EXHIBIT 28(a)


<PAGE>



                           CERTAIN  RIGHTS OF THE  LESSOR  UNDER  THIS  FACILITY
         LEASE HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY  INTEREST IN
         FAVOR OF, CHEMICAL BANK, AS INDENTURE  TRUSTEE UNDER A TRUST INDENTURE,
         MORTGAGE,  SECURITY  AGREEMENT  AND  ASSIGNMENT  OF  RENTS  DATED AS OF
         DECEMBER 16, 1985.  THIS  FACILITY  LEASE HAS BEEN  EXECUTED IN SEVERAL
         COUNTERPARTS.  SEE SECTION 22(e) OF THIS FACILITY LEASE FOR INFORMATION
         CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.

                           THIS COUNTERPART IS NOT THE ORIGINAL
         COUNTERPART.

================================================================================


                                 FACILITY LEASE

                          dated as of December 16, 1985

                                     between

                       THE FIRST NATIONAL BANK OF BOSTON,
               not in its individual capacity, but solely as Owner
                  Trustee under a Trust Agreement, dated as of
                     December 16, 1985, with Burnham Leasing
                                  Corporation,

                                     Lessor

                                       and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

                 Sale and Leaseback of an Undivided Interest in
                  Palo Verde Nuclear Generating Station Unit 1
                          and Certain Common Facilities

================================================================================


6091.20.2898.47:1

<PAGE>



                                TABLE OF CONTENTS
                                                                        Page
                                                                        ----


SECTION  1                 Definitions . . . . . . . . . .                1

SECTION  2                 Lease of Undivided
                           Interest; Term; Personal
                           Property. . . . . . . . . . . .                1

                a          Lease of Undivided
                           Interest. . . . . . . . . . . .                1

                b          Term. . . . . . . . . . . . . .                2

                c          Personal Property . . . . . . .                2

SECTION  3                 Rent; Adjustments to
                           Rent. . . . . . . . . . . . . .                2

                a          Basic Rent. . . . . . . . . . .                2

                b          Supplemental Rent . . . . . . .                3

                c          Form of Payment . . . . . . . .                4

                d          Adjustments to Rent . . . . . .                4

                e          Further Adjustments . . . . . .                5

                f          Computation of
                           Adjustments . . . . . . . . . .                5

                g          Sufficiency of Basic
                           Rent and Supplemental
                           Rent. . . . . . . . . . . . . .                6



6091.20.2898.47:1
                                     -- i --

<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                          Page
                                                                          ----


                h          Rent Differential . . . . . . .                 6

SECTION  4                 Net Lease . . . . . . . . . . .                 7

SECTION  5                 Return of the Undivided
                           Interest. . . . . . . . . . . .                 9

                a          Return of the Undivided
                           Interest. . . . . . . . . . . .                 9

                b          Disposition Services. . . . . .                11

SECTION  6                 Warranty of the Lessor. . . . .                11

                a          Quiet Enjoyment . . . . . . . .                11

                b          Disclaimer of Other
                           Warranties. . . . . . . . . . .                11

                c          Enforcement of Certain
                           Warranties. . . . . . . . . . .                12

SECTION  7                 Liens . . . . . . . . . . . . .                13

SECTION  8                 Operation and Mainten-
                           ance; Capital Improve-
                           ments . . . . . . . . . . . . .                13

                a          Operation and
                           Maintenance . . . . . . . . . .                13

                b          Inspection. . . . . . . . . . .                14


6091.20.2898.47:1
                                    -- ii --

<PAGE>

                          TABLE OF CONTENTS (Continued)
                                                                          Page
                                                                          ----


                c          Capital Improvements. . . . . .                  14

                d          Reports . . . . . . . . . . . .                  15

                e          Title to Capital
                           Improvements. . . . . . . . . .                  16

                f          Funding of the Cost of
                           Capital Improvements. . . . . .                  17

                g          Useful Life . . . . . . . . . .                  19

SECTION  9                 Event Of Loss; Deemed
                           Loss Event. . . . . . . . . . .                  19

                a          Damage or Loss. . . . . . . . .                  19

                b          Repair. . . . . . . . . . . . .                  19

                c          Payment of Casualty
                           Value . . . . . . . . . . . . .                  20

                d          Payment of Special
                           Casualty Value. . . . . . . . .                  21

                e          Requisition of Use. . . . . . .                  21

                f          Termination of
                           Obligation. . . . . . . . . . .                  22

                g          Application of Payments
                           of an Event of Loss . . . . . .                  22



6091.20.2898.47:1
                                    -- iii --

<PAGE>
                          TABLE OF CONTENTS (Continued)

                                                                          Page
                                                                          ----


                h          Application of Payments
                           Not Relating to an Event
                           of Loss . . . . . . . . . . . .                 23

                i          Other Dispositions. . . . . . .                 23

                j          Assumption of Notes;
                           Creation of Lien on
                           Undivided Interest. . . . . . .                 23

SECTION 10                 Insurance . . . . . . . . . . .                 24

                a          Required Insurance. . . . . . .                 24

                b          Permitted Insurance . . . . . .                 25

SECTION 11                 Rights to Assign or
                           Sublease. . . . . . . . . . . .                 25

                a          Assignment or Sublease
                           by the Lessee . . . . . . . . .                 25

                b          Assignment by Lessor as
                           Security for Lessor's
                           Obligations . . . . . . . . . .                 25

SECTION 12                 Lease Renewal . . . . . . . . .                 26

SECTION 13                 Notices for Renewal or
                           Purchase; Purchase
                           Options . . . . . . . . . . . .                 26



6091.20.2898.47:1
                                    -- iv --

<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                          Page
                                                                          ----


                a          Notice; Determination of
                           Values; Appraisal
                           Procedure . . . . . . . . . . .                  26

                b          Purchase Option at
                           Expiration of the Lease
                           Term. . . . . . . . . . . . . .                  27

                c          Special Purchase Option . . . .                  27

                d          Purchase of the
                           Undivided Interest;
                           Payment, Etc. . . . . . . . . .                  27

SECTION 14                 Termination for
                           Obsolescence. . . . . . . . . .                  28

                a          Termination Notice. . . . . . .                  28

                b          Right of Lessor to
                           Retain Undivided
                           Interest upon
                           Termination . . . . . . . . . .                  28

                c          Events on the
                           Termination Date. . . . . . . .                  29

                d          Early Termination
                           Notice. . . . . . . . . . . . .                  30

                e          Events on the Early
                           Termination Date. . . . . . . .                  30



6091.20.2898.47:1
                                     -- v --

<PAGE>


                          TABLE OF CONTENTS (Continued)

                                                                          Page


SECTION 15                 Events of Default . . . . . . .                  31

SECTION 16                 Remedies. . . . . . . . . . . .                  35

                a          Remedies. . . . . . . . . . . .                  35

                b          No Release. . . . . . . . . . .                  40

                c          Remedies Cumulative . . . . . .                  40

                d          Exercise of Other Rights
                           or Remedies . . . . . . . . . .                  41

                e          Special Cure Right of
                           Lessee. . . . . . . . . . . . .                  41

SECTION 17                 Notices . . . . . . . . . . . .                  42

SECTION 18                 Successors and Assigns. . . . .                  42

SECTION 19                 Right to Perform for
                           Lessee. . . . . . . . . . . . .                  43

SECTION 20                 Additional Covenants. . . . . .                  43

SECTION 21                 Lease of Real Property
                           Interest. . . . . . . . . . . .                  44

SECTION 22                 Amendments and
                           Miscellaneous . . . . . . . . .                  44



6091.20.2898.47:1
                                    -- vi --

<PAGE>


                          TABLE OF CONTENTS (Continued)
                                                                          Page
                                                                          ----


                a          Amendments in Writing . . . . .                   44

                b          Survival. . . . . . . . . . . .                   44

                c          Severability of
                           Provisions. . . . . . . . . . .                   45

                d          True Lease. . . . . . . . . . .                   45

                e          Original Lease. . . . . . . . .                   45

                f          Governing Law . . . . . . . . .                   46

                g          Headings. . . . . . . . . . . .                   46

                h          Concerning the Owner
                           Trustee . . . . . . . . . . . .                   46

                i          Disclosure. . . . . . . . . . .                   47

                j          Counterpart Execution . . . . .                   47

APPENDIX A                 Definitions

SCHEDULE 1                 Owner Participant Information

SCHEDULE 2                 Basic Rent Percentages

SCHEDULE 3                 Casualty Values

SCHEDULE 4                 Special Casualty Values

SCHEDULE 5                 Termination Values



6091.20.2898.47:1
                                    -- vii --

<PAGE>



                                 FACILITY LEASE


                  FACILITY  LEASE,  dated as of December 16,  1985,  between THE
FIRST  NATIONAL  BANK OF BOSTON,  a  national  banking  association,  not in its
individual capacity, but solely as Owner Trustee under a Trust Agreement,  dated
as of December 16, 1985,  with Burnham  Leasing  Corporation  (the Lessor),  and
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico, corporation (the Lessee).


                              W I T N E S S E T H :

                  WHEREAS,  the Lessor owns the Undivided  Interest and the Real
Property Interest;

                  WHEREAS,  the Lessee  desires to lease the Undivided  Interest
and the Real Property  Interest from the Lessor on the terms and  conditions set
forth herein; and

                  WHEREAS, the Lessor is willing to lease the Undivided Interest
and the Real  Property  Interest to the Lessee on the terms and  conditions  set
forth herein;

                  NOW THEREFORE,  in  consideration of the premises and of other
good and valuable  consideration,  receipt and  sufficiency  of which are hereby
acknowledged, the parties hereto agree as follows:

                  SECTION 1. Definitions.

                  For purposes hereof,  capitalized terms used herein shall have
the  meanings  assigned  to such  terms in  Appendix  A and  Schedule  1 hereto.
References in this  Facility  Lease to sections,  paragraphs  and clauses are to
sections,  paragraphs  and  clauses  in this  Facility  Lease  unless  otherwise
indicated.

                  SECTION  2.  Lease  of  Undivided  Interest;   Term;  Personal
Property.

                  (a) Lease of Undivided Interest. Upon the terms and subject to
the conditions of this Facility Lease,  the Lessor hereby agrees to lease to the
Lessee,  and the Lessee  hereby  agrees to lease from the Lessor,  the Undivided
Interest.


6091.20.2898.47:1
                                      - 1 -

<PAGE>

                  (b) Term.  The term of this Facility  Lease shall begin on the
Closing Date and shall end on the last day of the Lease Term.

                  (c)  Personal  Property.  It is the express  intention  of the
Lessor and the Lessee that title to the  Undivided  Interest  and every  portion
thereof  is  severed,  and shall be and remain  severed,  from title to the real
estate  constituting  the Real Property  Interest and the PANGS Site. The Lessor
and the Lessee  intend that the Undivided  Interest  shall  constitute  personal
property to the maximum extent permitted by Applicable Law.

                  SECTION 3. Rent; Adjustments to Rent.

                  (a) Basic Rent.  The Lessee shall pay to the Lessor,  as basic
rent  (herein  referred  to as  Basic  Rent)  for the  Undivided  Interest,  the
following amounts:

                           (i) on January 15, 1986, an amount equal to the daily
                  equivalent  of Basic  Rent (set forth in  Schedule  1) payable
                  pursuant to clause (ii) below, from and including December 31,
                  1985 to but excluding  January 15, 1986 plus or minus the Rent
                  Differential, if any, referred to in Section 3(h);

                           (ii) on July 15, 1986 and on each Basic Rent  payment
                  Date  thereafter to and including  January 15, 2015, an amount
                  equal to the  percentage of facility  Cost set forth  opposite
                  such Basic Rent  Payment  Date on Schedule 2 plus or minus the
                  Rent Differential, if any, referred to in Section 3(h); and

                           (iii) if the Lessee shall elect the Renewal  Term, on
                  July 15, 2015 and on each Basic Rent Payment  Date  thereafter
                  during the  Renewal  Term,  an amount  equal to one-half of an
                  amount  determined  by dividing  the amount of all payments of
                  Basic  Rent  payable  with  respect  to the Basic  Lease  Term
                  pursuant  to clause (ii) of this  Section  3(a)  (taking  into
                  account any adjustments pursuant to Sections 3(d) and 3(e) and
                  any increases and decreases pursuant to Section 3(h)), by 58.

If an interest payment on the Initial Series Note (and the Releveraging Note, if
then  outstanding)  shall be due on a date other than a Basic Rent Payment Date,
the Lessee shall pay  additional  Basic Rent on such date equal to such interest


6091.20.2898.47:1
                                      - 2 -

<PAGE>



payment and such payment of additional  Basic Rent shall be credited against the
Basic Rent due on the Basic Rent Payment Date next succeeding the date that such
additional Basic Rent shall have been paid.

                  (b)  Supplemental  Rent.  The Lessee  shall pay the  following
amounts (herein referred to as Supplemental Rent):

                           (i) when due or, where no due date is  specified,  on
                  demand,  any amount  (other than Basic Rent,  Casualty  Value,
                  Termination Value and Special Casualty Value) which the Lessee
                  assumes the  obligation to pay or agrees to pay to the Lessor,
                  the Owner Participant,  the Indenture Trustee,  the Collateral
                  Trust Trustee or any Indemnitee under this Facility Lease, any
                  other  Transaction  Document or the Collateral Trust Indenture
                  and any  amount  which the  Lessor is  obligated  to pay under
                  Section 6.9, 7.6 or 8.7 of the Indenture;

                           (ii)  when  due  any  amount  payable   hereunder  as
                  Casualty Value,  Termination  Value or Special Casualty Value,
                  and any  premium or  prepayment  penalty  with  respect to the
                  Notes;

                           (iii) on demand  and in any  event on the Basic  Rent
                  Payment Date next  succeeding  the date such amounts  shall be
                  due  and  payable  hereunder,   to  the  extent  permitted  by
                  Applicable  Law,  interest  (computed  on the  same  basis  as
                  interest on the Notes is  computed)  at a rate per annum equal
                  to (A) the  Overdue  Interest  Rate,  on that  portion  of the
                  payment  of  Basic  Rent or  Supplemental  Rent  distributable
                  pursuant to clause  "first" of Section 5.1 or clause  "second"
                  of  Section  5.3 of the  Indenture  (determined  prior  to the
                  computation  of  interest on overdue  payments  referred to in
                  such clauses), and (B) the Penalty Rate, on the balance of any
                  such payment of Basic Rent or Supplemental Rent (including, in
                  the case of both clause (i) and clause (ii) above, but without
                  limitation,   to  the  extent  permitted  by  Applicable  Law,
                  interest  payable pursuant to this clause (iii)) not paid when
                  due (without regard to any period of grace) for any period for
                  which the same shall be overdue.



6091.20.2898.47:1
                                      - 3 -

<PAGE>



The Lessor  shall have all  rights,  powers and  remedies  provided  for in this
Facility  Lease,  at law, in equity  orotherwise,  in the case of non-payment of
Basic Rent or Supplemental Rent.

                  (c) Form of Payment. Subject to Section 11(b), each payment of
Rent under this Facility Lease shall be made in immediately  available  funds no
later than 11:00 a.m., local time at the place of receipt, on the date each such
payment  shall be due and payable  hereunder and shall be paid either (A) in the
case of  payments  other than  Expected  Payments,  to the Lessor at its address
determined in accordance with Section 17, or at such other address as the Lessor
may direct by notice in writing to the  Lessee,  or (B) in the case of  Excepted
Payments,  to such Person as shall be entitled to receive  such  payment at such
address as such  Person may  direct by notice in writing to the  Lessee.  If the
date on which any payment of Rent is due hereunder  shall not be a Business Day,
the  payment  otherwise  due thereon  shall be due and payable on the  preceding
Business  Day,  with the same  force and  effect as if paid on the  normal  date
provided in this Facility Lease.

                  (d)  Adjustments  to Rent.  Basic  Rent and the  schedules  of
Casualty Values,  Termination Values and Special Casualty Values attached hereto
shall be adjusted  (upward or downward) to preserve Net Economic Return if there
is any change in the Code or successor  legislation  enacted by the Ninety-ninth
Congress  or if there is adopted,  promulgated,  issued or  published,  prior to
January 15, 1997, proposed,  temporary or final regulations  resulting therefrom
(regardless of the effective date of such  regulations)  herein referred to as a
Change in Tax Law).  Adjustments  under this paragraph (d) shall be (1) made not
more than once a year and (2) limited in the  aggregate  to the extent,  if any,
necessary such that aggregate  amount of Basic Rent  theretofore  and thereafter
payable  throughout the Basic Lease Term (computed for such purpose only without
regard to any  adjustments  theretofore  made  pursuant to Section  3(e) or 3(h)
shall not be more than 11% upward and 10% downward from the aggregate  amount of
Basic Rent payable throughout the Basic Lease Term (computed as aforesaid) prior
to any  adjustment  theretofore  made pursuant to this Section  3(d);  provided,
however,  that no downward  adjustment  shall be made hereunder unless and until
the aggregate amount of all such downward  adjustments  shall exceed 1% and then
only to the extent such  aggregate  exceeds 1% (resulting in a maximum  downward
adjustment of 10%).  The  foregoing  11% maximum,  10% minimum and 1% "deadband"
limitations  were  determined  on the basis of an assumed  interest  rate on the
Notes  set forth in  Schedule  1  hereunto  and are  subject  to  adjustment  in


6091.20.2898.47:1
                                      - 4 -

<PAGE>



connection  with any  refunding  of the Initial  Series Note to provide the same
protection to the Owner  Participant  and the Lessee as provided in the original
calculations thereof by the Owner Participant.

                  The   provisions   of  this   Section  3(d)  to  the  contrary
notwithstanding,  if any  Change in Tax Law is, or  becomes,  applicable  to the
transaction  contemplated  by this Facility Lease in consequence of the transfer
of the Owner  Participant's  beneficial  interest  in the Trust  (whether or not
permitted by Section 15 of the Participation Agreement) or if such Change in Tax
Law would not have been  applicable  to such  transaction  had no such  transfer
occurred,  then no  adjustment  shall be, or be required to be, made pursuant to
this paragraph (d); provided, however, that this sentence shall not apply to the
initial transfer of the Owner  Participants's  beneficial interest to one of its
Affiliates.

                  (e)  Further  Adjustments.  Basic  Rent and the  schedules  of
Casualty Values,  Special Casualty Values and Termination Values attached hereto
shall be adjusted  (upward or downward) to preserve Net Economic Return if there
is (i)  issuance  of the  Releveraging  Note or the Fixed  Rate  Note,  (ii) any
Supplemental  Financing,  (iii) the payment of Transaction Expenses in an amount
which is other than 1.1% of the Purchase Price or (iv) any change in the pricing
assumptions set forth in Schedule 2 to the Participation Agreement.

                  (f)  Computation  of  Adjustments.  Upon the  occurrence of an
event  requiring an adjustment to Basic Rent payable  pursuant to clause (ii) of
Section 3(a), and the schedules of Casualty Values,  Special Casualty Values and
Termination  Values  attached  hereto,  pursuant to paragraph (d) or (e) of this
Section 3, the Owner  Participant  shall  make the  necessary  computations  and
furnish to the  Lessee,  the Loan  Participant,  the  Lessor  and the  Indenture
Trustee the revised amounts and percentages, which amounts and percentages shall
be implemented  upon delivery thereof and effective as of the date of occurrence
of the event requiring such adjustment (taking into account any payment of Basic
Rent already made) and shall remain  effective  until changed in  consequence of
any verification procedure set forth below. Such revised amounts and percentages
shall  be  subject  to  verification  (at the  Lessee's  request)  by the  Owner
Participant's  nationally  recognized  independent public accountants,  in which
case such  accountants  shall  either (i) confirm to the Lessee in writing  that
such  revised  amounts  were  computed on a basis  consistent  with the original


6091.20.2898.47:1
                                              - 5 -

<PAGE>



calculations,  or (ii) compute and provide to the Lessee,  the Lessor, the Owner
Participant,  the Loan Participant and the Indenture Trustee revised amounts and
percentages  which are on such a basis. The revised amounts and percentages,  as
so confirmed or computed if applicable, shall be conclusive and binding upon the
Lessee,  the  Lessor,  the  Owner  Participant,  the  Loan  Participant  and the
Indenture  Trustee.  The  cost of any  such  verification  shall be borne by the
Lessee  unless  such  accountants  shall  require an  adjustment  to the revised
amounts  and  percentages  originally  provided by the Owner  Participant  which
greater than 10% of the adjustment so provided, in which case such cost shall be
divided and paid by the Lessee and the Owner Participant in equal amounts.  Each
adjustment pursuant to paragraph (d) or (e) of this Section 3 may, but need not,
be evidenced by the  execution  and  delivery of a supplement  to this  Facility
Lease  in  form  and  substance   satisfactory  to  the  Lessee  and  the  Owner
Participant,  but shall be effective as provided  herein  without  regard to the
date on  which  such  implement  to  this  Facility  Lease  is so  executed  and
delivered.  Any  adjustment  referred  to in this  Section 3 shall  satisfy  the
provisions of Revenue  Procedure  75-21,  Revenue  Procedure 75-28 and any other
applicable statute,  regulation,  revenue procedure, revenue ruling or technical
information release relating to the subject matter of Revenue Procedure 75-21 or
Revenue Procedure 75-28, but, in the case of any upward adjustment,  shall be no
less than the adjustment otherwise required pursuant to this Section 3.

                  (g)   Sufficiency  of  Basic  Rent  and   Supplemental   Rent.
Notwithstanding   any  other  provision  of  this  Facility  Lease,   any  other
Transaction  Document or any  Financing  Document,  (i) the amount of Basic Rent
payable on each Basic Rent Payment Date shall be at least equal to the aggregate
amount of principal,  premium,  if any, and accrued interest payable on al Notes
then Outstanding and (ii) each payment of Casualty Value, Special Casualty Value
and Termination Value shall in no event be less (when added to all other amounts
required to be paid by the Lessee  under this  Facility  Lease in respect of any
Event of Loss or Deemed Loss Event or termination  of this Facility  Lease) than
an amount  sufficient,  as of the date of payment,  to pay in full the principal
of, and premium, if any, and interest on all Notes Outstanding on and as of such
date of payment (taking into account any assumption of the Notes by the Lessee).

                  (h) Rent  Differential.  So long as the  Initial  Series  Note
shall be  outstanding,  each  installment  of Basic Rent shall be  increased  or
decreased, as the case may be, by the Rent Differential. For purposes hereof,

6091.20.2898.47:1
                                      - 6 -

<PAGE>

Rent Differential  shall mean, as of any Basic Rent Payment Date, the difference
between (i) the aggregate  amount of interest due and payable on each Basic Rent
Payment  Date on the Initial  Series Note (and the  Releveraging  Note,  if then
outstanding), and (ii) the aggregate amount of interest that would have been due
and payable on such Basic Rent  Payment  Date on such Note or Notes if such Note
or Notes had at all times  during the relevant  period borne  interest at a rate
equal to 9.5% per  annum  (computed  on the  basis of a  360-day  year of twelve
30-day months). If, as of any Basic Rent Payment Date, (A) the amount determined
in accordance  with clause (i) of the  immediately  preceding  sentence shall be
greater  than the amount  determined  in  accordance  with  clause  (ii) of such
sentence,  the amount of Basic Rent due on such Basic Rent Payment Date shall be
increased by the Rent Differential,  and (B) the amount determined in accordance
with such clause (ii) shall exceed the amount determined in accordance with such
clause (i),  the amount of Basic Rent due on such Basic Rent  Payment Date shall
be decreased by the Rent Differential.

                  SECTION 4. Net Lease.

