |   | $ | 3,693 |   | $ | (11,840 | ) |   |   |   | $ | 32,050 |   |
|                                        |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Gross                property additions** |   | $             | 40,715    |            | $      | 1,685     |   | $             | 18,721  |        | $      | 4,169 |   | $ | 46 |   | $ | 14,613 |   |   |   |   | $ | 79,949 |   |
|                                        |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **At                December 31, 2005:**    |   |          |      |            |   |      |   |          |    |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                assets**             |   | $             | 1,937,811 |            | $      | 1,169,090 |   | $             | 721,021 |        | $      | 421,377 |   | $ | 318,820 |   | $ | 556,590 |   |   |   |   | $ | 5,124,709 |   |
| **Goodwill**                                |   | $             | -         |            | $      | 367,245   |   | $             | -       |        | $      | - |   | $ | 131,910 |   | $ | - |   |   |   |   | $ | 499,155 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $11.7 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                acquisition related costs of $4.6 million and regulatory costs of                $2.3                million in operating expenses and an income tax benefit of $2.7 million                in                income taxes associated with the NMPRC’s approval of the TNP                acquisition. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                a write-off of software costs of $4.5 million in depreciation and                amortization expense and an income tax benefit of $1.8 million in                the                income taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Includes                income from proceeds earned on the TNP debt refinancing of $1.3 million                and an income tax expense of $0.5 million in the income                taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (e)                |  Includes              TNP debt refinancing costs of $4.9 million in interest charges and              an              income tax benefit of $1.8 million in income              taxes. |
|-------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *   |  Includes results from June 6 through June 30,              2005 |
|----------|-----------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| Segments                of Business          |   | **PNM**      |      | **PNM** |   | **PNM**       |   |      |    |   |   |             |   |
|----------------------------------------------|--------|--------------|-----------|---------|--------|---------------|--------|-----------|---------|--------|--------|------------------|--------|
|                                         |   | **Electric** |      | **Gas** |   | **Wholesale** |   | **Other** |    |   |   | **Consolidated** |   |
| **2006:**                                    |   |         |      |    |   |          |   |      |    |   |   |             |   |
| Operating                revenues            |   | $            | 144,080   |    | $      | 68,869        |   | $         | 109,063 |   | $      | (6,642           | )      |   | (a) |   | $ | 315,370 |   |
| Intersegment                revenues         |   |         | 2,256     |    |   | 92            |   |      | 12,674  |   |   | (2,225           | )      |   |   |   |   | 12,797 |   |
| **Total                revenues**            |   |         | 146,336   |    |   | 68,961        |   |      | 121,737 |   |   | (8,867           | )      |   |   |   |   | 328,167 |   |
| Less:                Cost of energy          |   |         | 43,308    |    |   | 42,168        |   |      | 108,756 |   |   | (8,822           | )      |   | (a) |   |   | 185,410 |   |
| Intersegment                energy transfer  |   |         | 8,524     |    |   | -             |   |      | (8,524  | )      |   | -                |   |   |   |   |   | - |   |
| **Gross                margin**              |   |         | 94,504    |    |   | 26,793        |   |      | 21,505  |   |   | (45              | )      |   |   |   |   | 142,757 |   |
| Operating                expenses            |   |         | 66,564    |    |   | 25,881        |   |      | 14,928  |   |   | (443             | )      |   |   |   |   | 106,930 |   |
| Depreciation                and amortization |   |         | 14,316    |    |   | 5,994         |   |      | 3,191   |   |   | 788              |   |   |   |   |   | 24,289 |   |
| Income                taxes                  |   |         | 1,852     |    |   | (3,236        | )      |      | (180    | )      |   | 310              |   |   |   |   |   | (1,254 | ) |
| **Operating                income**          |   |         | 11,772    |    |   | (1,846        | )      |      | 3,566   |   |   | (700             | )      |   |   |   |   | 12,792 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| Interest                income               |   |         | 6,626     |    |   | 468           |   |      | 1,276   |   |   | 300              |   |   |   |   |   | 8,670 |   |
| Other                income/(deductions)     |   |         | 216       |    |   | (11           | )      |      | 315     |   |   | (451             | )      |   |   |   |   | 69 |   |
| Other                income taxes            |   |         | (2,709    | )       |   | (181          | )      |      | (630    | )      |   | 76               |   |   |   |   |   | (3,444 | ) |
| Interest                charges              |   |         | (8,946    | )       |   | (3,091        | )      |      | (3,842  | )      |   | 980              |   |   |   |   |   | (14,899 | ) |
| **Segment                net income**        |   | $            | 6,959     |    | $      | (4,661        | )      | $         | 685     |   | $      | 205              |   |   |   |   | $ | 3,188 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $            | 46,114    |    | $      | 9,633         |   | $         | 5,797   |   | $      | (342             | )      |   |   |   | $ | 61,202 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **At                June 30, 2006:**         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Total                assets**              |   | $            | 1,943,340 |    | $      | 616,678       |   | $         | 410,579 |   | $      | 485,720          |   |   |   |   | $ | 3,456,317 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $6.6 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| Segments                of Business          |   | **PNM**      |      | **PNM** |   | **PNM**       |   |      |    |   |   |             |   |
|----------------------------------------------|--------|--------------|-----------|---------|--------|---------------|--------|-----------|---------|--------|--------|------------------|--------|
|                                         |   | **Electric** |      | **Gas** |   | **Wholesale** |   | **Other** |    |   |   | **Consolidated** |   |
| **2005:**                                    |   |         |      |    |   |          |   |      |    |   |   |             |   |
| Operating                revenues            |   | $            | 137,314   |    | $      | 82,261        |   | $         | 139,273 |   | $      | (9,627           | )      |   | (a) |   | $ | 349,221 |   |
| Intersegment                revenues         |   |         | 1,467     |    |   | 123           |   |      | 3,009   |   |   | (1,554           | )      |   |   |   |   | 3,045 |   |
| **Total                revenues**            |   |         | 138,781   |    |   | 82,384        |   |      | 142,282 |   |   | (11,181          | )      |   |   |   |   | 352,266 |   |
| Less:                Cost of energy          |   |         | 44,998    |    |   | 53,292        |   |      | 119,653 |   |   | (11,145          | )      |   | (a) |   |   | 206,798 |   |
| Intersegment                energy transfer  |   |         | (3,412    | )       |   | -             |   |      | 3,412   |   |   | -                |   |   |   |   |   | - |   |
| **Gross                margin**              |   |         | 97,195    |    |   | 29,092        |   |      | 19,217  |   |   | (36              | )      |   |   |   |   | 145,468 |   |
| Operating                expenses            |   |         | 65,786    |    |   | 24,234        |   |      | 11,080  |   |   | 2,559            |   |   | (b) |   |   | 103,659 |   |
| Depreciation                and amortization |   |         | 17,495    |    |   | 5,596         |   |      | 4,041   |   |   | 5,285            |   |   | (c) |   |   | 32,417 |   |
| Income                taxes                  |   |         | 2,155     |    |   | (1,442        | )      |      | 44      |   |   | (2,434           | )      |   | (b,c) |   |   | (1,677 | ) |
| **Operating                income**          |   |         | 11,759    |    |   | 704           |   |      | 4,052   |   |   | (5,446           | )      |   |   |   |   | 11,069 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| Interest                income               |   |         | 6,473     |    |   | 487           |   |      | 1,303   |   |   | 834              |   |   |   |   |   | 9,097 |   |
| Other                income/(deductions)     |   |         | 1,020     |    |   | 408           |   |      | 405     |   |   | (644             | )      |   |   |   |   | 1,189 |   |
| Other                income taxes            |   |         | (2,967    | )       |   | (354          | )      |      | (677    | )      |   | (222             | )      |   |   |   |   | (4,220 | ) |
| Interest                charges              |   |         | (8,471    | )       |   | (2,905        | )      |      | (3,987  | )      |   | 2,226            |   |   |   |   |   | (13,137 | ) |
| **Segment                net income**        |   | $            | 7,814     |    | $      | (1,660        | )      | $         | 1,096   |   | $      | (3,252           | )      |   |   |   | $ | 3,998 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $            | 26,091    |    | $      | 9,774         |   | $         | 2,855   |   | $      | (3,822           | )      |   |   |   | $ | 34,898 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **At                December 31, 2005:**     |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Total                assets**              |   | $            | 1,937,811 |    | $      | 721,021       |   | $         | 421,377 |   | $      | 507,542          |   |   |   |   | $ | 3,587,751 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $9.6 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                acquisition related costs of $1.2 million and regulatory costs of                $2.3                million in operating expenses and an income tax benefit of $1.4 million                in                income taxes associated with the NMPRC’s approval of the TNP                acquisition. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                a write-off of software costs of $4.5 million in depreciation and                amortization expense and an income tax benefit of $1.8 million in                the                income taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| Segments                of Business          |   | **PNM**      |      | **PNM** |   | **PNM**       |   |      |    |   |   |             |   |
|----------------------------------------------|--------|--------------|-----------|---------|--------|---------------|--------|-----------|---------|--------|--------|------------------|--------|
|                                         |   | **Electric** |      | **Gas** |   | **Wholesale** |   | **Other** |    |   |   | **Consolidated** |   |
| **2006:**                                    |   |         |      |    |   |          |   |      |    |   |   |             |   |
| Operating                revenues            |   | $            | 280,676   |    | $      | 276,345       |   | $         | 273,374 |   | $      | (11,383          | )      |   | (a) |   | $ | 819,012 |   |
| Intersegment                revenues         |   |         | 4,438     |    |   | 141           |   |      | 27,851  |   |   | (4,332           | )      |   |   |   |   | 28,098 |   |
| **Total                revenues**            |   |         | 285,114   |    |   | 276,486       |   |      | 301,225 |   |   | (15,715          | )      |   |   |   |   | 847,110 |   |
| Less:                Cost of energy          |   |         | 88,782    |    |   | 199,859       |   |      | 251,633 |   |   | (15,602          | )      |   | (a) |   |   | 524,672 |   |
| Intersegment                energy transfer  |   |         | 3,346     |    |   | -             |   |      | (3,346  | )      |   | -                |   |   |   |   |   | - |   |
| **Gross                margin**              |   |         | 192,986   |    |   | 76,627        |   |      | 52,938  |   |   | (113             | )      |   |   |   |   | 322,438 |   |
| Operating                expenses            |   |         | 133,718   |    |   | 50,971        |   |      | 26,713  |   |   | (2,137           | )      |   |   |   |   | 209,265 |   |
| Depreciation                and amortization |   |         | 29,288    |    |   | 11,914        |   |      | 6,352   |   |   | 1,590            |   |   |   |   |   | 49,144 |   |
| Income                taxes                  |   |         | 4,924     |    |   | 3,030         |   |      | 4,834   |   |   | 920              |   |   |   |   |   | 13,708 |   |
| **Operating                income (loss)**   |   |         | 25,056    |    |   | 10,712        |   |      | 15,039  |   |   | (486             | )      |   |   |   |   | 50,321 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| Interest                income               |   |         | 13,137    |    |   | 1,733         |   |      | 2,555   |   |   | 598              |   |   |   |   |   | 18,023 |   |
| Other                income/(deductions)     |   |         | 414       |    |   | 90            |   |      | 1,021   |   |   | (611             | )      |   |   |   |   | 914 |   |
| Other                income taxes            |   |         | (5,365    | )       |   | (722          | )      |      | (1,416  | )      |   | 48               |   |   |   |   |   | (7,455 | ) |
| Interest                charges              |   |         | (17,543   | )       |   | (6,088        | )      |      | (7,663  | )      |   | 2,975            |   |   |   |   |   | (28,319 | ) |
| **Segment                net income**        |   | $            | 15,699    |    | $      | 5,725         |   | $         | 9,536   |   | $      | 2,524            |   |   |   |   | $ | 33,484 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $            | 76,430    |    | $      | 13,998        |   | $         | 9,548   |   | $      | 32               |   |   |   |   | $ | 100,008 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **At                June 30, 2006:**         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Total                assets**              |   | $            | 1,943,340 |    | $      | 616,678       |   | $         | 410,579 |   | $      | 485,720          |   |   |   |   | $ | 3,456,317 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $11.4 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| Segments                of Business          |   | **PNM**      |      | **PNM** |   | **PNM**       |   |      |    |   |   |             |   |
|----------------------------------------------|--------|--------------|-----------|---------|--------|---------------|--------|-----------|---------|--------|--------|------------------|--------|
|                                         |   | **Electric** |      | **Gas** |   | **Wholesale** |   | **Other** |    |   |   | **Consolidated** |   |
| **2005:**                                    |   |         |      |    |   |          |   |      |    |   |   |             |   |
| Operating                revenues            |   | $            | 269,805   |    | $      | 247,494       |   | $         | 271,277 |   | $      | (11,679          | )      |   | (a) |   | $ | 776,897 |   |
| Intersegment                revenues         |   |         | 3,158     |    |   | 176           |   |      | 3,009   |   |   | (3,298           | )      |   |   |   |   | 3,045 |   |
| **Total                revenues**            |   |         | 272,963   |    |   | 247,670       |   |      | 274,286 |   |   | (14,977          | )      |   |   |   |   | 779,942 |   |
| Less:                Cost of energy          |   |         | 92,401    |    |   | 167,727       |   |      | 208,965 |   |   | (14,883          | )      |   | (a) |   |   | 454,210 |   |
| Intersegment                energy transfer  |   |         | (17,535   | )       |   | -             |   |      | 17,535  |   |   | -                |   |   |   |   |   | - |   |
| **Gross                margin**              |   |         | 198,097   |    |   | 79,943        |   |      | 47,786  |   |   | (94              | )      |   |   |   |   | 325,732 |   |
| Operating                expenses            |   |         | 129,123   |    |   | 48,325        |   |      | 21,968  |   |   | 3,110            |   |   | (b) |   |   | 202,526 |   |
| Depreciation                and amortization |   |         | 35,053    |    |   | 11,172        |   |      | 8,028   |   |   | 6,109            |   |   | (c) |   |   | 60,362 |   |
| Income                taxes                  |   |         | 6,654     |    |   | 5,787         |   |      | 3,875   |   |   | (3,350           | )      |   | (b,c) |   |   | 12,966 |   |
| **Operating                income (loss)**   |   |         | 27,267    |    |   | 14,659        |   |      | 13,915  |   |   | (5,963           | )      |   |   |   |   | 49,878 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| Interest                income               |   |         | 13,689    |    |   | 1,243         |   |      | 2,647   |   |   | 724              |   |   |   |   |   | 18,303 |   |
| Other                income/(deductions)     |   |         | 1,577     |    |   | 485           |   |      | 1,338   |   |   | (231             | )      |   |   |   |   | 3,169 |   |
| Other                income taxes            |   |         | (6,044    | )       |   | (684          | )      |      | (1,578  | )      |   | 245              |   |   |   |   |   | (8,061 | ) |
| Interest                charges              |   |         | (17,114   | )       |   | (5,829        | )      |      | (8,003  | )      |   | 4,009            |   |   |   |   |   | (26,937 | ) |
| **Segment                net income**        |   | $            | 19,375    |    | $      | 9,874         |   | $         | 8,319   |   | $      | (1,216           | )      |   |   |   | $ | 36,352 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Gross                property additions**  |   | $            | 40,715    |    | $      | 18,721        |   | $         | 4,169   |   | $      | (3,718           | )      |   |   |   | $ | 59,887 |   |
|                                         |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **At                December 31, 2005:**     |   |         |      |    |   |          |   |      |    |   |   |             |   |   |   |   |   |   |   |
| **Total                assets**              |   | $            | 1,937,811 |    | $      | 721,021       |   | $         | 421,377 |   | $      | 507,542          |   |   |   |   | $ | 3,587,751 |   |

