UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C. 20549
                                FORM 10-Q

(Mark One)

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

For the period ended November 30, 1996

OR

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

For the transition period from ____________________ to _______________________

Commission file number 1-3789

                   SOUTHWESTERN PUBLIC SERVICE COMPANY
        (Exact name of registrant as specified in its charter)

          New Mexico                             75-0575400
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)               Identification No.)

                  Tyler at Sixth, Amarillo, Texas 79101
           (Address of principal executive offices)  (Zip Code)

Registrant's Telephone Number, including area code (806) 378-2121

    Indicate  by check mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

    As of January 10, 1997, 40,917,908 shares of the Company's common stock were
outstanding.


<PAGE>

               SOUTHWESTERN PUBLIC SERVICE COMPANY
                            FORM 10-Q 
            For the Quarter Ended November 30, 1996


TABLE OF CONTENTS

Page

PART I. Financial Information

         Condensed Consolidated Balance Sheets at November 30, 1996 and 
           August 31, 1996

         Condensed Consolidated  Statements of Earnings for the three and twelve
           months ended November 30, 1996 and November 30, 1995

         Condensed  Consolidated  Statements  of Cash  Flows  for the  three and
           twelve months ended November 30, 1996 and November 30, 1995

         Notes to Condensed Consolidated Financial Statements

         Independent Accountants' Report

         Management's Discussion and Analysis of Financial Condition 
           and Results of Operations

PART II. Other Information

Signatures

Exhibit 12. Statement of Computation of Ratio of Earnings

               

     

                      FORWARD LOOKING INFORMATION

         Certain matters discussed in this 10-Q are "forward-looking statements"
intended to qualify  for the safe  harbors  from  liability  established  by the
Private  Securities   Litigation  Reform  Act  of  1995.  These  forward-looking
statements  can  generally  be  identified  as such  because  the context of the
statement  will  include  words such as the Company  "believes,"  "anticipates,"
"expects" or words of similar  import.  Similarly,  statements that describe the
Company's future plans, objectives or goals are also forward-looking statements.
Such  statements  address  future  events  and  conditions   concerning  capital
expenditures,  earnings,  litigation,  rate and other  regulatory  matters,  the
pending Merger,  liquidity and capital resources, and accounting matters. Actual
results in each case could differ materially from those currently anticipated in
such statements,  by reason of factors such as electric  utility  restructuring,
including the ongoing state and federal activities;  future economic conditions;
developments in the legislative, regulatory and competitive markets in which the
Company operates;  and other circumstances  affecting  anticipated  revenues and
costs.



<PAGE>


PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets


Assets
<S>                                                          <C>            <C>    

                                                             November 30,   August 31,
                                                             1996           1996
                                                             (Unaudited)
                                                                  (In Thousands)
Utility plant:
         Utility plant in service ........................   $ 2,510,014    $ 2,484,025
         Accumulated depreciation ........................      (926,055)      (911,422)
                  Net plant in service ...................     1,583,959      1,572,603
         Construction work in progress ...................        74,404         49,143
                  Net utility plant ......................     1,658,363      1,621,746
Nonutility property and investments ......................        71,401         71,855

Current assets:
         Cash and temporary investments ..................        20,651         31,223
         Accounts receivable, net ........................        63,921         77,959
         Undercollected fuel and purchased power cost, net        11,253          7,193
         Accrual for unbilled revenues ...................        19,744         23,152
         Materials and supplies, at average cost .........        20,082         21,513
         Prepayments and other current assets ............         6,288          7,452
                  Total current assets ...................       141,939        168,492

Deferred debits ..........................................       147,018        135,724

                  Total assets ...........................   $ 2,018,721    $ 1,997,817

         Continued . . .

See accompanying notes to condensed consolidated financial statements.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets


Capitalization and Liabilities
<S>                                                                         <C>             <C>    

                                                                            November 30,    August 31,
                                                                            1996            1996
                                                                            (Unaudited)
                                                                                 (In Thousands)
Capitalization:
         Common stock, $1 par value, authorized - 100,000,000 shares;
                  issued and outstanding - 40,917,908 shares ............   $   40,918      $   40,918
         Premium on capital stock .......................................      307,484         307,484
         Retained earnings ..............................................      385,682         386,717
                    Total common shareholders' equity ...................      734,084         735,119
         SPS Obligated Mandatorily Redeemable Preferred Securities of
           Subsidiary Trust holding solely Subordinated Debentures of SPS      100,000            -
         Long-term debt .................................................      620,402         622,931
                    Total capitalization ................................    1,454,486       1,358,050

