----

----

|   | x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|---------------------------------------------------------------------------------------------------|

|   | o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---|----------------------------------------------------------------------------------------------------|

| New Mexico                                                     |   | 75-0575400                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
| Tyler at Ninth                                                 |   |                                 |
| Amarillo, Texas                                                |   | 79101                                |
| (Address of principal executive offices)                       |   | (Zip Code)                           |

| Large accelerated filer o                   |   | Accelerated filer o         |
|---------------------------------------------|--------|-----------------------------|
|                                        |   |                        |
| Non-accelerated filer x                     |   | Smaller reporting company o |
| (Do not check if smaller reporting company) |   |                        |

| Class                      |   | Outstanding at Nov. 1, 2010 |
|----------------------------|--------|----------------------------------|
| Common Stock, $1 par value |   | 100 shares                       |

----

----

TA

| PART I - FINANCIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                        |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                        |   |
| Item l.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Financial Statements (Unaudited)                                                            | 3 |
| Item 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
| Item 4.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Controls and Procedures                                                                     | 20 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                        |   |
| PART II - OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                        |   |
| Item 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Legal Proceedings                                                                           | 20 |
| Item 1A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Risk Factors                                                                                | 21 |
| Item 6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Exhibits                                                                                    | 22 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                        |   |
| SIGNATURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 23                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                        |
| Certifications Pursuant to Section 302                                                                                                                                                        | 1                                                                                           |
| Certifications Pursuant to Section 906                                                                                                                                                        | 1                                                                                           |
| Statement Pursuant to Private Litigation                                                                                                                                                      | 1                                                                                           |

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Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

|                                                                                                   |   | Three Months Ended Sept. 30, |    |   | Nine Months Ended Sept. 30, |   |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|----------------------------------|--------|
|                                                                                                   |   | 2010                              |    |   | 2009                             |   |   | 2010 |   |   | 2009 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                                                     |   | $                                 | 467,424 |   |                             | $      | 397,094 |   |   | $ | 1,247,355 |   |   | $ | 1,094,217 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                                     |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Electric fuel and purchased power                                                                      |   |                              | 288,386 |   |                             |   | 229,607 |   |   |   | 788,089 |   |   |   | 673,126 |   |
| Other operating and maintenance expenses                                                               |   |                              | 61,807  |   |                             |   | 52,716 |   |   |   | 180,794 |   |   |   | 161,145 |   |
| Demand side management program expenses                                                                |   |                              | 3,393   |   |                             |   | 2,673 |   |   |   | 8,386 |   |   |   | 6,646 |   |
| Depreciation and amortization                                                                          |   |                              | 26,083  |   |                             |   | 25,970 |   |   |   | 77,391 |   |   |   | 76,524 |   |
| Taxes (other than income taxes)                                                                        |   |                              | 10,818  |   |                             |   | 9,458 |   |   |   | 30,879 |   |   |   | 29,231 |   |
| Total operating expenses                                                                               |   |                              | 390,487 |   |                             |   | 320,424 |   |   |   | 1,085,539 |   |   |   | 946,672 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                                                                                       |   |                              | 76,937  |   |                             |   | 76,670 |   |   |   | 161,816 |   |   |   | 147,545 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense), net                                                                            |   |                              | (82     | )      |                             |   | (538 | ) |   |   | 31 |   |   |   | (496 | ) |
| Allowance for funds used during construction – equity                                            |   |                              | 1,085   |   |                             |   | 887 |   |   |   | 2,529 |   |   |   | 2,977 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges and financing costs                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges – includes other financing costs of $666, $662, $1,975 and $1,989, respectively |   |                              | 16,217  |   |                             |   | 17,178 |   |   |   | 48,099 |   |   |   | 50,860 |   |
| Allowance for funds used during construction – debt                                              |   |                              | (792    | )      |                             |   | (618 | ) |   |   | (2,052 | ) |   |   | (2,063 | ) |
| Total interest charges and financing costs                                                             |   |                              | 15,425  |   |                             |   | 16,560 |   |   |   | 46,047 |   |   |   | 48,797 |   |
|                                                                                                   |   |                              |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| Income before income taxes                                                                             |   |                              | 62,515  |   |                             |   | 60,459 |   |   |   | 118,329 |   |   |   | 101,229 |   |
| Income taxes                                                                                           |   |                              | 23,326  |   |                             |   | 23,044 |   |   |   | 47,045 |   |   |   | 37,824 |   |
| Net income                                                                                             |   | $                                 | 39,189  |   |                             | $      | 37,415 |   |   | $ | 71,284 |   |   | $ | 63,405 |   |