| (a)   | Reflects                EITF 03-11 impact, under which wholesale revenues and the associated                cost                of energy of $11.7 million are reclassified to a net margin basis                in                accordance with GAAP. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Includes                acquisition related costs of $1.2 million and regulatory costs of                $2.3                million in operating expenses and an income tax benefit of $1.4 million                in                income taxes associated with the NMPRC’s approval of the TNP                acquisition. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Includes                a write-off of software costs of $4.5 million in depreciation and                amortization expense and an income tax benefit of $1.8 million in                the                income taxes. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(4)                **
**Fair      Value of Commodity Financial Instruments**

***Energy      Contracts***

***Gas      Fixed-for-Float Swaps***

***Options***

***PGAC      portion of options, swaps and hedges***

*Normal      Sales and Purchases Transactions*

*“Accounting      for Derivative Instruments and Hedging Activities”*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Hedge        Accounting Transactions*

*Mark-to-Market      Transactions*

*Electricity      Contracts*

*Gas      Contracts*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                     |   | **June                30,**                   |    | **December                31,**      |   | **June                30,** |   | **December                31,** |    |
|----------------------------------------------------------|--------|-----------------------------------------------|---------|--------------------------------------|--------|-----------------------------|--------|---------------------------------|---------|
|                                                     |   | **2006**                                      |    | **2005**                             |   | **2006**                    |   | **2005**                        |    |
| **Type                of Derivative**                    |   | **Mark-to-Market                Instruments** |    | **Hedge                Instruments** |   |
|                                                     |   |                                          |    | (In                thousands)        |   |                        |   |
| **Current****Assets**                                    |   |                                          |    |                                 |   |                        |   |                            |    |
| Energy                Contracts                          |   | $                                             | 25,967  |                                 | $      | 11,650                      |   | $                               | 252     |   | $ | 6,616 |   |
| Gas                fixed for float swaps                 |   |                                          | 11,231  |                                 |   | 6,488                       |   |                            | 3,990   |   |   | 10,465 |   |
| Options                                                  |   |                                          | 1,751   |                                 |   | 3,746                       |   |                            | -       |   |   | 261 |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | 3,412   |   |   | 7,528 |   |
| Total                Current Assets                      |   |                                          | 38,949  |                                 |   | 21,884                      |   |                            | 7,654   |   |   | 24,870 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| **Deferred                Charges**                      |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| Energy                Contracts                          |   |                                          | 2,477   |                                 |   | 3,477                       |   |                            | 6,090   |   |   | - |   |
| Gas                fixed for float swaps                 |   |                                          | 768     |                                 |   | 12,459                      |   |                            | 2,056   |   |   | 13,614 |   |
| Options                                                  |   |                                          | 1,515   |                                 |   | 5,329                       |   |                            | -       |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | 1,622   |   |   | (5,906 | ) |
| Total                Deferred Charges                    |   |                                          | 4,760   |                                 |   | 21,265                      |   |                            | 9,768   |   |   | 7,708 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| **Total                Assets**                          |   | $                                             | 43,709  |                                 | $      | 43,149                      |   | $                               | 17,422  |   | $ | 32,578 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| **Current                Liabilities**                   |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| Energy                Contracts                          |   | $                                             | (23,815 | )                                    | $      | (7,333                      | )      | $                               | (209    | ) | $ | (503 | ) |
| Gas                fixed for float swaps                 |   |                                          | (11,607 | )                                    |   | (7,151                      | )      |                            | (5,410  | ) |   | (3,970 | ) |
| Options                                                  |   |                                          | (1,362  | )                                    |   | (3,293                      | )      |                            | (8,286  | ) |   | (844 | ) |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | (3,412  | ) |   | 3,942 |   |
| Total                Current Liabilities                 |   |                                          | (36,784 | )                                    |   | (17,777                     | )      |                            | (17,317 | ) |   | (1,375 | ) |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| **Long-Term Liabilities**                           |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| Energy                Contracts                          |   |                                          | (2,623  | )                                    |   | (3,444                      | )      |                            | (1,008  | ) |   | - |   |
| Gas                fixed for float swaps                 |   |                                          | (354    | )                                    |   | (12,257                     | )      |                            | (221    | ) |   | - |   |
| Options                                                  |   |                                          | (1,284  | )                                    |   | (5,143                      | )      |                            | -       |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | (1,622  | ) |   | (5,564 | ) |
| Total                Long-Term Liabilities               |   |                                          | (4,261  | )                                    |   | (20,844                     | )      |                            | (2,851  | ) |   | (5,564 | ) |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |    |   |   |   |   |
| **tTTo**tal                Liabilities****               |   | $                                             | (41,045 | )                                    | $      | (38,621                     | )      | $                               | (20,168 | ) | $ | (6,939 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                  |   | **Three                Months Ended June 30,** |   | **Six                Months Ended June 30,** |   |
|-------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------|--------|
|                                                  |   | **2006**                                       |   | **2005**                                     |   | **2006** |   | **2005** |   |
|                                                  |   |                                           |   | (In                thousands)                |   |   |   |
| Amount                realized on contracts delivered |   |                                           |   |                                         |   |   |   |   |   |
| during                period                          |   | $                                              | (3,966 | )                                            | $      | (322 | ) | $ | (4,108 | ) | $ | (254 | ) |
| Changes                in fair value                  |   |                                           | 308    |                                         |   | 211 |   |   | 2,244 |   |   | 1,066 |   |
| Net                change recorded as mark-to-market  |   | $                                              | (3,658 | )                                            | $      | (111 | ) | $ | (1,864 | ) | $ | 812 |   |

|                                                             |   | **Three                Months Ended June 30,** |   | **Six                Months Ended June 30,** |   |
|------------------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------|--------|
|                                                             |   | **2006**                                       |   | **2005**                                     |   | **2006** |   | **2005** |   |
| **Type                of Derivative**                            |   | **Hedge                Instruments**           |   |
|                                                             |   |                                           |   | (In                thousands)                |   |   |   |
| Change                in fair value of energy contracts          |   | $                                              | 6,557  |                                         | $      | 1,127 |   | $ | (988 | ) | $ | (2,194 | ) |
| Change                in fair value of gas fixed for float swaps |   |                                           | (6,133 | )                                            |   | 3,310 |   |   | (19,694 | ) |   | 9,530 |   |
| Change                in the fair value of options               |   |                                           | (2,401 | )                                            |   | 583 |   |   | (7,703 | ) |   | 583 |   |
| Net                change in fair value                          |   | $                                              | (1,977 | )                                            | $      | 5,020 |   | $ | (28,385 | ) | $ | 7,919 |   |

*Normal      Sales and Purchases Transactions*

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Hedge      Accounting Transactions*

*PGAC      *

*Gas      Off-System Sales*

*Wholesale      Electricity*

*Wholesale      Gas*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Mark-to-Market      Transactions*

*Wholesale      Electricity*

*Wholesale      Gas*

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                     |   | **June                30,**                   |    | **December                31,**      |   | **June                30,** |   | **December                31,** |   |
|----------------------------------------------------------|--------|-----------------------------------------------|---------|--------------------------------------|--------|-----------------------------|--------|---------------------------------|--------|
|                                                     |   | **2006**                                      |    | **2005**                             |   | **2006**                    |   | **2005**                        |   |
| **Type                of Derivative**                    |   | **Mark-to-Market                Instruments** |    | **Hedge                Instruments** |   |
|                                                     |   |                                          |    | (In                thousands)        |   |                        |   |
| **Current****Assets**                                    |   |                                          |    |                                 |   |                        |   |                            |   |
| Energy                Contracts                          |   | $                                             | 13,314  |                                 | $      | 6,126                       |   | $                               | 252    |   | $ | 6,616 |   |
| Gas                fixed for float swaps                 |   |                                          | 1,037   |                                 |   | 2,074                       |   |                            | 3,990  |   |   | 9,150 |   |
| Options                                                  |   |                                          | 748     |                                 |   | 2,136                       |   |                            | -      |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | 3,412  |   |   | 7,528 |   |
| Total                Current Assets                      |   |                                          | 15,099  |                                 |   | 10,336                      |   |                            | 7,654  |   |   | 23,294 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| **Deferred                Charges**                      |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| Energy                Contracts                          |   |                                          | 1,886   |                                 |   | 3,477                       |   |                            | -      |   |   | - |   |
| Gas                fixed for float swaps                 |   |                                          | 535     |                                 |   | 12,459                      |   |                            | 2,056  |   |   | 13,614 |   |
| Options                                                  |   |                                          | 1,515   |                                 |   | 5,329                       |   |                            | -      |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | 1,622  |   |   | (5,906 | ) |
| Total                Deferred Charges                    |   |                                          | 3,936   |                                 |   | 21,265                      |   |                            | 3,678  |   |   | 7,708 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| **Total                Assets**                          |   | $                                             | 19,035  |                                 | $      | 31,601                      |   | $                               | 11,332 |   | $ | 31,002 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| **Current                Liabilities**                   |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| Energy                Contracts                          |   | $                                             | (14,628 | )                                    | $      | (5,931                      | )      | $                               | (209   | ) | $ | (503 | ) |
| Gas                fixed for float swaps                 |   |                                          | (187    | )                                    |   | (351                        | )      |                            | (1,090 | ) |   | (1,255 | ) |
| Options                                                  |   |                                          | (363    | )                                    |   | (2,217                      | )      |                            | -      |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | (3,412 | ) |   | 3,942 |   |
| Total                Current Liabilities                 |   |                                          | (15,178 | )                                    |   | (8,499                      | )      |                            | (4,711 | ) |   | 2,184 |   |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| **Long-Term Liabilities**                           |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| Energy                Contracts                          |   |                                          | (2,280  | )                                    |   | (3,444                      | )      |                            | (1,008 | ) |   | - |   |
| Gas                fixed for float swaps                 |   |                                          | -       |                                 |   | (12,257                     | )      |                            | (221   | ) |   | - |   |
| Options                                                  |   |                                          | (1,284  | )                                    |   | (5,143                      | )      |                            | -      |   |   | - |   |
| PGAC                portion of options, swaps and hedges |   |                                          | -       |                                 |   | -                           |   |                            | (1,622 | ) |   | (5,564 | ) |
| Total                Long-Term Liabilities               |   |                                          | (3,564  | )                                    |   | (20,844                     | )      |                            | (2,851 | ) |   | (5,564 | ) |
|                                                     |   |                                          |    |                                 |   |                        |   |                            |   |   |   |   |   |
| **tTTo**tal                  Liabilities****             |   | $                                             | (18,742 | )                                    | $      | (29,343                     | )      | $                               | (7,562 | ) | $ | (3,380 | ) |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                  |   | **Three                Months Ended June 30,** |   | **Six                Months Ended June 30,** |   |
|-------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------|--------|
|                                                  |   | **2006**                                       |   | **2005**                                     |   | **2006** |   | **2005** |   |
|                                                  |   |                                           |   | (In                thousands)                |   |   |   |
| Amount                realized on contracts delivered |   |                                           |   |                                         |   |   |   |   |   |
| during                period                          |   | $                                              | (658   | )                                            | $      | (322 | ) | $ | (85 | ) | $ | (254 | ) |
| Changes                in fair value                  |   |                                           | (1,811 | )                                            |   | 211 |   |   | (1,880 | ) |   | 1,066 |   |
| Net                change recorded as mark-to-market  |   | $                                              | (2,469 | )                                            | $      | (111 | ) | $ | (1,965 | ) | $ | 812 |   |

|                                                             |   | **Three                months ended June 30,** |   | **Six                months ended June 30,** |   |
|------------------------------------------------------------------|--------|------------------------------------------------|--------|----------------------------------------------|--------|
|                                                             |   | **2006**                                       |   | **2005**                                     |   | **2006** |   | **2005** |   |
| **Type                of Derivative**                            |   | **Hedge                Instruments**           |   |
|                                                             |   |                                           |   | (In                thousands)                |   |   |   |
| Change                in fair value of energy contracts          |   | $                                              | 466    |                                         | $      | 1,127 |   | $ | (7,078 | ) | $ | (2,194 | ) |
| Change                in fair value of gas fixed for float swaps |   |                                           | (2,019 | )                                            |   | 2,510 |   |   | (16,774 | ) |   | 8,730 |   |
| Net                change in fair value                          |   | $                                              | (1,553 | )                                            | $      | 3,637 |   | $ | (23,852 | ) | $ | 6,536 |   |