Current liabilities:
         Short-term debt ................................................           53          69,624
         Current maturities of long-term debt ...........................       15,231          15,176
         Accounts payable ...............................................       17,493          15,979
         Interest accrued ...............................................       17,082          10,962
         Fuel and purchased power expense accrued .......................       36,579          46,396
         Taxes accrued ..................................................       29,384          32,486
         Dividends payable on common stock ..............................       22,505          22,505
         Other current liabilities ......................................       40,229          43,441
                    Total current liabilities ...........................      178,556         256,569

Deferred credits:
         Deferred income taxes ..........................................      367,619         365,911
         Unamortized investment tax credits .............................        5,740           5,803
         Other ..........................................................       12,320          11,484
                    Total deferred credits ..............................      385,679         383,198

                    Total capitalization and liabilities ................   $2,018,721      $1,997,817

See accompanying notes to condensed consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Earnings
(Unaudited)

<S>                                                   <C>          <C>          <C>           <C>   
                                                      Three Months Ended        Twelve Months Ended
                                                      11-30-96     11-30-95     11-30-96      11-30-95
                                                            (In Thousands, Except Per Share Amounts)

Operating revenues ................................   $ 214,381    $ 200,957    $ 912,821     $ 847,823

Operating expenses:
         Operation:
                  Fuel ............................     100,466       89,450      428,039       375,476
                  Purchased power .................       3,289        1,438       19,862         5,579
                  Other ...........................      27,228       26,935      109,926       107,911
         Maintenance ..............................       8,525        7,234       33,825        28,382
         Depreciation and amortization ............      17,101       16,388       66,161        62,166
         Taxes other than property and income taxes       5,580        5,277       21,412        19,590
         Property taxes ...........................       5,801        5,678       23,594        23,843
         Income taxes .............................      11,680       13,165       57,863        64,338
                           Total operating expenses     179,670      165,565      760,682       687,285
Operating income ..................................      34,711       35,392      152,139       160,538

Other income, net:
         Income taxes .............................        (611)      (1,117)      (5,443)       (4,670)
         Other, net ...............................         966         (119)       9,571         8,562
                           Total other income, net          355       (1,236)       4,128         3,892

Interest charges ..................................      12,724       10,988       51,322        42,953
Preferred stock dividends of subsidiary ...........         872         -             872          -
Net earnings ......................................      21,470       23,168      104,073       121,477
Dividends on cumulative preferred stock ...........        -           1,219        1,274         4,878
Earnings applicable to common stock ...............   $  21,470    $  21,949    $ 102,799     $ 116,599
Earnings per common share* ........................   $     .52    $     .54    $    2.51     $    2.85
Weighted average shares outstanding ...............      40,918       40,918       40,918        40,918
Dividends declared per common share ...............    $    .55     $    .55     $   2.20      $   2.20

( ) Denotes deduction.
*Based on weighted average shares outstanding.

See accompanying notes to condensed consolidated financial statements.

Certain 1995 amounts have been reclassified to conform to the 1996 presentation.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)

<S>                                                                               <C>         <C>           <C>         <C> 
                                                                                  Three Months Ended        Twelve Months Ended
                                                                                  11-30-96    11-30-95      11-30-96    11-30-95
                                                                                                  (In Thousands)
Operating Activities:
         Cash received from customers ..........................................  $ 227,526   $ 225,264     $ 888,378   $ 835,409
         Cash paid to suppliers and employees ..................................   (149,325)   (128,683)     (584,764)   (503,790)
         Interest paid .........................................................     (7,398)     (4,154)      (51,370)    (41,986)
         Income taxes paid .....................................................    (13,000)    (19,205)      (49,220)    (58,283)
         Taxes other than income taxes paid ....................................    (10,330)     (9,248)      (46,682)    (42,087)
         Other operating cash receipts and payments, net .......................     (9,493)        441        (2,691)     11,007
                               Net cash provided by operating activities .......     37,980      64,415       153,651     200,270
Investing Activities:
         Construction expenditures .............................................    (54,456)    (32,991)     (133,451)   (105,507)
         Nonutility property and investments ...................................        454      (1,134)         (180)    (27,993)
         Acquisitions ..........................................................       -        (29,200)         -        (29,200)
                               Net cash used in investing activities ...........    (54,002)    (63,325)     (133,631)   (162,700)
Financing Activities:
         Issuance of long-term debt ............................................     82,300        -          142,300      76,204
         Issuance of SPS Obligated Mandatorily Redeemable
           Preferred Securities ................................................    100,000        -          100,000        -
         Retirement of long-term debt ..........................................    (84,774)     (1,645)      (87,574)    (18,375)
         Change in short-term debt .............................................    (69,571)       -               53        -
         Redemption of cumulative preferred stock ..............................       -           -          (75,434)       -
         Dividends paid (common and preferred) .................................    (22,505)    (23,724)      (91,295)    (94,898)
                               Net cash used in financing activities ...........      5,450     (25,369)      (11,950)    (37,069)
Net Increase (Decrease) in Cash and Temporary Investments ......................    (10,572)    (24,279)        8,070         501
Cash and Temporary Investments at Beginning of Period ..........................     31,223      36,860        12,581      12,080
Cash and Temporary Investments at End of Period ................................  $  20,651   $  12,581     $  20,651   $  12,581