                  This Facility Lease (as  originally  executed and as modified,
supplemented and amended from time to time) is a net lease and the Lessee hereby
acknowledges and agrees that the Lessee's  obligation to pay all Rent hereunder,
and  the  rights  of  the  Lessor  in and  to  such  Rent,  shall  be  absolute,
unconditional  and irrevocable and shall not be affected by any circumstances of
any  character,  including,  without  limitation,  (i) any  set-off,  abatement,
counterclaim, suspension, recoupment, reduction, defense or other right or claim
which the  Lessee  may have  against  the  Lessor,  the Owner  Participant,  the
Indenture  Trustee,  the Collateral  Trust Trustee,  the Loan  Participant,  the
Operating  Agent,  any ANPP  Participant,  any  vendor  or  manufacturer  of any
equipment  or assets  included in the  Undivided  Interest,  Unit 1, any Capital
Improvement,  the Real Property Interest,  the PANGS Site, PANGS, or any part of
any thereof,  or any other Person for any reason whatsoever,  (ii) any defect in
or failure of the title  merchantability,  condition,  design,  compliance  with
specifications, operation or fitness for use of all or any part of the Undivided
Interest, Unit 1, any Capital Improvement, the Real Property Interest, the PANGS
Site or PANGS, (iii) any damage to, or removal, abandonment,  shutdown, salvage,
scrapping, requisition, taking, loss, theft or destruction of all or any part of
the  Undivided  Interest,  Unit 1, any Capital  Improvement,  the Real  Property


6091.20.2898.47:1
                                      - 7 -

<PAGE>



Interest,  the  PANGS  Site  or  PANGS,  or any  interference,  interruption  or
cessation in the use or possession  thereof or of the Undivided  Interest by the
Lessee or by any other Person (including,  but without limitation, the Operating
Agent or any other ANPP  Participant)  for any reason  whatsoever or of whatever
duration,  (iv) any  restriction,  prevention or curtailment of or  interference
with any use of all or any part of the Undivided  Interest,  Unit 1, any Capital
Improvement,  the Real  Property  Interest,  the PANGS  Site or  PANGS,  (v) any
insolvency,  bankruptcy,  reorganization or similar proceeding by or against the
Lessee, the Lessor, the Owner Participant, the Indenture Trustee, the Collateral
Trust  Trustee,  the Loan  Participant,  the  Operating  Agent,  any other  ANPP
Participant   or  any  other  Person,   (vi)  the   invalidity,   illegality  or
unenforceabilty  of this Facility Lease,  any other  Transaction  Document,  any
Financing  Document,  the ANPP  Participation  Agreement or any other instrument
referred  to herein or therein or any other  infirmity  herein or therein or any
lack of  right,  power  or  authority  of the  Lessor,  the  Lessee,  the  Owner
Participant,  the Indenture  Trustee,  the Collateral  Trust  Trustee,  the Loan
Participant  or any other Person to enter into this  Facility  Lease,  any other
Transaction  Document  or any  Financing  Document,  or any  doctrine  of  force
majeure,  impossibility,  frustration,  failure of consideration, or any similar
legal or equitable doctrine that the Lessee's  obligation to pay Rent is excused
because  the Lessee has not  received  or will not receive the benefit for which
the Lessee bargained, it being the intent of the Lessee to assume all risks from
all causes  whatsoever that the Lessee does not receive such benefit,  (vii) the
breach or failure of any warranty or representation  made in this Facility Lease
or any other Transaction  Document or any Financing  Document by the Lessor, the
Owner Participant, the Indenture Trustee, the Collateral Trust Trustee, the Loan
Participant or any other Person, (viii) any amendment or other change of, or any
assignment of rights under, this Facility Lease, any other Transaction Document,
any Financing Document or any ANPP Project Agreement,  or any waiver,  action or
inaction  under or in  respect of this  Facility  Lease,  any other  Transaction
Document, any Financing Document or any ANPP Project Agreement,  or any exercise
or  non-exercise  of any right or remedy under this  Facility  Lease,  any other
Transaction  Document,  any  Financing  Document or any ANPP Project  Agreement,
including,  without limitation,  the exercise of any foreclosure or other remedy
under the Indenture,  the Collateral  Trust Indenture or this Facility Lease, or
the sale of Unit 1, any Capital  Improvement,  the Undivided Interest,  the Real
Property Interest,  the PANGS Site or PANGS, or any part thereof of any interest


6091.20.2898.47:1
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<PAGE>



therein,  or (ix) any other circumstance or happening  whatsoever whether or not
similar to any of the foregoing.  The Lessee  acknowledges that by conveying the
leasehold estate created by this Facility Lease to the Lessee and by putting the
Lessee in possession of the Undivided  Interest and the Real Property  Interest,
the Lessor has performed all of the Lessor's obligations under and in respect of
this Facility Lease,  except the covenant that the Lessor and Persons acting for
the Lessor will not interfere with the Lessee's quiet enjoyment of the Undivided
Interest and the Real Property Interest. The Lessee hereby waives, to the extent
permitted by  Applicable  Law, any and all rights which it may now have or which
at any time  hereafter  may be conferred  upon it, by statute or  otherwise,  to
terminate,  cancel,  quit or surrender this Facility Lease or to effect or claim
any diminution or reduction of Rent payable by the Lessee  hereunder,  including
without  limitation the provisions of Arizona Revised  Statutes  Section 33-343,
except in accordance with the express terms hereof. If for any reason whatsoever
this  Facility  Lease shall be terminate in whole or in part by operation of law
or otherwise,  except as specifically  provided herein,  the Lessee  nonetheless
agrees to pay to the Lessor or other Person entitled  thereto an amount equal to
each  installment  of Basic  Rent  and all  Supplemental  Rent at the time  such
payment  would have become due and payable in  accordance  with the terms hereof
had this Facility Lease not been terminated in whole or in part. Each payment of
Rent made by the Lessee  hereunder  shall be final and the Lessee shall not seek
or have any right to recover all or any part of such  payment from the Lessor or
any other  Person for any  reason  whatsoever.  All  covenants,  agreements  and
undertakings  of the Lessee  herein shall be performed at its cost,  expense and
risk  unless  expressly  otherwise  stated.  Nothing in this  Section 4 shall be
construed  as a guaranty by the Lessee of any  residual  value in the  Undivided
Interest or as a guaranty of the Notes.  Any  provisions  of Section 7(b) (2) or
8(c) of the  Participation  Agreement  to the contrary  notwithstanding,  if the
Lessee  shall fail to make any  payment  of Rent to any  Person  when and as due
(taking into account applicable grace periods), such Person shall have the right
at all times, to the exclusion of the ANPP Participants, to demand, collect, sue
for,  enforce  obligations  relating to and otherwise  obtain all amounts due in
respect of such Rent.

                  SECTION 5.  Return of the Undivided Interest.

                  (a) Return of the Undivided Interest. On the Lease Termination
Date,  the Lessee will  surrender  possession of the Undivided  Interest and the
Real

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<PAGE>



Real  Property  Interest  to the  Lessor.  At the time of such return the Lessee
shall  pay or have  paid all  amounts  due and  payable,  or to  become  due and
payable,  by it as an  ANPP  Participant  under  each  and  every  ANPP  Project
Agreement  allocable or chargeable  (whether or not payable  during or after the
Lease Term) to the Undivided  Interest or the Real Property  Interest in respect
of any  period  or  periods  ending on or prior to the  Lease  Termination  Date
(including,  but without limitation, all amounts payable with respect to any and
all discretionary  Capital  Improvements to Unit 1 or the PANGS Site approved or
authorized  (without the concurrence of the Owner Participant) within the 3-year
period  preceding  the end of the  Lease  Term,  whether  or not  implementation
thereof has been completed on or prior to the Lease  Termination  Date), and the
Undivided  Interest  shall be free and clear of all Liens (other than  Permitted
Liens  described in clauses (i),  (v) (other than those  arising by,  through or
under the Lessee alone),  (vi),  (vii) (other than as aforesaid),  (viii) (other
than as  aforesaid),  (ix) and (x) of the  definition  of such  term) and in the
condition  and state of repair by Section 8. The Lessor  shall not  abandon  the
Undivided  the  Undivided  Interest.  In the event that on or prior to the Lease
Termination  Date there  shall have  occurred a default by any ANPP  Participant
(other than PNM) under the ANPP  Participation  Agreement and such default shall
not have been  cured by the  defaulting  ANPP  Participant,  then (i) the Lessee
agrees  to  indemnify  and hold the  Lessor  (and  each  successor,  assign  and
transferee  thereof)  harmless  against  and  all  obligations  under  the  ANPP
Participation Agreement with respect to contributions or payments required to be
made  thereby  as a  result  of such  default  and  (ii) the  Lessor  (and  each
successor, assign and transferee thereof) agrees to reimburse the Lessee for all
amounts paid by the Lessee  pursuant to the foregoing  clause (i) to the extent,
but  only  to the  extent,  that  the  Lessor  (or  such  successor,  assign  or
transferee)  shall  have  actually  received  proceeds  from  the  sale  of  the
Generation  Entitlement  Share of the defaulting ANPP Participant as a result of
the payment made by the Lessee pursuant to the foregoing clause (i), and, to the
extent the Lessor (or such successor,  assign or transferee) shall have received
such proceeds, the amount to be reimbursed to the Lessee pursuant to this clause
(ii) shall  include  interest  at the Prime Rate from the date of any payment by
the  Lessee   pursuant  to  the  foregoing   clause  (i)  through  the  date  of
reimbursement of such amount pursuant to this clause (ii).



6091.20.2898.47:1
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<PAGE>


                  (b)  Disposition  Services.  The Lessee agrees that if it does
not  exercise its option to renew or purchase as provided in Sections 12 and 13,
respectively,  then during the last  thirty-six  months of the Lease  Term,  the
Lessee will fully  cooperate  with the Lessor in  connection  with the  Lessor's
efforts  to lease or  dispose  of the  Undivided  Interest  including  using the
Lessee's reasonable efforts to lease or dispose of the Undivided  Interest.  The
Lessor agrees to reimburse  the Lessee for  reasonable  out-of-pocket  costs and
expenses  of the  Lessee  incurred  at the  request  of the  Lessor or the Owner
Participant in connection with such cooperation and such efforts.

                  SECTION 6. Warranty of the Lessor.

                  (a) Quiet Enjoyment.  The Lessor warrants that until the Lease
Termination  Date, if the Lessee is in  compliance  with each and every term and
provision  of this  Facility  Lease and each other  Transaction  Document  to be
compiled  with  by the  Lessee,  the  Lessee's  use  and  possession  of Unit 1,
including the Undivided Interest,  shall not be interrupted by the Lessor or any
Person claiming by, through or under the Lessor, and their respective successors
and assigns.

                  (b) Disclaimer of Other Warranties.  The warranty set forth in
Section 6(a) is in the lieu of all other  warranties  of the Lessor or the Owner
Participant,  whether  written,  oral or implied,  with respect to this Facility
Lease, Unit 1, any Capital Improvement,  the Undivided Interest, PANGS, the Real
Property  Interest or the PANGS Site. As among the Owner  Participant,  the Loan
Participant, the Indenture Trustee, the Collateral Trust Trustee, the Lessor and
the Lessee,  execution by the Lessee of this Facility  Lease shall be conclusive
proof of the  compliance  of Unit 1  (including  any Capital  Improvement),  the
Undivided  Interest and the Real Property Interest with all requirements of this
Facility  Lease,  and the Lessee  acknowledges  and agrees  that (i) NEITHER THE
LESSOR NOR THE OWNER  PARTICIPANT IS A  MANUFACTURER  OR A DEALER IN PROPERTY OF
SUCH KIND AND (ii) THE LESSOR LEASES AND THE LESSEE TAKES THE UNDIVIDED INTEREST
AND THE REAL PROPERTY INTEREST, AND SHALL TAKE EACH CAPITAL IMPROVEMENT, AND ANY
PART  THEREOF,  AS IS AND  WHERE  IS,  and  neither  the  Lessor  nor the  Owner
Participant  shall  be  deemed  to have  made,  and  THE  LESSOR  AND THE  OWNER
PARTICIPANT EACH HEREBY DISCLAIMS, ANY OTHER REPRESENTATION OR WARRANTY,  EITHER
EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER,  INCLUDING, WITHOUT LIMITATION,
THE  DESIGN OR  CONDITION  OF UNIT 1, ANY  CAPITAL  IMPROVEMENT,  THE  UNDIVIDED


6091.20.2898.47:1
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<PAGE>



INTEREST,  THE REAL  PROPERTY  INTEREST,  THE PANGS  SITE OR PANGS,  OR ANY PART
THEREOF,  THE MERCHANTABILITY  THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR
PURPOSE,  TITLE TO UNIT 1, ANY CAPITAL IMPROVEMENT,  THE UNDIVIDED INTEREST, THE
REAL  PROPERTY  INTEREST,  THE PANGS  SITE OR PANGS,  OR ANY PART  THEREOF,  THE
QUALITY  OF THE  MATERIAL  OR  WORKMANSHIP  THEREOF  OR  CONFORMITY  THEREOF  TO
SPECIFICATIONS,  FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR THE ABSENCE OF
ANY LATENT OR OTHER DEFECTS,  WHETHER OR NOT DISCOVERABLE,  NOR SHALL THE LESSOR
OR THE OWNER  PARTICIPANT  BE LIABLE FOR  INCIDENTAL  OR  CONSEQUENTIAL  DAMAGES
(INCLUDING  LIABILITY IN TORT,  STRICT OR  OTHERWISE),  it being agreed that all
such risks, as among the Owner Participant, the Loan Participant, the Collateral
Trust Trustee, the Indenture Trustee, the Lessor and the Lessee, are to be borne
by the Lessee.  The provisions of this Section 6(b) have been  negotiated,  and,
except to the extent otherwise expressly provided in Section 6(a), the foregoing
provisions  are  intended  to  be a  complete  exclusion  and  negation  of  any
representations  or warranties by the Lessor,  the Owner  Participant,  the Loan
Participant,  the Collateral Trust Trustee or the Indenture Trustee,  express or
implied,  with  respect  to Unit 1  (including  any  Capital  Improvement),  the
Undivided Interest, PANGS, the Real Property Interest or the PANGS Site that may
arise pursuant to any law now or hereafter in effect, or otherwise.

                  (c) Enforcement of Certain  Warranties.  The Lessor authorizes
the Lessee (directly or through agents,  including the Operating  Agent), at the
Lessee's expense, to assert for the Lessor's account, during the Lease Term, all
of the  Lessor's  rights (if any) under any  applicable  warranty  and any other
claims (under this Facility  Lease or any Purchase  Document) that the Lessee or
the Lessor may have  against any vendor or  manufacturer  with respect to Unit 1
(including any Capital  Improvement) or the Undivided  Interest,  and the Lessor
agrees to cooperate,  at the Lessee's expense, with the Lessee and the Operating
Agent in asserting such rights.  Any amount  receivable  (without  regard to any
right of setoff or other similar right of any Person  against the Lessee) by the
Lessee as payment  under any such  warranty or other claim against any vendor or
manufacturer  (or, if such warranty or claim  relates to the Undivided  Interest
and the  Retained  Assets,  the portion of such  received  amount  appropriately
allocable  to the  Undivided  Interest)  shall be  applied  in  accordance  with
Sections 9(g), (h) and (i).



6091.20.2898.47:1
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<PAGE>


                  SECTION 7.  Liens.

                  The Lessee will not  directly  or  indirectly  create,  incur,
assume or permit to exist any Lien on or with respect to the Undivided Interest,
the Real Property  Interest,  the Lessor's  title thereto or any interest of the
Lessor or Lessee therein (and the Lessee will promptly, at its own expense, take
such  action  as may be  necessary  duly to  discharge  any such  Lien),  except
Permitted Liens.

                  SECTION 8.  Operation and Maintenance; Capital Improvements.

                  (a) Operation and Maintenance.  The Lessee agrees that it will
exercise its rights, powers,  elections and options as an ANPP Participant under
the ANPP Project  Agreements to cause the Operating Agent to (A) maintain Unit 1
in such condition  that Unit 1 will have the capacity and functional  ability to
perform,  on a continuing  basis  (ordinary wear and tear  excepted),  in normal
commercial  operation,  the functions and substantially at the ratings for which
it was designed,  (B) operate,  service,  maintain and repair Unit 1 and replace
all necessary or useful parts and  components  thereof so that the condition and
operating  efficiency  will be maintained and preserved,  ordinary wear and tear
excepted,  in all  material  respects in  accordance  with (1)  prudent  utility
practice for items of similar size and nature,  (2) such operating  standards as
shall be required to take  advantage of an enforce all available  warranties and
(3) the terms and conditions if all insurance  policies  maintained in effect at
any time with respect thereto, (C) use, possess,  operate and maintain Unit 1 in
compliance  with all material  applicable  Governmental  Actions  (including the
License)  affecting  PANGS  or  Unit 1 or the  use,  possession,  operation  and
maintenance  thereof and (D) otherwise act in accordance  with the standards set
forth in the ANPP Participation  Agreement.  The Lessee will comply with all its
obligations  under  Applicable  Law affecting  Unit 1, the  Undivided  Interest,
PANGS, the Real Property Interest and the PANGS Site, and the use, operation and
maintenance thereof. The Lessee agrees to (i) exercise its rights under the ANPP
Participation  Agreement so that there will always be an  Operating  Agent under
the ANPP  Participation  Agreement  and (ii) maintain in full force and effect a
license  from the NRC  adequate to possess the  Undivided  Interest and the Real
Property Interest under the circumstances contemplated by the ANPP Participation
Agreement.  The Lessee  will keep and  maintain  proper  books and  records  (i)


6091.20.2898.47:1
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<PAGE>



relating to all Operating Funds (as defined in the ANPP Participation Agreement)
provided by it to the Operating Agent under the ANPP Participation Agreement and
(ii)  upon  receipt  of the  requisite  information  from the  Operating  Agent,
relating  to the  application  of such  Operating  Funds  to the  operation  and
maintenance of Unit 1 and the  acquisition,  construction  and  installation  of
Capital Improvements, all in accordance with the Uniform System of Accounts. The
Lessor shall not be obliged in any way to maintain,  alter,  repair,  rebuild or
replace  Unit 1, any Capital  Improvement,  the  Undivided  Interest or the Real
Property Interest,  or any part thereof, or, except as provided in Section 8(f),
to pay the cost of alteration, rebuilding, replacement, repair or maintenance of
Unit 1, any Capital  Improvement,  the  Undivided  Interest or the Real Property
Interest,  or any part  thereof,  and the Lessee  expressly  waives the right to
perform any such action at the expense of the Lessor  pursuant to any law at any
time in effect.

                  (b)  Inspection.  The  Lessor,  the  Owner  Participant,   the
Indenture  Trustee  and the  Collateral  Trust  Trustee  shall have the right to
inspect PANGS  (subject,  in each event,  to the ANPP  Participation  Agreement,
Applicable  Law,   applicable   confidentiality   undertakings   and  procedures
established by the Operating  Agent) at their expense.  The Lessor and the Owner
Participant  shall have the right to inspect,  at their  expense,  the books and
records  of the  Lessee  relating  to PANGS,  and make  copies  of and  extracts
therefrom (subject as aforesaid) and may, at their expense, discuss the Lessee's
affairs,  finances and accounts with its executive  officers and its independent
public   accountants  (and  by  this  provision,   the  Lessee  authorizes  such
accountants,  in the presence of the Lessee,  to discuss with the Lessor and the
Owner Participant and their respective  authorized  representatives the affairs,
finances and  accounts of the Lessee),  all at such times and as often as may be
reasonably requested.  None of the Lessor, the Owner Participant,  the Indenture
Trustee and the Collateral  Trust Trustee shall have any duty whatsoever to make
any  inspection or inquiry  referred to in this Section 8(b) and shall not incur
any  liability  or  obligation  by reason of not making any such  inspection  or
inquiry.

                  (c) Capital Improvements. If and to the extent required by the
ANPP Participation  Agreement,  the Lessee shall, at its sole expense,  promptly
participate  in the making of any Capital  Improvement  to Unit 1. The Undivided
Interest  Percentage  of the net  proceeds of any sale or other  disposition  of
property  removed from Unit 1 receivable  (without regard to any right of setoff


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                                     - 14 -

<PAGE>



or other similar right of any Person against  the  Lessee) by or credited to the
account of the Lessee in accordance  with the ANPP  Participation  Agreement and
any  insurance  proceeds  receivable  (without  regard to any right of setoff or
other  similar  right of any Person  against  the Lessee) for the account of the
Lessor or the  Lessee in  respect  of the loss or  destruction  of, or damage or
casualty to, any such property shall be applied as provided in Section 9(g), (h)
or (i),  as the case  may be.  An  undivided  interest  equal  to the  Undivided
Interest Percentage in property at any time removed from Unit 1 shall remain the
property of the Lessor,  no matter where  located,  until such time as a Capital
Investment constituting a replacement of such property shall have been installed
in Unit 1 or such removed  property has been disposed of by the Operating  Agent
in accordance with the ANPP Participation  Agreement.  Simultaneously  with such
disposition by the Operating Agent,  title to the Lessor's undivided interest in
the removed property shall vest in the Person designated by the Operating Agent,
free  and  clear  of  any  and  all  claims  or  rights  of the  Lessor.  Unless
subparagraph (3) of Section 8(e) shall be applicable,  upon the incorporation of
a Capital  Improvement in Unit 1, without further act, (i) title to an undivided
interest equal to the Undivided Interest  Percentage in such Capital Improvement
shall  vest in the  Lessor  and (ii) such  undivided  interest  in such  Capital
Improvement shall become subject to this Facility Lease and be deemed to be part
of the  Undivided  Interest for all purposes  hereof to the same extent that the
Lessor had an undivided  interest in the  property  originally  incorporated  or
installed in Unit 1. The Lessee  warrants and agrees that the Lessor's  interest
in all  Capital  Improvements  shall be free  and  clear  of all  Liens,  except
Permitted  Liens other than the type specified in clauses (ii),  (iii) and (xii)
of the definition thereof.

                  (d)  Reports.  To the extent  permissible,  the  Lessee  shall
prepare and file in timely  fashion,  or,  where the Lessor shall be required to
file,  the Lessee  shall  prepare and deliver to the Lessor  within a reasonable
time  prior to the date for  filing,  any  reports  with  respect to Unit 1, the
Undivided  Interest or the Real Property  Interest or the condition or operation
thereof that shall be required to be filed with any  governmental  or regulatory
authority.  On or before March 1 of each year and on the Lease Termination Date,
the Lessee  shall  furnish  the Lessor and the Owner  Participant  with a report
stating the total cost of all Capital Improvements and describing separately and
in  reasonable  detail each  Capital  Improvement  (or related  group of Capital


6091.20.2898.47:1
                                     - 15 -

<PAGE>



Improvements)  made during the period from the date hereof to December  31, 1986
in the case of the first such  report or during  the period  from the end of the
period  covered by the last  previous  report to the  December  31 prior to such
report in the case of  subsequent  reports.  On or  before  March 1 in each year
(commencing  March 1, 1986) and at such  other  times as the Lessor or the Owner
Participant  shall reasonably  request in writing (which request shall provide a
reasonable period for response), the Lessee will report in writing to the Lessor
with respect to (i) the most recent annual capital  expenditure budget submitted
by the Operating Agent to the Lessee in accordance  with the ANPP  Participation
Agreement  and (ii) the then  plans (if any)  which the  Lessee may have for the
financing of the same under Section 8(f).

                  (e)  Title to  Capital  Improvements.  Title  to an  undivided
interest,   equal  to  the  Undivided  Interest  Percentage,   in  each  Capital
Improvement to Unit 1 shall vest as follows:

                (1)  in the  case  of  each  Nonseverable  Capital  Improvement,
whether or not the Lessor shall have financed or provided financing (in whole or
in  part)  for  such  undivided  interest  in  such  Capital  Improvement  by an
Additional Equity Investment or a Supplemental  Financing, or both, effective on
the date such Capital  Improvement  shall have been incorporated or installed in
Unit 1, the Lessor shall,  without further act,  acquire title to such undivided
interest in such Capital Improvement;

                (2) in the case of each Severable  Capital  Improvement,  if the
Lessor shall have financed (by an Additional Equity Investment or a Supplemental
Financing,  or  both)  the  Undivided  Interest  Percentage  of the cost of such
Capital  Improvement,  the Lessor shall,  without further act,  acquire title to
such undivided interest in such Capital Improvement; and

                (3) in the case of each Severable  Capital  Improvement,  if the
Lessor shall not have financed (by either an Additional  Equity  Investment or a
Supplemental  Financing,  or both) the Undivided Interest Percentage of the cost
of such Capital  Improvement,  the Lessee  shall retain title to such  undivided
interest.



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<PAGE>

                  Immediately  upon  title  to such  undivided  interest  in any
Capital  Improvement  vesting in the Lessor  pursuant  to  sub-paragraph  (1) or
sub-paragraph (2) of this Section 8(e), such undivided  interest in such Capital
Improvement  shall,  without  further act, become subject to this Facility Lease
and be deemed part of the  Undivided  Interest  and Unit 1 and for all  purposes
hereof.

                  (f)  Funding  of the  Cost  of  Capital  Improvements.  Before
placing in service any Capital  Improvement  to Unit 1 the cost of which exceeds
$100,000,000  in respect of the interests of all ANPP  Participants,  the Lessee
shall  give the  Lessor  and the Owner  Participant  reasonable  advance  notice
thereof. The Owner Participant shall have the option, in its sole discretion, of
financing  through the Lessor the cost of any such Capital  Improvement,  or any
other Capital  Improvement  presented to the Owner  Participation for financing,
including or not including the making of an investment by the Owner  Participant
(an Additional  Equity  Investment)  and the issuance of one or more  Additional
Notes, all on terms acceptable to the Lessee and the Owner  Participant.  If the
Owner  Participant  does not finance,  or arrange the  financing of, the cost of
such Capital  Improvement,  the Lessee may cause the Lessor to issue,  if and to
the extent  permitted by the  Indenture,  to one or more Persons (other than any
Person affiliated with the Lessee within the meaning of Section 318 of the Code)
one or more Additional  Notes and to use the proceeds thereof to pay the cost of
such Capital Improvement, subject to satisfaction of the following conditions:

                  (i) there shall be no more than one Supplemental  Financing in
any calendar year;

                  (ii)  the sum of the  Supplemental  Financing  Amounts  in any
calendar  year  shall  equal or exceed  the  Undivided  Interest  Percentage  of
$5,000,000;

                (iii) the Lessee may include in any  request for a  Supplemental
Financing only Capital  Improvements not previously financed in any Supplemental
Financing  and which  have been  installed  or  affixed  no  earlier  than three
calendar  years  before  the  beginning  of the  calendar  year  in  which  such
Supplemental Financing occurs;



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<PAGE>



                  (iv) the total amount of all Supplemental Financing during the
Basic  Lease  Term  shall  not  exceed  the  Undivided  Interest  Percentage  of
$100,000,000;

                (v) unless waived by the Owner Participant, the Bonds issued and
outstanding  under the Collateral  Trust  Indenture  shall be rated no less than
"investment  grade", as determined by Standard & Poor's  Corporation and Moody's
Investors Service, Inc.;

                (vi) the  Supplemental  Financing  Amount  shall not exceed that
portion  of  the  cost  of  Capital  Improvements  which,  when  financed,  will
constitute  an addition to the Owner  Participant's  basis under section 1012 of
the Code;

                (vii) in the  opinion of  independent  tax  counsel to the Owner
Participant,  such  Supplemental  Financing  shall  not  result in  adverse  tax
consequences  to the Owner  Participant  or adversely  affect the status of this
Facility  Lease as a "true  lease"  for  Federal  tax  purposes,  and the  Owner
Participant  and the  Lessor  shall  have  agreed  upon the amount and manner of
payment of any indemnity (if any) payable by the Lessee as a consequence of such
Supplemental Financing;

                  (viii) the  Additional  Notes shall have a final maturity date
no later than January 15, 2015;

                (if) the Lessee shall have made such representations, warranties
and covenants  regarding the tax  characteristics  of each undivided interest in
each  Capital  Improvement  as  the  Owner  Participant  requests  and  the  Tax
Indemnification Agreement shall have been appropriately modified;

                (x)  appropriate  adjustments to Basic Rent and the schedules of
Casualty Values,  Special Casualty Values and Termination Values shall have been
agreed to by the Owner Participant;



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<PAGE>


                  (xi) The Lessee shall pay to the Lessor an amount equal to all
out-of-pocket  costs and expenses reasonably incurred by the Lessor or the Owner
Participant not financed as a part of such  Supplemental  Financing or reflected
in adjustments to Basic Rent;

                  (xii) no Default or Event of Default  shall have  occurred and
be continuing; and

                (xiii) the Lessee  shall  enter into such  agreements  and shall
provide such tax indemnities, representations,  warranties, covenants, opinions,
certificates  and other  documents  as the Owner  Participant  shall  reasonably
request.