*Normal      Sales and Purchases Transactions*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **(5)** | **Earnings                Per Share** |
|---------|---------------------------------------|

*Earnings      per Share,”*

|                                                         |   | **Three                  Months Ended**                   |   | **Six                  Months Ended** |   |
|--------------------------------------------------------------|--------|-----------------------------------------------------------|--------|---------------------------------------|--------|
|                                                         |   | **June                  30,**                             |   | **June                  30,**         |   |
|                                                         |   | **2006**                                                  |   | **2005**                              |   | **2006** |   | **2005** |   |
|                                                         |   | (In                  thousands, except per share amounts) |   |
| **Basic:**                                                   |   |                                                      |   |                                  |   |   |   |   |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |
| **Net                  Earnings**                            |   | $                                                         | 16,307 |                                  | $      | 1,541 |   | $ | 42,632 |   | $ | 32,050 |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| Average                  Number of Common Shares Outstanding |   |                                                      | 68,852 |                                  |   | 65,534 |   |   | 68,819 |   |   | 63,057 |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings per Share of**               |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Common                  Stock (Basic)**                    |   | $                                                         | 0.24   |                                  | $      | 0.02 |   | $ | 0.62 |   | $ | 0.51 |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Diluted:**                                                 |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings**                            |   | $                                                         | 16,307 |                                  | $      | 1,541 |   | $ | 42,632 |   | $ | 32,050 |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| Average                  Number of Common Shares Outstanding |   |                                                      | 68,852 |                                  |   | 65,534 |   |   | 68,819 |   |   | 63,057 |   |
| Dilutive                  Effect of Common Stock             |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| Equivalents                  (a)                             |   |                                                      | 581    |                                  |   | 955 |   |   | 530 |   |   | 953 |   |
| Average                  Common and Common                   |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| Equivalent                  Shares Outstanding               |   |                                                      | 69,433 |                                  |   | 66,489 |   |   | 69,349 |   |   | 64,010 |   |
|                                                         |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Net                  Earnings per Share of Common**        |   |                                                      |   |                                  |   |   |   |   |   |   |   |   |   |
| **Stock                  (Diluted)**                         |   | $                                                         | 0.23   |                                  | $      | 0.02 |   | $ | 0.61 |   | $ | 0.50 |   |

|   | (a) | Excludes                    the effect of average anti-dilutive common stock equivalents                    related to                    out-of-the-money options of 661,855 and 4,154 for the three months                    and                    736,869 and 232,006 for the six months ended June 30, 2006 and                    2005,                    respectively. Excludes the effect of anti-dilutive equity-linked                    units of                    4,945,000 for the three and six months ended June 30, 2006 and                    2005 (see                    Note 7). |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **(6)** | **Stock-Based                Compensation** |
|---------|---------------------------------------------|

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*“Share-Based      Payment*
*"Accounting      for Stock Issued to Employees"*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                       |   | **Three** **Months****Ended**                                     |   | **Six                Months****Ended** |   |
|------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                       |   | **June                30, 2006**                                       |   |
|                                                       |   | (In                thousands, except per share                amounts) |   |
|                                                       |   |                                                                   |   |                                   |   |
| Reduction                - PNMR income from operations     |   | $                                                                      | 807    |                                   | $      | 3,515 |   |
| Reduction                - PNMR income before income taxes |   | $                                                                      | 807    |                                   | $      | 3,515 |   |
| Reduction                - PNMR net earnings               |   | $                                                                      | 492    |                                   | $      | 2,142 |   |
| Reduction                - PNMR earnings per share         |   |                                                                   |   |                                   |   |   |   |
| Basic                                                      |   | $                                                                      | 0.01   |                                   | $      | 0.03 |   |
| Diluted                                                    |   | $                                                                      | 0.01   |                                   | $      | 0.03 |   |

*“Share-Based      Payment*

|                                                          |   | **Three** **Months****Ended**                                     |   | **Six                Months****Ended** |   |
|---------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                          |   | **June                30, 2005**                                       |   |
|                                                          |   | (In                thousands, except per share                amounts) |   |
|                                                          |   |                                                                   |   |                                   |   |
| Net                earnings                                   |   | $                                                                      | 1,541  |                                   | $      | 32,050 |   |
| Add:                Stock compensation expense included       |   |                                                                   |   |                                   |   |   |   |
| in                reported income, net of related tax effects |   |                                                                   | -      |                                   |   | - |   |
| Deduct:                Total stock-based employee             |   |                                                                   |   |                                   |   |   |   |
| compensation                expense determined                |   |                                                                   |   |                                   |   |   |   |
| under                fair value based method for all          |   |                                                                   |   |                                   |   |   |   |
| awards,                net of related tax effects             |   |                                                                   | (346   | )                                      |   | (693 | ) |
| Pro                forma net earnings                         |   | $                                                                      | 1,195  |                                   | $      | 31,357 |   |
|                                                          |   |                                                                   |   |                                   |   |   |   |
| Earnings                per share:                            |   |                                                                   |   |                                   |   |   |   |
| Basic                - as reported                            |   | $                                                                      | 0.02   |                                   | $      | 0.51 |   |
|                                                          |   |                                                                   |   |                                   |   |   |   |
| Basic                - pro forma                              |   | $                                                                      | 0.02   |                                   | $      | 0.50 |   |
|                                                          |   |                                                                   |   |                                   |   |   |   |
| Diluted                - as reported                          |   | $                                                                      | 0.02   |                                   | $      | 0.50 |   |
|                                                          |   |                                                                   |   |                                   |   |   |   |
| Diluted                - pro forma                            |   | $                                                                      | 0.02   |                                   | $      | 0.49 |   |

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Stock      Options*

|                                           | **Six                Months Ended** |
|------------------------------------------------|-------------------------------------|
|                                           | **June                30,**         |
|                                           | **2006**                            |   | **2005** |
|                                           |                                |   |   |
| Dividend                yield                  | 3.33%                               |   | 2.55% |
| Expected                volatility             | 21.70%                              |   | 24.29% |
| Risk-free                interest rate         | 4.37%                               |   | 3.79% |
| Expected                life of option (years) | 4.14            |   | 4.23     |

|                                                |   |                                                              |      | **Weighted-** |   |          |   | **Weighted-**                    |   |
|-----------------------------------------------------|--------|-------------------------------------------------------------------|-----------|---------------|--------|---------------|--------|----------------------------------|--------|
|                                                |   |                                                              |      | **Average**   |   | **Aggregate** |   | **Average**                      |   |
|                                                |   |                                                              |      | **Exercise**  |   | **Intrinsic** |   | **Remaining**                    |   |
| **Stock                Options**                    |   | **Shares**                                                        |      | **Price**     |   | **Value**     |   | **Contract                Life** |   |
|                                                |   | (In                thousands, except share and per share amounts) |      |
|                                                |   |                                                              |      |          |   |          |   |                             |   |
| Outstanding                at beginning of period   |   |                                                              | 3,016,549 |          | $      | 18.97         |   |                             |   |   |   |   |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Granted                                             |   |                                                              | 817,200   |          | $      | 24.07         |   |                             |   |   |   |   |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Exercised                                           |   |                                                              | (268,576  | )             | $      | 15.59         |   |                             |   |   |   |   |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Forfeited                or expired                 |   |                                                              | (79,294   | )             | $      | 21.53         |   |                             |   |   |   |   |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Outstanding                at end of period         |   |                                                              | 3,485,879 |          | $      | 20.37         |   | $                                | 16,000 |   |   | 7.44                Years |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Options                exercisable at end of period |   |                                                              | 2,057,966 |          | $      | 17.51         |   | $                                | 15,331 |   |   | 6.29                Years |   |
|                                                |   |                                                              |      |          |   |          |   |                             |   |   |   |   |   |
| Options                available for future grant   |   |                                                              | 3,325,987 |          |   |          |   |                             |   |   |   |   |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **Stock                Options**                                            |   | **2006**                                                               |   | **2005** |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|----------|--------|
|                                                                        |   | (In                thousands, except                per share amounts) |   |
|                                                                        |   |                                                                   |   |     |   |
| Weighted-average                grant date fair value of options granted    |   | $                                                                      | 3.87   |     | $      | 5.41 |   |
| Total                fair value of options that vested during the period    |   | $                                                                      | 4,632  |     | $      | 4,322 |   |
| Total                intrinsic value of options exercised during the period |   | $                                                                      | 2,556  |     | $      | 11,547 |   |

*Restricted      Stock*

|                                                  | **Six                Months Ended**     |
|-------------------------------------------------------|-----------------------------------------|
|                                                  | **June                30,**             |
|                                                  | **2006**                                |   | **2005** |
|                                                  |                                    |   |   |
| Expected                quarterly dividends per share | $0.20                                   |   | N/A |
| Risk-free                interest rate                |                    4.64% |   | N/A |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                            |   |       |    | **Weighted-**                 |   |
|-------------------------------------------------|--------|------------|---------|-------------------------------|--------|
|                                            |   |       |    | **Average**                   |   |
|                                            |   |       |    | **Grant-Date**                |   |
| **Nonvested                Restricted Stock**   |   | **Shares** |    | **Fair                Value** |   |
|                                            |   |       |    |                          |   |
| Nonvested                at beginning of period |   |       | 109,044 |                          | $      | 24.92 |   |
|                                            |   |       |    |                          |   |   |   |
| Granted                                         |   |       | 105,400 |                          | $      | 21.86 |   |
|                                            |   |       |    |                          |   |   |   |
| Vested                                          |   |       | (39,571 | )                             | $      | 24.69 |   |
|                                            |   |       |    |                          |   |   |   |
| Forfeited                                       |   |       | (6,684  | )                             | $      | 22.35 |   |
|                                            |   |       |    |                          |   |   |   |
| Nonvested                at end of period       |   |       | 168,189 |                          | $      | 23.17 |   |

| **Nonvested                Restricted Stock**                           |   | **2006**                                                              |   | **2005** |   |
|-------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|----------|--------|
|                                                                    |   | (In                thousands,except                per share amounts) |   |
|                                                                    |   |                                                                  |   |     |   |
| Weighted-average                grant date fair value of shares granted |   | $                                                                     | 21.86  |     | $      | 26.80 |   |
| Total                fair value of shares that vested during the period |   | $                                                                     | 977    |     | $      | 276 |   |

*Performance      Shares*

*ESPP*

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **(7)** | **Capitalization** |
|---------|--------------------|

*Long-Term      Debt*

*Revolving      and Other Credit Facilities *

*Financing      Activities*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Long-Term      Debt*

*Revolving      and Other Credit Facilities *

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*Financing      Activities*

*Revolving      and Other Credit Facilities *

| **(8)** | **Pension                and Other Postretirement Benefit                Plans** |
|---------|----------------------------------------------------------------------------------|

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                               |   | **Three                Months Ended June 30,** |    |
|----------------------------------------------------|--------|------------------------------------------------|---------|
|                                               |   | **Pension                Plan**                |    | **Other                Postretirement Benefits** |   | **Executive                Retirement Program** |   |
|                                               |   | **2006**                                       |    | **2005** |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                               |   |                                           |    |   |   | (In                thousands) |   |   |   |   |   |
|                                               |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Service                cost                        |   | $                                              | 126     |   | $ | 477 |   | $ | 678 |   | $ | 645 |   | $ | 14 |   | $ | 16 |   |
| Interest                cost                       |   |                                           | 7,710   |   |   | 7,567 |   |   | 1,842 |   |   | 1,648 |   |   | 264 |   |   | 295 |   |
| Expected                long-term return on assets |   |                                           | (10,139 | ) |   | (10,042 | ) |   | (1,355 | ) |   | (1,318 | ) |   | - |   |   | - |   |
| Amortization                of net loss            |   |                                           | 1,210   |   |   | 892 |   |   | 1,670 |   |   | 1,490 |   |   | 25 |   |   | 43 |   |
| Amortization                of prior service cost  |   |                                           | 79      |   |   | 79 |   |   | (1,422 | ) |   | (1,702 | ) |   | 3 |   |   | 34 |   |
| Net                periodic benefit cost/(income)  |   | $                                              | (1,014  | ) | $ | (1,027 | ) | $ | 1,413 |   | $ | 763 |   | $ | 306 |   | $ | 388 |   |