Reconciliation of Net Earnings to Net Cash Provided
         by Operating Activities:
                  Net earnings .................................................  $  21,470   $  23,168     $ 104,073   $ 121,477
                  Adjustments to reconcile net earnings to net cash
                        provided by operating activities:
                           Depreciation ........................................     17,101      16,388        66,161      62,166
                           Deferred income taxes and investment tax credits ....      3,445       3,074        16,543      10,122
                           Allowance for equity funds used during construction .       (175)        (60)         (174)       (245)
                  Cash flows impacted by changes in:
                           Accounts receivable .................................     14,038      18,394        (9,053)     (1,121)
                           Accrual for unbilled revenues .......................      3,408       7,339         1,543      (9,821)
                           Materials and supplies ..............................      1,431       1,112           453        (924)
                           Accounts payable ....................................      1,514       4,723           583       6,029
                           Fuel and purchased power expense accrued ............     (9,817)    (10,587)        7,002         921
                           Taxes accrued .......................................     (3,102)     (6,289)       (4,084)      2,022
                           Undercollected fuel and purchased power cost, net ...     (4,060)     (1,165)      (16,057)       (536)
                           Other, net ..........................................     (7,273)      8,318       (13,339)     10,180
                                Net cash provided by operating activities ......  $  37,980   $  64,415     $ 153,651   $ 200,270

See accompanying notes to condensed consolidated financial statements.

</TABLE>

<PAGE>


SOUTHWESTERN PUBLIC SERVICE COMPANY
Notes to Condensed Consolidated Financial Statements
(Unaudited)


(1) Interim  periods.  The results of operations for the interim periods are not
necessarily an indication of the expected results for the fiscal year due to the
seasonal nature of Southwestern Public Service Company's (the Company) business.
The unaudited condensed  consolidated  financial statements included herein were
prepared from the books of the Company in  accordance  with  generally  accepted
accounting  principles and reflect all adjustments (none of which are other than
normal recurring adjustments) which are, in the opinion of management, necessary
to provide a fair statement of the results of operations and financial  position
for the interim  periods.  Such financial  statements  generally  conform to the
presentation  reflected in the  Company's  Annual  Report to  Stockholders.  The
current interim period reported herein is included in the fiscal year subject to
independent audit at the end of the year.


(2) Income taxes. The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
<S>                                             <C>         <C>         <C>         <C>   
                                                Three Months Ended      Twelve Months Ended
                                                11-30-96    11-30-95    11-30-96    11-30-95
                                                               (In Thousands) 
Taxes on operating income:
                  Federal-current ...........   $  7,997    $  9,518    $ 38,138    $ 51,188
                  Federal-deferred ..........      3,668       3,287      17,678      11,468
                  Investment tax credits ....        (62)        (62)       (250)       (250)
                  State-current .............         77         422       2,297       1,932
                                                  11,680      13,165      57,863      64,338
Taxes on other income:
                  Federal-current ...........        765       1,262       6,279       5,735
                  Federal-deferred ..........       (161)       (151)       (884)     (1,096)
                  State-current .............          7           6          48          31
                                                     611       1,117       5,443       4,670
                     Total income taxes .....   $ 12,291    $ 14,282    $ 63,306    $ 69,008
</TABLE>

(3) Merger  with Public  Service  Company of  Colorado  (PSCo).  The Company and
Denver-based  PSCo entered into a definitive  merger  agreement  (the Merger) on
August 22, 1995, to form a registered  public utility  holding company named New
Century  Energies,  Inc.,  which will be the parent  company for the Company and
PSCo. The transaction is subject to various conditions, including receipt of the
approval  of or the  taking  of other  action  by the  Securities  and  Exchange
Commission, the Federal Trade Commission, the Department of Justice, the Nuclear
Regulatory Commission,  the Federal Energy Regulatory Commission (FERC), and the
state public utility commissions in Texas,  Colorado,  New Mexico,  Wyoming, and
Kansas.  (See GENERAL.  Merger  Agreement in the Company's 1996 Annual Report on
Form 10-K.)