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Table of Contents

|                                                                          |   |                             |     |
|-------------------------------------------------------------------------------|--------|----------------------------------|----------|
|                                                                          |   | Nine Months Ended Sept. 30, |     |
|                                                                          |   | 2010                             |     |   | 2009 |   |
| Operating activities                                                          |   |                             |     |   |   |   |   |   |
| Net income                                                                    |   | $                                | 71,284   |   |   | $ | 63,405 |   |
| Adjustments to reconcile net income to cash provided by operating activities: |   |                             |     |   |   |   |   |   |
| Depreciation and amortization                                                 |   |                             | 79,094   |   |   |   | 78,244 |   |
| Demand side management program amortization expenses                          |   |                             | 1,573    |   |   |   | 1,317 |   |
| Deferred income taxes                                                         |   |                             | 26,520   |   |   |   | 3,745 |   |
| Amortization of investment tax credits                                        |   |                             | (223     | ) |   |   | (243 | ) |
| Allowance for equity funds used during construction                           |   |                             | (2,529   | ) |   |   | (2,977 | ) |
| Net realized and unrealized hedging and derivative transactions               |   |                             | 201      |   |   |   | (1,013 | ) |
| Changes in operating assets and liabilities:                                  |   |                             |     |   |   |   |   |   |
| Accounts receivable                                                           |   |                             | (25,352  | ) |   |   | 9,471 |   |
| Accrued unbilled revenues                                                     |   |                             | (12,666  | ) |   |   | 7,104 |   |
| Recoverable electric energy costs                                             |   |                             | (4,978   | ) |   |   | 3,978 |   |
| Inventories                                                                   |   |                             | (5,734   | ) |   |   | 20,543 |   |
| Prepayments and other                                                         |   |                             | 11,468   |   |   |   | (27,133 | ) |
| Accounts payable                                                              |   |                             | (19,399  | ) |   |   | (40,945 | ) |
| Deferred electric energy costs                                                |   |                             | (16,430  | ) |   |   | 52,547 |   |
| Net regulatory assets and liabilities                                         |   |                             | 2,134    |   |   |   | 1,961 |   |
| Other current liabilities                                                     |   |                             | 16,240   |   |   |   | 11,441 |   |
| Change in other noncurrent assets                                             |   |                             | (2,838   | ) |   |   | (8,019 | ) |
| Change in other noncurrent liabilities                                        |   |                             | (2,111   | ) |   |   | (18,110 | ) |
| Net cash provided by operating activities                                     |   |                             | 116,254  |   |   |   | 155,316 |   |
|                                                                          |   |                             |     |   |   |   |   |   |
| Investing activities                                                          |   |                             |     |   |   |   |   |   |
| Utility capital/construction expenditures                                     |   |                             | (196,035 | ) |   |   | (148,543 | ) |
| Allowance for equity funds used during construction                           |   |                             | 2,529    |   |   |   | 2,977 |   |
| Investments in utility money pool arrangement                                 |   |                             | (204,200 | ) |   |   | (776,400 | ) |
| Receipts from utility money pool arrangement                                  |   |                             | 281,200  |   |   |   | 776,900 |   |
| Net cash used in investing activities                                         |   |                             | (116,506 | ) |   |   | (145,066 | ) |
|                                                                          |   |                             |     |   |   |   |   |   |
| Financing activities                                                          |   |                             |     |   |   |   |   |   |
| Borrowings under utility money pool arrangement                               |   |                             | 61,000   |   |   |   | - |   |
| Repayment of long-term debt                                                   |   |                             | (25,000  | ) |   |   | (100,027 | ) |
| Capital contributions from parent                                             |   |                             | 8,802    |   |   |   | 13,044 |   |
| Dividends paid to parent                                                      |   |                             | (50,810  | ) |   |   | (49,813 | ) |
| Net cash used in financing activities                                         |   |                             | (6,008   | ) |   |   | (136,796 | ) |
|                                                                          |   |                             |     |   |   |   |   |   |
| Net decrease in cash and cash equivalents                                     |   |                             | (6,260   | ) |   |   | (126,546 | ) |
| Cash and cash equivalents at beginning of period                              |   |                             | 7,363    |   |   |   | 130,795 |   |
| Cash and cash equivalents at end of period                                    |   | $                                | 1,103    |   |   | $ | 4,249 |   |
|                                                                          |   |                             |     |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                             |   |                             |     |   |   |   |   |   |
| Cash paid for interest, net of amounts capitalized                            |   | $                                | (43,963  | ) |   | $ | (37,181 | ) |
| Cash paid for income taxes, net                                               |   |                             | (8,310   | ) |   |   | (58,574 | ) |
|                                                                          |   |                             |     |   |   |   |   |   |
| Supplemental disclosure of non-cash investing transactions:                   |   |                             |     |   |   |   |   |   |
| Property, plant and equipment additions in accounts payable                   |   | $                                | 4,075    |   |   | $ | 3,545 |   |