|                                               |   | **Six                Months Ended June 30,** |    |
|----------------------------------------------------|--------|----------------------------------------------|---------|
|                                               |   | **Pension                Plan**              |    | **Other                Postretirement Benefits** |   | **Executive                Retirement Program** |   |
|                                               |   | **2006**                                     |    | **2005** |   | **2006** |   | **2005** |   | **2006** |   | **2005** |   |
|                                               |   |                                         |    |   |   | (In                thousands) |   |   |   |   |   |
|                                               |   |                                         |    |   |   |   |   |   |   |   |   |   |   |
| Service                cost                        |   | $                                            | 252     |   | $ | 954 |   | $ | 1,356 |   | $ | 1,290 |   | $ | 28 |   | $ | 32 |   |
| Interest                cost                       |   |                                         | 15,420  |   |   | 15,134 |   |   | 3,684 |   |   | 3,296 |   |   | 528 |   |   | 590 |   |
| Expected                long-term return on assets |   |                                         | (20,277 | ) |   | (20,084 | ) |   | (2,709 | ) |   | (2,636 | ) |   | - |   |   | - |   |
| Amortization                of net loss            |   |                                         | 2,420   |   |   | 1,784 |   |   | 3,340 |   |   | 2,980 |   |   | 50 |   |   | 86 |   |
| Amortization                of prior service cost  |   |                                         | 158     |   |   | 158 |   |   | (2,844 | ) |   | (3,404 | ) |   | 6 |   |   | 68 |   |
| Net                periodic benefit cost/(income)  |   | $                                            | (2,027  | ) | $ | (2,054 | ) | $ | 2,827 |   | $ | 1,526 |   | $ | 612 |   | $ | 776 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                            |   | **Three                Months Ended June 30,** |   |
|-----------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                            |   |                                           |   |   |   |   |   |   |
|                                                            |   | **Post-**                                      |   | **Post-** |   |   | **Pre-** |   |
|                                                            |   | **Acquisition**                                |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                            |   | **April                1-**                    |   | **June                6-** |   |   | **April                1-** |   |
|                                                            |   | **June                30,**                    |   | **June                30,** |   |   | **June                6,** |   |
|                                                            |   | **2006**                                       |   | **2005** |   |   | **2005** |   |
|                                                            |   | (In                thousands)                  |   |
|                                                            |   |                                           |   |   |   |   |   |   |
| Service                cost                                     |   | $                                              | -      |   | $ | 187 |   |   | $ | 343 |   |
| Interest                cost                                    |   |                                           | 1,085  |   |   | 345 |   |   |   | 759 |   |
| Expected                long-term rate of return on plan assets |   |                                           | (1,754 | ) |   | (573 | ) |   |   | (966 | ) |
| Amortization                of prior service cost               |   |                                           | -      |   |   | - |   |   |   | (20 | ) |
| Net                periodic pension benefit cost/(income)       |   | $                                              | (669   | ) | $ | (41 | ) |   | $ | 116 |   |

|                                                            |   | **Six                Months Ended June 30,** |   |
|-----------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                            |   |                                         |   |   |   |   |   |   |
|                                                            |   | **Post-**                                    |   | **Post-** |   |   | **Pre-** |   |
|                                                            |   | **Acquisition**                              |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                            |   | **January                1-**                |   | **June                6-** |   |   | **January                1-** |   |
|                                                            |   | **June                30,**                  |   | **June                30,** |   |   | **June                6,** |   |
|                                                            |   | **2006**                                     |   | **2005** |   |   | **2005** |   |
|                                                            |   | (In                thousands)                |   |
|                                                            |   |                                         |   |   |   |   |   |   |
| Service                cost                                     |   | $                                            | -      |   | $ | 187 |   |   | $ | 848 |   |
| Interest                cost                                    |   |                                         | 2,170  |   |   | 345 |   |   |   | 1,875 |   |
| Expected                long-term rate of return on plan assets |   |                                         | (3,508 | ) |   | (573 | ) |   |   | (2,387 | ) |
| Amortization                of prior service cost               |   |                                         | -      |   |   | - |   |   |   | (49 | ) |
| Net                periodic pension benefit cost/(income)       |   | $                                            | (1,338 | ) | $ | (41 | ) |   | $ | 287 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                            |   | **Three                Months Ended June 30,** |   |
|-----------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                            |   |                                           |   |
|                                                            |   | **Post-**                                      |   | **Post-** |   |   | **Pre-** |   |
|                                                            |   | **Acquisition**                                |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                            |   | **April                1-**                    |   | **June                6-** |   |   | **April                1-** |   |
|                                                            |   | **June                30,**                    |   | **June                30,** |   |   | **June                6,** |   |
|                                                            |   | **2006**                                       |   | **2005** |   |   | **2005** |   |
|                                                            |   | (In                thousands)                  |   |
|                                                            |   |                                           |   |   |   |   |   |   |
| Service                cost                                     |   | $                                              | 106    |   | $ | 40 |   |   | $ | 79 |   |
| Interest                cost                                    |   |                                           | 178    |   |   | 52 |   |   |   | 114 |   |
| Expected                long-term rate of return on plan assets |   |                                           | (114   | ) |   | (33 | ) |   |   | (55 | ) |
| Amortization                of transition obligation            |   |                                           | -      |   |   | - |   |   |   | 55 |   |
| Amortization                of prior service cost               |   |                                           | 15     |   |   | - |   |   |   | - |   |
| Net                periodic postretirement benefit cost         |   | $                                              | 185    |   | $ | 59 |   |   | $ | 193 |   |

|                                                            |   | **Six                Months Ended June 30,** |   |
|-----------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                            |   |                                         |   |   |   |   |   |   |
|                                                            |   | **Post-**                                    |   | **Post-** |   |   | **Pre-** |   |
|                                                            |   | **Acquisition**                              |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                            |   | **January                1-**                |   | **June                6-** |   |   | **January                1-** |   |
|                                                            |   | **June                30,**                  |   | **June                30,** |   |   | **June                6,** |   |
|                                                            |   | **2006**                                     |   | **2005** |   |   | **2005** |   |
|                                                            |   | (In                thousands)                |   |
|                                                            |   |                                         |   |   |   |   |   |   |
| Service                cost                                     |   | $                                            | 212    |   | $ | 40 |   |   | $ | 195 |   |
| Interest                cost                                    |   |                                         | 356    |   |   | 52 |   |   |   | 282 |   |
| Expected                long-term rate of return on plan assets |   |                                         | (228   | ) |   | (33 | ) |   |   | (136 | ) |
| Amortization                of transition obligation            |   |                                         | -      |   |   | - |   |   |   | 136 |   |
| Amortization                of prior service cost               |   |                                         | 30     |   |   | - |   |   |   | - |   |
| Net                periodic postretirement benefit cost         |   | $                                            | 370    |   | $ | 59 |   |   | $ | 477 |   |

----

**PNM              RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC              SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW              MEXICO POWER COMPANY**
**AND              SUBSIDIARIES**

**NOTES              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                          |   | **Three                Months Ended June 30,** |   |
|---------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                          |   |                                           |   |   |   |   |   |   |
|                                                          |   | **Post-**                                      |   | **Post-** |   |   | **Pre-** |   |
|                                                          |   | **Acquisition**                                |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                          |   | **April                1-**                    |   | **June                6-** |   |   | **April                1-** |   |
|                                                          |   | **June                30,**                    |   | **June                30,** |   |   | **June                6,** |   |
|                                                          |   | **2006**                                       |   | **2005** |   |   | **2005** |   |
|                                                          |   | (In                thousands)                  |   |
|                                                          |   |                                           |   |   |   |   |   |   |
| Service                cost                                   |   | $                                              | -      |   | $ | - |   |   | $ | 16 |   |
| Interest                cost                                  |   |                                           | 19     |   |   | 6 |   |   |   | 32 |   |
| Amortization                of net loss                       |   |                                           | -      |   |   | - |   |   |   | 18 |   |
| Amortization                of prior service cost             |   |                                           | -      |   |   | - |   |   |   | (14 | ) |
| Net                periodic executive retirement program cost |   | $                                              | 19     |   | $ | 6 |   |   | $ | 52 |   |

|                                                          |   | **Six                Months Ended June 30,** |   |
|---------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                          |   |                                         |   |   |   |   |   |   |
|                                                          |   | **Post-**                                    |   | **Post-** |   |   | **Pre-** |   |
|                                                          |   | **Acquisition**                              |   | **Acquisition** |   |   | **Acquisition** |   |
|                                                          |   | **January                1-**                |   | **June                6-** |   |   | **January                1-** |   |
|                                                          |   | **June                30,**                  |   | **June                30,** |   |   | **June                6,** |   |
|                                                          |   | **2006**                                     |   | **2005** |   |   | **2005** |   |
|                                                          |   | (In                thousands)                |   |
|                                                          |   |                                         |   |   |   |   |   |   |
| Service                cost                                   |   | $                                            | -      |   | $ | - |   |   | $ | 40 |   |
| Interest                cost                                  |   |                                         | 38     |   |   | 6 |   |   |   | 78 |   |
| Amortization                of net loss                       |   |                                         | -      |   |   | - |   |   |   | 45 |   |
| Amortization                of prior service cost             |   |                                         | -      |   |   | - |   |   |   | (35 | ) |
| Net                periodic executive retirement program cost |   | $                                            | 38     |   | $ | 6 |   |   | $ | 128 |   |

| **(9)** | **Commitments                and Contingencies** |
|---------|--------------------------------------------------|

*Accounting      for Contingencies*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Conflicts      at San Juan Mine Involving Oil and Gas Leaseholders**

**Asbestos      Cases**

**New      Source Review Rules**

**Four      Corners Federal Implementation Plan Litigation**

**SESCO      Matter**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**California      Refund Proceeding**

* *

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**California      Antitrust Litigation**

**Generation      Market Power Filings**

**FERC      Office of Market Oversight and Investigations**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**SESCO      Matter**

| **(10)** | **Regulatory                and Rate Matters** |
|----------|------------------------------------------------|

**Price-to-Beat      Base Rate Reset**

**Energy      Agreement**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Gas      Rate Case**

**Transmission      Rate Case**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Complaint      Against Southwestern Public Service Company**

**TNMP      True-Up Proceeding**

**60-Day      Rate Review**

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **(11)** | **Variable                Interest Entities** |
|----------|-----------------------------------------------|

*“Consolidation      of Variable Interest Entities”*

| **(12)** | **Related                Party Transactions** |
|----------|-----------------------------------------------|

*Related      Party Disclosures*

----

**PNM                RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC                SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW                MEXICO POWER COMPANY**
**AND                SUBSIDIARIES**

**NOTES                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                     |   | **Three                Months Ended** |   | **Six                Months Ended** |   |
|----------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
|                                                     |   | **June                30,**           |   | **June                30,**         |   |
|                                                     |   | **2006**                              |   | **2005**                            |   | **2006** |   | **2005** |   |
|                                                     |   |                                  |   | (In                thousands)       |   |   |   |
| **PNMR                Transactions with PNM**            |   |                                  |   |                                |   |   |   |   |   |
| Shared                services billings from PNMR to PNM |   | $                                     | 30,759 |                                | $      | 25,754 |   | $ | 62,376 |   | $ | 51,290 |   |
|                                                     |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **PNM                Transactions with TNMP**            |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Electricity                & energy-scheduling       |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| billings                to TNMP                          |   | $                                     | 12,358 |                                | $      | 2,904 |   | $ | 27,371 |   | $ | 2,904 |   |
|                                                     |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |

|                                                                                       |   | **June                  30, 2006** |   | **December                  31, 2005** |   |
|--------------------------------------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------------|--------|
|                                                                                       |   | (In                  thousands)    |   |
| PNM                  payable to PNMR                                                       |   | $61,274                            |   | $50,070                                |   |
|                                                                                       |   |                               |   |                                   |   |
|  PNM                receivable from TNMP net                of transmission purchases |   |  $                  8,613     |   |  $                  4,130         |   |

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                                 |   | **Three                Months Ended** |   | **Six                Months Ended** |   |
|----------------------------------------------------------------------|--------|---------------------------------------|--------|-------------------------------------|--------|
|                                                                 |   | **June                30,**           |   | **June                30,**         |   |
|                                                                 |   | **2006**                              |   | **2005**                            |   | **2006** |   | **2005** |   |
|                                                                 |   |                                  |   | (In                thousands)       |   |   |   |
| **TNMP                Transactions with PNMR**                       |   |                                  |   |                                |   |   |   |   |   |
| Shared                services billings from PNMR                    |   | $                                     | 8,948  |                                | $      | 1,145 |   | $ | 18,288 |   | $ | 1,145 |   |
|                                                                 |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **TNMP                Transactions with PNM**                        |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Electricity                & energy-scheduling billings from PNM |   | $                                     | 12,358 |                                | $      | 2,904 |   | $ | 27,371 |   | $ | 2,904 |   |
|                                                                 |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| **TNMP                Transactions with First Choice**               |   |                                  |   |                                |   |   |   |   |   |   |   |   |   |
| Transmission                service billing to First Choice          |   | $                                     | 17,880 |                                | $      | 7,502 |   | $ | 33,167 |   | $ | 7,502 |   |

|                                                                        |   | **June                30, 2006** |   | **December                31, 2005** |
|-----------------------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------------|
|                                                                        |   | (In                thousands)    |
| TNMP                payable to PNMR                                         |   | $                8,932           |   | $3,043                               |
|                                                                        |   |                             |   |                                 |
| TNMP                payable to PNM net                of transmission sales |   | $                8,613           |   | $4,130                               |
|                                                                        |   |                             |   |                                 |
| TNMP                receivable from First Choice                            |   | $10,809                          |   | $9,565                               |

----

**PNM            RESOURCES, INC. AND SUBSIDIARIES**

**PUBLIC            SERVICE COMPANY OF NEW MEXICO AND SUBSIDIARY**

**TEXAS-NEW            MEXICO POWER COMPANY**
**AND            SUBSIDIARIES**

**NOTES            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

| **(13)** | **New                Accounting Pronouncements** |
|----------|--------------------------------------------------|