         The Merger,  with a targeted  completion date in the spring of 1997, is
conditioned on qualifying as a tax-free  reorganization  and being accounted for
as a pooling of interests.

(4)  Issuance  of  securities.  The  Company  redeemed in  September  1996,  the
$25,000,000  6-1/2%  pollution  control  revenue  bonds (PCRBs) due 2004 and the
$32,300,000  6-5/8% PCRBs due 2009 and replaced these series in September  1996,
with $57,300,000 5-3/4% PCRBs due 2016.

         In October 1996, the Company called its $25,000,000 principal amount of
13-1/2% PCRBs and issued  $25,000,000 of new variable rate PCRBs.  In connection
with the new issuance of variable  rate PCRBs,  the Company has an interest rate
swap  agreement,  which,  in effect,  fixes the interest  rate on a  $25,000,000
notional  amount at 6.435%.  Amounts paid or received  under this  agreement are
accrued  as  interest  rates  change  and are  recognized  over  the life of the
agreement  as an  adjustment  to  interest  expense.  The  Company is exposed to
interest rate risk in the event of nonperformance by the counterparty;  however,
the Company does not anticipate such nonperformance.

         In October 1996,  Southwestern Public Service Capital I, a wholly owned
trust,  issued in a public  offering  $100,000,000 of its 7.85% Trust  Preferred
Securities,  Series  A. The sole  asset of the trust is $103,000,000  principal
amount of the  Company's  7.85%  Deferrable  Interest  Subordinated  Debentures,
Series A due  September  1,  2036.  The funds from this  financing  were used to
reduce short-term debt.

(5) Rate and  regulatory  matters.  The Company may effect  changes in its rates
only as approved by the  regulatory  authorities  governing  its  jurisdictions.
Amounts   ultimately   realized  will  differ  from  amounts   approved  because
kilowatt-hour  sales  and  other  factors  will  vary  from  those  used in rate
proceedings.

         A Public Utility  Commission of Texas (PUCT)  substantive rule requires
periodic  examination  of the  Company's  fuel and  purchased  power costs,  the
efficiency of the use of such fuel and purchased  power,  fuel  acquisition  and
management policies and purchase power commitments.  On May 1, 1995, the Company
filed  with the PUCT a  petition  for a fuel  reconciliation  for the  months of
January 1992 through December 1994. A hearing was held in September 1995, and in
January  1996 an order was  issued  which  required  the  Company to make a $3.9
million fuel refund  consisting of $2.1 million of overrecovered  fuel costs and
$1.8 million of  disallowed  fuel costs for the period.  This refund was made in
April 1996.  Additionally,  the order  required  the Company to flow  through to
customers  100% of margins  from  non-firm  off-system  opportunity  sales as of
January 1995.  Prior PUCT rulings had allowed the Company to retain 25% of these
margins.  The 100% flow  through is required by PUCT rules,  absent rule waiver.
The Company filed a motion for rehearing on January 25, 1996. The PUCT issued an
order on March 14 denying rehearing on the fuel disallowance (which was adjusted
to $1.9 million),  and ordered the flow through of 100% of the margin  effective
with the first billing cycle after the date of the order.  On May 24, 1996,  the
Company  filed an appeal  in the  Travis  County  District  Court on the  PUCT's
decision with respect to the $1.9 million of disallowed  fuel costs in which the
hearing of merits was held on November 1, 1996.  The  District  Court upheld the
PUCT's  decision  on the  disallowed  fuel  costs.  It is  anticipated  that the
District  Court  decision  will be appealed  to the Texas Court of Appeals.  The
ultimate  outcome of this  matter  will not  significantly  affect  consolidated
financial  results.  Currently  the  Company  has  approximately  $11 million in
underrecovered  fuel  costs and has filed with the PUCT for a change in the fuel
factors. Settlement was made with the PUCT and intervening parties, and the fuel
factors were interimly approved and are now in effect.