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Table of Contents

|                                                                                  |   | Sept. 30, 2010 |      |   | Dec. 31, 2009 |   |
|---------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|--------------------|--------|
| Assets                                                                                |   |                |      |   |               |   |   |   |
| Current assets                                                                        |   |                |      |   |               |   |   |   |
| Cash and cash equivalents                                                             |   | $                   | 1,103     |   |               | $      | 7,363 |   |
| Investments in utility money pool arrangement                                         |   |                | -         |   |               |   | 77,000 |   |
| Accounts receivable, net                                                              |   |                | 73,849    |   |               |   | 47,065 |   |
| Accounts receivable from affiliates                                                   |   |                | 3,665     |   |               |   | 5,097 |   |
| Accrued unbilled revenues                                                             |   |                | 118,451   |   |               |   | 105,785 |   |
| Inventories                                                                           |   |                | 32,881    |   |               |   | 27,147 |   |
| Recoverable electric energy costs                                                     |   |                | 6,137     |   |               |   | 1,159 |   |
| Derivative instruments valuation                                                      |   |                | 7,892     |   |               |   | 8,926 |   |
| Deferred income taxes                                                                 |   |                | 23,742    |   |               |   | 36,406 |   |
| Prepayments and other                                                                 |   |                | 4,459     |   |               |   | 15,927 |   |
| Total current assets                                                                  |   |                | 272,179   |   |               |   | 331,875 |   |
|                                                                                  |   |                |      |   |               |   |   |   |
| Property, plant and equipment, net                                                    |   |                | 2,371,698 |   |               |   | 2,260,984 |   |
|                                                                                  |   |                |      |   |               |   |   |   |
| Other assets                                                                          |   |                |      |   |               |   |   |   |
| Regulatory assets                                                                     |   |                | 286,435   |   |               |   | 286,734 |   |
| Derivative instruments valuation                                                      |   |                | 66,707    |   |               |   | 67,625 |   |
| Other                                                                                 |   |                | 10,799    |   |               |   | 8,783 |   |
| Total other assets                                                                    |   |                | 363,941   |   |               |   | 363,142 |   |
| Total assets                                                                          |   | $                   | 3,007,818 |   |               | $      | 2,956,001 |   |
|                                                                                  |   |                |      |   |               |   |   |   |
| Liabilities and Equity                                                                |   |                |      |   |               |   |   |   |
| Current liabilities                                                                   |   |                |      |   |               |   |   |   |
| Current portion of long-term debt                                                     |   | $                   | 44,500    |   |               | $      | - |   |
| Borrowings under utility money pool arrangement                                       |   |                | 61,000    |   |               |   | - |   |
| Accounts payable                                                                      |   |                | 139,942   |   |               |   | 163,253 |   |
| Accounts payable to affiliates                                                        |   |                | 10,179    |   |               |   | 14,625 |   |
| Deferred electric energy costs                                                        |   |                | 43,353    |   |               |   | 59,783 |   |
| Taxes accrued                                                                         |   |                | 20,064    |   |               |   | 18,209 |   |
| Accrued interest                                                                      |   |                | 24,295    |   |               |   | 12,371 |   |
| Dividends payable                                                                     |   |                | 16,292    |   |               |   | 17,240 |   |
| Derivative instruments valuation                                                      |   |                | 3,601     |   |               |   | 3,588 |   |
| Other                                                                                 |   |                | 21,583    |   |               |   | 20,125 |   |
| Total current liabilities                                                             |   |                | 384,809   |   |               |   | 309,194 |   |
|                                                                                  |   |                |      |   |               |   |   |   |
| Deferred credits and other liabilities                                                |   |                |      |   |               |   |   |   |
| Deferred income taxes                                                                 |   |                | 547,042   |   |               |   | 533,241 |   |
| Deferred investment tax credits                                                       |   |                | 2,169     |   |               |   | 2,392 |   |
| Regulatory liabilities                                                                |   |                | 124,653   |   |               |   | 119,080 |   |
| Asset retirement obligations                                                          |   |                | 19,715    |   |               |   | 18,757 |   |
| Derivative instruments valuation                                                      |   |                | 45,891    |   |               |   | 48,654 |   |
| Pension and employee benefit obligations                                              |   |                | 41,816    |   |               |   | 44,276 |   |
| Other                                                                                 |   |                | 8,672     |   |               |   | 8,450 |   |
| Total deferred credits and other liabilities                                          |   |                | 789,958   |   |               |   | 774,850 |   |
|                                                                                  |   |                |      |   |               |   |   |   |
| Commitments and contingent liabilities                                                |   |                |      |   |               |   |   |   |
| Capitalization                                                                        |   |                |      |   |               |   |   |   |
| Long-term debt                                                                        |   |                | 853,187   |   |               |   | 922,447 |   |
| Common stock – authorized 200 shares of $1.00 par value; outstanding 100 shares |   |                | -         |   |               |   | - |   |
| Additional paid in capital                                                            |   |                | 701,750   |   |               |   | 692,948 |   |
| Retained earnings                                                                     |   |                | 279,832   |   |               |   | 258,409 |   |
| Accumulated other comprehensive loss                                                  |   |                | (1,718    | )      |               |   | (1,847 | ) |
| Total common stockholder’s equity                                               |   |                | 979,864   |   |               |   | 949,510 |   |
| Total liabilities and equity                                                          |   | $                   | 3,007,818 |   |               | $      | 2,956,001 |   |