*Accounting      for Uncertainty in Income Taxes*

*** ***
*“Accounting      for Certain Hybrid Instruments," (an Amendment of FASB Statements No. 133 and      140)” *

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**RESULTS      OF OPERATIONS - EXECUTIVE SUMMARY**

*PVNGS      Operations*

*Business      and Strategy*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

*Segment      Information*

**RESULTS      OF OPERATIONS - PNMR**

**THREE      MONTHS ENDED JUNE 30, 2006 **

**COMPARED      TO THREE MONTHS ENDED JUNE 30, 2005**

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**Regulated      Operations**

**PNM      Electric **

|                                                 |   | **Three                Months Ended** |        |     |   |
|------------------------------------------------------|--------|---------------------------------------|-------------|----------|--------|
|                                                 |   | **June                30,**           |        |     |   |
|                                                 |   | **2006**                              |        | **2005** |   | **Variance** |   |
|                                                 |   | (In                thousands)         |        |
| **Operating                revenues**                |   | **$**                                 | **146,336** |     | **$**  | **138,781** |   | **$** | **7,555** |   |
| Less:                Cost of energy                  |   |                                  | 43,308      |     |   | 44,998 |   |   | (1,690 | ) |
| Intersegment                energy transfer          |   |                                  | 8,524       |     |   | (3,412 | ) |   | 11,936 |   |
| **Gross                margin**                      |   |                                  | **94,504**  |     |   | **97,195** |   |   | **(2,691** | **)** |
| Energy                production costs               |   |                                  | 30,874      |     |   | 31,800 |   |   | (926 | ) |
| Transmission                and distribution O&M |   |                                  | 8,723       |     |   | 7,240 |   |   | 1,483 |   |
| Customer                related expense              |   |                                  | 4,228       |     |   | 4,679 |   |   | (451 | ) |
| Administrative                and general            |   |                                  | (1,054      | )        |   | 2,723 |   |   | (3,777 | ) |
| **Total                non-fuel O&M**            |   |                                  | **42,771**  |     |   | **46,442** |   |   | **(3,671** | **)** |
| Corporate                allocation                  |   |                                  | 18,515      |     |   | 14,753 |   |   | 3,762 |   |
| Depreciation                and amortization         |   |                                  | 14,316      |     |   | 17,495 |   |   | (3,179 | ) |
| Taxes                other than income taxes         |   |                                  | 5,278       |     |   | 4,591 |   |   | 687 |   |
| Income                taxes                          |   |                                  | 1,852       |     |   | 2,155 |   |   | (303 | ) |
| **Total                non-fuel operating expenses** |   |                                  | **82,732**  |     |   | **85,436** |   |   | **(2,704** | **)** |
| **Operating                income**                  |   | **$**                                 | **11,772**  |     | **$**  | **11,759** |   | **$** | **13** |   |

**PNM      Electric Revenues**

|                             |   | **Three                Months Ended**           |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **June                30,**                     |    |     |   |
|                             |   | **2006**                                        |    | **2005** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 52,026  |     | $      | 50,044 |   | $ | 1,982 |   |
| Commercial                       |   |                                            | 65,572  |     |   | 63,723 |   |   | 1,849 |   |
| Industrial                       |   |                                            | 15,588  |     |   | 15,340 |   |   | 248 |   |
| Transmission                     |   |                                            | 7,193   |     |   | 4,574 |   |   | 2,619 |   |
| Other                            |   |                                            | 5,957   |     |   | 5,100 |   |   | 857 |   |
|                             |   | $                                               | 146,336 |     | $      | 138,781 |   | $ | 7,555 |   |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 428,626 |     |   | 416,231 |   |   | 12,395 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Electric Sales**

|        |   | **Three                Months Ended** |      |     |   |
|-------------|--------|---------------------------------------|-----------|----------|--------|
|        |   | **June                30,**           |      |     |   |
|        |   | **2006**                              |      | **2005** |   | **Variance** |   |
|        |   | (Megawatt                hours)       |      |
| Residential |   |                                  | 647,422   |     |   | 606,419 |   |   | 41,003 |   |
| Commercial  |   |                                  | 929,221   |     |   | 872,242 |   |   | 56,979 |   |
| Industrial  |   |                                  | 332,579   |     |   | 317,672 |   |   | 14,907 |   |
| Other       |   |                                  | 71,558    |     |   | 62,147 |   |   | 9,411 |   |
|        |   |                                  | 1,980,780 |     |   | 1,858,480 |   |   | 122,300 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**TNMP      Electric**

|                                                 |   | **Three                Months Ended** |       |  **For                the Period**                |   |
|------------------------------------------------------|--------|---------------------------------------|------------|--------------------------------------------------------|--------|
|                                                 |   | **June                30,**           |       | **June                6 -****June                30,** |   |
|                                                 |   | **2006**                              |       | **2005**                                               |   |
|                                                 |   | (In                thousands)         |       |
| **Operating                revenues**                |   | **$**                                 | **61,456** |                                                   | **$**  | **19,235** |   |
| Less:                Cost of energy                  |   |                                  | 22,652     |                                                   |   | 6,702 |   |
| **Gross                margin**                      |   |                                  | **38,804** |                                                   |   | **12,533** |   |
| Transmission                and distribution O&M |   |                                  | 5,399      |                                                   |   | 1,150 |   |
| Customer                related expense              |   |                                  | 1,396      |                                                   |   | 302 |   |
| Administrative                and general            |   |                                  | (114       | )                                                      |   | 288 |   |
| **Total                non-fuel O&M**            |   |                                  | **6,681**  |                                                   |   | **1,740** |   |
| Corporate                allocation                  |   |                                  | 8,404      |                                                   |   | 1,461 |   |
| Depreciation                and amortization         |   |                                  | 7,831      |                                                   |   | 2,085 |   |
| Taxes                other than income taxes         |   |                                  | 5,872      |                                                   |   | 1,885 |   |
| Income                taxes                          |   |                                  | 1,239      |                                                   |   | 1,175 |   |
| **Total                non-fuel operating expenses** |   |                                  | **30,027** |                                                   |   | **8,346** |   |
| **Operating                income**                  |   | **$**                                 | **8,777**  |                                                   | **$**  | **4,187** |   |

**TNMP      Electric Revenues**

|                               |   | **Three                Months Ended**           |    |  **For                the Period** |   |
|------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------|--------|
|                               |   | **June                30,**                     |    | **June                6 - June 30,**    |   |
|                               |   | **2006**                                        |    | **2005**                                |   |
|                               |   | (In                thousands, except customers) |    |
| Residential                        |   | $                                               | 20,651  |                                    | $      | 7,857 |   |
| Commercial                         |   |                                            | 22,661  |                                    |   | 6,522 |   |
| Industrial                         |   |                                            | 8,576   |                                    |   | 2,607 |   |
| Other                              |   |                                            | 9,568   |                                    |   | 2,249 |   |
|                               |   | $                                               | 61,456  |                                    | $      | 19,235 |   |
|                               |   |                                            |    |                                    |   |   |   |
| Average                customers * |   |                                            | 262,268 |                                    |   | 258,251 |   |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**TNMP      Electric Sales ***

|        |   | **Three                Months****Ended** |      |  **For                the Period** |   |
|-------------|--------|------------------------------------------|-----------|-----------------------------------------|--------|
|        |   | **June                30,**              |      | **June                6 - June 30,**    |   |
|        |   | **2006**                                 |      | **2005**                                |   |
|        |   | (Megawatt                hours)          |      |
| Residential |   |                                     | 806,148   |                                    |   | 275,271 |   |
| Commercial  |   |                                     | 931,064   |                                    |   | 189,767 |   |
| Industrial  |   |                                     | 401,524   |                                    |   | 144,791 |   |
| Other       |   |                                     | 31,756    |                                    |   | 8,590 |   |
|        |   |                                     | 2,170,492 |                                    |   | 618,419 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Gas**

|                                                 |   | **Three                Months Ended** |       |     |   |
|------------------------------------------------------|--------|---------------------------------------|------------|----------|--------|
|                                                 |   | **June                30,**           |       |     |   |
|                                                 |   | **2006**                              |       | **2005** |   | **Variance** |   |
|                                                 |   | (In                thousands)         |       |
| **Operating                revenues**                |   | **$**                                 | **68,961** |     | **$**  | **82,384** |   | **$** | **(13,423** | **)** |
| Less:                Cost of energy                  |   |                                  | 42,168     |     |   | 53,292 |   |   | (11,124 | ) |
| **Gross                margin**                      |   |                                  | **26,793** |     |   | **29,092** |   |   | **(2,299** | **)** |
| Energy                production costs               |   |                                  | 615        |     |   | 569 |   |   | 46 |   |
| Transmission                and distribution O&M |   |                                  | 7,186      |     |   | 6,672 |   |   | 514 |   |
| Customer                related expense              |   |                                  | 4,609      |     |   | 5,038 |   |   | (429 | ) |
| Administrative                and general            |   |                                  | (233       | )        |   | 1,384 |   |   | (1,617 | ) |
| **Total                non-fuel O&M**            |   |                                  | **12,177** |     |   | **13,663** |   |   | **(1,486** | **)** |
| Corporate                allocation                  |   |                                  | 11,559     |     |   | 8,514 |   |   | 3,045 |   |
| Depreciation                and amortization         |   |                                  | 5,994      |     |   | 5,596 |   |   | 398 |   |
| Taxes                other than income taxes         |   |                                  | 2,145      |     |   | 2,057 |   |   | 88 |   |
| Income                taxes                          |   |                                  | (3,236     | )        |   | (1,442 | ) |   | (1,794 | ) |
| **Total                non-fuel operating expenses** |   |                                  | **28,639** |     |   | **28,388** |   |   | **251** |   |
| **Operating                income/(loss)**           |   | **$**                                 | **(1,846** | **)**    | **$**  | **704** |   | **$** | **(2,550** | **)** |

**PNM      Gas Revenues**

|                             |   | **Three                Months Ended**           |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **June                30,**                     |    |     |   |
|                             |   | **2006**                                        |    | **2005** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 38,514  |     | $      | 43,350 |   | $ | (4,836 | ) |
| Commercial                       |   |                                            | 13,363  |     |   | 13,418 |   |   | (55 | ) |
| Industrial                       |   |                                            | 1,514   |     |   | 282 |   |   | 1,232 |   |
| Transportation*                  |   |                                            | 2,827   |     |   | 3,129 |   |   | (302 | ) |
| Other                            |   |                                            | 12,743  |     |   | 22,205 |   |   | (9,462 | ) |
|                             |   | $                                               | 68,961  |     | $      | 82,384 |   | $ | (13,423 | ) |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 480,502 |     |   | 469,797 |   |   | 10,705 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Gas Throughput**

|            |   | **Three                Months Ended**    |   |     |   |
|-----------------|--------|------------------------------------------|--------|----------|--------|
|            |   | **June                30,**              |   |     |   |
|            |   | **2006**                                 |   | **2005** |   | **Variance** |   |
|            |   | (Thousands                of decatherms) |   |
| Residential     |   |                                     | 3,058  |     |   | 3,946 |   |   | (888 | ) |
| Commercial      |   |                                     | 1,391  |     |   | 1,576 |   |   | (185 | ) |
| Industrial      |   |                                     | 195    |     |   | 45 |   |   | 150 |   |
| Transportation* |   |                                     | 9,371  |     |   | 9,102 |   |   | 269 |   |
| Other           |   |                                     | 1,501  |     |   | 3,194 |   |   | (1,693 | ) |
|            |   |                                     | 15,516 |     |   | 17,863 |   |   | (2,347 | ) |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**Unregulated      Operations**

**Wholesale**

|                                                 |   | **Three                Months Ended** |        |     |   |
|------------------------------------------------------|--------|---------------------------------------|-------------|----------|--------|
|                                                 |   | **June                30,**           |        |     |   |
|                                                 |   | **2006**                              |        | **2005** |   | **Variance** |   |
|                                                 |   | (In                thousands)         |        |
| **Operating                revenues**                |   | **$**                                 | **154,494** |     | **$**  | **142,282** |   | **$** | **12,212** |   |
| Less:                Cost of energy                  |   |                                  | 119,869     |     |   | 119,653 |   |   | 216 |   |
| Intersegment                energy transfer          |   |                                  | (8,524      | )        |   | 3,412 |   |   | (11,936 | ) |
| **Gross                margin**                      |   |                                  | **43,149**  |     |   | **19,217** |   |   | **23,932** |   |
| Energy                production costs               |   |                                  | 12,238      |     |   | 7,447 |   |   | 4,791 |   |
| Transmission                and distribution O&M |   |                                  | 31          |     |   | 13 |   |   | 18 |   |
| Customer                related expense              |   |                                  | 304         |     |   | 104 |   |   | 200 |   |
| Administrative                and general            |   |                                  | 1,853       |     |   | 1,689 |   |   | 164 |   |
| **Total                non-fuel O&M**            |   |                                  | **14,426**  |     |   | **9,253** |   |   | **5,173** |   |
| Corporate                allocation                  |   |                                  | 1,882       |     |   | 1,016 |   |   | 866 |   |
| Depreciation                and amortization         |   |                                  | 7,155       |     |   | 4,041 |   |   | 3,114 |   |
| Taxes                other than income taxes         |   |                                  | 2,072       |     |   | 811 |   |   | 1,261 |   |
| Income                taxes                          |   |                                  | 3,219       |     |   | 44 |   |   | 3,175 |   |
| **Total                non-fuel operating expenses** |   |                                  | **28,754**  |     |   | **15,165** |   |   | **13,589** |   |
| **Operating                income**                  |   | **$**                                 | **14,395**  |     | **$**  | **4,052** |   | **$** | **10,343** |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**Wholesale      Revenues**

|                               |   | **Three                Months Ended** |    |     |   |
|------------------------------------|--------|---------------------------------------|---------|----------|--------|
|                               |   | **June                30,**           |    |     |   |
|                               |   | **2006**                              |    | **2005** |   | **Variance** |   |
|                               |   | (In                thousands)         |    |
| Long-term                contracts |   | $                                     | 73,924  |     | $      | 37,897 |   | $ | 36,027 |   |
| Short-term                sales    |   |                                  | 80,570  |     |   | 104,385 |   |   | (23,815 | ) |
|                               |   | $                                     | 154,494 |     | $      | 142,282 |   | $ | 12,212 |   |