         On December 19,  1989,  the FERC issued its final order  regarding  the
1985 rate case. The Company  appealed certain portions of the order that related
to recognition in rates of the reduction of the federal income tax rate from 46%
to 34%. The United States Court of Appeals for the District of Columbia  Circuit
remanded the case,  directing the FERC to reconsider  the Company's  claim of an
offsetting  cost and limiting the FERC's  actions.  The FERC issued its Order on
Remand in July 1992,  required  filings were made and a hearing was completed in
February 1994. In October 1994, the  administrative law judge issued a favorable
initial  decision  that, if approved by the FERC,  would result in a substantial
recovery by the  Company.  Negotiated  settlements  with the  Company's  partial
requirements  customers  and TNP  were  approved  by the  FERC in July  1993 and
September 1993, respectively, and the Company received approximately $2,800,000,
including  interest.  In a settlement with the Company's New Mexico  cooperative
customers the Company received approximately $7,000,000, including interest. The
FERC approved this  settlement in July 1995.  Resolutions  of these matters with
the  remaining  wholesale  customers,  Golden  Spread  member  cooperatives  and
Lyntegar  Electric  Cooperative,  have  not been  reached.  The  Company  cannot
reasonably  estimate the remaining amount  recoverable  from these  proceedings;
however, a favorable resolution could materially improve  consolidated  earnings
in the year in which it is resolved.

(6) Other events.  As discussed in the Company's 1996 Annual Report on Form 10-K
under  BUSINESS.  Nonutility  Businesses,  Quixx  Corporation,  a  wholly  owned
subsidiary  of the  Company,  holds a 49%  limited  partnership  interest in BCH
Energy Limited  Partnership which owns a waste-to-energy  cogeneration  facility
located near Fayetteville,  North Carolina.  Limited commercial operation of the
BCH project  began in June 1996;  however,  the  facility  has not  achieved the
expected performance level. Quixx is currently negotiating with the project debt
and equity holders  concerning the  restructuring  of the project to achieve the
required improvements on economically viable terms. Should it not be possible to
economically complete the necessary improvements, Quixx may be required to write
off a portion or all of its  investment  of  approximately  $15,000,000 in this
project.  The  resolution  of this matter could  adversely  affect  consolidated
earnings for the year.

         The banks  providing  the debt  financing to the project have  withheld
funds for the BCH project and for the  construction  of the  companion  Carolina
project discussed in such Form 10-K and construction of the Carolina project has
been suspended.  Quixx is also in  negotiations  concerning the viability of the
Carolina project and the restoration of the funding for its construction.

     The Company was named as a defendant in a case entitled  Thunder Basin Coal
Co. v.  Southwestern  Public Service Co., No. 93-CV-304B (D. Wyo.). (See ITEM 3.
LEGAL PROCEEDINGS in the Company's 1996 Annual Report on Form 10-K.) On November
1, 1994,  the jury returned a verdict in favor of Thunder Basin and awarded them
damages of  approximately  $18,800,000.  The Company appealed the judgement to
the Tenth Circuit  Court of Appeals and on January 7, 1997,  that Court found in
favor of Thunder  Basin and upheld the $18,800,000  judgement.  The Company is
considering a motion for rehearing.

         Management   believes  that  the  payment  would  be  recoverable  from
ratepayers,  although any such recovery  would be subject to regulatory  review.
Therefore,  management  believes  that the ultimate  resolution  will not have a
material adverse effect on the Company's consolidated financial statements.

(7) General.  See note (1) of Notes to Consolidated  Financial Statements in the
Company's  1996  Annual  Report  on Form  10-K for a  summary  of the  Company's
significant accounting policies.


<PAGE>


Independent Accountant's Report


Southwestern Public Service Company:

We have  reviewed  the  accompanying  condensed  consolidated  balance  sheet of
Southwestern  Public Service  Company and  subsidiaries as of November 30, 1996,
and the related condensed consolidated statements of earnings and cash flows for
the three-month and twelve-month periods ended November 30, 1996 and 1995. These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters.  It is  substantially  less in scope than an audit in  accordance  with
generally accepted auditing standards,  the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.  Accordingly,
we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such condensed  consolidated  financial  statements for them to be in
conformity with generally accepted accounting principles.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the consolidated  balance sheet and statement of  capitalization  of
Southwestern  Public Service Company and subsidiaries as of August 31, 1996, and
the related consolidated  statements of earnings,  common shareholders'  equity,
and cash flows for the year then ended (not presented herein); and in our report
dated  October  10,  1996,  we  expressed  an   unqualified   opinion  on  those
consolidated financial statements.  In our opinion, the information set forth in
the accompanying  condensed consolidated balance sheet as of August 31, 1996, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.