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Table of Contents

| 1. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

| 2. | Accounting Pronouncements |
|----|---------------------------|

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Table of Contents

| 3. | Selected Balance Sheet Data |
|----|-----------------------------|

| (Thousands of Dollars)              |   | Sept. 30, 2010 |       |   | Dec. 31, 2009 |   |
|-------------------------------------|--------|---------------------|------------|--------|--------------------|--------|
| Accounts receivable, net            |   |                |       |   |               |   |
| Accounts receivable                 |   | $                   | 78,727     |   |               | $      | 51,480 |   |
| Less allowance for bad debts        |   |                | (4,878     | )      |               |   | (4,415 | ) |
|                                |   | $                   | 73,849     |   |               | $      | 47,065 |   |
| Inventories                         |   |                |       |   |               |   |   |   |
| Materials and supplies              |   | $                   | 15,989     |   |               | $      | 15,737 |   |
| Fuel                                |   |                | 16,892     |   |               |   | 11,410 |   |
|                                |   | $                   | 32,881     |   |               | $      | 27,147 |   |
| Property, plant and equipment, net  |   |                |       |   |               |   |   |   |
| Electric plant                      |   | $                   | 3,881,273  |   |               | $      | 3,777,623 |   |
| Construction work in progress       |   |                | 160,821    |   |               |   | 95,652 |   |
| Total property, plant and equipment |   |                | 4,042,094  |   |               |   | 3,873,275 |   |
| Less accumulated depreciation       |   |                | (1,670,396 | )      |               |   | (1,612,291 | ) |
|                                |   | $                   | 2,371,698  |   |               | $      | 2,260,984 |   |

| 4. | Income Taxes |
|----|--------------|

|                                               |   |                |   |   |               |   |
|----------------------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
| (Millions of Dollars)                              |   | Sept. 30, 2010 |   |   | Dec. 31, 2009 |   |
| Unrecognized tax benefit - Permanent tax positions |   | $                   | 0.1    |   |               | $      | 0.2 |   |
| Unrecognized tax benefit - Temporary tax positions |   |                | 3.6    |   |               |   | 2.7 |   |
| Unrecognized tax benefit balance                   |   | $                   | 3.7    |   |               | $      | 2.9 |   |