**Wholesale      Sales**

|                               |   | **Three                Months Ended** |      |     |   |
|------------------------------------|--------|---------------------------------------|-----------|----------|--------|
|                               |   | **June                30,**           |      |     |   |
|                               |   | **2006**                              |      | **2005** |   | **Variance** |   |
|                               |   | (Megawatt                hours)       |      |
| Long-term                contracts |   |                                  | 1,102,365 |     |   | 563,482 |   |   | 538,883 |   |
| Short-term                sales    |   |                                  | 1,569,151 |     |   | 1,949,416 |   |   | (380,265 | ) |
|                               |   |                                  | 2,671,516 |     |   | 2,512,898 |   |   | 158,618 |   |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**First      Choice**

|                                                 |   | **Three                Months Ended** |       |  **For                the Period** |   |
|------------------------------------------------------|--------|---------------------------------------|------------|-----------------------------------------|--------|
|                                                 |   | **June                30,**           |       | **June                6 - June 30,**    |   |
|                                                 |   | **2006**                              |       | **2005**                                |   |
|                                                 |   | (In                thousands)         |       |
| **Operating                revenues**                |   | $                                     | 154,908    |                                    | $      | 43,031 |   |
| Less:                Cost of energy                  |   |                                  | 118,073    |                                    |   | 34,083 |   |
| **Gross                margin**                      |   |                                  | **36,835** |                                    |   | **8,948** |   |
| Customer                related expense              |   |                                  | 2,411      |                                    |   | 466 |   |
| Administrative                and general            |   |                                  | 8,444      |                                    |   | 1,089 |   |
| **Total                non-fuel O&M**            |   |                                  | **10,855** |                                    |   | **1,555** |   |
| Corporate                allocation                  |   |                                  | 3,156      |                                    |   | 1,130 |   |
| Depreciation                and amortization         |   |                                  | 510        |                                    |   | 105 |   |
| Taxes                other than income taxes         |   |                                  | 1,356      |                                    |   | 512 |   |
| Income                taxes                          |   |                                  | 7,363      |                                    |   | 2,020 |   |
| **Total                non-fuel operating expenses** |   |                                  | **23,240** |                                    |   | **5,322** |   |
| **Operating                income**                  |   | **$**                                 | **13,595** |                                    | **$**  | **3,626** |   |

**First      Choice Electric Revenues**

|                               |   | **Three                Months Ended**           |    |  **For                the Period** |   |
|------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------|--------|
|                               |   | **June                30,**                     |    | **June                6 - June 30,**    |   |
|                               |   | **2006**                                        |    | **2005**                                |   |
|                               |   | (In                thousands, except customers) |    |
| Residential                        |   | $                                               | 89,181  |                                    | $      | 29,265 |   |
| Mass-market                        |   |                                            | 23,789  |                                    |   | 6,615 |   |
| Mid-market                         |   |                                            | 33,866  |                                    |   | 5,864 |   |
| Other                              |   |                                            | 8,072   |                                    |   | 1,287 |   |
|                               |   | $                                               | 154,908 |                                    | $      | 43,031 |   |
|                               |   |                                            |    |                                    |   |   |   |
| Average                customers * |   |                                            | 217,162 |                                    |   | 215,965 |   |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**First      Choice Electric Sales ***

|        |   | **Three                Months Ended** |      |  **For                the Period** |   |
|-------------|--------|---------------------------------------|-----------|-----------------------------------------|--------|
|        |   | **June                30,**           |      | **June                6 - June 30**     |   |
|        |   | **2006**                              |      | **2005**                                |   |
|        |   | (Megawatt                hours)       |      |
| Residential |   |                                  | 636,662   |                                    |   | 246,332 |   |
| Mass-market |   |                                  | 161,019   |                                    |   | 55,424 |   |
| Mid-market  |   |                                  | 308,420   |                                    |   | 67,420 |   |
| Other       |   |                                  | 13,183    |                                    |   | 2,949 |   |
|        |   |                                  | 1,119,284 |                                    |   | 372,125 |   |

**Corporate      and Other**

*Corporate      Administrative and General Expenses*

*Depreciation      Expense*

*Taxes      Other Than Income*

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNMR      Consolidated**

*Other      Income and Deductions*

*Interest      Charges*

*Income      Taxes*

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**RESULTS      OF OPERATIONS - PNMR**

**SIX      MONTHS ENDED JUNE 30, 2006 **

**COMPARED      TO SIX MONTHS ENDED JUNE 30, 2005**

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**Regulated      Operations**

**PNM      Electric **

|                                                 |   | **Six                Months Ended** |        |     |   |
|------------------------------------------------------|--------|-------------------------------------|-------------|----------|--------|
|                                                 |   | **June                30,**         |        |     |   |
|                                                 |   | **2006**                            |        | **2005** |   | **Variance** |   |
|                                                 |   | (In                thousands)       |        |
| **Operating                revenues**                |   | **$**                               | **285,114** |     | **$**  | **272,963** |   | **$** | **12,151** |   |
| Less:                Cost of energy                  |   |                                | 88,782      |     |   | 92,401 |   |   | (3,619 | ) |
| Intersegment                energy transfer          |   |                                | 3,346       |     |   | (17,535 | ) |   | 20,881 |   |
| **Gross                margin**                      |   |                                | **192,986** |     |   | **198,097** |   |   | **(5,111** | **)** |
| Energy                production costs               |   |                                | 60,117      |     |   | 60,281 |   |   | (164 | ) |
| Transmission                and distribution O&M |   |                                | 16,368      |     |   | 14,625 |   |   | 1,743 |   |
| Customer                related expense              |   |                                | 7,958       |     |   | 8,700 |   |   | (742 | ) |
| Administrative                and general            |   |                                | 1,637       |     |   | 5,290 |   |   | (3,653 | ) |
| **Total                non-fuel O&M**            |   |                                | **86,080**  |     |   | **88,896** |   |   | **(2,816** | **)** |
| Corporate                allocation                  |   |                                | 36,163      |     |   | 30,209 |   |   | 5,954 |   |
| Depreciation                and amortization         |   |                                | 29,288      |     |   | 35,053 |   |   | (5,765 | ) |
| Taxes                other than income taxes         |   |                                | 11,475      |     |   | 10,018 |   |   | 1,457 |   |
| Income                taxes                          |   |                                | 4,924       |     |   | 6,654 |   |   | (1,730 | ) |
| **Total                non-fuel operating expenses** |   |                                | **167,930** |     |   | **170,830** |   |   | **(2,900** | **)** |
| **Operating                income**                  |   | **$**                               | **25,056**  |     | **$**  | **27,267** |   | **$** | **(2,211** | **)** |

**PNM      Electric Revenues**

|                             |   | **Six                Months Ended**             |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **June                30,**                     |    |     |   |
|                             |   | **2006**                                        |    | **2005** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 107,354 |     | $      | 104,058 |   | $ | 3,296 |   |
| Commercial                       |   |                                            | 122,651 |     |   | 119,889 |   |   | 2,762 |   |
| Industrial                       |   |                                            | 30,329  |     |   | 30,543 |   |   | (214 | ) |
| Transmission                     |   |                                            | 14,238  |     |   | 9,038 |   |   | 5,200 |   |
| Other                            |   |                                            | 10,542  |     |   | 9,435 |   |   | 1,107 |   |
|                             |   | $                                               | 285,114 |     | $      | 272,963 |   | $ | 12,151 |   |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 427,273 |     |   | 415,028 |   |   | 12,245 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Electric Sales**

|        |   | **Six                Months Ended** |      |     |   |
|-------------|--------|-------------------------------------|-----------|----------|--------|
|        |   | **June                30,**         |      |     |   |
|        |   | **2006**                            |      | **2005** |   | **Variance** |   |
|        |   | (Megawatt                hours)     |      |
| Residential |   |                                | 1,335,894 |     |   | 1,260,512 |   |   | 75,382 |   |
| Commercial  |   |                                | 1,732,921 |     |   | 1,639,618 |   |   | 93,303 |   |
| Industrial  |   |                                | 646,587   |     |   | 633,488 |   |   | 13,099 |   |
| Other       |   |                                | 126,421   |     |   | 114,016 |   |   | 12,405 |   |
|        |   |                                | 3,841,823 |     |   | 3,647,634 |   |   | 194,189 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**TNMP      Electric**

|                                                 |   | **Six                Months Ended** |        |  **For                the Period** |   |
|------------------------------------------------------|--------|-------------------------------------|-------------|-----------------------------------------|--------|
|                                                 |   | **June                30,**         |        | **June                6 - June 30,**    |   |
|                                                 |   | **2006**                            |        | **2005**                                |   |
|                                                 |   | (In                thousands)       |        |
| **Operating                revenues**                |   | **$**                               | **124,141** |                                    | **$**  | **19,235** |   |
| Less:                Cost of energy                  |   |                                | 49,823      |                                    |   | 6,702 |   |
| **Gross                margin**                      |   |                                | **74,318**  |                                    |   | **12,533** |   |
| Transmission                and distribution O&M |   |                                | 10,112      |                                    |   | 1,150 |   |
| Customer                related expense              |   |                                | 2,600       |                                    |   | 302 |   |
| Administrative                and general            |   |                                | 284         |                                    |   | 288 |   |
| **Total                non-fuel O&M**            |   |                                | **12,996**  |                                    |   | **1,740** |   |
| Corporate                allocation                  |   |                                | 18,014      |                                    |   | 1,461 |   |
| Depreciation                and amortization         |   |                                | 15,563      |                                    |   | 2,085 |   |
| Taxes                other than income taxes         |   |                                | 11,479      |                                    |   | 1,885 |   |
| Income                taxes                          |   |                                | 566         |                                    |   | 1,175 |   |
| **Total                non-fuel operating expenses** |   |                                | **58,618**  |                                    |   | **8,346** |   |
| **Operating                income**                  |   | **$**                               | **15,700**  |                                    | **$**  | **4,187** |   |

**TNMP      Electric Revenues**

|                               |   | **Six                Months Ended**             |    |  **For                the period** |   |
|------------------------------------|--------|-------------------------------------------------|---------|-----------------------------------------|--------|
|                               |   | **June                30,**                     |    | **June                6 - June 30,**    |   |
|                               |   | **2006**                                        |    | **2005**                                |   |
|                               |   | (In                thousands, except customers) |    |
| Residential                        |   | $                                               | 39,931  |                                    | $      | 7,857 |   |
| Commercial                         |   |                                            | 43,507  |                                    |   | 6,522 |   |
| Industrial                         |   |                                            | 21,640  |                                    |   | 2,607 |   |
| Other                              |   |                                            | 19,063  |                                    |   | 2,249 |   |
|                               |   | $                                               | 124,141 |                                    | $      | 19,235 |   |
|                               |   |                                            |    |                                    |   |   |   |
| Average                customers * |   |                                            | 261,602 |                                    |   | 258,251 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**TNMP      Electric Sales ***

|        |   | **Six                Months Ended** |      |  **For                the period** |   |
|-------------|--------|-------------------------------------|-----------|-----------------------------------------|--------|
|        |   | **June                30,**         |      | **June                6 - June 30,**    |   |
|        |   | **2006**                            |      | **2005**                                |   |
|        |   | (Megawatt                hours)     |      |
| Residential |   |                                | 1,334,494 |                                    |   | 275,271 |   |
| Commercial  |   |                                | 1,426,121 |                                    |   | 189,767 |   |
| Industrial  |   |                                | 942,643   |                                    |   | 144,791 |   |
| Other       |   |                                | 60,715    |                                    |   | 8,590 |   |
|        |   |                                | 3,763,973 |                                    |   | 618,419 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Gas**

|                                                 |   | **Six                Months Ended** |        |     |   |
|------------------------------------------------------|--------|-------------------------------------|-------------|----------|--------|
|                                                 |   | **June                30,**         |        |     |   |
|                                                 |   | **2006**                            |        | **2005** |   | **Variance** |   |
|                                                 |   | (In                thousands)       |        |
| **Operating                revenues**                |   | **$**                               | **276,486** |     | **$**  | **247,670** |   | **$** | **28,816** |   |
| Less:                Cost of energy                  |   |                                | 199,859     |     |   | 167,727 |   |   | 32,132 |   |
| **Gross                margin**                      |   |                                | **76,627**  |     |   | **79,943** |   |   | **(3,316** | **)** |
| Energy                production costs               |   |                                | 1,103       |     |   | 1,197 |   |   | (94 | ) |
| Transmission                and distribution O&M |   |                                | 13,854      |     |   | 13,367 |   |   | 487 |   |
| Customer                related expense              |   |                                | 8,147       |     |   | 9,313 |   |   | (1,166 | ) |
| Administrative                and general            |   |                                | 1,268       |     |   | 2,561 |   |   | (1,293 | ) |
| **Total                non-fuel O&M**            |   |                                | **24,372**  |     |   | **26,438** |   |   | **(2,066** | **)** |
| Corporate                allocation                  |   |                                | 22,314      |     |   | 17,881 |   |   | 4,433 |   |
| Depreciation                and amortization         |   |                                | 11,914      |     |   | 11,172 |   |   | 742 |   |
| Taxes                other than income taxes         |   |                                | 4,285       |     |   | 4,006 |   |   | 279 |   |
| Income                taxes                          |   |                                | 3,030       |     |   | 5,787 |   |   | (2,757 | ) |
| **Total                non-fuel operating expenses** |   |                                | **65,915**  |     |   | **65,284** |   |   | **631** |   |
| **Operating                income**                  |   | **$**                               | **10,712**  |     | **$**  | **14,659** |   | **$** | **(3,947** | **)** |