                  (g) Useful  Life.  If the Lessee  shall not  theretofore  have
exercised its option under Section 13 to purchase the Undivided Interest and the
Real  Property  Interest,  then (i) if the  Lessee  shall not  theretofore  have
exercised  its option to renew the Lease  pursuant to Section 12, on January 15,
2014,  the Lessee shall  initiate  the  Appraisal  Procedure  to  determine  the
remaining  economic  useful  life of Unit 1 as of July 15,  2014 and (ii) on the
Rent Payment Date  occurring  one year prior to the end of the Renewal  Term, if
any,  the Lessee  shall  initiate  the  Appraisal  Procedure  to  determine  the
remaining  economic useful life of Unit 1 as of the date six months prior to the
end of the  Renewal  Term.  The Lessee  and the  Lessor  agree to use their best
efforts to ensure that such  determination of remaining  economic useful life is
made no later than July 15,  2014 (in the case of the first such  determination)
and six months  prior to the end of the Renewal  Term (in the case of the second
such determination).

                  SECTION 9. Event of Loss; Deemed Loss Event.

                  (a) Damage or Loss. In the event that Section 16.2 of the ANPP
Participation  Agreement  (as  in  effect  on  the  date  hereof)  shall  become
applicable,  or an Event of Loss, a Requisition of Use or a Requisition of Title
shall occur, or Unit 1 or any substantial part thereof shall suffer destruction,
damage,  loss,  condemnation,  confiscation,  theft or  seizure  for any  reason
whatsoever,  such fact shall promptly, and in any case within five Business Days
of any such  event,  be  reported  by the  Lessee  to the  Lessor  and the Owner
Participant.

                  (b)  Repair.  The  Lessee  shall  promptly  make  any  and all
payments  required of the Lessee under the provisions of the ANPP  Participation
Agreement relating to damage or destruction or the like to Unit 1 or any portion
thereof; provided, however, that the Lessee shall

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<PAGE>



in no event be obligated to make or join in any agreement  under Section 16.2 of
the ANPP  Participation  Agreement (as in effect on the date hereof)  concerning
repairs to or reconstruction of Unit 1.

                  (c) Payment of Casualty  Value. On the Basic Rent Payment Date
next  following the  occurrence of an Event of Loss, the Lessee shall pay to the
Lessor all Basic Rent due on such Basic Rent Payment Date,  plus an amount equal
to the excess of (i)  Casualty  Value  determined  as of such Basic Rent Payment
Date, plus an amount equal to the execww of (i) Casualty Value  determined as of
such Basic Rent Payment Date over (ii) the unpaid  principal amount of the Notes
Outstanding  on such date after  giving  effect to the  payment,  if any, of the
principal  installment  due and payable on such date. Upon compliance in full by
the Lessee with the foregoing  provisions of this Section 9(c) and assumption by
the Lessee of all the obligations and liabilities of the Owner Trustee under the
Indenture and the Notes pursuant to Section 3.9(b) of the Indenture,  the Lessor
shall (so long as no  Default or Event of Default  shall  have  occurred  and be
continuing),  and at any time  after  the  occurrence  of an Event of Loss,  the
Lessor may:

                (1) in the  case  of an  Event  of  Loss  arising  from a  Final
Shutdown,  if the Lessee shall have declined,  but one or more of the other ANPP
Participants shall have elected,  to reconstruct or restore Unit 1, as permitted
by the ANPP  Participation  Agreement,  Transfer the Undivided  Interest and the
Real Property Interest to such electing ANPP Participants, as required by and in
the proportions set forth in the ANPP Participation Agreement, in which case the
Lessee shall be entitled to receive the portion of the "salvage  value" purchase
price allocable to the Undivided Interest; or

                  (2) if  clause  (1)  shall  not be  applicable,  Transfer  the
Undivided Interest and the Real Property Interest to the Lessee.

If the Lessee shall not have assumed all the  obligations and liabilities of the
Owner  Trustee  under the  Indenture  and the Notes in  accordance  with Section
3.9(b) of the  Indenture,  but  shall  have paid all  amounts  required  by this
Section  9(c),  the Lessor  shall  retain the  Undivided  Interest  and the Real
Property  Interest  subject to the terms of this Facility Lease and Section 7(b)
(4) of the Participation Agreement;  provided,  however, that (i) the obligation


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<PAGE>



of the  Lessee to pay  further  Basic Rent shall be reduced to an amount on each
Basic Rent Payment Date equal to the aggregate amount of the principal, premium,
if any, and accrued interest then payable on all Notes then Outstanding and (ii)
this  Facility  Lease  shall  become a security  agreement  for all  purposes of
Applicable Law.

                  (d) Payment of Special  Casualty Value. If a Deemed Loss Event
occurs,  the party hereto having knowledge  thereof and, at the Lessor's option,
on the day of the month  (specified  in  Schedule  4) next  following  the month
during which the Deemed Loss Event occurs, the Lessee shall pay to the Lessor on
such day an amount equal to the excess of (i) Special  Casualty Value determined
as of the date such payment is due over (ii) the  principal  amount of the Notes
Outstanding  on such date after  giving  effect to the  payment,  if any, of the
principal instalment due and payable on such day. Upon compliance in full by the
Lessee with the foregoing  provisions of this Section 9(d) and assumption by the
Lessee of all the  obligations  and  liabilities  of the Owner Trustee under the
Indenture and the Notes pursuant to Section 3.9(b) of the Indenture,  the Lessor
shall (so long as no  Default or Event of Default  shall  have  occurred  and be
continuing),  and at any time after the  occurrence of a Deemed Loss Event,  the
Lessor may,  Transfer the Undivided  Interest and the Real Property  Interest to
the  Lessee.  If the  Lessee  shall not have  assumed  all the  liabilities  and
obligations of the Owner Trustee under the Indenture and the Notes in accordance
with Section 3.9(b) of the Indenture but shall have paid all amounts required by
this Section 9(d),  the Lessor shall retain the Undivided  Interest and the Real
Property  Interest  subject to the terms of this Facility Lease and Section 7(b)
(4) of the Participation Agreement;  provided,  however, that (i) the obligation
of the  Lessee to pay  further  Basic Rent shall be reduced to an amount on each
Basic Rent Payment Date equal to the aggregate amount of principal,  premium, if
any, and accrued  interest then payable on all Notes  Outstanding  and (ii) this
Facility Lease shall become a security  agreement for all purposes of Applicable
Law.

                  (e)  Requisition  of Use. In the case of a Requisition  of Use
not constituting an Event of Loss, this Facility Lease shall continue,  and each
and every obligation of the Lessee hereunder and under each Transaction Document
shall remain in full force and effect. So long as no Default or Event of Default
shall have occurred and be continuing,  the Lessee shall be entitled to all sums
received by reason of any such  Requisition  of Use for the period ending on the


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<PAGE>



Lease Termination Date, and the Lessor shall be entitled to all sums received by
reason of any such Requisition of Use for the period after the Lease Termination
Date.

                  (f)  Termination  of  Obligation.  Until the Lessee shall have
made the payments  specified in Section 9(c) or 9(d),  the Lessee shall make all
payments of Rent when due; and the Lessee shall  thereafter  be required to make
all payments of Supplemental  Rent as and when due. In the event that the Lessee
shall assume all the  obligations and liabilities of the Owner Trustee under the
Indenture  and the Notes  pursuant  to  Section  3.9(b) of the  Indenture,  upon
payment by the Lessee of the payments  specified in Section 9(c) or 9(d) and all
Rent due and owing through and including  the date of payment  (including  Basic
Rent due on or accrued  through  such date,  as the case may be), the Lease Term
shall end and the Lessee's obligation to pay further Basic Rent shall cease.

                  (g)  Application of Payments on an Event of Loss. Any payments
receivable  (without regard to any right of setoff or other similar right of any
Person  against the Lessee) at any time by the Lessor or the Lessee  (other than
insurance  placed by the Owner  Trustee  or the Owner  Participant  pursuant  to
Section 10(b)) from any governmental authority,  insurer or other Person (except
the Lessee) as a result of the  occurrence  of an Event of Loss shall be applied
as follows:

                  (i) all such payments received at any time by the Lessee shall
be  promptly  paid to the  Lessor  for  application  pursuant  to the  following
provisions of this Section  9(g),  except that the Lessee may retain any amounts
that  would at the time be  payable  to the  Lessee as  reimbursement  under the
provisions of clause (ii) below;

                  (ii) so much of such  payments  as shall not exceed the amount
required to be paid by the Lessee pursuant to Section 9(c)  (ignoring,  for this
purpose,  clause  (ii) of the  first  sentence  thereof)  shall  be  applied  in
reduction of the Lessee's  obligation  to pay such amount if not already paid by
the Lessee or, if already paid by the Lessee,  shall be applied to reimburse the
Lessee for its payment of such amount; and

                  (iii)  the  balance,   if  any,  of  such  payments  remaining
thereafter shall be divided between the Lessor and the Lessee as their interests
may appear.



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<PAGE>

                  (h)  Application of Payments Not Relating to an Event of Loss.
Payments  receivable  (without  regard to any  right of setoff or other  similar
right of any Person  against the  Lessee) at any time by the Lessor  (other than
insurance  placed by the Owner  Trustee  or the Owner  Participant  pursuant  to
Section 10(b)) or the Lessee from any Governmental  Authority,  insurer or other
Person  with   respect  to  any   destruction,   damage,   loss,   condemnation,
confiscation,  theft or seizure of or  Requisition of Title to or Requisition of
Use of Unit 1 or any part  thereof  not  constituting  an Event of Loss shall be
applied first to reimburse the Lessee for all amounts expended in respect of the
repair,  replacement or reconstruction of Unit 1 or any part thereof as provided
in Section  9(b),  and second the  balance,  if any, of such  payments  shall be
divided between the Lessor and the Lessee as their interests may appear.

                  (i)  Other   Dispositions.   Notwithstanding   the   foregoing
provisions  of this  Section 9, so long as a Default  or Event of Default  shall
have occurred and be continuing,  any amount that would  otherwise be payable to
or for the  account  of, or that  would  otherwise  be  retained  by, the Lessee
pursuant to Section 10 or this Section 9 shall be paid to the Lessor as security
for the  obligations  of the Lessee under this Facility  Lease and, at such time
thereafter  as no Default or Event of Default shall be  continuing,  such amount
shall be paid  promptly  to the Lessee  unless  this  Facility  Lease shall have
theretofore been declared to be in default,  in which event such amount shall be
disposed of in accordance  with the provisions  hereof,  of the Indenture and of
the Trust Agreement.

                  (j)  Assumption  of  Notes;  Creation  of  Lien  on  Undivided
Interest.  In  connection  with an  Event of Loss,  a Deemed  Loss  Event or the
exercise of the Cure  Option,  (i) the Lessee  agrees to use its best efforts to
comply with the conditions  respecting its assumption of all the obligations and
liabilities  of the Owner Trustee under the Indenture and the Notes set forth in
Section 3.9(b) of the Indenture,  and (ii) the Lessor agrees that, if the Lessee
fails to assume all the  obligations  and liabilities of the Owner Trustee under
the Indenture and the Notes in accordance  with Section 3.9(b) of the Indenture,
not later  than two  Business  Days  prior to the date on which the Lessee is to
acquire the Owner Participant's interest in the Trust Estate pursuant to Section


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<PAGE>



7(b) (4) of the  Participation  Agreement,  the Lessor will cause the  Undivided
Interest  and the Real  Property  Interest  to be  subjected  to the Lien of the
Indenture by executing and  delivering  to the  Indenture  Trustee the Undivided
Interest Indenture Supplement.

                  SECTION 10.  Insurance.

                  (a) Required  Insurance.  The Lessee will use its best efforts
to cause the Operating Agent to carry and maintain  insurance required under the
ANPP  Participation  Agreement and will make all payments required of the Lessee
under the ANPP Participation Agreement in respect of such insurance.  The Lessee
will at all times maintain, directly or through the Operating Agent, policies of
casualty and liability  insurance with respect to the Undivided Interest and the
Real  Property  Interest  in such  amounts  and with such  coverage  as shall be
adequate in accordance with prudent utility practice.  Any policies of insurance
in  respect  of  destruction,  damage,  loss,  theft  or other  casualty  to the
Undivided Interest, the Real Property Interest, Unit 1 or any part thereof shall
name the Lessor  (and,  to the extent  practicable,  the Owner  Participant)  as
additional  insured,  as its interests may appear, and any policies with respect
to nuclear  liability  insurance  shall  include all  Indemnities  as additional
insureds;  provided,  however,  that if the Operating  Agent, as trustee,  shall
become  the loss  payee  under any  policy  of  insurance  constituting  Project
Insurance,  then  the  Lessor  and the  Owner  Participant  shall be and be made
beneficiaries of the trust  arrangement  under which the Operating Agent acts as
trustee.  The Lessee shall, on or before March 1 of each year,  commencing March
1,  1986,  furnish to the Lessor  and the Owner  Participant  (A) a  certificate
signed by an independent  insurance broker showing the insurance then maintained
under the ANPP Participation Agreement and hereunder,  stating that all premiums
then due have  been  paid  and  stating  that the  insurance  then  carried  and
maintained under the ANPP Participation Agreement and hereunder is in accordance
with the terms of the ANPP Participation  Agreement and this Section 10, and (B)
upon the request of the Lessor or the Owner  Participant,  copies (to the extent
permitted  by the  issuers of such  policies)  of policies  so  maintained.  All
insurance proceeds paid in respect of damage, destruction,  loss, theft or other
casualty  to the  Undivided  Interest  or the Real  Property  Interest  shall be
applied as provided in Section 9(g) (h) or (i), as the case may be.



6091.20.2898.47:1
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<PAGE>


                  (b)  Permitted  Insurance.  Nothing  in this  Section 10 shall
prohibit the Lessee from placing,  at its expense,  insurance on or with respect
to the cost of purchasing replacement power, naming the Lessee as insured and/or
loss payee,  unless such insurance  would  conflict with or otherwise  limit the
availability  of  insurance  to be provided or  maintained  in  accordance  with
Section 10(a). Nothing in this Section 10 shall prohibit the Lessor or the Owner
Participant  from placing at its expense  other  insurance on or with respect to
Unit 1, the Undivided Interest or the Real Property Interest or the operation of
Unit 1, naming the Lessor or the Owner Participant as insured and/or loss payee,
unless such insurance would conflict with or otherwise limit the insurance to be
provided or maintained in accordance with Section 10(a).

                  SECTION 11. Rights to Assign or Sublease.

                  (a)  Assignment  or Sublease by the Lessee.  Without the prior
written consent of the Lessor, the Lessee shall not assign,  sublease,  transfer
or encumber (except for Permitted Liens) its leasehold interest in the Undivided
Interest or the Real Property  Interest  under this Facility  Lease.  The Lessee
shall  not,  without  the prior  written  consent  of the  Lessor  and the Owner
Participant,  part with the possession of, or suffer or allow to pass out of its
possession,  the Undivided Interest,  the Real Property Interest or any interest
therein,  except  to the  extent  required  pursuant  to the ANPP  Participation
Agreement or expressly permitted by the provisions of this Facility Lease or any
other Transaction Document.

                  (b) Assignment by Lessor as Security for Lessor's Obligations.
To secure the indebtedness evidenced by the Notes, the Lessor will assign to the
Indenture  Trustee its right,  title and interest to receive certain payments of
Rent (not including, in any event, Excepted Payments), to the extent provided in
the  Indenture  and may assign to the  Indenture  Trustee  its right,  title and
interest  in  the  Undivided   Interest  and  the  Real  Property   Interest  as
contemplated  by Section 9(j). The Lessee hereby (a) consents to such assignment
pursuant  to the  terms of the  Indenture,  (b)  agrees to pay  directly  to the
Indenture Trustee at the Indenture  Trustee's Office (so long as the lien of the
Indenture  has not been  satisfied  and  discharged  and the Lessor is obligated
thereunder) all amounts of Rent (other than Excepted  Payments) due or to become
due to the Lessor  that shall be required  to be paid to the  Indenture  Trustee
pursuant to the Indenture, (c) agrees that the

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<PAGE>



right of the  Indenture  Trustee  to any such  payments  shall be  absolute  and
unconditional  and  shall  not  be  affected  by  an  circumstances  whatsoever,
including,  without  limitation,  those circumstances set forth in Section 4 and
(d) agrees that, to the extent provided in the Indenture and until the Indenture
is discharged in accordance with its terms, the Indenture Trustee shall have all
the rights of the Lessor  hereunder with respect to Assigned  Payments as if the
Indenture Trustee had originally been named herein as the Lessor.

                  SECTION 12.  Lease Renewal.

                  Subject to the notice requirements set forth in Section 13(a),
at the end of the Basic Lease Term provided  that no Default,  Event of Default,
event of Loss or Deemed Loss Event shall have occurred and be continuing and the
Notes shall have been paid in full, the Lessee shall have the right to renew the
term of this Facility Lease for a period commencing January 15, 2015, and ending
on the later of January 15, 2017 and the end of the Maximum  Option  Period (the
Renewal Term),  during which the Basic Rent payable shall be the rental provided
in Section 3(a) (iii) and Section 21.

                  SECTION 13.  Notices for Renewal or Purchase;
Purchase Options.

                  (a) Notice;  Determination of Values; Appraisal Procedure. Not
later than three years nor earlier than five years prior to the expiration  date
of the Basic  Lease Term,  and not later than three years nor earlier  than five
years prior to the expiration  date of the Renewal Term, as the case may be, the
Lessee shall give to the Lessor  written  notice of its  election  either to (A)
return the  Undivided  Interest  and the Real  Property  Interest  to the Lessor
pursuant to Section 5, or (B) exercise the renewal  option  permitted by Section
12 (in the case of the notice delivered in respect of the expiration date of the
Basic Lease Term) or the  purchase  option  permitted by Section  13(b).  If the
notice  specified in clause (B) of the  preceding  sentence is given three years
prior to the  expiration of the Basic Lease Term,  then not later than two years
prior to the  expiration  date of the Basic Lease Term, the Lessee will give the
Lessor  written  notice of its election  either to exercise  the renewal  option
permitted by Section 12 or the purchase option  permitted by Section 13(b).  Any
such election shall be irrevocable as to the Lessee,  but no such election shall
be  binding on the Lessor if, on the  effective  date  thereof,  a Default or an
Event of Default shall have occurred and be continuing or an Event of Loss

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<PAGE>



or a Deemed Loss Event shall have occurred. Promptly after giving notice, (i) in
case the renewal  option has been  elected,  the Maximum  Option Period shall be
determined  by the  Appraisal  Procedure,  or (ii) in case the  purchase  option
permitted  by  Section  13(b)  has  been  elected,  the  Lessee  and  the  Owner
Participant shall agree upon the Fair Sales Value of the Undivided  Interest and
the Real  Property  Interest,  or, if within  three months after the date of the
Lessee's  notice  the  Lessee  and the Owner  Participant  shall be unable so to
agree, such value shall be determined by the Appraisal Procedure.

                  (b) Purchase  Option at Expiration of the Lease Term.  Subject
to the notice  requirements  set forth in Section 13(a),  unless a Default or an
Event of Default  shall have  occurred and be  continuing or an Event of Loss or
Deemed  Loss Event shall have  occurred,  on the date of the  expiration  of the
Basic Lease Term or the Renewal  Term (if  elected),  the Lessee  shall have the
right to purchase the Undivided  Interest and the Real  Property  Interest for a
purchase price equal to the Fair Market Sales Value thereof.

                  (c)  Special  Purchase  Option.  Upon 30 days'  prior  written
notice  to the  Lessor,  unless a  Default  or an Event of  Default  shall  have
occurred  or be  continuing  or an Event of Loss or Deemed Loss Event shall have
occurred,  if the Lessee  shall  determine  that upon a refunding of the Initial
Series Note (and the  Releveraging  Note, if theretofore  issued) such refunding
would violate any  limitation  then imposed by the NMPSC,  the Lessee shall have
the right to purchase the Undivided  Interest and the Real Property Interest for
a purchase price equal to the greater of (i) the Fair Market Sales Value thereof
and (ii)  Casualty  Value as of the Basic Rent Payment Date first  preceding the
date of such purchase (or as of the date of such purchase, if such date shall be
a Basic Rent Payment  Date) plus, if such date shall not be a Basic Rent Payment
Date, a pro ration of Basic Rent to the date of purchase.

                  (d) Purchase of the Undivided Interest;  Payment,  Etc. If the
Lessee shall have elected to purchase the Undivided pursuant to Section 13(b) or
Section  (c),  payment by the  Lessee of the  purchase  price for the  Undivided
Interest and the Real Property  Interest shall be made in immediately  available
funds,  whereupon the Lessor shall Transfer the Undivided  Interest and the Real
Property Interest to the Lessee.



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<PAGE>



                  SECTION 14.  Termination for Obsolescence.

                  (a) Termination  Notice.  Notwithstanding any provision herein
contained to the  contrary,  unless a Default or an Event of Default  shall have
occurred and be continuing or an Event of Loss or a Deemed Loss Event shall have
occurred,  the Lessee shall have the option (provided that the Lessee shall have
delivered to the Lessor an Officers' Certificate to the effect that the Lessee's
Board of Directors  has adopted and there is in effect a resolution  determining
that Unit 1 is (A) uneconomic to the Lessee or (B) economically obsolete for any
reason;  and provided that the Lessee shall be disposing of all its other leased
interests in Unit 1, on at least 360 days' prior written  notice (a  Termination
Notice) to the Lessor,  the Owner  Participant and the Indenture  Trustee (which
notice shall be irrevocable)) to terminate this Facility Lease on any Basic Rent
Payment  Date  after  January  15,  1998,  and prior to  January  15,  2012 (the
Termination Date). If the Lessee shall give the Lessor a Termination Notice, the
Lessee shall, as agent for the Lessor,  use its best efforts to obtain cash bids
for the  purchase of the  Undivided  Interest  and the Real  Property  Interest,
together with the interest of the Lessor under the  Assignment  and  Assumption.
The Lessor shall also have the right to obtain such cash bids,  either  directly
or through agents other than the Lessee.  The Lessee shall certify to the Lessor
within ten days after the Lessee's receipt of each bid (and, in any event, prior
to the  Termination  Date) the amount and terms thereof and the name and address
of the party  (which  shall not be the Lessee or any  Affiliate  of the  Lessee)
submitting such bid.

                  (b)  Right  of  Lessor  to  Retain  Undivided   Interest  upon
Termination.  The Lessor may elect to retain,  rather than sell,  the  Undivided
Interest and the Real  Property  Interest by giving  notice to the Lessee and to
the  Indenture  Trustee prior to the  Termination  Date. It shall be a condition
precedent to the Lessor's  right to retain the  Undivided  Interest and the Real
Property Interest that on or prior to the Termination Date the Lessor shall have
paid (or made  provision  for  payment)  to the  Indenture  Trustee,  the unpaid
principal amount of all Notes Outstanding on such date and all premium,  if any,
and interest accrued and unpaid on the date of payment.  If the Lessor elects to
retain the Undivided  Interest and the Real Property  Interest  pursuant to this
Section 14(b),  the Lessee shall pay to the Lessor on the  Termination  Date the
Basic  Rent and any  other  Rent  due or  accrued,  as the  case may be,  to and
including the Termination Date, together with an amount equal to the

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<PAGE>



excess,  if any, of the Termination  Value as of the  Termination  Date over the
highest bona fide offer received pursuant to Section 14(a).

                  (c)  Events on the  Termination  Date.  If the  Lessor has not
elected to retain the  Undivided  Interest  and the Real  Property  Interest  as
provided  in Section  14(b),  on the  Termination  Date the Lessor  shall  (upon
receipt  of the sale price and all  additional  payments  specified  in the next
sentence)  Transfer the Undivided  Interest and the Real  Property  Interest for
cash to the bidder (which shall not be the Lessee or an Affiliate of the Lessee)
that shall have submitted the highest bid on or before the Termination Date. The
total sale price realized at such sale shall be retained by the Lessor (subject,
however, to the terms of the Indenture and the requirement that there shall have
been paid, or provision  for payment  made, to the Indenture  Trustee the unpaid
principal of all Notes  Outstanding on the Termination Date and all premium,  if
any, and interest  accrued and unpaid on the date of payment)  and, in addition,
on the  Termination  Date the Lessee shall pay to the Lessor (A) the excess,  if
any, of the Termination Value as of the Termination Date over the net sale price
of the Undivided  Interest and the Real Property Interest and (B) any Basic Rent
due or accrued,  as the case may be, to and including the  Termination  Date and
shall pay to the Person or Persons entitled thereto all Supplemental Rent (other
than  Termination  Value).  Upon  compliance  by the Lessee with the  applicable
provisions  of this Section 14, the  obligation  of the Lessee to pay Basic Rent
due  hereunder  for any period  after the  Termination  Date shall cease and the
Basic Lease Term shall end on the Termination Date; provided,  however, that, in
the event of termination of this Facility Lease pursuant to this Section 14, the
obligations  of the Lessee  under the ANPP  Participation  Agreement  (except as
therein expressly  provided) and the Assignment and Assumption shall continue in
full  force  and  effect  and  shall  not be  impaired  by  reason  of any  such
termination.  If, other than as a result of the Lessor's  election to retain the
Undivided  Interest and the Real Property Interest as provided in Section 14(b),
on or as of the  Termination  Date no such sale shall occur or the Lessee  shall
not have  complied  in full with this  Section  14,  this  Facility  Lease shall
continue in full force and effect in accordance with its terms without prejudice
to the Lessee's  right to exercise its rights under this Section 14  thereafter,
except  that the Lessee  shall not be entitled  to deliver  another  Termination
Notice during the 3-year period  following  such  Termination  Date.  The Lessor
shall be under no duty to  solicit  bids,  to  inquire  into the  efforts of the


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Lessee to obtain bids or otherwise  take any action in connection  with any such
sale other than, if the Lessor has not elected to retain the Undivided  Interest
and the Real Property Interest,  to Transfer the Undivided Interest and the Real
Property  Interest to the  purchaser  named in the highest bid  certified by the
Lessee to the Lessor or obtained by the Lessor,  against receipt of the payments
provided for herein.

                  (d) Early  Termination  Notice.  In the event  that the Lessee
shall fail to exercise  its renewal  option or purchase  option  within the time
limit provided by Section 13(a), the Lessor shall have the option,  on any Basic
Rent  Payment Date  thereafter,  on at least 120 days prior  written  notice (an
Early Termination  Notice) to the Lessee and the Indenture Trustee, to terminate
this Facility Lease on the Basic Rent Payment Date specified in such notice (the
Early  Termination  Date).  Any Early  Termination  Notice may be revoked by the
Lessor at any time on or prior to the Early Termination Date.