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Table of Contents

| 5. | Rate Matters |
|----|--------------|

| (Millions of Dollars)              |   | Request |   |
|------------------------------------|--------|---------|--------|
| Proposed base rate increase        |   | $       | 62.0   |   |
| Franchise fee cost recovery        |   |    | 8.7    |   |
| Nitrogen oxide emission allowances |   |    | 0.8    |   |
| Purchased capacity recovery factor |   |    | (13.5  | ) |
| Transmission cost recovery factor  |   |    | (4.6   | ) |
| Adjusted rate increase             |   | $       | 53.4   |   |

|   | ● | Intervenor direct testimony due Jan. 18, 2011; |
|--------|---------|----------------------------------------------------------|

|   | ● | PUCT staff direct testimony due Jan. 25, 2011; |
|--------|---------|----------------------------------------------------------|

|   | ● | PUCT staff and intervenor cross rebuttal testimony due Feb. 1, 2011; |
|--------|---------|--------------------------------------------------------------------------------|

|   | ● | SPS rebuttal testimony due Feb. 8, 2011; and |
|--------|---------|--------------------------------------------------------|

|   | ● | Hearings on Feb. 21, 2011 through March 11, 2011. |
|--------|---------|-----------------------------------------------------------------------|

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Table of Contents

| 6. | Commitments and Contingent Liabilities |
|----|----------------------------------------|

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Table of Contents

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Table of Contents

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Table of Contents

| 7. | Short-Term Borrowings and Other Financing Instruments |
|----|-------------------------------------------------------|

|                                |   |                |   |   |               |   |
|-------------------------------------|--------|---------------------|--------|--------|--------------------|--------|
| (Millions of Dollars)               |   | Sept. 30, 2010 |   |   | Dec. 31, 2009 |   |
| Money pool (borrowings) investments |   | $                   | (61    | )      |               | $      | 77 |   |
| Weighted average interest rate      |   |                | 0.35   | %      |               |   | 0.36 | % |
| Money pool borrowing limit          |   | $                   | 100    |   |               | $      | 100 |   |

| 8. | Long-Term Borrowings and Other Financing Instruments |
|----|------------------------------------------------------|

| 9.  | Derivative Instruments and Fair Value Measurements |
|----------|----------------------------------------------------|

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Table of Contents

|                                 |   |                                      |   |   |                                                |   |   |                                      |   |   |                                           |   |   |   |   |   |
|--------------------------------------|--------|-------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|------------------------------------------------|--------|--------|--------|--------|--------|
|                                 |   | Sept. 30, 2010                       |   |   | Dec. 31, 2009                                  |   |
| (Thousands of Dollars)               |   | Derivative Instruments Valuation - Assets |   |   | Derivative Instruments Valuation - Liabilities |   |   | Derivative Instruments Valuation - Assets |   |   | Derivative Instruments Valuation - Liabilities |   |
| Long-term purchased power agreements |   | $                                         | 74,599 |   |                                                | $      | 49,492 |                                      |   | $      | 76,551                                         |   |   | $      | 52,242 |   |

|                                                                                |   |                         |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|--------|--------|
|                                                                                |   | Three Months Ended Sept. 30, |   |
| (Thousands of Dollars)                                                              |   | 2010                         |   |   | 2009   |   |
| Accumulated other comprehensive loss related to cash flow hedges at July 1          |   | $                            | (1,762 | )      |   | $      | (5,239 | ) |
| After-tax net realized losses on derivative transactions reclassified into earnings |   |                         | 44     |   |   |   | 159 |   |
| Accumulated other comprehensive loss related to cash flow hedges at Sept. 30        |   | $                            | (1,718 | )      |   | $      | (5,080 | ) |