**PNM      Gas Revenues**

|                             |   | **Six                Months Ended**             |    |     |   |
|----------------------------------|--------|-------------------------------------------------|---------|----------|--------|
|                             |   | **June                30,**                     |    |     |   |
|                             |   | **2006**                                        |    | **2005** |   | **Variance** |   |
|                             |   | (In                thousands, except customers) |    |
| Residential                      |   | $                                               | 180,151 |     | $      | 151,619 |   | $ | 28,532 |   |
| Commercial                       |   |                                            | 57,384  |     |   | 45,349 |   |   | 12,035 |   |
| Industrial                       |   |                                            | 2,251   |     |   | 925 |   |   | 1,326 |   |
| Transportation*                  |   |                                            | 7,486   |     |   | 7,117 |   |   | 369 |   |
| Other                            |   |                                            | 29,214  |     |   | 42,660 |   |   | (13,446 | ) |
|                             |   | $                                               | 276,486 |     | $      | 247,670 |   | $ | 28,816 |   |
|                             |   |                                            |    |     |   |   |   |   |   |   |
| Average                customers |   |                                            | 480,579 |     |   | 470,066 |   |   | 10,513 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNM      Gas Throughput**

|            |   | **Six                Months Ended**      |   |     |   |
|-----------------|--------|------------------------------------------|--------|----------|--------|
|            |   | **June                30,**              |   |     |   |
|            |   | **2006**                                 |   | **2005** |   | **Variance** |   |
|            |   | (Thousands                of decatherms) |   |
| Residential     |   |                                     | 15,020 |     |   | 16,704 |   |   | (1,684 | ) |
| Commercial      |   |                                     | 5,557  |     |   | 5,885 |   |   | (328 | ) |
| Industrial      |   |                                     | 267    |     |   | 130 |   |   | 137 |   |
| Transportation* |   |                                     | 20,402 |     |   | 17,252 |   |   | 3,150 |   |
| Other           |   |                                     | 3,067  |     |   | 5,985 |   |   | (2,918 | ) |
|            |   |                                     | 44,313 |     |   | 45,956 |   |   | (1,643 | ) |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**Unregulated      Operations**

**Wholesale**

|                                                 |   | **Six                Months Ended** |       |                         |   |
|------------------------------------------------------|--------|-------------------------------------|------------|------------------------------|--------|
|                                                 |   | **June                30,**         |       |                         |   |
|                                                 |   | **2006**                            |       | **2005**                     |   | **Variance** |   |
|                                                 |   | (In                thousands)       |       |
| **Operating                revenues**                |   | **$333,982**                        |       | **$                274,286** |   | **$                59,696** |   |
| Less:                Cost of energy                  |   |                                | 262,746    |                         |   | 208,965 |   |   | 53,781 |   |
| Intersegment                energy transfer          |   |                                | (3,346     | )                            |   | 17,535 |   |   | (20,881 | ) |
| **Gross                margin**                      |   |                                | **74,582** |                         |   | **47,786** |   |   | **26,796** |   |
| Energy                production costs               |   |                                | 20,136     |                         |   | 14,402 |   |   | 5,734 |   |
| Transmission                and distribution O&M |   |                                | 50         |                         |   | 21 |   |   | 29 |   |
| Customer                related expense              |   |                                | 562        |                         |   | 382 |   |   | 180 |   |
| Administrative                and general            |   |                                | 3,294      |                         |   | 3,383 |   |   | (89 | ) |
| **Total                non-fuel O&M**            |   |                                | **24,042** |                         |   | **18,188** |   |   | **5,854** |   |
| Corporate                allocation                  |   |                                | 3,075      |                         |   | 2,053 |   |   | 1,022 |   |
| Depreciation                and amortization         |   |                                | 10,316     |                         |   | 8,028 |   |   | 2,288 |   |
| Taxes                other than income taxes         |   |                                | 3,048      |                         |   | 1,727 |   |   | 1,321 |   |
| Income                taxes                          |   |                                | 8,233      |                         |   | 3,875 |   |   | 4,358 |   |
| **Total                non-fuel operating expenses** |   |                                | **48,714** |                         |   | **33,871** |   |   | **14,843** |   |
| **Operating                income**                  |   | **$**                               | **25,868** |                         | **$**  | **13,915** |   | **$** | **11,953** |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**Wholesale      Revenues**

|                               |   | **Six                Months Ended** |    |     |   |
|------------------------------------|--------|-------------------------------------|---------|----------|--------|
|                               |   | **June                30,**         |    |     |   |
|                               |   | **2006**                            |    | **2005** |   | **Variance** |   |
|                               |   | (In                thousands)       |    |
| Long-term                contracts |   | $                                   | 105,158 |     | $      | 75,372 |   | $ | 29,786 |   |
| Short-term                sales    |   |                                | 228,824 |     |   | 198,914 |   |   | 29,910 |   |
|                               |   | $                                   | 333,982 |     | $      | 274,286 |   | $ | 59,696 |   |

**Wholesale      Sales**

|                               |   | **Six                Months Ended** |      |     |   |
|------------------------------------|--------|-------------------------------------|-----------|----------|--------|
|                               |   | **June                30,**         |      |     |   |
|                               |   | **2006**                            |      | **2005** |   | **Variance** |   |
|                               |   | (Megawatt                hours)     |      |
| Long-term                contracts |   |                                | 1,680,909 |     |   | 1,288,885 |   |   | 392,024 |   |
| Short-term                sales    |   |                                | 3,789,903 |     |   | 4,074,439 |   |   | (284,536 | ) |
|                               |   |                                | 5,470,812 |     |   | 5,363,324 |   |   | 107,488 |   |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**First      Choice**

|                                                 |   | **Six                Months Ended** |        | **For                the Period**   |   |
|------------------------------------------------------|--------|-------------------------------------|-------------|-------------------------------------|--------|
|                                                 |   | **June                30,**         |        | **June                6 - June 30** |   |
|                                                 |   | **2006**                            |        | **2005**                            |   |
|                                                 |   | (In                thousands)       |        |
| **Operating                revenues**                |   | **$**                               | **259,990** |                                | **$**  | **43,031** |   |
| Less:                Cost of energy                  |   |                                | 208,408     |                                |   | 34,083 |   |
| **Gross                margin**                      |   |                                | **51,582**  |                                |   | **8,948** |   |
| Customer                related expense              |   |                                | 5,988       |                                |   | 466 |   |
| Administrative                and general            |   |                                | 12,056      |                                |   | 1,089 |   |
| **Total                non-fuel O&M**            |   |                                | **18,044**  |                                |   | **1,555** |   |
| Corporate                allocation                  |   |                                | 7,965       |                                |   | 1,130 |   |
| Depreciation                and amortization         |   |                                | 1,008       |                                |   | 105 |   |
| Taxes                other than income taxes         |   |                                | 2,536       |                                |   | 512 |   |
| Income                taxes                          |   |                                | 7,663       |                                |   | 2,020 |   |
| **Total                non-fuel operating expenses** |   |                                | **37,216**  |                                |   | **5,322** |   |
| **Operating                income**                  |   | **$**                               | **14,366**  |                                | **$**  | **3,626** |   |

**First      Choice Electric Revenues**

|                               |   | **Six                Months Ended**             |    | **For                the Period**   |   |
|------------------------------------|--------|-------------------------------------------------|---------|-------------------------------------|--------|
|                               |   | **June                30,**                     |    | **June                6 - June 30** |   |
|                               |   | **2006**                                        |    | **2005**                            |   |
|                               |   | (In                thousands, except customers) |    |
| Residential                        |   | $                                               | 148,782 |                                | $      | 29,265 |   |
| Mass-market                        |   |                                            | 42,730  |                                |   | 6,615 |   |
| Mid-market                         |   |                                            | 53,313  |                                |   | 5,864 |   |
| Other                              |   |                                            | 15,165  |                                |   | 1,287 |   |
|                               |   | $                                               | 259,990 |                                | $      | 43,031 |   |
|                               |   |                                            |    |                                |   |   |   |
| Average                customers * |   |                                            | 212,958 |                                |   | 215,965 |   |

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**First      Choice Electric Sales ***

|        |   | **Six                Months Ended** |      | **For                the period**    |   |
|-------------|--------|-------------------------------------|-----------|--------------------------------------|--------|
|        |   | **June                30,**         |      | **June                6 - June 30,** |   |
|        |   | **2006**                            |      | **2005**                             |   |
|        |   | (Megawatt                hours)     |      |
| Residential |   |                                | 1,064,206 |                                 |   | 246,332 |   |
| Mass-market |   |                                | 282,789   |                                 |   | 55,424 |   |
| Mid-market  |   |                                | 486,063   |                                 |   | 67,420 |   |
| Other       |   |                                | 25,445    |                                 |   | 2,949 |   |
|        |   |                                | 1,858,503 |                                 |   | 372,125 |   |

**Corporate      and Other**

*Corporate      Administrative and General Expenses*

*Depreciation      Expense*

*Taxes      Other Than Income*

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**PNMR      Consolidated**

*Other      Income and Deductions*

*Interest      Charges*

*Income      Taxes*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**RESULTS      OF OPERATIONS - PNM**

**THREE      AND SIX MONTHS ENDED JUNE 30, 2006**

**COMPARED      TO THREE AND SIX MONTHS ENDED JUNE 30, 2005**

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**RESULTS      OF OPERATIONS - TNMP**

**THREE      AND SIX MONTHS ENDED JUNE 30, 2006**

**COMPARED      TO THREE AND SIX MONTHS ENDED JUNE 30, 2005**

**CRITICAL      ACCOUNTING POLICIES AND ESTIMATES**

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**LIQUIDITY      AND CAPITAL RESOURCES**

*Statements      of Cash Flow*

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

*Capital      Requirements*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

*Liquidity*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

*Off-Balance      Sheet Arrangements*

*Commitments      and Contractual Obligations*

*Contingent      Provisions of Certain Obligations*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

*Financing      Activities*

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

*Capital      Structure*

|                                |   | **June                30,** |   | **December                31,** |   |
|-------------------------------------|--------|-----------------------------|--------|---------------------------------|--------|
|                                |   | **2006**                    |   | **2005**                        |   |
|                                |   |                        |   |                            |   |
| Common                Equity        |   |                        | 42.9   | %                               |   | 42.3 | % |
| Preferred                Stock      |   |                        | 0.4    | %                               |   | 0.4 | % |
| Long-term                Debt       |   |                        | 56.7   | %                               |   | 57.3 | % |
| Total                Capitalization |   |                        | 100.0  | %                               |   | 100.0 | % |

|                                |   | **June                30,** |   | **December                31,** |   |
|-------------------------------------|--------|-----------------------------|--------|---------------------------------|--------|
|                                |   | **2006**                    |   | **2005**                        |   |
|                                |   |                        |   |                            |   |
| Common                Equity        |   |                        | 51.0   | %                               |   | 50.2 | % |
| Preferred                Stock      |   |                        | 0.6    | %                               |   | 0.6 | % |
| Long-term                Debt       |   |                        | 48.4   | %                               |   | 49.2 | % |
| Total                Capitalization |   |                        | 100.0  | %                               |   | 100.0 | % |

|                                |   | **June                30,** |   | **December                31,** |   |
|-------------------------------------|--------|-----------------------------|--------|---------------------------------|--------|
|                                |   | **2006**                    |   | **2005**                        |   |
|                                |   |                        |   |                            |   |
| Common                Equity        |   |                        | 54.7   | %                               |   | 54.6 | % |
| Long-term                Debt       |   |                        | 45.3   | %                               |   | 45.4 | % |
| Total                Capitalization |   |                        | 100.0  | %                               |   | 100.0 | % |

----

**ITEM            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**OTHER      ISSUES FACING THE COMPANY**

**NEW      ACCOUNTING STANDARDS**

*.*

**DISCLOSURE      REGARDING FORWARD LOOKING STATEMENTS**

| ·   | The                potential unavailability of cash from PNMR’s subsidiaries due to                regulatory, statutory and contractual                restrictions, |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                outcome of any appeals of the PUCT order in the stranded cost true-up                proceeding, |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | The                ability of First Choice to attract and retain                customers, |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Changes                in ERCOT protocols, |
|--------------------|--------------------------------------------|

| ·   | Changes                in the cost of power acquired by First                Choice, |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | Collections                experience, |
|--------------------|----------------------------------------|

| ·   | Insurance                coverage available for claims made in                litigation, |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | Fluctuations                in interest rates, |
|--------------------|------------------------------------------------|

| ·   | The                risk that the Twin Oaks power plant will not be successfully integrated                into PNMR, |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | Conditions                in the financial markets affecting PNMR’s permanent financing for the Twin                Oaks power plant acquisition, |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Weather,                including impacts on PNMR and its subsidiaries of the hurricanes                in the                Gulf Coast region, |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Water                supply, |
|--------------------|------------------------------|

| ·   | Changes                in fuel costs, |
|--------------------|---------------------------------------|

| ·   | Availability                of fuel supplies, |
|--------------------|-----------------------------------------------|

| ·   | The                effectiveness of risk management and commodity risk                transactions, |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | Seasonality                and other changes in supply and demand in the market for electric                power, |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Variability                of wholesale power prices and natural gas                prices, |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Volatility                and liquidity in the wholesale power markets and the natural gas                markets, |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Changes                in the competitive environment in the electric and natural gas                industries, |
|--------------------|------------------------------------------------------------------------------------------------------------------|

| ·   | The                performance of generating units, including PVNGS, and transmission                systems, |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | The                market for electrical generating                equipment, |
|--------------------|-------------------------------------------------------------------------------|

| ·   | The                ability to secure long-term power                sales, |
|--------------------|----------------------------------------------------------------------------|

| ·   | The                risks associated with completion of generation, transmission, distribution                and other projects, including construction delays and unanticipated                cost                overruns, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | State                and federal regulatory and legislative decisions and                actions, |
|--------------------|---------------------------------------------------------------------------------------------------|

| ·   | The                outcome of legal proceedings, |
|--------------------|--------------------------------------------------|

| ·   | Changes                in applicable accounting principles,                and |
|--------------------|--------------------------------------------------------------------------------|

| ·   | The                performance of state, regional and national                economies. |
|--------------------|------------------------------------------------------------------------------------------|