Deloitte & Touche LLP

January 10, 1997
Dallas, Texas


<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

         Operating Revenues and Kilowatt-Hour Sales

         Substantially all of the Company's  operating  revenues result from the
sale of electric  energy.  The principal  factors  determining  revenues are the
amount and price per unit of energy sold.  The  following  table  describes  the
principal components of changes in revenues.
<TABLE>
<CAPTION>
<S>     <C>    <C>    
                                                          Increase (Decrease) From
                                                          Corresponding Prior Period
                                                          Three Months    Twelve Months
                                                          Ended           Ended
                                                          11-30-96        11-30-96
                                                            (Dollars In Thousands)
Estimated effect on revenues of variations in:
       Kilowatt-hour (kwh) sales*  ....................   $   (711)       $ 37,408
       Rates ..........................................      3,490          (9,441)
       Fuel and purchased power cost recovery .........      8,325          31,747
                 Subtotal ............................      11,104          59,714
       Non-firm kwh sales .............................      2,320           5,284
                 Total revenue increase ...............   $ 13,424        $ 64,998
Increase in kwh sales* (in millions) ..................         52             805
Increase (decrease) in non-firm kwh sales (in millions)        132             (45)

* Comprised of retail and wholesale excluding economy and interruptible (non-firm) wholesale kwh sales.
</TABLE>

         Variations in Kwh Sales.  The revenue  increases  for the  twelve-month
period  was due  primarily  to  increased  Kwh  sales to all  retail  (ultimate)
customers and to rural  electric  cooperatives  (RECs) due primarily to a hotter
than  normal  late  spring and early  summer.  These  conditions  increased  air
conditioning load for the twelve-month period. Contributing to the increase were
kwh sales  resulting from the  acquisition  of electric  properties in the Texas
Panhandle  from  Texas-New  Mexico  Power  Company  (TNP).  The decrease for the
quarter  is  primarily  due to a  significant  decline  in  firm  sales  to firm
municipal customers including the Texas cities of Lubbock, Brownfield, Tulia and
Floydada.  These customers  purchased  available non-firm power from the Company
and others.  Although kwh sales increased modestly in the quarter, the migration
of these customer  purchases to the lower priced non-firm power caused a decline
in revenues that was not offset by the increased level of sales.

         Variations in Rates.  Increased revenues for the three-month period are
due  primarily  to  increased  demand  charges  per kwh  received  from  certain
wholesale customers. The decreases for the twelve-month period are primarily the
result  of  last  year's  settlement  of  the  1985  Federal  Energy  Regulatory
Commission  (FERC)  rate  case  with the  Company's  New  Mexico  wholesale  REC
customers. This settlement contributed  increased revenues of approximately $4.0
million  (and  interest  of $3.0  million  that is  included  in other  income).
Interruptible  rates  available  to  certain  classes of retail  customers  were
approved  and  implemented  in Texas and New Mexico in 1996 which acted to lower
related  revenues  for both  periods.  The Company  sought  approval to put into
effect these new rates in compliance with settlement  agreements in the 1993 and
1994  rate  cases in Texas  and New  Mexico,  respectively,  and to  respond  to
generation resource capacity needs.

     Variations in Fuel and Purchased Power Cost Recovery. Revenue increases for
the three- and twelve-month periods are due to increased gas and coal costs.

         Variations in Non-Firm Kwh Sales.  The amount of revenues  arising from
non-firm  sales is dependent,  in large part,  upon the amount and cost of power
available to the Company for sale,  the demand for power,  the  availability  of
competing  hydroelectric  power from the  Northwest  and  generation  from major
plants in the West.  The increases for the three- and  twelve-month  periods are
due  primarily  to increased  fuel  charges  included in the non-firm kwh sales.
Additionally,  interruptible  sales to  Public  Service  Company  of New  Mexico
increased for both periods because of an increased demand for power.

         Operating Expenses and Non-Operating Items

         Operating  Expenses.  Fuel and purchased power expense  comprised 57.7%
and 58.9% of total  operating  expenses  for the three and twelve  months  ended
November 30, 1996, respectively. When compared to the corresponding periods last
year, these expenses  increased $12.9 million,  or 14.2%, and $66.8 million,  or
17.5%,  for the three- and  twelve-month  periods  respectively.  Increased fuel
costs,  primarily  gas costs,  caused  increases in both  periods.  Fuel expense
(excluding purchased power expense), per net kwh generated,  increased from 1.83
to 2.01  cents  and  from  1.78 to 2.02  cents  for the  respective  three-  and
twelve-month periods due to higher natural gas and coal costs.