|                                                                                |   | Nine Months Ended Sept. 30, |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------|--------|
| (Thousands of Dollars)                                                              |   |                        | 2010   |   |   |   | 2009 |   |
| Accumulated other comprehensive loss related to cash flow hedges at Jan. 1          |   | $                           | (1,847 | ) |   | $ | (5,559 | ) |
| After-tax net realized losses on derivative transactions reclassified into earnings |   |                        | 129    |   |   |   | 479 |   |
| Accumulated other comprehensive loss related to cash flow hedges at Sept. 30        |   | $                           | (1,718 | ) |   | $ | (5,080 | ) |
|                                                                                |   |                        |   |   |   |   |   |   |

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Table of Contents

| 10.  | Financial Instruments |
|-----------|-----------------------|

|                   |   |                |    |   |               |   |      |            |   |   |       |   |
|------------------------|--------|---------------------|---------|--------|--------------------|--------|-----------|-----------------|--------|--------|------------|--------|
|                   |   | Sept. 30, 2010 |    |   | Dec. 31, 2009 |   |
| (Thousands of Dollars) |   | Carrying Amount     |    |   | Fair Value         |   |      | Carrying Amount |   |   | Fair Value |   |
| Other investments      |   | $                   | 247     |   |               | $      | 247       |            |   | $      | 263        |   |   | $ | 263 |   |
| Long-term debt         |   |                | 897,687 |   |               |   | 1,019,592 |            |   |   | 922,447    |   |   |   | 977,029 |   |

| 11. | Other Income (Expense), Net |
|-----|-----------------------------|

|                        |   |                              |   |   |                             |   |   |   |   |   |   |   |
|-----------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                        |   | Three Months Ended Sept. 30, |   |   | Nine Months Ended Sept. 30, |   |
| (Thousands of Dollars)      |   | 2010                              |   |   | 2009                             |   |   | 2010   |   |   | 2009   |   |
| Interest income (expense)   |   | $                                 | 71     |   |                             | $      | (135   | )      |   | $      | 168    |   |   | $ | 57 |   |
| Other nonoperating income   |   |                              | -      |   |                             |   | 23     |   |   |   | 11     |   |   |   | 28 |   |
| Insurance policy expense    |   |                              | (153   | )      |                             |   | (233   | )      |   |   | (148   | )      |   |   | (377 | ) |
| Other nonoperating expense  |   |                              | -      |   |                             |   | (193   | )      |   |   | -      |   |   |   | (204 | ) |
| Other income (expense), net |   | $                                 | (82    | )      |                             | $      | (538   | )      |   | $      | 31     |   |   | $ | (496 | ) |

| 12.  | Segment Information |
|-----------|---------------------|

| 13.  | Comprehensive Income |
|-----------|----------------------|

|                                                                                |   | Three Months Ended Sept. 30, |   |   | Nine Months Ended Sept. 30, |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|----------------------------------|--------|
| (Thousands of Dollars)                                                              |   | 2010                              |   |   | 2009                             |   |   | 2010 |   |   | 2009 |   |
| Net income                                                                          |   | $                                 | 39,189 |   |                             | $      | 37,415 |   |   | $ | 71,284 |   |   | $ | 63,405 |   |
| Other comprehensive income:                                                         |   |                              |   |   |                             |   |   |   |   |   |   |   |   |   |   |   |
| After-tax net realized losses on derivative transactions reclassified into earnings |   |                              | 44     |   |                             |   | 159 |   |   |   | 129 |   |   |   | 479 |   |
| Comprehensive income                                                                |   | $                                 | 39,233 |   |                             | $      | 37,574 |   |   | $ | 71,413 |   |   | $ | 63,884 |   |