                  (e)  Events  on the  Early  Termination  Date.  On  the  Early
Termination  Date the Lessor  shall,  at its option,  (i) Transfer the Undivided
Interest and the Real Property  Interest to the bidder (other than the Lessee or
any Affiliate of the Lessee) selected by the Lessor or (ii) retain the Undivided
Interest and the Real Property  Interest.  It shall be a condition  precedent to
the  Lessor's  right  to sell or  retain  the  Undivided  Interest  and the Real
Property  Interest  that on or prior to the Early  Termination  Date the  Lessor
shall have paid (or made provision for payment) to the Indenture Trustee on such
date the unpaid principal  amount of all Notes  Outstanding on such date and all
premium,  if any,  and interest  accrued and unpaid on the date of payment.  The
total sale price  realized at any such sale shall be retained by the Lessor and,
in addition,  on the Early  Termination  Date the Lessee shall pay to the Lessor
any Basic Rent due or accrued,  as the case may be, to and  including  the Early
Termination  Date, and shall pay to the Person or Persons  entitled  thereto all
Supplemental  Rent (other than  Termination  Value).  Upon compliance the Lessee
with the applicable  provisions of this Section 14, the obligation of the Lessee
to pay Basic Rent due hereunder for any period after the Early  Termination Date


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shall  cease  and the  Lease  Term  shall  end on the  Early  Termination  Date;
provided,  however,  that in the event of the termination of this Facility Lease
pursuant  to this  Section  14, the  obligations  of the  Lessee  under the ANPP
Participation   Agreement  (except  as  therein  expressly   provided)  and  the
Assignment and Assumption  shall continue in full force and effect and shall not
be impaired by reason of any such termination.

                  SECTION 15. Events of Default.

                  The term Event of Default,  wherever  used herein,  shall mean
any of the following  events  (whatever the reason for such Event of Default and
whether it shall be voluntary, or come about or be effected by operation of law,
or be pursuant  to or in  compliance  with any  Applicable  Law or  Governmental
Action):

                (i) the  Lessee  shall  fail to make,  or cause to be made,  (x)
payment of Casualty Value,  Termination Value, Special Casualty Value or payment
due  pursuant to exercise of the Cure Option when due,  (y) any payment of Basic
Rent within 5 Business  Days after the same shall  become due or (z) any payment
of Supplemental  Rent (other than Casualty  Value,  Termination  Value,  Special
Casualty Value or payment due pursuant to exercise of the Cure Option) within 20
days after the same shall become due or demanded, as the case may be; or

                (ii) the Lessee  shall fail to perform or observe any  covenant,
condition or agreement to be performed or observed by it under Section 10(b) (3)
(i),  10(b)  (3) (ii),  10(b)  (3)  (iii) or 10(b) (3) (v) of the  Participation
Agreement  or  Section  7, 10 (other  than  failure of the Lessee to cause to be
delivered the insurance  broker's  certificate  described therein) or 11 of this
Facility Lease; or



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                (iii)  the  remaining   economic  useful  life  of  Unit  1,  as
determined under Section 8(g) (if required  thereby to be so determined),  shall
be less than 5-1/2 years as of July 15, 2014, or less than 3-1/2 years as of the
date six months prior to the end of the Renewal Term; or

                (iv) the Lessee shall fail to perform or observe any covenant or
agreement to be performed  or observed by it under  Section  10(b) (3) (viii) of
the  Participation  Agreement and such failure shall continue for a period of 30
days after  there shall have been given to the Lessee by the Lessor or the Owner
Participant a notice specifying such failure and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or

                (v) the Lessee  shall fail to perform or observe  any  covenant,
condition or agreement (other than those referred to in clauses (i) through (iv)
above) to be performed or observed by it under this Facility  Lease or any other
Transaction  Document,  and such failure shall  continue for a period of 30 days
after  there  shall  have been  given to the  Lessee by the  Lessor or the Owner
Participant a notice specifying such failure and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder; or

                (vi) any  representation  or warranty made by the Lessee in this
Facility   Lease,   any  other   Transaction   Document   (other  than  the  Tax
Indemnification  Agreement) or any agreement,  document or certificate delivered
by the Lessee in  connection  herewith  or  therewith  shall  prove to have been
incorrect in any material respect when any such  representation  or warranty was


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<PAGE>



made or given and shall remain material and materially incorrect at the time
in question; or

                (vii)  the  Lessee  shall  commence  a  voluntary  case or other
proceeding seeking  liquidation,  reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter  in  effect  or  seeking  the  appointment  of  a  trustee,  receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property,  or shall consent to any such relief or to the  appointment  of or
taking  of  possession  by any such  official  in an  involuntary  case or other
proceeding  commenced  against  it, or shall make a general  assignment  for the
benefit of creditors, or shall take any corporate action to authorize any of the
foregoing; or an involuntary case or other proceeding shall be commenced against
the Lessee seeking  liquidation,  reorganization or other relief with respect to
it or its debts under any  bankruptcy,  insolvency  or other  similar law now or
hereafter  in  effect  or  seeking  the  appointment  of  a  trustee,  receiver,
liquidator, custodian or other similar official of it or any substantial part of
its  property,  and such  involuntary  case of  other  proceeding  shall  remain
undismissed or unstayed for a period of 60 consecutive days; or

                (viii)  final  judgement  for the  payment of money in excess of
$1,000,000  shall be rendered  against the Lessee and the Lessee  shall not have
discharged  the same or provided for its discharge in accordance  with its terms
or bonded the same or procured a stay of execution  thereof  within 60 days from
the entry thereof; or

                (ix) (1) a default  by the Lessee  under the ANPP  Participation
Agreement in consequence of which the Lessee's right to receive its Generation

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<PAGE>



Entitlement Share in PVNGS is suspended by the other ANPP  Participants,  or (2)
the  giving  by any ANPP  Participant  of a notice  under  Section  23.2 (or any
comparable successor provision) of the ANPP Participation Agreement respecting a
default  thereunder  by the  Lessee and the lapse of 20  Business  Days from the
giving of such notice  without the Lessee having cured such  default;  provided,
however,  that for purposes of this clause (2) if the Lessee shall have disputed
the  existence  or nature of a default  and such  dispute  shall have become the
subject  of an  arbitration  under  Section  24  (or  any  comparable  successor
provision)  of the ANPP  Participation  Agreement,  such 20 Business  Day period
shall  commence  on the  date  of  the  final  determination  of  the  board  of
arbitrators under such Section 24; or

                (x) (1) the  Lessee  shall  fail to pay  when  due  (whether  by
scheduled maturity, required prepayment,  acceleration, demand or otherwise) any
Debt (which term shall mean (A) indebtedness for borrowed money, (B) obligations
as lessee under leases and (C) obligations  under direct or indirect  guarantees
in respect  of,  and  obligations  (contingent  or  otherwise)  to  purchase  or
otherwise  acquire or otherwise to assure a creditor against loss in respect of,
indebtedness  or obligations of others of the kinds referred to in clause (A) or
(B)  above,  in each case if the  principal  amount (or  equivalent)  thereof is
greater than  $20,000,000) of the Lessee,  and such failure shall continue after
the applicable  grace period,  if any,  specified in the agreement or instrument
relating to such Debt, but only if the Lessee shall have received notice of such
failure or a Responsible  Officer of the Lessee shall have actual acknowledge of


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<PAGE>



such  failure;  or (2) any other  default  under  any  agreement  or  instrument
relating to any such Debt,  or any other event,  shall occur and shall  continue
after the  applicable  grace  period,  if any,  specified  in such  agreement or
instrument,  if the  effect of such  default  or event is to  accelerate,  or to
permit the  acceleration  of, the maturity of such Debt,  but only if the Lessee
shall  have  received  notice of such  default or a  Responsible  Officer of the
Lessee shall have actual knowledge of such default.

                  SECTION 16. Remedies.

                  (a) Remedies.  Upon the occurrence of any Event of Default and
so long as the same shall be continuing,  the Lessor may, at its option, declare
this Facility  Lease to be in default by written  notice to such effect given to
the Lessee, and may exercise one more of the following remedies as the Lessor in
its sole discretion shall elect:

                (i)  the  Lessor  may,  by  notice  to the  Lessee,  rescind  or
terminate this Facility Lease;

                (ii) the Lessor may (x) demand  that the Lessee,  and  thereupon
the Lessee  shall,  return  possession  of the  Undivided  Interest and the Real
Property  Interest  promptly to the Lessor in the manner and condition  required
by, and otherwise in accordance  with the  provisions of, this Facility Lease as
if they Undivided Interest and the Real Property Interest were being returned at
the  end of  the  Lease  Term  and  the  Lessor  shall  not be  liable  for  the
reimbursement of the Lessee for any costs and expenses incurred by the Lessee in
connection  therewith  and (y)  enter  upon the  PANGS  Site and take  immediate
possession of (to the  exclusion of the Lessee) the  Undivided  Interest and the
Real Property Interest, by summary proceedings or otherwise, all without

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<PAGE>



liability to the Lessee for or by reason of such entry or taking of  possession,
whether  for the  restoration  of damage to  property  caused by such  taking or
otherwise;

                (iii) the Lessor may sell the  Undivided  Interest  and the Real
Property Interest, or any part thereof, together with any interest of the Lessor
under the  Assignment and  Assumption,  at public or private sale, as the Lessor
may  determine,  free and  clear of any  rights of the  Lessee in the  Undivided
Interest and the Real  Property  Interest and without any duty to account to the
Lessee with  respect to such action or inaction  or any  proceeds  with  respect
thereto (except to the extent required by clause (v) or (vi) below if the Lessor
shall  elect to exercise  its rights  thereunder),  in which event the  Lessee's
obligation to pay Basic Rent hereunder for periods  commencing after the date of
such sale shall be terminated  or  proportionately  reduced,  as the case may be
(except to the extent that Basic Rent is to be included  in  computations  under
clause  (v) or (vi)  below if the  Lessor  shall  elect to  exercise  its rights
thereunder);

                (iv) the  Lessor  may hold,  keep idle or lease to others all or
any part of the Undivided Interest and the Real Property Interest, as the Lessor
in its sole discretion may determine, free and clear of any rights of the Lessee
and  without  any duty to account to the Lessee  with  respect to such action or
inaction or for any proceeds  with  respect to such action or  inaction,  except
that the Lessee's  obligation to pay Basic Rent for periods commencing after the
Lessee shall have been  deprived of use of the  Undivided  Interest and the Real
Property  Interest  pursuant  to this  clause  (iv)  shall be reduced by the net
proceeds, if any, received by the Lessor from leasing the Undivided Interest and

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<PAGE>



the Real  Property  Interest  to any  Person  other than the Lessee for the same
periods or any portion thereof;

                (v)  except  in the  case of an Event of  Default  specified  in
clause (iii) of Section 15, the Lessor may, whether or not the Lessor shall have
exercised or shall  thereafter at any time exercise its rights under clause (i),
(ii), (iii) or (iv) above,  demand, by written notice to the Lessee specifying a
payment  date which shall be a Basic Rent  Payment Date not earlier than 10 days
after the date of such notice, that the Lessee pay to the Lessor, and the Lessee
shall pay to the  Lessor,  on the Basic  Rent  Payment  Date  specified  in such
notice,  as  liquidated  damages  (in lieu of the Basic Rent due after the Basic
Rent Payment  specified in such  notice),  any unpaid Rent due through the Basic
Rent Payment  Date  specified  in such notice plus  whichever  of the  following
amounts  the  Lessor,  in its sole  discretion,  shall  specify  in such  notice
(together with interest on such amount at the interest rate specified in Section
3(b) (iii) from the Basic Rent Payment Date specified in such notice to the date
of actual  payment) (and upon receipt of such payment the Lessor shall  Transfer
to the Lessee the Undivided Interest and the Real Property Interest):

                (A) an amount  equal to the excess,  if any, of Casualty  Value,
computed as of the Basic Rent  Payment Date  specified in such notice,  over the
Fair  Market  Rental  Value of the  Undivided  Interest  and the  Real  Property
Interest  (determined on the basis of the then actual condition of Unit 1) until
the end of the remaining useful life of Unit 1, after discounting

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<PAGE>



such Fair Market  Rental Value  semi-annually  to present  value as of the Basic
Rent Payment Date specified in such notice at a rate of 12% per annum;

                (B) an amount  equal to the  excess,  if any,  of such  Casualty
Value over the Fair Market  Sales Value of the  Undivided  Interest and the Real
Property Interest  (determined on the basis of the then actual condition of Unit
1) as of the Basic Rent Payment Date specified in such notice; or

                (C) an amount  equal to the  excess,  if any, of (1) the present
value  as of the  Basic  Rent  Payment  Date  specified  in such  notice  of all
installments  of Basic Rent until the end of the Basic Lease Term or the Renewal
Term, as the case may be,  discounted  semi-annually at a rate of 10% per annum,
over (2) the present value as of such Basic Rent Payment Date of the Fair Market
Rental  Value  of  the  Undivided   Interest  and  the  Real  Property  Interest
(determined  on the basis of the then actual  condition of Unit 1) until the end
of the Basic  Lease Term or the  Renewal  Term,  as the case may be,  discounted
semi-annually at a rate of 10% per annum;

                (vi) if the Lessor  shall have sold all the  Undivided  Interest
and the Real Property  Interest  pursuant to clause (iii) above, the Lessor,  in
lieu of  exercising  its  rights  under  clause  (v) above  with  respect to the
Undivided  Interest and the Real  Property  Interest  may, if it shall so elect,
demand that the Lessee pay to the Lessor and the Lessee  shall pay to the Lessor
on the date of such sale, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of Basic Rent due for periods commencing after the next Basic


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<PAGE>



Rent Payment Date  following  the date of such sale),  any unpaid Basic Rent due
through such Basic Rent Payment Date, plus the amount of any deficiency  between
the Sale  Proceeds  and Casualty  Value,  computed as of such Basic Rent Payment
Date, together with interest at the interest rate specified in Section 3(b)(iii)
on the amount of such Rent and such  deficiency from the date of such sale until
the date of actual payment;

                (vii) in the case of an Event of  Default  specified  in  clause
(iii) of Section  15, the Lessor  may  demand,  by written  notice of the Lessee
specifying a payment date which shall be the last Basic Rent Payment Date of the
Lease Term,  that the Lessee pay to the Lessor,  and the Lessee shall pay to the
Lessor,  on such Basic Rent Payment Date,  as  liquidated  damages for loss of a
bargain  and not as a  penalty,  any  unpaid  Rent due  through  such Basic Rent
Payment Date plus an amount equal to the Fair Market Sales Value (without regard
to the obligations of the Lessee under Section 10(b)(3)(xi) of the Participation
Agreement) of the Undivided Interest and the Real Property Interest  (determined
on the basis of the then  actual  condition  of Unit 1)  deter-mined  as of such
Basic Rent Payment Date  (together  with interest on such amount at the interest
rate specified in Section  3(b)(iii) from such Basic Rent Payment Date specified
in such notice to the date of actual  payment) (and upon receipt of such payment
the Lessor  shall  transfer to the Lessee the  Undivided  Interest  and the Real
Property Interest); or

                (viii) the Lessor may  exercise  any other  right or remedy that
may be available to it under any Applicable Law or proceed by appropriate  court
action to enforce the terms hereof or to recover damages for the breach hereof.



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<PAGE>



                  (b) No Release. No restriction or termination of this Facility
Lease,  in whole or in part, or  repossession  of the Undivided  Interest or the
Real  Property  Interest or exercise of any remedy under  paragraph  (a) of this
Section 16 shall, except as specifically provided therein, relieve the Lessee of
any of its liabilities and obligations hereunder.  In addition, the Lessee shall
be liable,  except as otherwise  provided above, for any and all unpaid Rent due
hereunder before, after or during the exercise of any of the foregoing remedies,
including all reasonable legal fees and other costs and expenses incurred by the
Lessor or the Owner  Participant  by  reason of the  occurrence  of any Event of
Default or the exercise of the Lessor's  remedies with respect  thereto.  At any
sale of the Undivided  Interest,  the Real Property Interest or any part thereof
pursuant to this Section 16, the Owner Participant,  the Lessor or the Indenture
Trustee may bid for and purchase such property.

                  (c) Remedies Cumulative. No remedy under paragraph (a) of this
Section 16 is  intended to be  exclusive,  but each shall be  cumulative  and in
addition to any other  remedy  provided  under such  paragraph  (a) or otherwise
available to the Lessor at law or in equity. No express or implied waiver by the
Lessor of any Default or Event of Default  hereunder  shall in any way be, or be
construed  to be, a waiver  of any  future  or  subsequent  Default  or Event of
Default.  The failure or delay of the Lessor in exercising  any right granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such  contingencies  or  similar  contingencies  and any  single or  partial
exercise  of any  particular  right by the Lessor  shall not exhaust the same or
constitute a waiver of any other right provided herein.  To the extent permitted
by  Applicable  Law,  the Lessee  hereby  waives  any  rights  now or  hereafter
conferred by statute or otherwise which may require the Lessor to sell, lease or
otherwise  use the  Undivided  Interest or Unit 1 in  mitigation of the Lessor's
damages as set forth in paragraph  (a) of this Section 16 or which may otherwise
limit or modify any of the Lessor's rights and remedies provided in this
Section 16.

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<PAGE>


                  (d) Exercise of Other  Rights or Remedies.  In addition to all
other rights and  remedies  provided in this Section 16, the Lessor may exercise
any other right or remedy that may be  available to it under  Applicable  Law or
proceed by  appropriate  court  action to enforce the terms hereof or to recover
damages for the breach hereof.

                  (e)  Special  Cure Right of Lessee.  In the event a "Notice of
Default"  is given  under  Section 15 (iv),  the Lessee  may, on or prior to the
occurrence of an Event of Default  resulting  therefrom,  give written notice to
the Lessor  stating that the Lessee has elected to exercise the option (the Cure
Option)  provided in this Section 16(e),  which election shall be irrevocable as
to the  Lessee.  Promptly  after the giving of such  notice,  the Lessee and the
Owner  Participant shall agree upon the Fair Market Sales Value of the Undivided
Interest and the Real Property  Interest or, if they shall be unable so to agree
within one month  after the date of the  Lessee's  notice,  such value  shall be
determined  by the  Appraisal  Procedure.  On the Basic Rent  Payment  Date next
following the date that such Fair Market Sales Value shall have been determined,
the Lessee shall pay to the Lessor all Rent due on such Basic Rent Payment Date,
plus an amount  equal to the excess of (i) the greater of such Fair Market Sales
Value and the Casualty Value  determined as of such Basic Rent Payment Date over
(ii) the unpaid  principal  amount of the Notes  Outstanding  on such date after
giving effect to the payment,  if any, of the principal  installment and payable
on such  date.  Upon  compliance  in  full  by the  Lessee  with  the  foregoing
provisions  of  this  paragraph  (e) and  assumption  by the  Lessee  of all the
obligations  and  liabilities  of the Owner  Trustee under the Indenture and the
Notes pursuant to Section 3.9(b) of the Indenture, the Lessor shall Transfer the
Undivided  Interest and the Real Property  Interest to the Lessee. If the Lessee
shall not have assumed all the obligations and liabilities of the Owner

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<PAGE>



Trustee under the Indenture and the Notes in accordance  with Section  3.9(b) of
the Indenture,  but shall have paid all amounts  required by this paragraph (e),
the Lessor shall retain the Undivided  Interest and the Real  Property  Interest
subject  to the  terms  of  this  Facility  Lease  and  Section  7(b)(4)  of the
Participation Agreement; provided, however, that the obligation of the Lessee to
pay further  Basic Rent shall be reduced to an amount on each Basic Rent Payment
Date equal to the aggregate  amount of principal,  premium,  if any, and accrued
interest  then payable on all Notes then  Outstanding  and this  Facility  Lease
shall become a security agreement for all purposes of Applicable Law. The Lessee
agrees to use its best  efforts to comply  with the  conditions  respecting  its
assumption  set forth in  Section  3.9(b) of the  Indenture  and,  failing  such
assumption,  agrees to accept a transfer of the Owner Participant's right, title
and  interest  in  the  Trust  Estate   pursuant  to  Section   7(b)(4)  of  the
Participation Agreement.

                  SECTION 17.  Notices.

                  All  communications  and notices provided for in this Facility
Lease  shall be in  writing  and  shall be given in person or by means of telex,
telecopy, or other wire transmission, or mailed by registered or certified mail,
addressed as provided in the Participation  Agreement.  All such  communications
and notices  given in such manner  shall be  effective on the date of receipt of
such communication or notice.

                  SECTION 18.  Successors and Assigns.

                  This  Facility  Lease,  including all  agreements,  covenants,
indemnities,  representations and warranties, shall be binding upon and inure to
the benefit of the Lessor and its  successors  and  permitted  assigns,  and the
Lessee and its successors and, to the extent permitted hereby, assigns.



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                  SECTION 19.  Right to Perform for Lessee.

                  If the  Lessee  shall  fail to make any  payment of Rent to be
made by it, or shall fail to perform or comply with any of its other  agreements
contained  herein,  or fail to make any  payment to be made by it under any ANPP
Project  Agreement,  or shall fail to  perform  or comply  with any of its other
agreements  contained  in any ANPP Project  Agreement,  either the Lessor or the
Owner  Participant  may, but shall not be obligated to, tender such payment,  or
effect such  performance or  compliance,  and the amount of such payment and the
amount of all costs and expenses (including, without limitation,  attorneys' and
other  professionals' fees and expenses) of the Lessor or the Owner Participant,
as the case may be,  incurred in connection with such payment or the performance
of or compliance with such agreement, as the case may be, together with interest
thereon at the Penalty Rate, shall be deemed  Supplemental  Rent, payable by the
Lessee upon demand.  In the event that the Lessor or the Owner Participant shall
cure any default by the Lessee under the ANPP Participation Agreement,  then (so
long as an Event of Default has occurred and is continuing) the Lessor, together
with each other Person contributing to such cure, shall be entitled (to the full
extent  enforceable in accordance with Applicable Law) to receive the Generation
Entitlement  Share of the Lessee  under the ANPP  Participation  Agreement  (not
limited  to Unit 1),  with each  contributor  to  receive a  percentage  of such
Generation  Entitlement  Share equal to the  percentage of the cure  contributed
thereby.

                  SECTION 20. Additional Covenants.

                  The Lessee  agrees to comply with and to pay, as  Supplemental
Rent,  all  amounts  payable  by it under the  provisions  of  Section 13 of the
Participation  Agreement  and under the  provisions  of the Tax  Indemnification
Agreement,  which provisions are incorporated  herein by this reference as fully
as if set forth in full at this  place.  The  Lessee  agrees to comply  with its
covenants and agreements set forth in Sections 10(b), 14 and 16 of

6091.20.2898.47:1
                                     - 43 -

<PAGE>



the Participation Agreement and Articles III, IV, V and VI of the Assignment and
Assumption  which  covenants  and  agreements  are  incorporated  herein by this
reference as fully as if set forth in full at this place.

                  SECTION 21. Lease of Real Property Interest.

                  Pursuant  to  the  Deed  and  the   Assignment  of  Beneficial
Interest,  the Lessee has sold to the Lessor  the Real  Property  Interest.  The
Lessor  hereby  grants to the Lessee a leasehold  interest in the Real  Property
Interest,  such  leasehold  to be  coterminous  with the lease of the  Undivided
Interest  hereunder  and to be at a rent per  annum  equal to 12.42% of the Real
Estate  Investment  payable  by the  Lessee to the  Lessor in  arrears  in equal
semiannual installments on each Basic Rent Payment Date during the Lease Term.

                  SECTION 22.  Amendments and Miscellaneous.

                  (a)  Amendments in Writing.  The terms of this Facility  Lease
may not be waived, altered, modified, amended, supplemented or terminated in any
manner  whatsoever  except by  written  instrument  signed by the Lessor and the
Lessee.

                  (b)  Survival.   (1)  All  indemnities,   representations  and
warranties contained in this Facility Lease and the other Transaction  Documents
and the  Financing  Documents  and in any  agreement,  document  or  certificate
delivered  pursuant  hereto or thereto or in  connection  herewith or  therewith
shall survive,  and continue in effect following,  the execution and delivery of
this Facility  Lease and the  expiration or other  termination  of this Facility
Lease.

                  (2) The obligations of the Lessee to pay Supplemental Rent and
the  obligations  of the Lessee  under  Sections  5, 16, 19 and 20 hereof  shall
survive the expiration or termination of this Facility  Lease.  The extension of
any  applicable  statute of  limitations  by the Owner  Trustee,  the  Indenture
Trustee,  the  Lessee,  the  Owner  Participant,  the  Loan  Participant  or any


6091.20.2898.47:1
                                     - 44 -

<PAGE>



Indemnitee  shall not affect such survival.  The obligations of the Lessee under
Section 20 are expressly made for the benefit of, and shall be  enforceable  by,
any Indemnitee, separately or together, without declaring this Facility Lease to
be in default and  notwithstanding any assignment by the Lessor of this Facility
Lease or any of its rights  thereunder or any  disposition of all or any part of
any interest in the Undivided  Interest,  the Real Property Interest,  Unit 1 or
any other property  referred to in this Facility Lease or in this Facility Lease
or any other Transaction  Document or Financing Document.  All payments required
to be made  pursuant to Section 20 shall be made  directly  to, or as  otherwise
requested  by, the  Indemnitee  entitled  thereto  upon  written  demand by such
Indemnitee.

                  (c) Severability of Provisions. Any provision of this Facility
Lease  which may be  determined  by  competent  authority  to be  prohibited  or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforce-ability  without invalidating the
remaining   provisions   hereof  or  thereof,   and  any  such   prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by  Applicable  Law, the Lessee hereby waives any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.

                  (d) True  Lease.  This  Facility  Lease  shall  constitute  an
agreement of lease and nothing herein or therein shall be construed as conveying
to the Lessee any right,  title or interest in or to the  Undivided  Interest or
the Real Property Interest, except as lessee only.

                  (e)  Original  Lease.  The single  executed  original  of this
Facility  Lease  marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"
of this  Facility  Lease.  To the extent that this  Facility  Lease  constitutes


6091.20.2898.47:1
                                     - 45 -

<PAGE>



chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any  applicable  jurisdiction,  no security  interest in this Facility
Lease may be created through the transfer or possession of any counterpart other
than the "Original".

                  (f) Governing  Law.  This Facility  Lease shall be governed by
and construed in accordance with the law of the State of New York, except to the
extent that  pursuant to the law of the State of Arizona the law of the State of
Arizona is mandatorily applicable thereto.

