AMENDMENT No. 1
                                     To The
                                 SAN JUAN UNIT 4
                      PURCHASE AND PARTICIPATION AGREEMENT
                                     Between
                      Public Service Company of New Mexico
                                       and
                         The City of Anaheim, California

1.0      PARTIES

         This Amendment No. 1 to the San Juan Unit 4 Purchase and  Participation
Agreement  ("Amendment No. 1") is made and entered into this 27th day of October
1999,  by and  between  PUBLIC  SERVICE  COMPANY  OF NEW  MEXICO,  a New  Mexico
corporation ("PNM") and THE CITY OF ANAHEIM, CALIFORNIA, a municipal corporation
organized  under the laws of the State of  California  ("Anaheim"),  hereinafter
sometimes  referred  to  individually  as  a  "Party"  or  collectively  as  the
"Parties."

2.0      RECITALS

         This  Amendment No. 1 is made with  reference to the  following  facts,
among others:

         2.1 The San Juan  Unit 4  Purchase  and  Participation  Agreement  (the
"PPA") was entered  into by the Parties as of April 26,  1991.  The PPA provides
for the sale by PNM and the  purchase  by Anaheim of a 10.04  percent  undivided
ownership interest in San Juan Unit 4 and associated common facilities, supplies
and inventories  and the operation  thereof by PNM as Operating Agent of the San
Juan Project.

         2.2 PNM and Tucson  Electric Power Company  ("TEP") only are parties to
the San Juan Project Co-Tenancy  Agreement (the "Co-Tenancy  Agreement") and the
San Juan Project Operating Agreement (the "Operating Agreement").


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         2.3 The  Co-Tenancy  Agreement  and the Operating  Agreement  have been
previously  amended by action of PNM and TEP,  through and including  Amendments
Number  1  through  Number  10 to the  Co-Tenancy  Agreement  and the  Operating
Agreement.

         2.4 The San Juan Project Construction  Agreement was terminated in 1995
by action of PNM and TEP.

         2.5 PNM, TEP, Century Power Company,  Southern  California Public Power
Authority ("SCPPA"),  the City of Farmington,  New Mexico ("Farmington"),  M-S-R
Public Power Agency ("M-S-R"), the Incorporated County of Los Alamos, New Mexico
("Los  Alamos")  and  Anaheim  entered  into  the San  Juan  Project  Designated
Representative  Agreement ("DR Agreement") as of April 29, 1994, for the purpose
of complying with the federal Clean Air Act Amendments of 1990; the DR Agreement
was thereafter accepted by Utah Associated Municipal Power Systems ("UAMPS") and
Tri-State  Generation and Transmission  Association,  Inc.  ("Tri-State") at the
time of  their  respective  purchases  of  ownership  interests  in the San Juan
Project.

         2.6 The owners of the San Juan Project, including PNM and Anaheim, have
negotiated  a  San  Juan  Project   Participation   Agreement  among  PNM,  TEP,
Farmington,  M-S-R,  Los  Alamos,  SCPPA,  Anaheim,  UAMPS  and  Tri-State  (the
"Participation  Agreement") to amend,  restate and replace in their entirety the
Co-Tenancy  Agreement  and  the  Operating  Agreement  and  to  set  out  in one
instrument all of the matters  previously  included in the Co-Tenancy  Agreement
and the Operating Agreement.

         2.7 The Participation  Agreement will, upon its effective date, provide
Anaheim with all the rights,  privileges and obligations of a "Participant,"  as
that  term  is  defined  in the  Participation  Agreement,  and is  intended  to
supersede  the  rights,  privileges  and  obligations  of  Anaheim  as  a  "Unit
Participant," as that term is defined in the Operating Agreement.


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         2.8 The Parties desire to amend the PPA to make the PPA consistent with
the Participation Agreement.

         NOW, THEREFORE, based on the foregoing recitals and in consideration of
the mutual  promises,  terms and covenants of this  Amendment No. 1, the Parties
hereby agree as follows:

3.0      TERM AND TERMINATION

         3.1 This Amendment No. 1 shall become effective as of the date on which
the Participation Agreement becomes effective.

         3.2 Section 1 of the PPA is amended to read in its entirety as follows:

               1.1 This  Agreement  shall  become  effective  on the  date  (the
            "Effective  Date") it is executed by both PNM and Anaheim and shall,
            unless  terminated  earlier by the  Parties,  remain in effect until
            July 1, 2022;  provided,  however,  that if the term of the San Juan
            Project Participation Agreement, dated as of ________________,  1999
            (the  "Participation  Agreement")  is  extended,  the  term  of this
            Agreement shall be extended,  without further action of the Parties,
            so  that  the  terms  of  this  Agreement  and of the  Participation
            Agreement shall be coterminous.

4.0      CHANGES IN REFERENCES TO CO-TENANCY AGREEMENT
         AND OPERATING AGREEMENT

         4.1 Section 7 of the PPA is hereby  amended to read in its  entirety as
follows:

               7.1 Participation Agreement. Except as otherwise provided in this
            Agreement, the rights and obligations of the Parties with respect to
            the  San  Juan  Project  are  as  set  forth  in  the  Participation
            Agreement.  Any reference in this  Agreement to any provision of the
            San Juan Project Agreements shall be deemed to be a reference to the
            corresponding or successor provision of the Participation Agreement.

               7.2 PNM/Anaheim  Relationship.  The relationship  between PNM and
            Anaheim with  respect to Unit 4 shall be governed by this  Agreement
            and the Interconnection Agreement. As between PNM and Anaheim, where
            a  specific  provision  of  this  Agreement  is in  conflict  with a
            provision  in one or more of the San Juan  Project  Agreements,  the
            provisions of this Agreement shall govern.