         Total operating expenses, excluding fuel and purchased power, increased
$1.2 million,  or 1.7%, for the three-month  period, and increased $6.6 million,
or 2.1%, for the twelve-month period. The increase in the three-month period was
due primarily to steam production maintenance expenses.  Additionally, a decline
in taxable  income  lowered  taxes in the current  period.  The  increase in the
twelve-month period was due primarily to increased steam production  maintenance
expense  and  expenses  associated  with  the  acquisition  of the TNP  electric
properties.  Maintenance  expenses  were  higher  due  to the  normal  recurring
eighteen-month repair cycle and additional cooling tower maintenance costs.

         Other Income.  Other income  increased for the  three-month  period due
primarily to reduced taxes and merger and business  integration expenses as well
as slightly increased subsidiary earnings.  Other income during the twelve-month
period was favorably  impacted by the approximate $7.7 million after-tax gain on
the sale of certain  water rights by Quixx  Corporation.  The gain was offset by
increased  merger  and  business  integration  expenses  of  approximately  $5.4
million.  The Company  reclassified  these expenses from  operating  expenses to
other income to conform with a FERC order.  Other income was favorably  impacted
in the prior  twelve-month  period by the  approximate  $3.0 million of interest
arising from the rate case settlement with New Mexico wholesale customers.

         Earnings

         Current  earnings  applicable to common stock declined for both periods
in part because of increased  interest  expense due to increased  long-term  and
short-term  debt.  These higher levels of debt were caused by the  retirement of
preferred  stock,  the 1995  acquisition  of  electric  properties  from TNP and
increased  construction  expenditures.  Twelve-month  earnings  were  positively
affected by the sale of a portion of underground water rights held by Quixx that
added 19 cents per share.  However,  these earnings were  adversely  affected by
merger-related and business integration expenses. Additionally, earnings for the
prior twelve-month period had been boosted by the rate settlement with wholesale
customers  in New Mexico  that added 11 cents per share,  and by a change in the
estimate  of  delivered-but-not-billed  kwh sales that added 13 cents per share.
These  estimated  kwh sales  relate to energy used by  customers  but not billed
until the subsequent month. Operating income was flat in the three-month  period
and  decreased  in the  twelve-month  period  primarily  because of the  greater
maintenance expenses and the expenses associated with the TNP acquisition.

         Assuming normal weather  conditions,  1997 operating income is expected
to remain relatively flat, but net earnings for 1997 will be negatively impacted
by increased  merger-related and business  integration  expenses.  Any write-off
associated  with the BCH project  discussed in Note (6) would further  adversely
affect  such  earnings.  A  resolution  of the 1985 FERC  rate  case with  Texas
wholesale REC  customers,  by settlement or otherwise,  would  favorably  affect
income and earnings in the year received.

LIQUIDITY AND CAPITAL RESOURCES

         The   Company's   demand  for  capital  is  normally   related  to  the
construction  of utility plant and  equipment.  Cash  construction  expenditures
excluding  AFUDC for the three and twelve months ended  November 30, 1996,  were
$54.5 million and $133.5 million, respectively. Also in fiscal 1996, the Company
received  regulatory  approval to make investments in Quixx of up to $15 million
each year  beginning  in fiscal  1996 and  continuing  for five  years.  Quixx's
investment in independent  power projects is dependent upon suitable  investment
opportunities  and the  availability of capital.  The Company cannot  accurately
forecast  the  portion  of  internally  generated  funds to be used for  capital
expenditures,  but expects that it will be approximately  40% in fiscal 1997. To
the extent the capital required in 1997 is not supplied by internally  generated
funds,  the Company expects to obtain such capital from short-term  borrowing or
from the sale of long-term  debt,  preferred  stock  and/or  common  stock.  The
Company's   estimates  of  capital  needs,   in  particular   those  related  to
construction  and the  generation  of  internal  funds are subject to review and
revision,  and may vary  substantially  from the foregoing  especially in a more
competitive  environment.  Due to the merger, Standard & Poor's is reviewing the
Company's rated debt for possible downgrade.

         In August  1994 the  Company  entered in a forward  interest  rate swap
agreement in  anticipation  of  redeeming  its $25 million  principal  amount of
13-1/2%  Pollution Control Revenue Bonds (PCRBs) with a new issuance of variable
rate  PCRBs.  Such bonds were  redeemed  October 1, 1996,  and  replaced  with a
variable  rate bond issue that has been  swapped  for a fixed rate of 6.435% due
July 1, 2016. Additionally,  the Company redeemed on September 26, 1996, the $25
million  6-1/2% PCRBs due 2004 and the $32.3  million  6-5/8% PCRBs and replaced
these  series on  September  18,  1996,  with  $57.3  million  5-3/4%  PCRBs due
September 1, 2016.