                  (g)  Headings.  The  division  of  this  Facility  Lease  into
sections, the provision of a table of contents and the insertion of headings are
for  convenience  of  reference  only and shall not affect the  construction  or
interpretation of this Facility Lease.

                  (h) Concerning  the Owner  Trustee.  FNB is entering into this
Facility Lease solely as Owner Trustee under the Trust  Agreement and not in its
individual capacity.  Anything herein to the contrary  notwithstanding,  all and
each of the  representations,  war-ranties,  undertakings and agreements  herein
made on the part of the Owner  Trustee  are made and  intended  not as  personal
representations,  warranties,  undertakings and agreements by or for the purpose
or with the  intention of binding FNB  personally  but are made and intended for
the  purpose  of  binding  only the Trust  Estate,  and this  Facility  Lease is
executed and delivered by the Owner Trustee solely in the exercise of the powers
expressly  conferred  upon it as  trustee  under  the  Trust  Agreement;  and no
personal  liability or  responsibility  is assumed  hereunder by or shall at any
time  be  enforceable  against  FNB or  any  successor  in  trust  or the  Owner
Participant  on  account  of  any  representations,   warranty,  undertaking  or
agreement hereunder of the Owner Trustee,  either expressed or implied, all such
personal  liability,  if any, being expressly waived by the Lessee,  except that
the  Lessee  or any  Person  claiming  by,  through  or under it,  making  claim
hereunder,  may look to the Trust  Estate for  satisfaction  of the same and the


6091.20.2898.47:1
                                     - 46 -

<PAGE>



Owner  Trustee or its  successor in trust,  as  applicable,  shall be personally
liable for its own gross negligence or willful misconduct.  If a successor owner
trustee is appointed in accordance with the terms of the Trust  Agreement,  such
successor  owner  trustee  shall,  without any further  act,  succeed to all the
rights,  duties,  immunities and obligations of the Owner Trustee  hereunder and
the  predecessor  owner trustee  shall be released  from all further  duties and
obligations hereunder.

                  (i) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401,  the  beneficiary  of  the  Trust  Agreement  is the  Owner  Participant
described in Schedule 1 hereto.  The address of the  beneficiary is also therein
described.  A copy of the Trust  Agreement is available  for  inspection  at the
offices of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110,
Attention of Corporate Trust Division.

                  (j) Counterpart Execution. This Facility Lease may be executed
in any number of  counterparts  and by each of the parties  hereto or thereto on
separate  counterparts,  all such counterparts together constituting but one and
the same instrument.



6091.20.2898.47:1
                                     - 47 -

<PAGE>



                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Facility Lease to be duly executed in New York, New York by an officer thereunto
duly authorized.



                                    THE FIRST  NATIONAL  BANK OF BOSTON,  not in
                                      its  individual  capacity,  but  solely as
                                      Owner   Owner   Trustee   under   a  Trust
                                      Agreement,  dated as of December 16, 1985,
                                      with Burnham Leasing Corporation


                                    By:     /S/
                                            Vice President



                                    PUBLIC SERVICE COMPANY OF NEW
                                      MEXICO,


                                    By:     /S/
                                            Senior Vice President and
                                             Chief Financial Officer


6091.BURNHAM.2898.47A:2
                                     - 48 -

<PAGE>



State of New York                   )
                                    ) ss:
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 31st
day of December,  1985,  by A.J.  ROBISON,  the Senior Vice  President and Chief
Financial  Officer  of  PUBLIC  SERVICE  COMPANY  OF NEW  MEXICO,  a New  Mexico
corporation, on behalf of the
corporation.



                                                     /S/
                                                     Notary Public



State of New York                   )
                                    ) ss:
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 31st
day of  December,  1985,  by CLARK M.  WHITCOMB,  a Vice  President of THE FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985.



                                                     /S/
                                                     Notary Public


6091.BURNHAM.2898.47A:2

<PAGE>
                                   SCHEDULE 1
                                       to
                                      LEASE

                          OWNER PARTICIPANT INFORMATION


                  1. The Owner Participant is Burnham Leasing Corporation, a New
York  corporation,  whose address is 60 Broad Street,  New York, New York 10004,
Attention: Chief Financial Officer.

                  2. The daily equivalent rate is .0242685% of Facility Cost.

                  3.  The  assumed  interest  rate  on  the  Notes  utilized  in
determining the limitations set forth in Section 3(d) is 11.84%.



6091.BURNHAM.2898.47A:2

<PAGE>



                                   SCHEDULE 2
                                    TO LEASE

                             BASIC RENT PERCENTAGES

On each Basic Rent Payment Date the percentage of Facility Cost is 4.3683233%.




<PAGE>


                                   SCHEDULE 4
                                       to
                                      LEASE


                       SCHEDULE OF SPECIAL CASUALTY VALUES



                                   SCHEDULE 3
                                       to
                                      LEASE

                           SCHEDULE TO CASUALTY VALUES



    Basic                                       Basic
    Rent               Percentage               Rent                Percentage
   Payment            of Facility              Payment             of Facility
    Date                 Cost                   Date                  Cost
    ----                 ----                   ----                  ----

  1/15/1986           104.9449929             1/15/2010            45.6329355
  7/15/1986           104.9449929             7/15/2010            42.8476191
  1/15/1987           106.7906349             1/15/2011            40.2065051
  7/15/1987           108.3567602             7/15/2011            37.6968572
  1/15/1988           109.6453406             1/15/2012            35.3513537
  7/15/1988           110.7459963             7/15/2012            33.1926801
  1/15/1989           111.6684070             1/15/2013            31.0385731
  7/15/1989           112.4079070             7/15/2013            28.6298750
  1/15/1990           112.9478299             1/15/2014            26.0153606
  7/15/1990           113.2823292             7/15/2014            23.1718185
  1/15/1991           113.3934703             1/15/2015             20,000000
  7/15/1991           113.2872211
  1/15/1992           112.9615662
  7/15/1992           112.4099531
  1/15/1993           111.6146188
  7/15/1993           111.8178282
  1/15/1994           113.2588791
  7/15/1994           115.1747439
  1/15/1995           116.4172103
  7/15/1995           114.9036415
  1/15/1996           112.4507038
  7/15/1996           109.6691084
  1/15/1997           106.9772870
  7/15/1997           103.8909368
  1/15/1998           100.9371133
  7/15/1998            97.5501383
  1/15/1999            95.3829528
  7/15/1999            94.0642048
  1/15/2000            91.7972204
  7/15/2000            90.4161433
  1/15/2001            88.0435117
  7/15/2001            86.6035347
  1/15/2002            84.1210666
  7/15/2002            82.6204585
  1/15/2003            80.0238785
  7/15/2003            78.4609530
  1/15/2004            75.7459084
  7/15/2004            74.1190412
  1/15/2005            71.2811124
  7/15/2005            68.5579027
  1/15/2006            66.2116454
  7/15/2006            63.8258487
  1/15/2007            61.3746389
  7/15/2007            58.8892024
  1/15/2008            56.3361083
  7/15/2008            53.7482788
  1/15/2009            51.0906065
  7/15/2009            48.3977741

<PAGE>

                      Percentage                                 Percentage
    Payment           of Facility           Payment              of Facility
     Date                Cost                Date                   Cost
     ----                ----                ----                   ----

  30 JAN 1986          102.54722          30 DEC 1989          116.00042
  30 FEB 1986          103.64809          30 JAN 1990          112.41168
  30 MAR 1986          104.75644          30 FEB 1990          113.20895
  30 APR 1986          105.85531          30 MAR 1990          114.00891
  30 MAY 1986          106.90920          30 APR 1990          114.79379
  30 JUN 1986          107.99805          30 MAY 1990          115.55060
  30 JUL 1986          104.66690          30 JUN 1990          116.32934
  30 AUG 1986          105.70480          30 JUL 1990          112.70049
  30 SEP 1986          106.76439          30 AUG 1990          113.45689
  30 OCT 1986          107.77067          30 SEP 1990          114.21556
  30 NOV 1986          108.81131          30 OCT 1990          114.93740
  30 DEC 1986          109.85732          30 NOV 1990          115.68063
  30 JAN 1987          106.48278          30 DEC 1990          116.42596
  30 FEB 1987          107.47676          30 JAN 1991          112.76362
  30 MAR 1987          108.49187          30 FEB 1991          113.48483
  30 APR 1987          109.48584          30 MAR 1991          114.20996
  30 MAY 1987          110.44763          30 APR 1991          114.91859
  30 JUN 1987          111.43881          30 MAY 1991          115.60346
  30 JUL 1987          108.01763          30 JUN 1991          116.30691
  30 AUG 1987          108.95994          30 JUL 1991          112.60692
  30 SEP 1987          109.92276          30 AUG 1991          113.28852
  30 OCT 1987          110.83991          30 SEP 1991          113.97163
  30 NOV 1987          111.78590          30 OCT 1991          114.62245
  30 DEC 1987          112.73605          30 NOV 1991          115.29131
  30 JAN 1988          109.27090          30 DEC 1991          115.96152
  30 FEB 1988          110.19466          30 JAN 1992          112.22826
  30 MAR 1988          111.12455          30 FEB 1992          112.87585
  30 APR 1988          112.03624          30 MAR 1992          113.52462
  30 MAY 1988          112.92193          30 APR 1992          114.15949
  30 JUN 1988          113.83156          30 MAY 1992          114.76960
  30 JUL 1988          110.33408          30 JUN 1992          115.39710
  30 AUG 1988          111.22450          30 JUL 1992          111.62095
  30 SEP 1988          112.11852          30 AUG 1992          112.22479
  30 OCT 1988          112.97559          30 SEP 1992          112.82939
  30 NOV 1988          113.85615          30 OCT 1992          113.40186
  30 DEC 1988          114.74020          30 NOV 1992          113.99113
  30 JAN 1989          111.21711          30 DEC 1992          114.58097
  30 FEB 1989          112.08135          30 JAN 1993          110.76709
  30 MAR 1989          112.94895          30 FEB 1993          111.33238
  30 APR 1989          113.80184          30 MAR 1993          111.89806
  30 MAY 1989          114.62675          30 APR 1993          112.44941
  30 JUN 1989          115.47466          30 MAY 1993          112.97597
  30 JUL 1989          111.91523          30 JUN 1993          113.51859
  30 AUG 1989          112.74245          30 JUL 1993          109.68773
  30 SEP 1989          113.57265          30 AUG 1993          110.22027
  30 OCT 1989          114.36596          30 SEP 1993          110.75290
  30 NOV 1989          115.18177          30 OCT 1993          111.28561
                                          30 NOV 1993
                                          30 DEC 1993



<PAGE>


                                   SCHEDULE 4
                                       to
                                      LEASE


                       SCHEDULE OF SPECIAL CASUALTY VALUES


  30 NOV 1993          111.81840        30 JAN 1998         96.86932
  30 DEC 1993          112.35127        30 FEB 1998         97.30108
  30 JAN 1994          108.51231        30 MAR 1998         97.73297
  30 FEB 1994          109.03561        30 APR 1998         98.16499
  30 MAR 1994          109.55900        30 MAY 1998         98.59715
  30 APR 1994          110.08248        30 JUN 1998         99.02943
  30 MAY 1994          110.60604        30 JUL 1998         95.08740
  30 JUN 1994          111.12969        30 AUG 1998         95.50515
  30 JUL 1994          107.28128        30 SEP 1998         95.92304
  30 AUG 1994          107.79490        30 OCT 1998         96.34107
  30 SEP 1994          108.30862        30 NOV 1998         96.75923
  30 OCT 1994          108.82242        30 DEC 1998         97.17753
  30 NOV 1994          109.33632        30 JAN 1999         93.24199
  30 DEC 1994          109.85031        30 FEB 1999         93.64041
  30 JAN 1995          105.99200        30 MAR 1999         94.04822
  30 FEB 1995          106.49549        30 APR 1999         94.45618
  30 MAR 1995          106.99907        30 MAY 1999         94.88336
  30 APR 1995          107.50275        30 JUN 1999         95.30138
  30 MAY 1995          108.00652        30 JUL 1999         91.36876
  30 JUN 1995          108.51040        30 AUG 1999         91.75200
  30 JUL 1995          104.64171        30 SEP 1999         92.15473
  30 AUG 1995          105.13459        30 OCT 1999         92.55760
  30 SEP 1995          105.62756        30 NOV 1999         92.96063
  30 OCT 1995          106.12063        30 DEC 1999         93.36381
  30 NOV 1995          106.61380        30 JAN 2000         89.41386
  30 DEC 1995          107.10708        30 FEB 2000         89.79616
  30 JAN 1996          103.22754        30 MAR 2000         90.18837
  30 FEB 1996          103.70929        30 APR 2000         90.58073
  30 MAR 1996          104.19115        30 MAY 2000         90.99331
  30 APR 1996          104.67311        30 JUN 2000         91.39628
  30 MAY 1996          105.15518        30 JUL 2000         87.44946
  30 JUN 1996          105.63736        30 AUG 2000         87.81585
  30 JUL 1996          101.74645        30 SEP 2000         88.20275
  30 AUG 1996          102.21656        30 OCT 2000         88.58982
  30 SEP 1996          102.68678        30 NOV 2000         88.97705
  30 OCT 1996          103.15711        30 DEC 2000         89.36446
  30 NOV 1996          103.62755        30 JAN 2001         85.39946
  30 DEC 1996          104.09811        30 FEB 2001         85.76492
  30 JAN 1997          100.19529        30 MAR 2001         86.14081
  30 FEB 1997          100.65320        30 APR 2001         86.51687
  30 MAR 1997          101.11123        30 MAY 2001         86.91421
  30 APR 1997          101.56938        30 JUN 2001         87.30144
  30 MAY 1997          102.02764        30 JUL 2001         83.33981
  30 JUN 1997          102.48602        30 AUG 2001         83.68859
  30 JUL 1997          98.57073         30 SEP 2001         84.05895
  30 AUG 1997          99.01587         30 OCT 2001         84.42950
  30 SEP 1997          99.46114         30 NOV 2001         84.80023
  30 OCT 1997          99.90652         30 DEC 2002         85.17115
  30 NOV 1997          100.35203        30 JAN 2002         81.19045
  30 DEC 1997          100.79767        30 FEB 2002         81.53831
  30 JAN 1998           96.86932




<PAGE>


                                   SCHEDULE 4
                                       to
                                      LEASE


                       SCHEDULE OF SPECIAL CASUALTY VALUES





  30 MAR 2002         81.89715           30 APR 2006           63.09828
  30 APR 2002         82.25618           30 MAY 2006           63.41309
  30 MAY 2002         82.63761           30 JUN 2006           63.71494
  30 JUN 2002         83.00841           30 JUL 2006           59.67209
  30 JUL 2002         79.03131           30 AUG 2006           59.90959
  30 AUG 2002         79.36168           30 SEP 2006           60.18114
  30 SEP 2002         79.71478           30 OCT 2006           60.48094
  30 OCT 2002         80.06807           30 NOV 2006           60.76741
  30 NOV 2002         80.42157           30 DEC 2006           61.05437
  30 DEC 2002         80.77528           30 JAN 2007           56.99607
  30 JAN 2003         76.77818           30 FEB 2007           57.22714
  30 FEB 2003         77.10766           30 MAR 2007           57.46705
  30 MAR 2003         77.44869           30 APR 2007           57.75958
  30 APR 2003         77.78994           30 MAY 2007           58.05516
  30 MAY 2003         78.15476           30 JUN 2007           58.33713
  30 JUN 2003         78.50841           30 JUL 2007           54.27558
  30 JUL 2003         74.51517           30 AUG 2007           54.46990
  30 AUG 2003         74.82632           30 SEP 2007           54.74005
  30 SEP 2003         75.16138           30 OCT 2007           55.01992
  30 OCT 2003         75.49667           30 NOV 2007           55.28580
  30 NOV 2003         75.83218           30 DEC 2007           55.55220
  30 DEC 2003         76.16792           30 JAN 2008           51.47450
  30 JAN 2004         72.15371           30 FEB 2008           51.68218
  30 FEB 2004         72.46399           30 MAR 2008           51.92020
  30 MAR 2004         72.78644           30 APR 2008           52.17150
  30 APR 2004         73.10912           30 MAY 2008           52.44706
  30 MAY 2004         73.45662           30 JUN 2008           52.70833
  30 JUN 2004         73.79237           30 JUL 2008           48.62731
  30 JUL 2004         69.78229           30 AUG 2008           48.81749
  30 AUG 2004         70.07337           30 SEP 2008           49.04536
  30 SEP 2004         70.38961           30 OCT 2008           49.30450
  30 OCT 2004         70.70610           30 NOV 2008           49.54894
  30 NOV 2004         71.02284           30 DEC 2008           49.79396
  30 DEC 2004         71.33983           30 JAN 2009           45.69606
  30 JAN 2005         67.30778           30 FEB 2009           45.87938
  30 FEB 2005         67.59802           30 MAR 2009           46.09461
  30 MAR 2005         67.90107           30 APR 2009           46.32383
  30 APR 2005         68.20439           30 MAY 2009           46.57857
  30 MAY 2005         68.53381           30 JUN 2009           46.81831
  30 JUN 2005         68.85090           30 JUL 2009           42.71705
  30 JUL 2005         64.82101           30 AUG 2009           42.88209
  30 AUG 2005         65.08662           30 SEP 2009           43.08677
  30 SEP 2005         65.37871           30 OCT 2009           43.32435
  30 OCT 2005         65.69764           30 NOV 2009           43.54650
  30 NOV 2005         66.00389           30 DEC 2009           43.76927
  30 DEC 2005         66.31059           30 JAN 2010           39.64990
  30 JAN 2006         62.27094           30 FEB 2010           39.81258
  30 FEB 2006         62.52446           30 MAR 2010           40.00605
  30 MAR 2006         62.80539           30 APR 2010           40.21428



<PAGE>


                                   SCHEDULE 4
                                       to
                                      LEASE


                       SCHEDULE OF SPECIAL CASUALTY VALUES




   30 MAY 2010         40.44946        30 JUN 2014          17.82200
   30 JUN 2010         40.66889        30 JUL 2014          13.69703
   30 JUL 2010         36.54160        30 AUG 2014          13.71950
   30 AUG 2010         36.75182        30 SEP 2014          13.84269
   30 SEP 2010         36.96306        30 OCT 2014          14.00862
   30 OCT 2010         37.21023        30 NOV 2014          14.15552
   30 NOV 2010         37.44141        30 DEC 2014          14.30390
   30 DEC 2010         37.67386        30 JAN 2015          14.45385
   30 JAN 2011         33.56106        30 FEB 2015          10.36392
   30 FEB 2011         33.78481
   30 MAR 2011         34.01011
   30 APR 2011         34.25218
   30 MAY 2011         34.52503
   30 JUN 2011         34.78171
   30 JUL 2011         30.69470
   30 AUG 2011         30.94344
   30 SEP 2011         31.19440
   30 OCT 2011         31.48591
   30 NOV 2011         31.76102
   30 DEC 2011         32.03866
   30 JAN 2012         27.97434
   30 FEB 2012         28.24479
   30 MAR 2012         28.51811
   30 APR 2012         28.81105
   30 MAY 2012         29.13901
   30 JUN 2012         29.45044
   30 JUL 2012         25.42895
   30 AUG 2012         25.66442
   30 SEP 2012         25.94466
   30 OCT 2012         26.26950
   30 NOV 2012         26.57742
   30 DEC 2012         26.88890
   30 JAN 2013         22.87848
   30 FEB 2013         23.01696
   30 MAR 2013         23.25765
   30 APR 2013         23.51922
   30 MAY 2013         23.81622
   30 JUN 2013         24.09586
   30 JUL 2013         20.05318
   30 AUG 2013         20.15899
   30 SEP 2013         20.36659
   30 OCT 2013         20.61801
   30 NOV 2013         20.85150
   30 DEC 2013         21.08759
   30 JAN 2014         17.00080
   30 FEB 2014         17.06193
   30 MAR 2014         17.22429
   30 APR 2014         17.40681
   30 MAY 2014         17.62360

<PAGE>

                                               Basic
                      Percentage               Rent               Percentage
   Payment            of Facility             Payment            of Facility
    Date                 Cost                 Date                  Cost
    ----                 ----                 ----                  ----

  7/15/1986           104.3596781            1/15/2010           39.5550496
  1/15/1987           106.1754379            7/15/2010           36.4594370
  7/15/1987           107.7101553            1/15/2011           33.4921851
  1/15/1988           108.9657244            7/15/2011           30.6397490
  7/15/1988           110.0316834            1/15/2012           27.9339567
  1/15/1989           110.9176260            7/15/2012           25.3966003
  7/15/1989           111.6187962            1/15/2013           22.8444777
  1/15/1990           112.1184324            7/15/2013           20.0174438
  7/15/1990           112.4105882            1/15/2014           16.9632363
  1/15/1991           112.4772241            7/15/2014           13.6575533
  7/15/1991           112.3241974            1/15/2015           10.0000000
  1/15/1992           111.9493769
  7/15/1992           111.3460882
  1/15/1993           110.4964402
  7/15/1993           110.6425629
  1/15/1994           112.0236126
  7/15/1994           113.8764128
  1/15/1995           115.0525952
  7/15/1995           113.4693583
  1/15/1996           110.9431956
  7/15/1996           108.0846369
  1/15/1997           105.3119231
  7/15/1997           102.1405505
  1/15/1998           99.0973640
  7/15/1998           95.6164637
  1/15/1999           93.3505577
  7/15/1999           91.9280492
  1/15/2000           89.5520069
  7/15/2000           88.0563043
  1/15/2001           85.5631951
  7/15/2001           83.9965897
  1/15/2002           81.3810284
  7/15/2002           79.7405323
  1/15/2003           76.9969225
  7/15/2003           75.2794608
  1/15/2004           72.4019905
  7/15/2004           70.6044053
  1/15/2005           67.5870427
  7/15/2005           64.6752385
  1/15/2006           62.1307583
  7/15/2006           59.5366188
  1/15/2007           56.8664297
  7/15/2007           54.1508341
  1/15/2008           51.3558306
  7/15/2008           48.5137414
  1/15/2009           45.5888287
  7/15/2009           42.6151122

<PAGE>
                                  EXHIBIT 28.1



<PAGE>



                                    EXHIBIT B


When Recorded, Return to:                            Gregg R. Neilsen
                                                     Snell & Wilmer
                                                     3100 Valley Bank Center
                                                     Phoenix, Arizona 85073


         CERTAIN  RIGHTS OF THE LESSOR  UNDER THE  FACILITY  LEASE AS AMENDED BY
THIS  AMENDMENT  NO. 1 THERETO  HAVE BEEN  ASSIGNED  TO,  AND ARE  SUBJECT  TO A
SECURITY INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE TRUSTEE UNDER A TRUST
INDENTURE,  MORTGAGE,  SECURITY  AGREEMENT  AND  ASSIGNMENT OF RENTS DATED AS OF
DECEMBER 16, 1985, AS AMENDED. THIS AMENDMENT NO. 1 HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS.  SEE  SECTION  3(f)  OF  THIS  AMENDMENT  NO.  1  FOR  INFORMATION
CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF.

THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 AMENDMENT NO. 1
                            Dated as of July 15, 1986

                                       to

                                 FACILITY LEASE
                          Dated as of December 16, 1985

                                     between

                        THE FIRST NATIONAL BANK OF BOSTON
                         not in its individual capacity,
                        but solely as Owner Trustee under
                         a Trust Agreement, dated as of
                         December 16, 1985, with Burnham
                               Leasing Corporation

                                     Lessor

                                       and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

               Original Facility Lease recorded December 31, 1985,
               as Instrument No. 85-623268, re-recorded April 17,
               1986, as Instrument No. 86-187558 and confirmed by
                 document recorded April 25, 1986, as Instrument
              No. 86-203239, in Maricopa County, Arizona Recorder's
                                     Office.

================================================================================



<PAGE>



                  AMENDMENT NO. 1 dated as of July 15, 1986  (Amendment  No. 1),
to the Facility Lease dated as of December 16, 1985,  between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association,  not in its individual capacity,
but solely as Owner  Trustee under a Trust  Agreement,  dated as of December 16,
1985, with Burnham Leasing Corporation (the Lessor),  and PUBLIC SERVICE COMPANY
OF NEW MEXICO, a New Mexico corporation (the Lessee).

                              W I T N E S S E T H :

                  WHEREAS,  the Lessee and the Lessor  have  heretofore  entered
into a Facility  Lease  dated as of  December  16,  1985 (the  Facility  Lease),
providing  for the lease by the Lessor to the Lessee of the  Undivided  Interest
and the Real Property Interest;

                  WHEREAS,  Section 3(e) of the Facility  Lease  provides for an
adjustment  to Basic  Rent and to the  schedules  of  Casualty  Values,  Special
Casualty Values and Termination Values in the event, among other things, that
the Fixed Rate Note is issued; and

                  WHEREAS,  the Fixed Rate Notes are being  issued  pursuant  to
Supplemental Indenture No. 1, dated as of July 15, 1986, to the Indenture;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  SECTION 1.  Definitions.

                  For  purposes  hereof,  capitalized  terms used herein and not
otherwise  defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A and Schedule 1 to the Facility Lease.

                  SECTION 2.  Amendments.

                  (a) Section  3(a)(ii) of the Facility Lease is amended to read
in its entirety as follows:

         "(ii)  (1) on July  15,  1986 an  amount  equal  to  4.3683233%  of the
Facility Cost and (2) on January 15, 1987 and on each Basic Rent


                                     - 1 -

<PAGE>



Payment Date  thereafter to and  including  January 15, 2015, an amount equal to
4.57322% of Facility Cost; and".