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         4.2 Except as otherwise  provided herein,  the Participation  Agreement
shall be applicable to all aspects of Anaheim's  ownership  interest in San Juan
Unit 4.

5.0      FINANCING

         5.1      Section 10.3 of the PPA is hereby deleted in its entirety.

6.0      PNM AS OPERATING AGENT

         6.1 Section 11 of the PPA is hereby  amended to read in its entirety as
follows:

               11.1 Anaheim  recognizes that PNM is the Operating Agent, as that
            term is defined in Section 5.31 of the Participation  Agreement,  as
            of the effective date of the Participation Agreement.

               11.2 PNM's  responsibilities  as  Operating  Agent to Anaheim are
            described in Section 28 of the Participation Agreement.

7.0      APPLICABILITY OF CERTAIN PROVISIONS OF CO-TENANCY AGREEMENT

         7.1      Section 12 of the PPA is hereby deleted in its entirety.

8.0      ENTITLEMENT  TO AND  SCHEDULING OF POWER AND ENERGY 8.1 Section 13.1 of
         the PPA is hereby deleted in its entirety.

9.0      START-UP AND AUXILIARY POWER

         9.1 Section 14 of the PPA is hereby  amended to read in its entirety as
follows:

               14.1 The  provisions  of this  Section 14 shall  apply  after the
            Closing Date.  Each Party shall be obligated to provide its share of
            start-up  and  auxiliary  power  and  energy  in  proportion  to its
            Participation  Share in San Juan Unit 4 as provided in Section 17 of
            the Participation  Agreement.  Any supplementary  arrangements which
            may be  required to  facilitate  Anaheim's  supply of  start-up  and
            auxiliary  power  and  energy  shall  be  made  in  accordance  with
            procedures  established  by the Operating  Representatives,  as that
            term is defined in Section 7 of the Interconnection Agreement.


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10.0     CAPITAL BETTERMENTS, ADDITIONS AND REPLACEMENTS

         10.1     Section 15 of the PPA is hereby deleted in its entirety.

11.0     DEFAULTS

         11.1  Section  19.5 and Section  19.6 of the PPA are hereby  deleted in
their entirety.

12.0     DISPUTES; ARBITRATION

         12.1 Section 20 of the PPA is hereby amended to read in its entirety as
follows:

               20.1 In the event that a dispute between the Parties should arise
            under this  Agreement,  such dispute shall be first submitted to the
            PNM and Anaheim members on the  Engineering and Operating  Committee
            for  resolution.  In the event  these  members are unable to resolve
            such dispute within thirty (30) days after  submission,  the dispute
            shall be referred in writing to the  President  or a Vice  President
            designated  by PNM and  the  Public  Utilities  General  Manager  of
            Anaheim,  or his or her  designee.  If such  dispute  has  not  been
            resolved  within  thirty (30) days after the referral made by either
            Party  (unless  such  thirty  (30) day period is  extended by mutual
            agreement  of the  Parties),  either Party may  thereafter  call for
            submission of such dispute to arbitration in the manner set forth in
            Section  37 of the  Participation  Agreement,  which  call  shall be
            binding upon the  Parties,  except that the notices  required  under
            Section 37.1 of the  Participation  Agreement shall only be provided
            to the  Parties to this  Agreement  unless the  dispute  between the
            Parties to this Agreement  affects the interests of other parties to
            the Participation Agreement.

13.0     DESTRUCTION, DAMAGE OR CONDEMNATION OF SAN JUAN UNIT 4

         13.1     Section 22 of the PPA is hereby deleted in its entirety.

14.0     NOTICES

         14.1  Section  31.1.2  of the  PPA is  hereby  revised  to  read in its
entirety as follows:

                           City of Anaheim, California
                                 c/o City Clerk
                           200 South Anaheim Boulevard
                                Anaheim, CA 92805

                                 with a copy to:


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                        Public Utilities General Manager
                           201 South Anaheim Boulevard
                                   Suite 1101
                                Anaheim, CA 92805

15.0     ASSIGNMENT, TRANSFER, CONVEYANCE OR OTHER DISPOSITION

         15.1 Section 29.2 of the PPA is hereby  amended to read in its entirety
as follows:

               29.2  Except  as  provided  in  Section  10 of the  Participation
            Agreement,  and  subject to any rights of first  refusal of M-S-R or
            others  existing on the Effective Date with respect to any ownership
            interest  of PNM in Unit 4, should  either  Party  desire  after the
            Closing to Assign any portion of or all of its respective  ownership
            interest in Unit 4 (the "Transfer Interest") to any person, company,
            corporation  or  government  agency  (the  "Outside   Party"),   the
            remaining  Party  shall have the right of first  refusal to purchase
            the Transfer  Interest in accordance  with the terms and  conditions
            and  the  procedures  set  out in  Section  11 of the  Participation
            Agreement.

16.0     CONTINUATION IN EFFECT

         16.1 Except as herein modified, all provisions of the PPA are unchanged
and continue in full force and effect.

         IN WITNESS WHEREOF,  the Parties have caused this Amendment No. 1 to be
executed  by their  duly  authorized  representatives  as of the date set  forth
above.


                                   PUBLIC SERVICE COMPANY OF NEW MEXICO

                                   By:       /s/ Patrick J. Goodman
                                       --------------------------------------
                                             Patrick J. Goodman
                                             Vice President, Power Production



                                   THE CITY OF ANAHEIM, CALIFORNIA

                                   By:
                                       --------------------------------------
                                           Public Utilities General Manager

73145

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