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| 14.  | Benefit Plans and Other Postretirement Benefits |
|-----------|-------------------------------------------------|

|                                                                                 |   |                                          |     |
|--------------------------------------------------------------------------------------|--------|-----------------------------------------------|----------|
|                                                                                 |   |   Three Months Ended Sept. 30, |     |
|                                                                                 |   | 2010                                          |     |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| (Thousands of Dollars)                                                               |   | Pension Benefits                              |     |   | Postretirement Health Care Benefits |   |
| Xcel Energy Inc.                                                                     |   |                                          |     |   |   |   |   |   |   |   |   |   |
| Service cost                                                                         |   | $                                             | 18,286   |   |   | $ | 16,365 |   |   | $ | 1,002 |   |   | $ | 1,166 |   |
| Interest cost                                                                        |   |                                          | 41,253   |   |   |   | 42,448 |   |   |   | 10,695 |   |   |   | 12,603 |   |
| Expected return on plan assets                                                       |   |                                          | (58,080  | ) |   |   | (64,135 | ) |   |   | (7,132 | ) |   |   | (5,694 | ) |
| Amortization of transition obligation                                                |   |                                          | -        |   |   |   | - |   |   |   | 3,611 |   |   |   | 3,611 |   |
| Amortization of prior service cost (credit)                                          |   |                                          | 5,165    |   |   |   | 6,155 |   |   |   | (1,233 | ) |   |   | (681 | ) |
| Amortization of net loss                                                             |   |                                          | 12,078   |   |   |   | 3,114 |   |   |   | 2,910 |   |   |   | 4,832 |   |
| Net periodic benefit cost                                                            |   |                                          | 18,702   |   |   |   | 3,947 |   |   |   | 9,853 |   |   |   | 15,837 |   |
| Costs not recognized and additional cost recognized due to the effects of regulation |   |                                          | (6,630   | ) |   |   | (723 | ) |   |   | 972 |   |   |   | 972 |   |
| Net benefit cost recognized for financial reporting                                  |   | $                                             | 12,072   |   |   | $ | 3,224 |   |   | $ | 10,825 |   |   | $ | 16,809 |   |
|                                                                                 |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SPS                                                                                  |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net benefit cost (credit) recognized for financial reporting                         |   | $                                             | 1,448    |   |   | $ | (1,661 | ) |   | $ | 900 |   |   | $ | 1,250 |   |
|                                                                                 |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                 |   |   Nine Months Ended Sept. 30,  |     |
|                                                                                 |   |                                          | 2010     |   |   |   | 2009 |   |   |   | 2010 |   |   |   | 2009 |   |
| (Thousands of Dollars)                                                               |   | Pension Benefits                              |     |   | Postretirement Health Care Benefits |   |
| Xcel Energy Inc.                                                                     |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                                                                         |   | $                                             | 54,860   |   |   | $ | 49,095 |   |   | $ | 3,005 |   |   | $ | 3,499 |   |
| Interest cost                                                                        |   |                                          | 123,758  |   |   |   | 127,343 |   |   |   | 32,085 |   |   |   | 37,809 |   |
| Expected return on plan assets                                                       |   |                                          | (174,239 | ) |   |   | (192,404 | ) |   |   | (21,397 | ) |   |   | (17,082 | ) |
| Amortization of transition obligation                                                |   |                                          | -        |   |   |   | - |   |   |   | 10,833 |   |   |   | 10,833 |   |
| Amortization of prior service cost (credit)                                          |   |                                          | 15,493   |   |   |   | 18,464 |   |   |   | (3,699 | ) |   |   | (2,044 | ) |
| Amortization of net loss                                                             |   |                                          | 36,236   |   |   |   | 9,342 |   |   |   | 8,732 |   |   |   | 14,497 |   |
| Net periodic benefit cost                                                            |   |                                          | 56,108   |   |   |   | 11,840 |   |   |   | 29,559 |   |   |   | 47,512 |   |
| Costs not recognized and additional cost recognized due to the effects of regulation |   |                                          | (20,270  | ) |   |   | (2,169 | ) |   |   | 2,918 |   |   |   | 2,918 |   |
| Net benefit cost recognized for financial reporting                                  |   | $                                             | 35,838   |   |   | $ | 9,671 |   |   | $ | 32,477 |   |   | $ | 50,430 |   |
|                                                                                 |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SPS                                                                                  |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net benefit cost (credit) recognized for financial reporting                         |   | $                                             | 4,345    |   |   | $ | (4,983 | ) |   | $ | 2,701 |   |   | $ | 3,750 |   |