                  (b) Section 10(a) of the Facility  Lease is amended to read in
its entirety as follows:

         "(a) Required Insurance.  The Lessee will use its best efforts to cause
the  Operating  Agent to carry and maintain  insurance  required  under the ANPP
Participation  Agreement and will make all payments required of the Lessee under
the ANPP Participation  Agreement in respect of such insurance.  The Lessee will
at all times  maintain,  directly or through the  Operating  Agent,  policies of
casualty and liability  insurance with respect to the Undivided Interest and the
Real  Property  Interest  in such  amounts  and with such  coverage  as shall be
adequate in accordance with prudent utility practice.  Any policies of insurance
in  respect  of  destruction,  damage,  loss,  theft  or other  casualty  to the
Undivided Interest, the Real Property Interest, Unit 1 or any part thereof shall
name the Lessor  (and,  to the extent  practicable,  the Owner  Participant)  as
additional  insured,  as its interest (or their  interests) may appear,  and any
policies  with  respect  to  nuclear  liability  insurance  with  respect to the
Undivided  Interest,  the Real Property  Interest,  Unit 1, or any part thereof,
shall include all  Indemnities as "insureds" or through  endorsement;  provided,
however,  that if the Operating  Agent, as trustee,  shall become the loss payee
under any policy of insurance  constituting  Project Insurance,  then the Lessor
and the  Owner  Participant  shall  be and be made  beneficiaries  of the  trust
arrangement  under which the Operating Agent acts as trustee.  The Lessee shall,


                                     - 2 -

<PAGE>



on or before  March 1 of each year,  commencing  March 1,  1987,  furnish to the
Lessor and the Owner  Participant  (A) a report  signed by the broker or brokers
for the PVNGS  insurance  (or if insurance is placed  directly by the  Operating
Agent,  a certificate  signed by the Operating  Agent) (i) showing the insurance
then  maintained by the ANPP  Participants  with respect to PVNGS,  (ii) stating
that no premiums  are then  delinquent,  and (iii)  stating  that the  insurance
maintained by the ANPP  Participants with respect to PVNGS is in accordance with
the terms of (1) the ANPP Participation Agreement and (2) this Section 10, (B) a
report  signed by the  broker  or  brokers  for the  Lessee's  insurance  (of if
insurance is placed directly by the Lessee, a certificate  signed by the Lessee)
showing the  separate  insurance,  if any,  then  maintained  by the Lessee with
respect  to its  interest  in PVNGS  and  stating  that no  premium  under  such
insurance are  delinquent;  (C) a certificate  signed by the Lessee stating that
the insurance maintained by the ANPP Participants and by the Lessee,  identified
on the reports to be delivered pursuant to clauses (A) and (B), is in accordance
with  prudent   utility   practice  within  the  nuclear   industry,   the  ANPP
Participation  Agreement  and this  Section  10; and (D) upon the request of the
Lessor or the Owner Participant,  copies (to the extent permitted by the issuers
of such policies) of policies so maintained.  Any report by an insurance  broker
with  respect  to clause  (A)(iii)(1)  may be made in  reliance  upon a schedule
provided  by the  Lessee (a copy of which  shall be  attached)  identifying  the
insurance (by coverage,  limits,  insureds and other pertinent details) required
to be maintained under the ANPP Participation Agreement. Any report with respect
to clause (A)(ii)(2) may be made in reliance upon a similar schedule provided by


                                     - 3 -

<PAGE>



the  Lessee  (a copy of  which  shall be  attached)  identifying  the  insurance
required to be maintained under this Section 10. All insurance  proceeds paid in
respect of damage,  destruction,  loss, theft or other casualty to the Undivided
Interest or the Real Property  Interest  shall be applied as provided in Section
9(g),  (h) or  (i),  as the  case  may be,  subject,  however,  to any  priority
allocations of such proceeds to decontamination  and debris removal set forth in
the  insurance  policies or  required  under  Applicable  Law. In the event that
either the  Operating  Agent or the Lessee  delivers a  certificate  pursuant to
clause (A) or (B) of the foregoing,  the Owner  Participant shall be entitled to
receive (if it so requests and if the insurer will issue the same) a report from
any insurer listed in such certificate."

                  (c) Section  16(a)(v) of the Facility  Lease is hereby amended
to insert the words "may, if it shall so elect in its sole  discretion," in lieu
of the word  "shall" in the  parenthetical  phrase first  preceding  clause A of
Section 16(a)(v).

                  (d)  Schedule 3 to the  Facility  Lease  (Schedule of Casualty
Values) is hereby replaced with Schedule 1 hereto.

                  (e)  Schedule 4 to the  Facility  Lease  (Schedule  of Special
Casualty Values) is hereby replaced with Schedule 2 hereto.

                  (f) Schedule 5 to the Facility Lease  (Schedule of Termination
Values) is hereby replaced with Schedule 3 hereto.

                  (g) Schedule 2 to the Facility  Lease (Basic Rent  Percentage)
is hereby deleted in its entirety.



                                      - 4 -

<PAGE>


                  SECTION 3. Miscellaneous.

                  (a) Partial  Prepayment of Rent.  In accordance  with the last
sentence of Section 3(a) of the Facility  Lease,  the Lessee shall pay an amount
equal to  $42,191.78  on July 17,  1986,  such  amount  (i)  being  equal to the
interest  payment  due on the  Initial  Series  Note on such date and (ii) to be
credited against Basic Rent due on January 15, 1987.

                  (b) Effective Date of  Amendments.  The amend- ments set forth
in Section 2 hereof shall be and become  effective upon the execution  hereof by
the parties hereto.

                  (c)  Counterpart  Execution.  This  Amendment  No.  1  may  be
executed  in any number of  counterparts  and by each of the  parties  hereto on
separate  counterparts;  all such counterparts shall together constitute but one
and the same instrument.

                  (d) Governing  Law. This  Amendment No. 1 has been  negotiated
and  delivered  in the  State of New  York and  shall  be  governed  by,  and be
construed in accordance  with, the laws of the State of New York,  except to the
extent that pursuant to the law of the State of Arizona such law is  mandatorily
applicable hereto.

                  (e) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401, the beneficiary of the Trust Agreement is Burnham Leasing Corporation, a
Delaware  corporation.  The address of the  beneficiary is 60 Broad Street,  New
York, New York 10004,  Attention:  Chief Financial  Officer. A copy of the Trust
Agreement is available for inspection at the offices of the Owner Trustee at 100
Federal  Street,  Boston,  Massachusetts  02110,  Attention of  Corporate  Trust
Division.

                  (f)  Amendment No. 1. The single  executed  orig- inal of this
Amendment  No. 1 marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"


                                      - 5 -

<PAGE>



of this  Amendment  No. 1. To the extent that this  Amendment  No. 1 constitutes
chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any applicable  jurisdiction,  no security  interest in this Amendment
No. 1 may be created or  continued  through the  transfer or  possession  of any
counterpart other than the "Original".

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to Facility  Lease to be duly executed in New York,  New York by
an officer thereunto duly authorized.

                                    THE FIRST  NATIONAL  BANK OF BOSTON,  not in
                                        its individual  capacity,  but solely as
                                        Owner Trustee  under a Trust  Agreement,
                                        dated  as of  December  16,  1985,  with
                                        Burnham Leasing Corporation

                                    By:      _______________________________
                                                     Authorized Officer



                                    PUBLIC SERVICE COMPANY OF NEW
                                        MEXICO,



                                    By:     _______________________________
                                            Vice President and Corporate
                                                     Controller


                                      - 6 -

<PAGE>



State of New York                   )
                                    )   ss.
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 16th
day of July, by B. D. LACKEY,  the Vice  President  and Corporate  Controller of
PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on behalf of the
corporation.



                                  -------------------------------
                                  Notary Public



State of New York                   )
                                    ) ss.
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 16th
day of July,  by  _____________________,  an  Authorized  Officer  of THE  FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Burnham Leasing Corporation.



                                  -------------------------------
                                  Notary Public




<PAGE>



                                    SCHEDULE
                                       to
                                 AMENDMENT NO. 1




      Basic                                     Basic
      Rent              Percentage               Rent             Percentage
     Payment           of Facility             Payment            of Facility
      Date                Cost                   Date                Cost
      ----                ----                   ----                ----

    7/15/1986          106.6269350            7/15/2005           72.4819062
    1/15/1987          108.4620154            1/15/2006           70.1272653
    7/15/1987          110.0191648            7/15/2006           67.7223143
    1/15/1988          111.3308106            1/15/2007           65.2424137
    7/15/1988          112.4699820            7/15/2007           62.7159973
    1/15/1989          113.4394230            1/15/2008           60.1110508
    7/15/1989          114.2371946            7/15/2008           57.4576292
    1/15/1990          114.8476467            1/15/2009           54.7218716
    7/15/1990          115.2657844            7/15/2009           51.9355999
    1/15/1991          115.4747706            1/15/2010           49.0630858
    7/15/1991          115.4811581            7/15/2010           46.1380045
    1/15/1992          115.2837367            1/15/2011           43.1255891
    7/15/1992          114.8727613            7/15/2011           40.2351879
    1/15/1993          114.2315094            1/15/2012           37.4545358
    7/15/1993          113.3518165            7/15/2012           34.8021269
    1/15/1994          114.2544464            1/15/2013           32.3125759
    7/15/1994          116.2447321            7/15/2013           29.6407060
    1/15/1995          117.5625418            1/15/2014           26.7123360
    7/15/1995          116.1352724            7/15/2014           23.5329689
    1/15/1996          113.7700741            1/15/2015           20.00000000
    7/15/1996          111.0905234
    1/15/1997          108.5017094
    7/15/1997          105.5182863
    1/15/1998          102.6512304
    7/15/1998          100.7617481
    1/15/1999           98.6890884
    7/15/1999           97.4270097
    1/15/2000           95.2439805
    7/15/2000           93.9169144
    1/15/2001           91.6175245
    7/15/2001           90.2230831
    1/15/2002           87.8022117
    7/15/2002           86.3380175
    1/15/2003           83.7888657
    7/15/2003           82.2508222
    1/15/2004           79.5667924
    7/15/2004           77.9527950
    1/15/2005           75.1293462




<PAGE>



                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 1




  Basic                                        Basic
   Rent               Percentage                Rent               Percentage
 Payment             of Facility              Payment              of Facility
   Date                  Cost                   Date                  Cost
   ----                  ----                   ----                  ----

  12/30/1985           103.0588289             5/30/1989           116.4477567
   1/30/1986           103.7923344             6/30/1989           117.3018730
   2/30/1986           104.8971263             7/30/1989           113.6020990
   3/30/1986           105.9917542             8/30/1989           114.4759270
   4/30/1986           107.0426922             9/30/1989           115.3137944
   5/30/1986           108.1278120            10/30/1989           116.1738092
   6/30/1086           109.1610390            11/30/1989           117.0367257
   7/30/1986           106.4046445            12/30/1989           117.8635975
   8/30/1086           107.4943009             1/30/1990           114.1360496
   9/30/1986           108.5322101             2/30/1990           114.9817059
  10/30/1986           109.6035084
  11/30/1986           110.6800137
  12/30/1986           111.7037517
   1/30/1987           108.1973982
   2/30/1987           109.2430627
   3/30/1987           110.2680052
   4/30/1987           111.2613874
   5/30/1987           112.2835284
   6/30/1987           113.2612975
   7/30/1987           109.6713452
   8/30/1987           110.6691026
   9/30/1987           111.6223008
  10/30/1987           112,6037248
  11/30/1987           113.5892757
  12/30/1987           114.5301317
   1/30/1988           110.9230965
   2/30/1988           111.8909093
   3/30/1988           112.8409945
   4/30/1988           113.7658191
   5/30/1988           114.7141103
   6/30/1988           115.6262660
   7/30/1988           111.9856774
   8/30/1988           112.9194747
   9/30/1988           113.8172844
  10/30/1988           114.7381525
  11/30/1988           115.6625315
  12/30/1988           116.5508531
   1/30/1989           112.8859043
   2/30/1989           113.7950233
   3/30/1989           114.6898951
   4/30/1989           115.5575279



<PAGE>



                   PUBLIC SERVICE COMPANY OF NEW MEXICO UNIT 1



  Basic                    Basic                        Basic
   Rent     Percentage      Rent     Percentage         Rent       Percentage
 Payment   of Facility    Payment     Facility         Payment     of Facility
   Date        Cost         Date         Cost           Date          Cost
   ----        ----         ----         ----           ----          ----

12/30/2002  84.1549965   3/30/2007    60.8010191      6/30/2011     37.2438571
1/30/2002   80.2852074   4/30/2007    61.1255136      7/30/2011     32.9061843
2/30/2003   80.6651963   5/30/2007    61.4365804      8/30/2011     33.1276222
3/30/2003   80.7182764   6/30/2007    61.7764532      9/30/2011     33.3880555
4/30/2003   81.1219511   7/30/2007    57.4524084      10/30/2011    33.6315938
5/30/2003   81.5148273   8/30/2007    57.7307275      11/30/2011    33.8768170
6/30/2003   81.9306252   9/30/2007    58.0382460      12/30/2011    34.1616107
7/30/2002   78.5870581   10/30/2007   58.3319272      1/30/2012     29.8377510
8/30/2003   78.9602796   11/30/2007   58.6260648      2/30/2012     30.0727675
9/30/2003   78.4586946   12/30/2007   58.9497026      3/30/2012     30.3261358
10/30/2003  78.8331087   1/30/2008    54.6183102      4/30/2012     30.6131522
11/30/2003  79.2077209   2/30/2008    54.8827187      5/30/2012     30.8829984
12/30/2003  79.6055938   3/30/2008    55.1601300      6/30/2012     31.1950184
1/30/2004   75.7324981   4/30/2008    55.4614318      7/30/2012     26.8972285
2/30/2004   76.0917968   5/30/2008    55.7485590      8/30/2012     27.1582177
3/30/2004   76.1066169   6/30/2008    56.0661201      9/30/2012     27.4635357
4/30/2004   76.4909708   7/30/2008    51.7146639      10/30/2012    27.7513591
5/30/2004   76.8639177   8/30/2008    51.9672357      11/30/2012    28.0422598
6/30/2004   77.2610948   9/30/2008    52.2506558      12/30/2012    28.3781693
7/30/2004   73.9447211   10/30/2008   52.5194695      1/30/2013     23.9710573
8/30/2004   74.2969169   11/30/2008   52.7887736      2/30/2013     24.2071394
9/30/2004   73.7250314   12/30/2008   53.0892439      3/30/2013     24.4638829
10/30/2004  74.0785035   1/30/2009    48.7301015      4/30/2013     24.7568327
11/30/2004  74.4321905   2/30/2009    48.9680452      5/30/2013     25.0318253
12/30/2004  74.8104651   3/30/2009    49.2197313      6/30/2013     25.3523356
1/30/2005   70.9362855   4/30/2009    49.4966581      7/30/2013     20.8753173
2/30/2005   71.2738234   5/30/2009    49.7586230      8/30/2013     21.0756993
3/30/2005   71.2459504   6/30/2009    50.0527397      9/30/2013     21.3207056
4/30/2005   71.6099603   7/30/2009    45.6724792      10/30/2013    21.5471233
5/30/2005   71.9619216   8/30/2009    45.8979902      11/30/2013    21.7759750
6/30/2005   72.3394936   9/30/2009    46.1560906      12/30/2013    22.0497917
7/30/2005   68.0730056   10/30/2009   46.3987735      1/30/2014     17.5254847
8/30/2005   68.3991238   11/30/2009   46.6419836      2/30/2014     17.6779874
9/30/2005   68.7513806   12/30/2009   46.9181187      3/30/2014     17.8508931
10/30/2005  69.0912309   1/30/2010    42.5298259      4/30/2014     18.0586319
11/30/2005  69.4314766   2/30/2010    42.7399638      5/30/2014     18.2473113
12/30/2005  69.7981485   3/30/2010    42.9646252      6/30/2014     18.4804514
1/30/2006   65.5182775   4/30/2010    43.2159533      7/30/2014     13.9149576
2/30/2006   65.8318202   5/30/2010    43.4514896      8/30/2014     14.0257567
3/30/2006   66.1569719   6/30/2010    43.7209919      9/30/2014     14.1800593
4/30/2006   66.5035386   7/30/2010    39.3115246      10/30/2014    14.3146384
5/30/2006   66.8373860   8/30/2010    39.5089879      11/30/2014    14.4505026
6/30/2006   67.1984976   9/30/2010    39.7408968      1/15/2015     10.00000000
7/30/2006   62.9005129   10/30/2010   39.9565359
8/30/2006   63.2033238   11/30/2010   40.1727495
9/30/2006   63.5337717   12/30/2010   40.4237658
10/30/2006  63.8511120   1/30/2011    36.0685335
11/30/2006  64.1688770   2/30/2011    36.2725758
12/30/2006  64.5145639   3/30/2011    36.4924178
1/30/2007   60.2095553   4/30/2011    36.7415607
2/30/2007   60.4991358   5/30/2011    36.9741664



<PAGE>



                   PUBLIC SERVICE COMPANY OF NEW MEXICO UNIT 1




    Basic                      Basic                       Basic
    Rent       Percentage      Rent        Percentage      Rent      Percentage
   Payment     of Facility    Payment     of Facility     Payment    of Facility
    Date          Cost         Date           Cost         Date         Cost
    ----          ----         ----           ----         ----         ----

  3/30/1990    115.8127529   6/30/1994    118.7185007    9/30/1998   98.7191253
  4/30/1990    116.6164370   7/30/1994    114.7053342   10/30/1998   99.1836346
  5/30/1990    117.4417493   8/30/1994    115.2593247   11/30/1998   99.6482756
  6/30/1990    118.2309505   9/30/1994    117.0587606   12/30/1998   100.1305252
  7/30/1990    114.4650598  10/30/1994    117.6129279    1/30/1999   96.2683714
  8/30/1990    115.2718567  11/30/1994    118.1671845    2/30/1999   96.7212981
  9/30/1990    116.0426987  12/30/1994    119.9634413    3/30/1999   96.9133184
 10/30/1990    116.8346756   1/30/1995    115.9405816    4/30/1999   97.3851756
 11/30/1990    117.6288686   2/30/1995    116.4850345    5/30/1999   97.8483679
 12/30/1990    118.3870062   3/30/1995    117.5872129    6/30/1999   98.3299062
  1/30/1991    114.5894174   4/30/1995    117.7524901    7/30/1999   94.8909132
  2/30/1991    115.3640914   5/30/1995    118.2972203    8/30/1999   95.3382772
  3/30/1991    116.1237373   6/30/1995    118.4608819    9/30/1999   95.0840806
  4/30/1991    116.8602001   7/30/1995    114.4272433   10/30/1999   95.5323608
  5/30/1991    117.6150972   8/30/1995    114.9617173   11/30/1999   95.9807840
  6/30/1991    118.3382255   9/30/1995    114.9557537   12/30/1999   96.4478272
  7/30/1991    114.5027974  10/30/1995    115.4904197    1/30/2000   92.5846993
  8/30/1991    115.2391186  11/30/1995    116.0251828    2/30/2000   93.0207655
  9/30/1991    115.9438590  12/30/1995    116.0157395    3/30/2000   93.1798883
 10/30/1991    116.6665461   1/30/1996    111.9723237    4/30/2000   93.6359865
 11/30/1991    117.3907609   2/30/1996    112.4963634    5/30/2000   94.0829283
 12/30/1991    118.0833047   3/30/1996    112.8154630    6/30/2000   94.5492687
  1/30/1992    114.2162646   4/30/1996    112.7730131    7/30/2000   91.1324130
  2/30/1992    114.9202294   5/30/1996    113.2973541    8/30/2000   91.5626405
  3/30/1992    115.6107262   6/30/1996    113.2531361    9/30/2000   91.2511704
  4/30/1992    116.2770454   7/30/1996    109.1992437   10/30/2000   91.6823733
  5/30/1992    116.9607136   8/30/1996    109.7123720   11/30/2000   92.1137312
  6/30/1992    117.6127239   9/30/1996    109.6335828   12/30/2000   92.5647764
  7/30/1992    113.7043410  10/30/1996    110.1469197    1/30/2001   88.6994113
  8/30/1992    114.3663954  11/30/1996    110.6603621    2/30/2001   89.1177331
  9/30/1992    114.9970243  12/30/1996    110.5777674    3/30/2001   89.2434354
 10/30/1992    115.6444469   1/30/1997    106.5121035    4/30/2001   89.6829422
 11/30/1992    116.2926665   2/30/1997    107.0122704    5/30/2001   90.1127742
 12/30/1992    116.9093610   3/30/1997    107.2543773    6/30/2001   90.5631159
  1/30/1993    112.9649228   4/30/1997    107.1309959    7/30/2001   87.1690624
  2/30/1993    113.5903921   5/30/1997    107.6314901    8/30/2001   87.5812494
  3/30/1993    114.2020066   6/30/1997    107.5058970    9/30/2001   87.2100140
  4/30/1993    114.7894113   7/30/1997    103.4261335   10/30/2001   87.6232475
  5/30/1993    115.3929380   8/30/1997    103.9126619   11/30/2001   88.0366492
  6/30/1993    115.9649496   9/30/1997    103.7441158   12/30/2001   88.4708653
  7/30/1993    111.9749265  10/30/1997    104.2308709    1/30/2002   84.6032660
  8/30/1993    112.5541938  11/30/1997    104.7177404    2/30/2002   85.0029110
  9/30/1993    113.7975464  12/30/1997    104.5444217    3/30/2002   85.0933045
 10/30/1993    114.3695393   1/30/1998    100.4521334    4/30/2002   85.5153514
 11/30/1993    114.9416143   2/30/1998    100.9243217    5/30/2002   85.9271766
 12/30/1993    116.7990391   3/30/1998    101.1115772    6/30/2002   86.3606848
  1/30/1994    112.7942485   4/30/1998    100.9416046    7/30/2002   82.9915632
  2/30/1994    113.3573574   5/30/1998    101.4147395    8/30/2002   83.3847667
  3/30/1994    114.4969708   6/30/1998    101.9049255    9/30/2002   82.9496808
  4/30/1994    116.3267919   7/30/1998     98.4546107   10/30/2002   83.3439963
  5/30/1994    116.8901562   8/30/1998     98.9182646   11/30/2002   83.7384943




<PAGE>


                                   SCHEDULE 3
                                       to
                                 AMENDMENT NO. 1


                         SCHEDULE OF TERMINATION VALUES



Basic                                  Basic
Rent              Percentage            Rent              Percentage
Payment          of Facility          Payment             of Facility
Date                 Cost               Date                 Cost
----                 ----               ----                 ----

7/15/1986        105.6802338         7/15/2005            67.9242911
1/15/1987        107.4753404         1/15/2006            65.3772083
7/15/1987        108.9908282         7/15/2006            62.7716897
1/15/1988        110.2590532         1/15/2007            60.0827526
7/15/1988        111.3529705         7/15/2007            57.3384734
1/15/1989        112.2752465         1/15/2008            54.5064650
7/15/1989        113.0238617         7/15/2008            51.6163938
1/15/1990        113.5830816         1/15/2009            48.6339944
7/15/1990        113.9478241         7/15/2009            45.5906667
1/15/1991        114.1011603         1/15/2010            42.4502425
7/15/1991        114.0495482         7/15/2010            39.2459388
1/15/1992        113.7916781         1/15/2011            35.9425111
7/15/1992        113.3177017         7/15/2011            32.7488097
1/15/1993        112.6107885         1/15/2012            29.6520508
7/15/1993        111.6626619         7/15/2012            26.6701878
1/15/1994        112.4939685         1/15/2013            23.8372717
7/15/1994        114.4099193         7/15/2013            20.8075384
1/15/1995        115.6502554         1/15/2014            17.5061945
7/15/1995        114.1422412         7/15/2014            13.9381049
1/15/1996        111.6928886         1/15/2015           10.00000000
7/15/1996        108.9256303
1/15/1997        106.2454052
7/15/1997        103.1667114
7/15/1998        100.2003619
1/15/1998         98.2073936
7/15/1999         96.0268782
1/15/1999         94.6523896
7/15/2000         92.3522041
1/15/2000         90.9030350
7/15/2001         88.4763863
1/15/2001         86.9493125
7/15/2002         84.3902087
1/15/2002         82.7819452
7/15/2003         80.0826409
1/15/2003         78.3881048
7/15/2004         75.5409746
1/15/2004         73.7569900
7/15/2005         70.7563765
<PAGE>

                                  EXHIBIT 28.1



<PAGE>



When Recorded, Return to:                            Gregg R. Neilsen
                                                     Snell & Wilmer
                                                     3100 Valley Bank Center
                                                     Phoenix, Arizona 85073


         CERTAIN  RIGHTS OF THE LESSOR  UNDER THE FACILITY  LEASE AS  HERETOFORE
AMENDED AND AS AMENDED BY THIS  AMENDMENT  NO. 2 THERETO HAVE BEEN  ASSIGNED TO,
AND ARE SUBJECT TO A SECURITY  INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE
TRUSTEE UNDER A TRUST INDENTURE,  MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS DATED AS OF DECEMBER 16, 1985, AS AMENDED.  THIS  AMENDMENT NO. 2 HAS BEEN
EXECUTED IN SEVERAL  COUNTERPARTS.  SEE SECTION 3(e) OF THIS AMENDMENT NO. 2 FOR
INFORMATION  CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS COUNTERPARTS HEREOF AND
OF THE FACILITY LEASE.

THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 AMENDMENT NO. 2
                          Dated as of November 18, 1986

                                       to

                                 FACILITY LEASE
                    Dated as of December 16, 1985, as amended

                                     between

                        THE FIRST NATIONAL BANK OF BOSTON
                         not in its individual capacity,
                        but solely as Owner Trustee under
                         a Trust Agreement, dated as of
                         December 16, 1985, with Burnham
                               Leasing Corporation

                                     Lessor

                                       and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

               Original Facility Lease recorded December 31, 1985,
               as Instrument No. 85-623268, re-recorded April 17,
              1986, as Instrument No. 86-187558 confirmed by docu-
                 ment recorded April 25, 1986, as Instrument No.
                86-203239, and amended by Amendment No. 1 thereto
              recorded July 17, 1986, as Instrument No. 86-367462,
                 in Maricopa County, Arizona Recorder's Office.

================================================================================


6091.BURNHAMU1.DEBT.71:1

<PAGE>



                  AMENDMENT NO. 2 dated as of November 18, 1986  (Amendment  No.
2), to the Facility  Lease dated as of December 16, 1985, as heretofore  amended
between THE FIRST NATIONAL BANK OF BOSTON, a national banking  association,  not
in its individual capacity, but solely as Owner Trustee under a Trust Agreement,
dated as of December 16, 1985,  with Burnham Leasing  Corporation  (the Lessor),
and PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).