----

**ITEM              2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF              OPERATIONS**

**SECURITIES      ACT DISCLAIMER**

----

**ITEM              3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET              RISK**

*Accounting      for Derivatives*

*Commodity      Risk *

----

**ITEM            3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET            RISK**

|                                                             |   | **June                30,**   |    | **December                31,** |   |
|------------------------------------------------------------------|--------|-------------------------------|---------|---------------------------------|--------|
|                                                             |   | **2006**                      |    | **2005**                        |   |
|                                                             |   | (In                thousands) |    |
| Mark-to-Market                Energy Contracts:                  |   |                          |    |                            |   |   |   |
| Current                asset                                     |   | $                             | 38,949  |                            | $      | 21,884 |   |
| Long-term                asset                                   |   |                          | 4,760   |                            |   | 21,265 |   |
| Total                mark-to-market assets                       |   |                          | 43,709  |                            |   | 43,149 |   |
| Current                liability                                 |   |                          | (36,784 | )                               |   | (17,777 | ) |
| Long-term                liability                               |   |                          | (4,261  | )                               |   | (20,844 | ) |
| Total                mark-to-market liabilities                  |   |                          | (41,045 | )                               |   | (38,621 | ) |
|                                                             |   |                          |    |                            |   |   |   |
| Net                fair value of mark-to-market energy contracts |   | $                             | 2,664   |                            | $      | 4,528 |   |

|                                                                |   | **Six                Months Ended** |   |
|---------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                |   | **June                30,**         |   |
|                                                                |   | **2006**                            |   | **2005** |   |
|                                                                |   | (In                thousands)       |   |
| Sources                of Fair Value Gain/(Loss):                   |   |                                |   |   |   |
| Fair                value at beginning of period                    |   | $                                   | 4,528  |   | $ | 2,073 |   |
|                                                                |   |                                |   |   |   |   |   |
| Amount                realized on contracts delivered during period |   |                                | (4,108 | ) |   | (254 | ) |
|                                                                |   |                                |   |   |   |   |   |
| Changes                in fair value                                |   |                                | 2,244  |   |   | 1,066 |   |
|                                                                |   |                                |   |   |   |   |   |
| Net                fair value at end of period                      |   | $                                   | 2,664  |   | $ | 2,885 |   |
|                                                                |   |                                |   |   |   |   |   |
| Net                change recorded as mark-to-market                |   | $                                   | (1,864 | ) | $ | 812 |   |

**Fair      Value at June 30, 2006**

| **Maturities**               |
|------------------------------|
| **Less                than** |   |   |   |   |   |   |
| **1                year**    |   | **1-3                Years** |   | **4+                Years** |   | **Total** |
|                         |   | (In                thousands) |   |   |
| $2,165                       |   | $272 |   | $227 |   | $2,664 |

*Risk      Management Activities*

----

**ITEM              3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET              RISK**

*“Amendment      of Statement 133 on Derivative Instruments and Hedging*
*Activities.”*

----

**ITEM              3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET              RISK**

*Credit      Risk*

**Wholesale**

**Schedule      of Credit Risk Exposure**

**June      30, 2006**

|                                |   |                                  |    |         |   | **Net**      |   |
|-------------------------------------|--------|---------------------------------------|---------|--------------|--------|--------------|--------|
|                                |   | **(b)**                               |    | **Number**   |   | **Exposure** |   |
|                                |   | **Net**                               |    | **of**       |   | **of**       |   |
|                                |   | **Credit**                            |    | **Counter**  |   | **Counter-** |   |
|                                |   | **Risk**                              |    | **-parties** |   | **parties**  |   |
| **Rating                (a)**       |   | **Exposure**                          |    | **>10%**  |   | **>10%**  |   |
|                                |   | (Dollars                in thousands) |    |
|                                |   |                                  |    |         |   |         |   |
| Investment                grade     |   | $                                     | 96,865  |         |   | 4            |   | $ | 64,619 |   |
| Non-investment                grade |   |                                  | 901     |         |   | -            |   |   | - |   |
| Internal                ratings     |   |                                  |    |         |   |         |   |   |   |   |
| Investment                grade     |   |                                  | 315     |         |   | -            |   |   | - |   |
| Non-investment                grade |   |                                  | 6,308   |         |   | -            |   |   | - |   |
| Total                               |   | $                                     | 104,389 |         |   |         |   | $ | 64,619 |   |

| (a)   | The***Rating***** **included                in “Investment Grade” is for counterparties with a minimum S&P rating                of BBB- or Moody's rating of Baa3. If the counterparty has provided                a                guarantee by a higher rated entity (e.g., its parent), determination                is                based on the rating of its guarantor. The category “Internal Ratings -                Investment Grade” includes those counterparties that are internally rated                as investment grade in accordance with the guidelines established                in the                Company’s credit policy. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The                ***Net                Credit Risk*** ***Exposure***is                the net credit exposure to PNM from Wholesale operations. This includes                long-term contracts, forward sales and short-term sales. The exposure                captures the net amounts due to PNM from receivables/payables for                realized                transactions, delivered and unbilled revenues, and mark-to-market                gains/losses (pursuant to contract terms). Exposures are offset according                to legally enforceable netting arrangements and reduced by credit                collateral. Credit collateral includes cash deposits, letters of                credit                and performance bonds received from counterparties. Amounts are presented                before those reserves that are determined on a portfolio                basis. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM              3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET              RISK**

**Wholesale**

**Maturity      of Credit Risk Exposure**

**June      30, 2006**

|                                |   |                         |   |                          |   |                           |   | **Total**    |   |
|-------------------------------------|--------|------------------------------|--------|-------------------------------|--------|--------------------------------|--------|--------------|--------|
|                                |   | **Less                than** |   |                          |   |                           |   | **Net**      |   |
| **Rating**                          |   | **2                Years**   |   | **2-5                Years**  |   | **>5                Years** |   | **Exposure** |   |
|                                |   |                         |   | (In                thousands) |   |                           |   |
|                                |   |                         |   |                          |   |                           |   |         |   |
| Investment                grade     |   | $                            | 90,770 |                          | $      | 5,455                          |   | $            | 639    |   | $ | 96,864 |   |
| Non-investment                grade |   |                         | 901    |                          |   | -                              |   |         | -      |   |   | 901 |   |
| Internal                ratings     |   |                         |   |                          |   |                           |   |         |   |   |   |   |   |
| Investment                grade     |   |                         | 315    |                          |   | -                              |   |         | -      |   |   | 315 |   |
| Non-investment                grade |   |                         | 6,308  |                          |   | -                              |   |         | -      |   |   | 6,308 |   |
| Total                               |   | $                            | 98,294 |                          | $      | 5,455                          |   | $            | 639    |   | $ | 104,388 |   |

*First      Choice*

*Interest      Rate Risk*

----

**ITEM                3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET                RISK**

*Equity      Market Risk*

----

**ITEM              3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET              RISK**

**ITEM      4. CONTROLS AND PROCEDURES**

*PNMR*

*Disclosure      Controls and Procedures*

*Changes      in Internal Controls*

| o**  ** | Implemented                a new application to process accounts payable activities and modified                the                related business process controls. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o**  ** | Implemented                a new application to process gas purchasing and miscellaneous accounts                receivable and billing activities and modified the related business                process controls for one of its subsidiaries,                PNM. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Upgraded                the general ledger system to enhance existing functionality and to                add new                functionality for use in analysis and financial                reporting. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*TNP      Acquisition*

*Twin      Oaks Acquisition*

** **

*PNM*

*Disclosure      Controls and Procedures*

----

*Changes      in Internal Controls*

| o   | Implemented                a new application to process accounts payable activities and modified                the                related business process controls. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Implemented                a new application to process gas purchasing and miscellaneous accounts                receivable and billing activities and modified the related business                process controls. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Upgraded                the general ledger system to enhance existing functionality and to                add new                functionality for use in analysis and financial                reporting. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*TNMP*

*Disclosure      Controls and Procedures*

*Changes      in Internal Controls*

| o   | Implemented                a new application to process accounts payable activities and modified                the                related business process controls. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Upgraded                the general ledger system to enhance existing functionality and to                add new                functionality for use in analysis and financial                reporting. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

| ·   | Asbestos                Cases |
|--------------------|-------------------------------|

| ·   | SESCO                Matter (for both PNM and TNMP) |
|--------------------|-----------------------------------------------------|

| ·   | California                Refund Proceeding |
|--------------------|---------------------------------------------|

| ·   | TNMP                True-Up Proceeding |
|--------------------|----------------------------------------|

**ITEM      1A. RISK FACTORS**

**ITEM      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**Annual      Meeting**

| Director                               |   | Votes                For |       | Votes                Against or Withheld |   |
|----------------------------------------|--------|--------------------------|------------|------------------------------------------|--------|
| Terms                expiring in 2007: |   |                     |       |                                     |   |
| Adelmo                E. Archuleta     |   |                     | 61,731,760 |                                     |   | 192,210 |   |
| Julie                A. Dobson         |   |                     | 61,723,253 |                                     |   | 200,717 |   |
| Woody                L. Hunt           |   |                     | 61,730,796 |                                     |   | 193,174 |   |
| C.                E. McMahen           |   |                     | 61,729,836 |                                     |   | 194,134 |   |
| M.                T. Pacheco           |   |                     | 61,719,470 |                                     |   | 204,500 |   |
| R.                M. Price             |   |                     | 57,915,087 |                                     |   | 4,008,883 |   |
| B.                S. Reitz             |   |                     | 61,718,240 |                                     |   | 205,730 |   |
| Jeffry                E. Sterba        |   |                     | 57,936,128 |                                     |   | 3,987,842 |   |
| Joan                B. Woodard         |   |                     | 61,731,251 |                                     |   | 192,719 |   |

| Votes                For | Votes                Against or Withheld | Abstentions |
|--------------------------|------------------------------------------|-------------|
| 61,778,325               | 90,648                                   | 54,996      |

| Votes                For | Votes                Against or Withheld | Abstentions |
|--------------------------|------------------------------------------|-------------|
| 60,059,637               | 1,714,389                                | 149,943     |

**ITEM      5. OTHER EVENTS**

----

**ITEM      6. EXHIBITS**

| 3.1     | PNMR   | Articles                of Incorporation of PNM Resources, as amended through June 21,                2006.                                                                                                                                             |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                    |
| 10.4    | PNMR   | Term                Loan Agreement, dated as of April 17, 2006, among PNM Resources,                as                borrower, the lenders identified therein and Lehman Commercial Paper                Inc.,                as administrative agent. |
|    |   |                                                                                                                                                                                                                                                    |
| 10.43** | PNMR   | PNMR                 Fourth Amendment to the PNM Resources Non-Union Severance Pay Plan                executed April 19, 2006.                                                                                                                    |
|    |   |                                                                                                                                                                                                                                                    |
| 12.1    | PNMR   | Ratio                of Earnings to Fixed Charges                                                                                                                                                                                                       |
|    |   |                                                                                                                                                                                                                                                    |
| 12.2    | PNMR   | Ratio                of Earnings to Combined Fixed Charges and Preferred Stock                Dividends                                                                                                                                                 |
|    |   |                                                                                                                                                                                                                                                    |
| 31.1    | PNMR   | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 31.2    | PNMR   | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 31.3    | PNM    | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley                Act of 2002                                                                                                            |
|    |   |                                                                                                                                                                                                                                                    |
| 31.4    | PNM    | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley                Act of 2002                                                                                                            |
|    |   |                                                                                                                                                                                                                                                    |
| 31.5    | TNMP   | Chief                Executive Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 31.6    | TNMP   | Chief                Financial Officer Certification Pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.1    | PNMR   | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.2    | PNMR   | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.3    | PNM    | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.4    | PNM    | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.5    | TNMP   | Chief                Executive Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |
|    |   |                                                                                                                                                                                                                                                    |
| 32.6    | TNMP   | Chief                Financial Officer Certification Pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002                                                                                                                           |

----

**Signature**

|                                | **PNM                RESOURCES, INC.****PUBLIC                SERVICE COMPANY OF NEW MEXICO****TEXAS-NEW                MEXICO POWER COMPANY** |
|-------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|
|                                | (Registrants)                                                                                                                                  |
|                                |                                                                                                                                           |
|                                |                                                                                                                                           |
| Date:                August 9, 2006 | /s/                Thomas G. Sategna                                                                                                           |
|                                | Thomas                G. Sategna                                                                                                               |
|                                | Vice                President and Corporate Controller                                                                                         |
|                                | (Officer                duly authorized to sign this                report)                                                                    |