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

|                              |   |                             |   |
|-----------------------------------|--------|----------------------------------|--------|
|                              |   | Nine Months Ended Sept. 30, |   |
| (Millions of Dollars)             |   | 2010                             |   |   | 2009 |   |
| Electric revenues                 |   | $                                | 1,247  |   |   | $ | 1,094 |   |
| Electric fuel and purchased power |   |                             | (788   | ) |   |   | (673 | ) |
| Electric margin                   |   | $                                | 459    |   |   | $ | 421 |   |

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|                                             |   |          |   |
|--------------------------------------------------|--------|---------------|--------|
| (Millions of Dollars)                            |   | 2010 vs. 2009 |   |
| Fuel and purchased power cost recovery           |   | $             | 123    |   |
| Sales mix and demand revenue                     |   |          | 12     |   |
| Fuel cost allocation regulatory accruals         |   |          | 11     |   |
| Retail sales increase (excluding weather impact) |   |          | 7      |   |
| Retail rate increases (New Mexico)               |   |          | 6      |   |
| Estimated impact of weather                      |   |          | 5      |   |
| Non-fuel riders                                  |   |          | (3     | ) |
| Other, net                                       |   |          | (8     | ) |
| Total increase in electric revenues              |   | $             | 153    |   |

|                                             |   |          |   |
|--------------------------------------------------|--------|---------------|--------|
| (Millions of Dollars)                            |   | 2010 vs. 2009 |   |
| Sales mix and demand revenue                     |   | $             | 12     |   |
| Fuel cost allocation regulatory accruals         |   |          | 11     |   |
| Retail sales increase (excluding weather impact) |   |          | 7      |   |
| Retail rate increases (New Mexico)               |   |          | 6      |   |
| Estimated impact of weather                      |   |          | 5      |   |
| Non-fuel riders                                  |   |          | (3     | ) |
| Transmission revenue, net of expense             |   |          | (2     | ) |
| Other, net                                       |   |          | 2      |   |
| Total increase in electric margin                |   | $             | 38     |   |

|                                                        |   |          |   |
|-------------------------------------------------------------|--------|---------------|--------|
| (Millions of Dollars)                                       |   | 2010 vs. 2009 |   |
| Higher employee benefit costs                               |   | $             | 9      |   |
| Higher plant generation costs                               |   |          | 4      |   |
| Higher labor costs                                          |   |          | 3      |   |
| Other, net (including contract labor and employee expenses) |   |          | 4      |   |
| Total increase in other operating and maintenance expenses  |   | $             | 20     |   |

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|   | ● | For projects rated at a voltage level less than 100 KV, all costs would be recovered from the pricing zone of the project; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | For projects rated at a voltage level between 100 KV and 300 KV, one-third of the costs would be recovered on an SPP region-wide basis and two-thirds would be recovered from the pricing zone of the project; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | For projects rated at a voltage level greater than 300 KV, 100 percent of costs would be recovered on an SPP region-wide basis. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 4. CONTROLS AND PROCEDURES

Part II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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Item 1A — RISK FACTORS

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Item 6. EXHIBITS

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| 3.01* |   | Amended and Restated Articles of Incorporation dated Sept. 30, 1997 (Exhibit 3(a)(2) to Form 10-K for the year ended Dec. 31, 1997 (file no. 001-03789) dated March 3, 1998).              |
|-------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.02* |   | By-laws dated Sept. 29, 1997 (Exhibit 3(b)(2) to Form 10-K for the year ended Dec. 31, 1997 (file no. 001-03789) dated March 3, 1998).                                                     |
| 31.01 |   | Principal Executive Officer’s and Principal Financial Officer’s certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.01 |   | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                              |
| 99.01 |   | Statement pursuant to Private Securities Litigation Reform Act of 1995.                                                                                                                                        |

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|   | /s/ TERESA S. MADDEN                       |
|--------|--------------------------------------------|
|   | Teresa S. Madden                           |
|   | Vice President and Controller              |
|   |                                       |
|   | /s/ DAVID M. SPARBY                        |
|   | David M. Sparby                            |
|   | Vice President and Chief Financial Officer |

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