                              W I T N E S S E T H :

                  WHEREAS,  the Lessee and the Lessor  have  heretofore  entered
into a Facility  Lease dated as of December 16, 1985 as heretofore  amended (the
Facility  Lease),  providing  for the lease by the  Lessor to the  Lessee of the
Undivided Interest and the Real Property Interest;

                  WHEREAS,  Section 3(e) of the Facility  Lease  provides for an
adjustment  to Basic  Rent and to the  schedules  of  Casualty  Values,  Special
Casualty Values and Termination Values in the event, among other things,  that a
Releveraging Note is issued; and

                  WHEREAS,  a  Releveraging  Note is being  issued  pursuant  to
Supplemental Indenture No. 2 dated as of November 18, 1986, to the Indenture;

                  WHEREAS,  Section 3(d) of the Facility  Lease  provides for an
adjustment  to Basic  Rent and to the  schedules  of  Casualty  Values,  Special
Casualty Values and Termination Values in the event of a Change in Tax Law;

                  WHEREAS, a Change in Tax Law has occurred; and

                  WHEREAS,  pursuant  to  Amendment  No. 2 to the  Participation
Agreement and the Indenture, the Trustee has consented to this Amendment No. 2;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



6091.BURNHAMU1.DEBT.71:1
                                      - 1 -

<PAGE>



                  SECTION 1.  Definitions.

                  For  purposes  hereof,  capitalized  terms used herein and not
otherwise  defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.

                  SECTION 2.  Amendments.

                  (a) Section  3(a)(ii) of the Facility Lease is amended to read
in its entirety as follows:

                  "(ii) (1) on July 15, 1986 an amount  equal to  4.3683233%  of
         Facility  Cost  and (2) on  January  15,  1987 and on each  Basic  Rent
         Payment Date  thereafter to and  including  January 15, 2015, an amount
         equal to 4.70354% of Facility Cost; and".

                  (b) Section  3(e)(iii) of the Facility Lease is hereby amended
to replace "1.1% of the Purchase Price" with "1.7% of the Purchase Price".

                  (c) Section  3(e)(iv) of the Facility  Lease is hereby amended
(x) to  insert  "(except  for a change  in items  4, 5, 8 (as to the  basis  for
amortization of Transaction Expenses) 15, 16 and 18 that arises from a change in
tax law;  provided,  however,  that this  exception will not limit the effect of
Section 3(d) hereof)" immediately  following the word "change" and (y) to insert
the  phrase  "Current  Pricing  Assumptions"  in  lieu  of the  phrase  "pricing
assumptions set forth in Schedule 2 to the Participation Agreement".

                  (d) Section  3(e) of the Facility  Lease is hereby  amended to
insert  at  the  end  thereof  the  following  new  sentence:  "Current  Pricing
Assumptions shall mean the assumptions attached to the letter from the Lessee to
the Owner  Participant  dated  November 25, 1986, as such letter may be replaced
from time to time with the consent of the Owner Participant."

                  (e)  Schedule  1 to  Amendment  No.  1 to the  Facility  Lease
(Schedule of Casualty Values), is hereby replaced with Schedule 1 hereto.

                  (f)  Schedule  2 to  Amendment  No.  1 to the  Facility  Lease
(Schedule  of Special  Casualty  Values),  is hereby  replaced  with  Schedule 2
hereto.



6091.BURNHAMU1.DEBT.71:1
                                      - 2 -

<PAGE>



                  (g)  Schedule  3 to  Amendment  No.  1 to the  Facility  Lease
(Schedule of Termination Values), is hereby replaced with Schedule 3 hereto.

                  SECTION 3. Miscellaneous.

                  (a) Effective Date of  Amendments.  The amend- ments set forth
in Section 2 hereof shall be and become  effective upon the execution  hereof by
the parties hereto.

                  (b)  Counterpart  Execution.  This  Amendment  No.  2  may  be
executed  in any number of  counterparts  and by each of the  parties  hereto on
separate  counterparts;  all such counterparts shall together constitute but one
and the same instrument.

                  (c) Governing  Law. This  Amendment No. 2 has been  negotiated
and  delivered  in the  State of New  York and  shall  be  governed  by,  and be
construed in accordance  with, the laws of the State of New York,  except to the
extent that pursuant to the law of the State of Arizona such law is  mandatorily
applicable hereto.

                  (d) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401, the beneficiary of the Trust Agreement is Burnham Leasing Corporation, a
New York  corporation.  The address of the  beneficiary is 60 Broad Street,  New
York,  New York  10004,  Attention:  Assistant  Treasurer.  A copy of the  Trust
Agreement is available for inspection at the offices of the Owner Trustee at 100
Federal  Street,  Boston,  Massachusetts  02110,  Attention of  Corporate  Trust
Division.

                  (e)  Amendment No. 2. The single  executed  orig- inal of this
Amendment  No. 2 marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"
of this  Amendment  No. 2. To the extent  that the  Facility  Lease  constitutes
chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any  applicable  jurisdiction,  no security  interest in the  Facility
Lease as amended by this Amendment No. 2 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 2 other than the
"Original".

                  (f) The Facility Lease.  The Facility Lease, as amended,  is a
lease of the property described in and conveyed to the Lessor by (i) the Deed

6091.BURNHAMU1.DEBT.71:1
                                      - 3 -

<PAGE>



and Bill of Sale recorded  December 31, 1985 as Instrument No.  85-623265,  (ii)
the Deed recorded December 31, 1985 as Instrument No.  85-623266,  and (iii) the
Deed an Assignment of Beneficial  Interest  dated December 31, 1985 with respect
to Title USA Company of Arizona  Trust No. 530 (as  reflected  in  Affidavit  of
Trustee  recorded  December 31, 1985 as Instrument  No.  85-623286),  all in the
records of Maricopa County  Recorder's  Office,  the legal  descriptions of such
property  being  incorporated  herein by this  reference,  which property is the
Undivided Interest and the Real Property Interest subject to the Facility Lease.


6091.BURNHAMU1.DEBT.71:1
                                      - 4 -

<PAGE>



                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 2 to Facility  Lease to be duly executed in New York,  New York by
an officer thereunto duly authorized.

                                    THE FIRST  NATIONAL  BANK OF BOSTON,  not in
                                        its individual  capacity,  but solely as
                                        Owner Trustee  under a Trust  Agreement,
                                        dated  as of  December  16,  1985,  with
                                        Burnham Leasing Corporation

                                    By:     /S/
                                          Authorized Officer



                                    PUBLIC SERVICE COMPANY OF NEW
                                        MEXICO,



                                    By:     _______________________________
                                                         B.D. Lackey
                                                     Vice President and
                                                     Corporate Controller


6091.BURNHAMU1.DEBT.71:1
                                      - 5 -

<PAGE>



State of New York                   )
                                    )   ss.
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 24th
day of  November,  1986,  by B.D.  LACKEY,  the  Vice  President  and  Corporate
Controller of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation, on
behalf of the corporation.



                                            /S/ Delia T. Santiago
                                               Notary Public



State of New York                   )
                                    ) ss.
County of New York                  )



                  The foregoing  instrument was acknowledged before me this 16th
day of November,  1986 by Martin P. Henry,  an Assistant  Vice  President of THE
FIRST NATIONAL BANK OF BOSTON, a national banking association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Burnham Leasing Corporation.



                                            /S/ David A. Spivak
                                                Notary Public


6091.BURNHAMU1.DEBT.71:1

<PAGE>



                                   SCHEDULE 1
                                       to
                                 AMENDMENT NO. 2





     Basic                                      Basic
     Rent              Percentage                Rent            Percentage
    Payment           of Facility              Payment           of Facility
     Date                 Cost                   Date               Cost
     ----                 ----                   ----               ----

   7/15/1986            106.4518467            1/15/2005          72.3307960
   1/15/1987            105.4650524            7/15/2005          70.4213019
   7/15/1987            106.5112367            1/15/2006          68.4489361
   1/15/1988            104.0277290            7/15/2006          66.4145594
   7/15/1988            104.6099981            1/15/2007          64.2963730
   1/15/1989            105.0871009            7/15/2007          62.1154375
   7/15/1989            105.4593212            1/15/2008          59.8430745
   1/15/1990            105.7172712            7/15/2008          57.5008480
   7/15/1990            105.8582489            1/15/2009          55.0587786
   1/15/1991            105.8721938            7/15/2009          52.5391836
   7/15/1991            105.7636214            1/15/2010          49.9100924
   1/15/1992            105.5322749            7/15/2010          47.1947679
   7/15/1992            105.1710850            1/15/2011          44.3613272
   1/15/1993            104.6701325            7/15/2011          41.3668272
   7/15/1993            104.0248972            1/15/2012          38.7931788
   1/15/1994            103.2247011            7/15/2012          36.0501745
   7/15/1994            102.2640136            1/15/2013          33.4464656
   1/15/1995            101.2202252            7/15/2013          27.2579072
   7/15/1995             99.9075530            1/15/2014          23.7924770
   1/15/1996             96.6558769            7/15/2014          20.6510073
   7/15/1996             97.4026782            1/15/2015
   1/15/1997             96.1548205
   7/15/1997             94.9069467
   1/15/1998             93.6659207
   7/15/1998             92.4358234
   1/15/1999             91.1586840
   7/15/1999             89.8656106
   1/15/2000             88.4993884
   7/15/2000             87.1233160
   1/15/2001             85.6689341
   7/15/2001             84.2031059
   1/15/2002             82.6533673
   7/15/2002             81.0902492
   1/15/2003             79.4370651
   7/15/2003             77.7682653
   1/15/2004             76.0026833
   7/15/2004             74.2188324


6091.BURNHAMU1.DEBT.11:2

<PAGE>

                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 2




     Basic                                      Basic
      Rent               Percentage              Rent            Percentage
    Payment             of Facility            Payment           of Facility
      Date                  Cost                 Date               Cost
      ----                  ----                 ----               ----

   12/30/1985           102.7542310           11/30/1988         107.3861219
   1/30/1986            103.4952377           12/30/1988         108.2252291
   2/30/1986            104.6078078           1/30/1989          104.3721936
   3/30/1986            105.7108970           2/30/1989          105.2227569
   4/30/1986            106.7688424           3/30/1989          106.0648901
   5/30/1986            107.8619358           4/30/1989          106.8905469
   6/30/1086            108.9018907           5/30/1989          107.7306007
   7/30/1986            106.1524169           6/30/1989          108.5486893
   8/30/1086            107.2495920           7/30/1989          104.6742270
   9/30/1986            108.2948285           8/30/1989          105.5030562
   10/30/1986           109.3738757           9/30/1989          106.3100259
   11/30/1986           110.3486578           10/30/1989         107.1311334
   12/30/1986           111.3422972           11/30/1989         107.9544649
   1/30/1987            105.0370031           12/30/1989         108.7558981
   2/30/1987            106.0146695           1/30/1990          104.8644349
   3/30/1987            106.9727922           2/30/1990          105.6759956
   4/30/1987            107.9070757           3/30/1990          106.4789497
   5/30/1987            108.8643302           4/30/1990          107.2653992
   6/30/1987            109.7860350           5/30/1990          108.0656946
   7/30/1987            106.0034229           6/30/1990          108.8440754
   8/30/1987            106.9411928           7/30/1990          104.9291197
   9/30/1987            107.8412366           8/30/1990          105.7168476
   10/30/1987           108.7637925           9/30/1990          106.4827708
   11/30/1987           109.6895801           10/30/1990         107.2622556
   12/30/1987           110.5795269           11/30/1990         108.0435915
   1/30/1988            103.4415899           12/30/1990         108.8030753
   2/30/1988            104.3295725           1/30/1991          104.8688029
   3/30/1988            105.2045795           2/30/1991          105.6369351
   4/30/1988            106.0654587           3/30/1991          106.3962554
   5/30/1988            106.9412314           4/30/1991          107.1417191
   6/30/1988            107.7949807           5/30/1991          107.8991040
   7/30/1988            103.9569412           6/30/1991          108.6373247
   8/30/1988            104.8227101           7/30/1991          104.6800108
   9/30/1988            105.6665574           8/30/1991          105.4247639
   10/30/1988           106.5250618


6091.BURNHAMU1.DEBT.11:2
                                                          Page 1 of 5

<PAGE>



                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 2


                       SCHEDULE OF SPECIAL CASUALTY VALUES



          Basic                                 Basic
           Rent            Percentage           Rent             Percentage
         Payment           of Facility         Payment           of Facility
           Date               Cost              Date                Cost
           ----               ----              ----                ----

        9/30/1991        106.1504846         11/30/1994          102.9714486
        10/30/1991       106.8878496         12/30/1994          103.6158088
        11/30/1991       107.6266990          1/30/1995           99.4920797
        12/30/1991       108.3464775          2/30/1995          100.0576103
        1/30/1992        104.3699150          3/30/1995          100.9598708
        2/30/1992        105.0948215          4/30/1995          101.2948499
        3/30/1992        105.8119470          5/30/1995          101.8606539
        4/30/1992        106.5146636          6/30/1995          102.2347013
        5/30/1992        107.2286934          7/30/1995           98.0918042
        6/30/1992        107.9236935          8/30/1995           98.6477409
        7/30/1992        103.9218114          9/30/1995           99.2119925
        8/30/1992        104.6210185         10/30/1995           99.7723369
        9/30/1992        105.3013575         11/30/1995          100.3328385
        10/30/1992       105.9926942         12/30/1995          100.9017657
        11/30/1992       106.6851316          1/30/1996           96.7571646
        12/30/1992       107.3386585          2/30/1996           97.3112887
        1/30/1993        103.3348127          3/30/1996           97.8687424
        2/30/1993        104.0116958          4/30/1996           98.4335007
        3/30/1993        104.6806310          5/30/1996           98.9942961
        4/30/1993        105.3352104          6/30/1996           99.5640259
        5/30/1993        106.0004160          7/30/1996           95.4199158
        6/30/1993        106.6467554          8/30/1996           95.9744426
        7/30/1993        102.5951179          9/30/1996           96.5383215
        8/30/1993        103.2438009         10/30/1996           97.0981759
        9/30/1993        103.8737902         11/30/1996           97.6584525
        10/30/1993       104.5140593         12/30/1996           98.2282138
        11/30/1993       105.1550022          1/30/1997           94.0829564
        12/30/1993       105.7771970          2/30/1997           94.6355097
        1/30/1994        101.7008528          3/30/1997           95.1924846
        2/30/1994        102.3244396          4/30/1997           95.7575271
        3/30/1994        102.9398914          5/30/1997           96.3184853
        4/30/1994        103.5410327          6/30/1997           96.8895581
        5/30/1994        104.1520389          7/30/1997           92.7452084
        6/30/1994        104.7443471          8/30/1997           93.2985153
        7/30/1994        100.6374641          9/30/1997           93.8624570
        8/30/1994        101.2300504         10/30/1997           94.4222385
        9/30/1994        101.8041551         11/30/1997           94.9827830
        10/30/1994       102.3876948         12/30/1997           95.5541283


6091.BURNHAMU1.DEBT.11:2
                                                          Page 2 of 5

<PAGE>



                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 2



          Basic                                     Basic
           Rent              Percentage             Rent          Percentage
         Payment             of Facility           Payment        of Facility
           Date                 Cost                Date             Cost
           ----                 ----                ----             ----

        1/30/1998            91.4095520           2/30/2001       83.1945370
        2/30/1998            91.9624841           3/30/2001       83.7100504
        3/30/1998            92.5206088           4/30/2001       84.2365386
        4/30/1998            93.0879868           5/30/2001       84.7579923
        5/30/1998            93.6511613           6/30/2001       85.2931965
        6/30/1998            94.2258566           7/30/2001       81.0638904
        7/30/1998            90.0587394           8/30/2001       81.5615927
        8/30/1998            90.6061628           9/30/2001       82.0730587
        9/30/1998            91.1653160          10/30/2001       82.5792563
        10/30/1998           91.7201086          11/30/2001       83.0865199
        11/30/1998           92.2758974          12/30/2001       83.6077022
        12/30/1998           92.8435688           1/30/2002       79.3875913
        1/30/1999            88.6758122           2/30/2002       79.8782822
        2/30/1999            89.2178183           3/30/2002       80.3756506
        3/30/1999            89.7655484           4/30/2002       80.8845744
        4/30/1999            90.3231803           5/30/2002       81.3881339
        5/30/1999            90.8763696           6/30/2002       81.9061812
        6/30/1999            91.4419321           7/30/2002       77.6562150
        7/30/1999            87.2494322           8/30/2002       78.1345529
        8/30/1999            87.7815320           9/30/2002       78.6273903
        9/30/1999            88.3260203          10/30/2002       79.1146137
        10/30/1999           88.8658606          11/30/2002       79.6029164
        11/30/1999           89.4067242          12/30/2002       80.1058807
        12/30/1999           89.9601180           1/30/2003       75.8653785
        1/30/2000            85.7762220           2/30/2003       76.3360404
        2/30/2000            86.3024327           3/30/2003       76.8137097
        3/30/2000            86.8346937           4/30/2003       77.3035400
        4/30/2000            87.3773736           5/30/2003       77.7876507
        5/30/2000            87.9153256           6/30/2003       78.2870200
        6/30/2000            88.4663236           7/30/2003       74.0146875
        7/30/2000            84.2561120           8/30/2003       74.4720081
        8/30/2000            84.7716834           9/30/2003       74.9445974
        9/30/2000            85.3003149          10/30/2003       75.4112001
        10/30/2000           85.8239993          11/30/2003       75.8788887
        11/30/2000           86.3487305          12/30/2003       76.3620151
        12/30/2000           86.8866703           1/30/2004       72.0993762
        1/30/2001            82.6853819           2/30/2004       72.5482737


6091.BURNHAMU1.DEBT.11:2
                                                          Page 3 of 5

<PAGE>



                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 2



            Basic                                  Basic
            Rent               Percentage          Rent           Percentage
           Payment            of Facility         Payment         of Facility
            Date                 Cost              Date              Cost
            ----                 ----              ----              ----

          3/30/2004            73.0045186          4/30/2007      60.3747600
          4/30/2004            73.4730509          5/30/2007      60.7655813
          5/30/2004            73.9364902          6/30/2007      61.1752418
          6/30/2004            74.4154887          7/30/2007      56.8077588
          7/30/2004            70.1188601          8/30/2007      57.1682150
          8/30/2004            70.5533154          9/30/2007      57.5476840
          9/30/2004            71.0038427         10/30/2007      57.9194339
         10/30/2004            71.4479811         11/30/2007      58.2923563
         11/30/2004            71.8932032         12/30/2007      58.6845124
         12/30/2004            72.3546734          1/30/2008      54.3068099
          1/30/2005            68.0679036          2/30/2008      54.6513134
          2/30/2005            68.4930799          3/30/2008      55.0047423
          3/30/2005            68.9259528          4/30/2008      55.3738747
          4/30/2005            69.3722741          5/30/2008      55.7350693
          5/30/2005            69.8120779          6/30/2008      56.1160563
          6/30/2005            70.2687886          7/30/2008      51.7156640
          7/30/2005            65.9646993          8/30/2008      52.0444855
          8/30/2005            66.3803907          9/30/2008      52.3932782
          9/30/2005            66.8132731         10/30/2008      52.7338096
         10/30/2005            67.2394018         11/30/2008      53.0754684
         11/30/2005            67.6667438         12/30/2008      53.4373277
         12/30/2005            68.1114926          1/30/2009      49.0255076
          1/30/2006            63.7934138          2/30/2009      49.3368286
          2/30/2006            64.1957571          3/30/2009      49.6574593
          3/30/2006            64.6062534          4/30/2009      49.9945557
          4/30/2006            65.0310108          5/30/2009      50.3231497
          5/30/2006            65.4488770          6/30/2009      50.6725248
          6/30/2006            65.8845650          7/30/2009      46.2360503
          7/30/2006            61.5471496          8/30/2009      46.5301055
          8/30/2006            61.9364581          9/30/2009      46.8451255
          9/30/2006            62.3438562         10/30/2009      47.1512939
         10/30/2006            62.7440346         11/30/2009      47.4585240
         11/30/2006            63.1454130         12/30/2009      47.7869559
         12/30/2006            63.5650940          1/30/2010      43.3376742
          1/30/2007            59.2185145          2/30/2010      43.6124904
          2/30/2007            59.5932443          3/30/2010      43.8970027
          3/30/2007            59.9765196


6091.BURNHAMU1.DEBT.11:2
                                                          Page 4 of 5

<PAGE>



                                   SCHEDULE 2
                                       to
                                 AMENDMENT NO. 2


                       SCHEDULE OF SPECIAL CASUALTY VALUES




          Basic                             Basic
           Rent          Percentage         Rent           Percentage
         Payment         of Facility       Payment         of Facility
           Date             Cost            Date              Cost
           ----             ----            ----              ----

        4/30/2010        44.1987658       5/30/2013        25.9554947
        5/30/2010        44.4914112       6/30/2013        26.2400600
        6/30/2010        44.8058611       7/30/2013        21.6371751
        7/30/2010        40.3305967       8/30/2013        21.8253254
        8/30/2010        40.5866417       9/30/2013        22.0416242
        9/30/2010        40.8646922      10/30/2013        22.2468204
        10/30/2010       41.1332506      11/30/2013        22.4539730
        11/30/2010       41.4027867      12/30/2013        22.6895049
        12/30/2010       41.6945747       1/30/2014        18.0369516
        1/30/2011        37.2563200       2/30/2014        18.1747973
        2/30/2011        37.5081100       3/30/2014        18.3254751
        3/30/2011        37.7703691       4/30/2014        18.4979519
        4/30/2011        38.0514945       5/30/2014        18.6587608
        5/30/2011        38.3230213       6/30/2014        18.8473546
        6/30/2011        38.6182686       7/30/2014        14.1472611
        7/30/2011        34.1825064       8/30/2014        14.2369575
        8/30/2011        34.4364524       9/30/2014        14.3535414
        9/30/2011        34.7153309      10/30/2014        14.4577454
        10/30/2011       34.9844358      11/30/2014        14.5626126
        11/30/2011       35.2553148      12/30/2014        14.6943496
        12/30/2011       35.5515126
        1/30/2012        31.1156137
        2/30/2012        31.3690299
        3/30/2012        31.6346125
        4/30/2012        31.9218743
        5/30/2012        32.1992631
        6/30/2012        32.5036487
        7/30/2012        28.0749204
        8/30/2012        28.3351926
        9/30/2012        28.6238310
        10/30/2012       28.9024516
        11/30/2012       29.1838391
        12/30/2012       29.4940500
        1/30/2013        24.9617093
        2/30/2013        25.1910404
        3/30/2013        25.4338865
        4/30/2013        25.6999140


6091.BURNHAMU1.DEBT.11:2
                                                          Page 5 of 5

<PAGE>


                                   SCHEDULE 3
                                       to
                                 AMENDMENT NO. 2


                         SCHEDULE OF TERMINATION VALUES




          Basic                                   Basic
           Rent              Percentage           Rent             Percentage
         Payment             of Facility         Payment           of Facility
           Date                 Cost              Date                Cost
           ----                 ----              ----                ----

        7/15/1986          103.4212361          1/15/2005          67.8255614
        1/15/1987          104.3925241          7/15/2005          65.7328276
        7/15/1987          105.3950859          1/15/2006          63.5697692
        1/15/1988          102.8661814          7/15/2006          61.3369441
        7/15/1988          103.4012074          1/15/2007          59.0124377
        1/15/1989          103.8291454          7/15/2007          56.6163826
        7/15/1989          104.1502014          1/15/2008          54.1203585
        1/15/1990          104.3549060          7/15/2008          51.5453742
        7/15/1990          104.4404728          1/15/2009          48.8610801
        1/15/1991          104.3967530          7/15/2009          46.0894084
        7/15/1991          104.2281706          1/15/2010          43.1979879
        1/15/1992          103.9343733          7/15/2010          40.2096646
        7/15/1992          103.5081925          1/15/2011          37.0921214
        1/15/1993          102.9396058          7/15/2011          34.0019638
        7/15/1993          102.2239855          1/15/2012          30.9206325
        1/15/1994          101.3505415          7/15/2012          27.8574311
        7/15/1994          100.3136271          1/15/2013          24.8316940
        1/15/1995           99.1905114          7/15/2013          21.5737285
        7/15/1995           97.7952853          1/15/2014          18.0242927
        1/15/1996           96.4576977          7/15/2014          14.1833071
        7/15/1996           95.1150933          1/15/2015          10.6510073
        1/15/1997           93.7741936
        7/15/1997           92.4294935
        1/15/1998           91.0877029
        7/15/1998           89.7527428
        1/15/1999           88.3664754
        7/15/1999           86.9598355
        1/15/2000           85.4754279
        7/15/2000           83.9763631
        1/15/2001           82.3939863
        7/15/2001           80.7949574
        1/15/2002           79.1066005
        7/15/2002           77.3992261
        1/15/2003           75.5959184
        7/15/2003           73.7708891
        1/15/2004           71.8427233
        7/15/2004           69.8896959


6091.BURNHAMU1.DEBT.11:2

<PAGE>
                                 EXHIBIT 10.21.3



<PAGE>



When Recorded, Return to:                            Gregg R. Neilsen
                                                     Snell & Wilmer
                                                     3100 Valley Bank Center
                                                     Phoenix, Arizona 85073


                  CERTAIN  RIGHTS  OF THE  LESSOR  UNDER THE  FACILITY  LEASE AS
         HERETOFORE  AMENDED AND AS AMENDED BY THIS AMENDMENT NO. 2 THERETO HAVE
         BEEN  ASSIGNED TO, AND ARE SUBJECT TO A SECURITY  INTEREST IN FAVOR OF,
         CHEMICAL BANK, AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE,  MORTGAGE,
         SECURITY  AGREEMENT  AND  ASSIGNMENT  OF RENTS DATED AS OF DECEMBER 16,
         1985,  AS AMENDED.  THIS  AMENDMENT  NO. 3 HAS BEEN EXECUTED IN SEVERAL
         COUNTERPARTS.  SEE SECTION 3(e) OF THIS AMENDMENT NO. 3 FOR INFORMATION
         CONCERNING THE RIGHTS OF HOLDERS OF VARIOUS  COUNTERPARTS HEREOF AND OF
         THE FACILITY LEASE.

         THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 AMENDMENT NO. 3
                           Dated as of March 30, 1987

                                       to

                                 FACILITY LEASE
                    Dated as of December 16, 1985, as amended

                                     between

                        THE FIRST NATIONAL BANK OF BOSTON
                         not in its individual capacity,
                        but solely as Owner Trustee under
                         a Trust Agreement, dated as of
                         December 16, 1985, with Burnham
                              Leasing Corporation,

                                     Lessor

                                       and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

                  Original   Facility  Lease  recorded  December  31,  1985,  as
         Instrument No. 85-623268, re-recorded April 17, 1986, as Instrument No.
         86-187558  confirmed by document recorded April 25, 1986, as Instrument
         No.  86-203239,  amended by Amendment  No. 1 thereto  recorded July 17,
         1986,  as  Instrument  No.  86-367462,  and amended by Amendment  No. 2
         thereto recorded on November 25, 1986, as Instrument No. 86-650739,  in
         Maricopa County, Arizona Recorder's Office.