         In October 1996,  Southwestern Public Service Capital I, a wholly owned
trust,  issued  in a public  offering  $100  million  of 7.85%  Trust  Preferred
Securities,  Series  A. The sole  asset of the trust is $103  million  principal
amount of the  Company's  7.85%  Deferrable  Interest  Subordinated  Debentures,
Series A due  September  1,  2036.  The  securities  are shown as SPS  Obligated
Mandatorily  Redeemable  Preferred Securities of Subsidiary Trust holding solely
Subordinated Debentures of SPS on the Consolidated Balance Sheet. The funds from
this financing were used to reduce short-term debt.

         The Company also has  effective a shelf  registration  under which $220
million of debt securities and/or preferred stock are available for issuance.

 OTHER MATTERS

         Electric  utilities have  historically  operated in a highly  regulated
environment  in which they have an  obligation  to provide  electric  service to
their  customers  in return for an  exclusive  franchise  within  their  service
territory  with  an  opportunity  to  earn a  regulated  rate  of  return.  This
regulatory  environment  is  changing.  The  generation  sector has  experienced
competition from nonutility power producers and the FERC is requiring utilities,
including the Company, to provide wholesale  transmission  service to others and
may order electric utilities to enlarge their transmission systems to facilitate
transmission  services  without  impairing  reliability.  On July 9,  1996,  the
Company filed its open access  transmission tariff in compliance with FERC Order
No. 888. (See GENERAL.  Competition  in the Company's 1996 Annual Report on Form
10-K.)  State  regulatory  authorities  are in the process of  changing  utility
regulations  in  response to federal and state  statutory  changes and  evolving
markets.  All  of the  Company's  jurisdictions  continue  to  evaluate  utility
regulations  with respect to competition,  and  legislative  proposals to effect
retail  wheeling are expected to be introduced in 1997. The Company is unable to
predict what financial  impact or effect the adoption of these  proposals  would
have on its  operations.  In part in response to these  changing  conditions the
Company has entered  into a  definitive  merger  agreement  with Public  Service
Company  of  Colorado  (the  Merger).  Consummation  of the Merger is subject to
customary conditions including receiving regulatory authority approvals. The two
utilities  are working  toward a completion  date in spring 1997.  The foregoing
discussions of the Company's  "Results of Operations" and "Liquidity and Capital
Resources"  do not take into account any changes that could arise as a result of
the Merger.



<PAGE>


PART II. OTHER INFORMATION

Item 5. Other Information.

         The Company's  ratio of earnings to fixed charges for the twelve months
ended  November 30, 1996,  was 4.00.  The ratio of earnings to fixed charges and
preferred dividend requirements combined was 3.86 for such period.

         See Note (6) of Notes to Condensed  Consolidated  Financial  Statements
for a  discussion  of Quixx's BCH project and a lawsuit  between the Company and
Thunder Basin Coal Company.

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

         (a)   Exhibits:

                 4(a)   Indenture dated as of October 21, 1996, between the 
                        Company and Wilmington Trust Company

                  (b)   Supplemental Indenture dated as of October 21, 1996,
                        between the Company and Wilmington Trust Company

                  (c)   Guarantee Agreement dated as of October 21, 1996,
                        between the Company and Wilmington Trust Company

                  (d)   Amended and Restated Trust Agreement dated as of 
                        October 21, 1996, among the Company, David M. Wilks,
                        as initial depositor, Wilmington Trust Company and
                        the administrative trustees named therein

                  (e)   Agreement as to Expenses and Liabilities dated as of
                        October 21, 1996, between the Company and Southwestern
                        Public Service Capital I (included as Exhibit F in
                        Exhibit 4(d))

                        Instruments defining the rights of holders of other 
                        long-term debt not required to be filed as exhibits
                        will be furnished to the Commission upon request.

                12      Statement showing computations of ratio of earnings for
                        the twelve months ended November 30, 1996

                15      Letter of Deloitte & Touche LLP regarding unaudited
                        condensed consolidated interim financial information

         (b)      Reports on Form 8-K:

                   Item reported - Item 5. Other Events
                   Financial Statements filed - None
                   Date of  report  filed - October  11,  1996,  reporting  1996
                                            fiscal year earnings


<PAGE>


SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



         SOUTHWESTERN PUBLIC SERVICE COMPANY

                  /s/ Doyle R. Bunch II
         By
                  Doyle R. Bunch II
                  Executive Vice-President
                  Accounting and Corporate Development

DATE: January 10, 1997