================================================================================


6091.BURNHAMU1.DEBT.71:1

<PAGE>

                  AMENDMENT NO. 3 dated as of March 30, 1987  (Amendment No. 3),
to the Facility Lease dated as of December 16, 1985,  between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association,  not in its individual capacity,
but solely as Owner  Trustee under a Trust  Agreement,  dated as of December 16,
1985, with Burnham Leasing Corporation (the Lessor),  and PUBLIC SERVICE COMPANY
OF NEW MEXICO, a New Mexico corporation (the Lessee).

                              W I T N E S S E T H :

                  WHEREAS,  the Lessee and the Lessor  have  heretofore  entered
into a Facility Lease dated as of December 16, 1985, as heretofore  amended (the
Facility  Lease),  providing  for the lease by the  Lessor to the  Lessee of the
Undivided Interest and the Real Property Interest;

                  WHEREAS,  the  Lessee  and the  Lessor  desire  to  amend  the
Facility Lease as set forth in Section 2 hereof; and

                  WHEREAS, the Indenture Trustee has consented to this Amendment
No. 3 pursuant to the Request,  Instruction  and Consent  effective on March 30,
1987;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



6091.BURNHAMU1.DEBT.71:1
                                      - 1 -

<PAGE>

                  SECTION 1.  Definitions.

                  For  purposes  hereof,  capitalized  terms used herein and not
otherwise  defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.

                  SECTION 2.  Amendments.

                  (a)  Section  3(a)(ii)  of the  Facility  Lease (as amended by
Amendment No. 2 thereto) is hereby amended to read in its entirety as follows:

         "(ii) (1) on July 15, 1986 an amount  equal to  4.3683233%  of Facility
Cost (2) on January 15, 1987 an amount  equal to 4.70354% of Facility  Cost and"
(3) on July 15,  1987 and on each  Basic Rent  Payment  Date  thereafter  to and
including  January 15, 2015,  an amount equal to  4.7006080%  of Facility  Cost;
and".

                  (b) Section  16(a)(v) of the Facility  Lease is hereby amended
by (i)  striking the "or" at the end of clause (B)  thereof,  (ii)  inserting an
"or" at the end of clause (C)  thereof  and (iii)  inserting  at the end of such
Section 16(a)(v) the following new clause (D):

         "(D) an amount equal to the higher of (1) the Casualty  Value  (Special
Casualty  Value if the Event of Default  is an event  specified  in clause  (v),
(viii) or (x)(2) of Section 15 hereof),  computed  as of the Basic Rent  Payment
Date  specified  in such  notice  or (2) the  Fair  Market  Sales  Value  of the
Undivided Interest and the real Property Interest;"

                  (c) Section  16(a)(v)  of the  Facility  Lease,  as amended by
Amendment No. 1 thereto, is hereby further amended by deleting the parenthetical
phrase first preceding clause (A) of such Section 16(a)(v) and inserting in lieu
thereof ("and, in the case of (D) below, upon receipt of such payment the Lessor
shall (or,  prior to receipt of such  payment,  may)  Transfer to the Lessee the
Undivided Interest and the Real Property Interest)".



6091.BURNHAMU1.DEBT.71:1
                                      - 2 -

<PAGE>

                  (d) Section  16(a)(vi) of the Facility Lease is hereby amended
by inserting the phrase",  but not in the case of an Event of Default  specified
in clause (iii) of Section 15," immediately  following the words "if it shall so
elect".

                  (e) The  definitions  of "Event of Loss" and "Final  Shutdown"
set forth in  Appendix A to the  Facility  Lease are  hereby  amended to read in
their entirety as set forth in Appendix A-1 hereto.

                  (f) The  definition of  "Undivided  Interest  Percentage"  set
forth in Appendix A to the Facility  Lease is hereby  amended in its entirety to
read as follows:

"Undivided  Interest  Percentage  shall,  when used with  respect to Unit 1 (not
including Common  Facilities),  mean an undivided 2.266667% interest therein and
shall, when used with respect to Common  Facilities,  mean an undivided .755556%
interest therein."

                  SECTION 3. Miscellaneous.

                  (a) Effective Date of  Amendments.  The amend- ments set forth
in Section 2 hereof shall be and become  effective upon the execution  hereof by
the parties hereto.

                  (b)  Counterpart  Execution.  This  Amendment  No.  3  may  be
executed  in any number of  counterparts  and by each of the  parties  hereto on
separate  counterparts;  all such counterparts shall together constitute but one
and the same instrument.

                  (c) Governing  Law. This  Amendment No. 3 has been  negotiated
and  delivered  in the  State of New  York and  shall  be  governed  by,  and be
construed in accordance  with, the laws of the State of New York,  except to the
extent that pursuant to the law of the State of Arizona such law is  mandatorily
applicable hereto.



6091.BURNHAMU1.DEBT.71:1
                                      - 3 -

<PAGE>

                  (d) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401, the beneficiary of the Trust Agreement is Burnham Leasing Corporation, a
New York  corporation.  The address of the  beneficiary is 60 Broad Street,  New
York,  New York  10004,  Attention:  Assistant  Treasurer.  A copy of the  Trust
Agreement is available for inspection at the offices of the Owner Trustee at 100
Federal  Street,  Boston,  Massachusetts  02110,  Attention of  Corporate  Trust
Division.

                  (e)  Amendment No. 3. The single  executed  orig- inal of this
Amendment  No. 3 marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"
of this  Amendment  No. 3. To the extent  that the  Facility  Lease  constitutes
chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any  applicable  jurisdiction,  no security  interest in the  Facility
Lease as amended by this Amendment No. 3 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 3 other than the
"Original".


6091.BURNHAMU1.DEBT.71:1
                                      - 4 -

<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston,  Massachusetts,
or  Albuquerque,  New Mexico,  as the case may be, by an officer  thereunto duly
authorized.



                                      THE FIRST NATIONAL BANK OF BOSTON,  not in
                                          its individual capacity, but solely as
                                          Owner Trustee under a Trust Agreement,
                                          dated as of December  16,  1985,  with
                                          Burnham Leasing Corporation

                                      By:      /S/
                                               Assistant Cashier


                                      PUBLIC SERVICE COMPANY OF NEW
                                          MEXICO


                                      By:      /S/ B. D. Lackey
                                               Vice President and Corporate
                                               Controller


6091.BURNHAMU1.DEBT.71:1
                                      - 5 -

<PAGE>



                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston,  Massachusetts,
or  Albuquerque,  New Mexico,  as the case may be, by an officer  thereunto duly
authorized.


                                      THE FIRST NATIONAL BANK OF BOSTON,  not in
                                          its individual capacity, but solely as
                                          Owner Trustee under a Trust Agreement,
                                          dated as of December  16,  1985,  with
                                          Burnham Leasing Corporation

                                      By:      /S/
                                               Assistant Cashier


                                      PUBLIC SERVICE COMPANY OF NEW
                                          MEXICO


                                       By:
                                               Vice President and Corporate
                                               Controller

6091.BURNHAMU1.DEBT.71:1
                                      - 6 -

<PAGE>



State of New Mexico )
                    )       ss.
County of Bernalillo)



                  The foregoing  instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate  Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation,  on behalf of
the corporation.



                                                     /S/
                                                   Notary Public



Commonwealth of Massachussets)
                             ) ss.
County of Suffolk            )



                  The foregoing  instrument was acknowledged before me this 27th
day of March,  1987 by James E.  Mogavero,  an  Assistant  Cashier  of THE FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Burnham Leasing Corporation.




                                                    Notary Public


6091.BURNHAMU1.DEBT.71:1

<PAGE>



State of New Mexico )
                    )       ss.
County of Bernalillo)



                  The foregoing  instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate  Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation,  on behalf of
the corporation.




                                                     Notary Public



Commonwealth of Massachussets)
                             ) ss.
County of Suffolk            )



                  The foregoing  instrument was acknowledged before me this 27th
day of March,  1987 by James E.  Mogavero,  an  Assistant  Cashier  of THE FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Burnham Leasing Corporation.



                                                     /S/ Julie E. Comeau
                                                          Notary Public


6091.BURNHAMU1.DEBT.71:1

<PAGE>



                                  SCHEDULE A-1
                                       to
                                 AMENDMENT NO. 3


                           Amendment to Definitions of
                      "Event of Loss" and "Final Shutdown"


         Event of Loss  shall  mean  any of the  following  events:  (a) a Final
Shutdown,  (b) a  Requisition  of  Title,  or (c) a  Requisition  of Use  for an
indefinite period which can be reasonably expected to exceed, or a stated period
which ends on the last day of or after,  the Lease Term  (including  the Renewal
Term only if the Renewal Term shall have been elected prior to such  Requisition
of Use by the  exercise  of the  renewal  option  provided  in Section 12 of the
Facility Lease).

         Final Shutdown shall mean the earlier to occur of:

                  (1)  the  expiration  or  revocation  of the  License  or that
portion of the License that permits the  operation of Unit 1 or the  expiration,
suspension  or  revocation  of the License or that  portion of the License  that
permits the  possession  by the Lessee of the  Undivided  Interest  and the Real
Property Interest; or

                  (2) the suspension  (pursuant to 10 C.F.R.  Section 2.202,  as
amended,  and any  successor  provision)  of the License or that  portion of the
License that permits the operation of Unit 1, which suspension remains in effect
for three consecutive calendar months; or

                  (3) the permanent or temporary  cessation of operation of Unit
1 as a result of a Nuclear  Incident at Unit 1 (or if Unit 1 is not in operation
immediately  prior to the  occurrence of such Nuclear  Incident,  the failure to
resume operation thereof as a result of such Nuclear Incident) if (A) the Period
of such cessation or failure equals or exceeds twenty-four  consecutive calendar
months,  or  (B)  such  Nuclear  Incident  causes  the  radiation  level  in the
containment  building  of Unit 1, as  measured  by the average of two high range
radiation  monitors in such containment  building of Unit 1 (or if only one such
monitor is  operating  at such  time,  such  monitor)  over one hour to equal or
exceed 500 rads per hour; provided, however, this subsection (B) shall not apply
in respect of a Nuclear Incident  arising solely from a fuel handling  accident;
or


6091.BURNHAMU1.DEBT.71:1

<PAGE>



                  (4) the permanent or temporary  cessation of operation of Unit
1 as a result of a Nuclear  Incident at Unit 2 or 3 (the  Affected  Unit) (or if
Unit 1 is not in operation  immediately  prior to the occurrence of such Nuclear
Incident,  the failure to resume  operation  thereof as a result of such Nuclear
Incident)  if (A) the  Period of such  cessation  or  failure  equals or exceeds
thirty-six  consecutive calendar months; or (B) such Nuclear Incident causes the
radiation level in the containment building of the Affected Unit, as measured by
the average of two high range radiation  monitors in such  containment  building
(or if only one such monitor is operating at such time,  such  monitor) over one
hour to equal or exceed 500 rads per hour;  provided,  however,  this subsection
(B) shall not apply in respect of a Nuclear  Incident arising solely from a fuel
handling accident;

                  (5) the  occurrence  of a Nuclear  Incident  at Unit 1, 2 or 3
causing (A)  substantial  injury or death to any person on or off the PVNGS Site
or (B) a discharge or dispersal of Source, Special Nuclear or Byproduct Material
from its intended  place of confinement in amounts off the PVNGS Site or causing
radiation  levels off the PVNGS Site such that, in the case of (B) above (x) the
NRC declares the occurrence of an Extraordinary  Nuclear  Occurrence or declares
any other event  connoting  an  equivalent  level of accident or (y) the surface
contamination  dose rate measured off the PVNGS Site by a radiation monitor at 1
meter  above  the  surface  level  equals  or is  greater  at any  time  than 10
millirads/hour (0.10  milligray/hour) or in the case of noble gas plume passage,
the radiation dose rate equals or is greater than 10 rads (0.10 gray) integrated
over 24 hours,  (or if the NRC  shall at any time  lower  the  radiation  levels
required for the occurrence of an Extraordinary  Nuclear Occurrence,  such lower
levels as shall be consistent with such change by the NRC); or

                  (6)  damage to or  destruction  of any  portion of Unit 1 and,
unless Lessee theretofore shall have exercised its purchase option under Section
13(b) of the Facility Lease, the failure of the Lessee, or of the Lessee and one
more other ANPP  Participants,  (A) to agree within eighteen  calendar months of
such damage or  destruction  (or prior to such  earlier  date as of which one or
more other ANPP  Participants  shall agree to restore or reconstruct any damaged
portion of Unit 1 in accordance with Section 16.2 of the ANPP Participation

6091.BURNHAMU1.DEBT.71:1

<PAGE>



Agreement) to restore or reconstruct Unit 1 to completion prior to the day sixty
calendar  months after the date of such agreement and (B) thereafter to complete
the restoration and  reconstruction  of Unit 1 within a period of sixty calendar
months after the date of such  agreement,  provided that no Final Shutdown shall
be deemed to have occurred  pursuant to this clause (6) if and so long as Unit 1
is in operation at a rated core power level of at least 1900 megawatts  thermal;
or

                  (7) the  non-operation of Unit 1 or the operation of Unit 1 at
a net rated power level below 630 megawatts electric or any combination  thereof
for any reason  (including,  without  limitation,  the occurrence of any Nuclear
Incident at any generating  facility located anywhere in the world) for a Period
of thirty-six  consecutive  calendar months (or a period through the penultimate
day of the Lease  Term if the Lessee  shall  have given  notice of its intent to
exercise the purchase  option  permitted by Section 13(b) of the Facility Lease)
other than as a result of damage to or destruction of Unit 1.

For purposes of this definition,  a Final Shutdown resulting from the occurrence
of an event  described  in  clause  (5) above  shall be deemed to have  occurred
immediately and automatically  upon the decline of the water coolant within Unit
1 to a level three feet above the nuclear fuel.

                  For purposes of the definition of "Final  Shutdown"  only, the
following  capitalized terms set forth therein shall have the following meanings
(other capitalized terms having the respective  meanings set forth in Appendix A
to the Facility Lease):

                  Extraordinary  Nuclear  Occurrence  shall have its  meaning as
defined in Section 11 of the Atomic Energy Act and the related NRC  regulations,
as amended to the date hereof, and as the meaning of such term shall be expanded
from time to time by future amendments thereof. The definition of "extraordinary
nuclear occurrence" contained in Section 11 of the Atomic Energy Act on the date
hereof is: "any event causing a discharge dispersal of source,  special nuclear,
or byproduct  material  from its place of  confinement  in amounts  offsite,  or
causing  radiation  levels  offsite,  which  the  Commission  determines  to  be


6091.BURNHAMU1.DEBT.71:1

<PAGE>



substantial,  and which the Commission  determines has resulted or will probably
result in  substantial  damages to  persons  offsite or  property  offsite.  Any
determination  by the  Commission  that such an event has, or has not,  occurred
shall be final and  conclusive,  and no other  official  or any court shall have
power or jurisdiction  to review any such  determination.  The Commission  shall
establish   criteria  in  writing  setting  forth  the  basis  upon  which  such
determination  shall be made. As used in this  subsection,  'offsite' means away
from 'the  location' or 'the  contract  location'  as defined in the  applicable
Commission  indemnity  agreement,  entered into pursuant to section 2210 of this
title."

                  Nuclear  Incident shall have its meaning as defined in Section
11 of the Atomic Energy Act, as amended to the date hereof and as the meaning of
such term may be expanded from time to time by future  amendments  thereof.  The
definition of "nuclear incident"  contained in the Atomic Energy Act on the date
hereof is: "any  occurrence,  including  an  extraordinary  nuclear  occurrence,
within the United States  causing,  within or outside the United States,  bodily
injury,  sickness,  disease, or death, or loss of or damage to property, or loss
of use of property,  arising out of or resulting  from the  radioactive,  toxic,
explosive,  or  other  hazardous  properties  of  source,  special  nuclear,  or
byproduct  material:  Provided,  however,  that as the  term is used in  section
2210(1) of this title, it shall include any such  occurrence  outside the United
States:  And provided  further,  That as the term is used in section  2210(d) of
this title,  it shall include any such  occurrence  outside the United States if
such occurrence  involves source,  special nuclear,  or byproduct material owned
by, and used by or under contract with, the United States: And provided further,
That as the term is used in section  2210(c) of this title, it shall include any
such  occurrence  outside  both the United  States and any other  nation if such
occurrence arises out of or results from the radioactive,  toxic,  explosive, or
other hazardous  properties of source,  special nuclear,  or byproduct  material
licensed  pursuant to subchapters  V, VI, VII, and IX of this chapter,  which is
used in  connection  with the operation of a licensed  stationary  production or
utilization facility or which moves outside the territorial limits of the United
States in transit from one person  licensed by the  Commission to another person
licensed by the Commission."


6091.BURNHAMU1.DEBT.71:1

<PAGE>


                  Period of a stated duration in respect of any event shall mean
an  indefinite  period which can  reasonably be expected to exceed the lesser of
such duration and the period remaining to the date which is three years prior to
the end of the  remaining  Basic Lease Term (or if such event  occurs  after the
date three years prior to the end of the remaining  Basic Lease Term, the lesser
of six months and the period  remaining to the day next preceding the end of the
Basic  Lease  Term) or a stated  period in excess of the  lesser  thereof  or an
actual period which continues in excess of the lesser thereof.

                  Source, Special Nuclear or Byproduct Material shall have their
respective defined meanings as defined in Section 11 of the Atomic Energy Act of
1954,  as amended to the date  hereof and as the  meanings  of such terms may be
expanded by future amendments thereof.



6091.BURNHAMU1.DEBT.71:1

<PAGE>

                                  EXHIBIT 10.54



<PAGE>



When Recorded, Return to:                            Gregg R. Neilsen, Esq.
                                                     Snell & Wilmer
                                                     3100 Valley Bank Center
                                                     Phoenix, Arizona 85073


         CERTAIN  RIGHTS OF THE LESSOR  UNDER THE FACILITY  LEASE AS  HERETOFORE
AMENDED AND AS AMENDED BY THIS  AMENDMENT  NO. 3 THERETO HAVE BEEN  ASSIGNED TO,
AND ARE SUBJECT TO A SECURITY  INTEREST IN FAVOR OF, CHEMICAL BANK, AS INDENTURE
TRUSTEE UNDER A TRUST INDENTURE,  MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF
RENTS DATED AS OF DECEMBER 16, 1985, AS AMENDED.  THIS  AMENDMENT NO. 3 HAS BEEN
EXECUTED IN SEVERAL  COUNTERPARTS.  SEE SECTION 3(e) OF THIS AMENDMENT NO. 3 FOR
INFORMATION  CONCERNING THE RIGHTS OF HOLDERS OF VAR- IOUS  COUNTERPARTS  HEREOF
AND OF THE FACILITY LEASE.

THIS COUNTERPART IS NOT THE ORIGINAL COUNTERPART.

================================================================================

                                 AMENDMENT NO. 3
                           Dated as of March 30, 1987

                                       to

                                 FACILITY LEASE
                    Dated as of December 16, 1985, as amended

                                     between

                       THE FIRST NATIONAL BANK OF BOSTON,
                         not in its individual capacity,
                        but solely as Owner Trustee under
                         a Trust Agreement, dated as of
                        December 16, 1985, with Chrysler
                             Financial Corporation,

                                     Lessor

                                       and

                      PUBLIC SERVICE COMPANY OF NEW MEXICO,

                                     Lessee

================================================================================

Original Facility Lease recorded December 31, 1985, as Instrument No. 85-623282,
amended by Amendment No. 1 thereto recorded July 17, 1986, as Instrument No. 86-
367464 and amended by Amendment No. 2 thereto  recorded on November 25, 1986, as
Instrument 86-650763, in Maricopa County, Arizona Recorder's Office.

================================================================================


6091.CHRYSLER.DEBT.71:1

<PAGE>



                  AMENDMENT NO. 3, dated as of March 30, 1987 (Amendment No. 3),
to the Facility Lease dated as of December 16, 1985,  between THE FIRST NATIONAL
BANK OF BOSTON, a national banking association,  not in its individual capacity,
but solely as Owner  Trustee under a Trust  Agreement,  dated as of December 16,
1985,  with Chrysler  Financial  Corporation  (the Lessor),  and PUBLIC  SERVICE
COMPANY OF NEW MEXICO, a New Mexico corporation (the Lessee).

                              W I T N E S S E T H :

                  WHEREAS,  the Lessee and the Lessor  have  heretofore  entered
into a Facility Lease dated as of December 16, 1985, as heretofore  amended (the
Facility  Lease),  providing  for the lease by the  Lessor to the  Lessee of the
Undivided Interest and the Real Property Interest;

                  WHEREAS,  the  Lessee  and the  Lessor  desire  to  amend  the
Facility Lease as set forth in Section 2 hereof; and

                  WHEREAS, the Indenture Trustee has consented to this Amendment
No. 3 pursuant to the Request,  Instruction  and Consent  effective on March 30,
1987;

                  NOW, THEREFORE,  in consideration of the premises and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



6091.CHRYSLER.DEBT.71:1
                                      - 1 -

<PAGE>

                  SECTION 1.  Definitions.

                  For  purposes  hereof,  capitalized  terms used herein and not
otherwise  defined herein or in the recitals shall have the meanings assigned to
such terms in Appendix A to the Facility Lease.

                  SECTION 2.  Amendments.

                  (a)  Section  3(a)(ii)  of the  Facility  Lease (as amended by
Amendment No. 2 thereto) is hereby amended to read in its entirety as follows:

                  "(ii)(1) on July 15,  1986 an amount  equal to  4.3683233%  of
         Facility  Cost (2) on January 15, 1987 an amount  equal to 4.755716% of
         Facility  Cost and (3) on July 15, 1987 and on each Basic Rent  Payment
         Date  thereafter to and including  January 15, 2015, an amount equal to
         4.7527840% of Facility Cost; and".

                  (b) Section  16(a)(v) of the Facility  Lease is hereby amended
by (i)  striking the "or" at the end of clause (B)  thereof,  (ii)  inserting an
"or" at the end of clause (C)  thereof  and (iii)  inserting  at the end of such
Section 16(a)(v) the following new clause (D):

                  "(D) an amount equal to the higher of (1) the  Casualty  Value
         (Special  Casualty Value if the Event of Default is an event  specified
         in clause (v),  (viii) or (x)(2) of Section 15 hereof),  computed as of
         the Basic Rent  Payment  Date  specified in such notice or (2) the Fair
         Market  Sales Value of the  Undivided  Interest  and the Real  Property
         Interest;"

                  (c) Section  16(a)(v)  of the  Facility  Lease,  as amended by
Amendment No. 1 thereto, is hereby further amended by deleting the parenthetical
phrase first preceding clause (A) of such Section 16(a)(v) and inserting in lieu
thereof ("and, in the case of (D) below, upon receipt of such payment the Lessor
shall (or,  prior to receipt of such  payment,  may)  Transfer to the Lessee the
Undivided Interest and the Real Property Interest)".



6091.CHRYSLER.DEBT.71:1
                                      - 2 -

<PAGE>

                  (d) Section  16(a)(vi) of the Facility Lease is hereby amended
by inserting the phrase",  but not in the case of an Event of Default  specified
in clause (iii) of Section 15," immediately  following the words "if it shall so
elect".

                  (e) The  definitions  of "Event of Loss" and "Final  Shutdown"
set forth in  Appendix A to the  Facility  Lease are  hereby  amended to read in
their entirety as set forth in Appendix A-1 hereto.

                  (f) The  definition of  "Undivided  Interest  Percentage"  set
forth in Appendix A to the Facility  Lease is hereby  amended in its entirety to
read as follows:

         "Undivided  Interest Percentage shall, when used with respect to Unit 1
         (not including  Common  Facilities),  mean an undivided  3.74% interest
         therein and shall, when used with respect to Common Facilities, mean an
         undivided 1.246667% interest therein."

                  SECTION 3. Miscellaneous.

                  (a) Effective Date of  Amendments.  The amend- ments set forth
in Section 2 hereof shall be and become  effective upon the execution  hereof by
the parties hereto.

                  (b)  Counterpart  Execution.  This  Amendment  No.  3  may  be
executed  in any number of  counterparts  and by each of the  parties  hereto on
separate  counterparts;  all such counterparts shall together constitute but one
and the same instrument.

                  (c) Governing  Law. This  Amendment No. 3 has been  negotiated
and  delivered  in the  State of New  York and  shall  be  governed  by,  and be
construed in accordance  with, the laws of the State of New York,  except to the
extent that pursuant to the law of the State of Arizona such law is  mandatorily
applicable hereto.



6091.CHRYSLER.DEBT.71:1
                                      - 3 -

<PAGE>

                  (d) Disclosure.  Pursuant to Arizona Revised  Statutes Section
33-401,   the  beneficiary  of  the  Trust   Agreement  is  Chrysler   Financial
Corporation, a Michigan corporation. The address of the beneficiary is Greenwich
Office Park I,  Greenwich,  Connecticut  06836. A copy of the Trust Agreement is
available  for  inspection  at the  offices of the Owner  Trustee at 100 Federal
Street, Boston, Massachusetts 02110, Attention of Corporate Trust Division.

                  (e)  Amendment No. 3. The single  executed  orig- inal of this
Amendment  No. 3 marked  "THIS  COUNTERPART  IS THE  ORIGINAL  COUNTERPART"  and
containing the receipt of the Indenture  Trustee thereon shall be the "Original"
of this  Amendment  No. 3. To the extent  that the  Facility  Lease  constitutes
chattel  paper,  as such term is defined in the  Uniform  Commercial  Code as in
effect in any  applicable  jurisdiction,  no security  interest in the  Facility
Lease as amended by this Amendment No. 3 may be created or continued through the
transfer or possession of any counterpart of this Amendment No. 3 other than the
"Original".


6091.CHRYSLER.DEBT.71:1
                                      - 4 -

<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston,  Massachusetts,
or  Albuquerque,  New Mexico,  as the case may be, by an officer  thereunto duly
authorized.



                                      THE FIRST NATIONAL BANK OF BOSTON,  not in
                                          its individual capacity, but solely as
                                          Owner Trustee under a Trust Agreement,
                                          dated as of December  16,  1985,  with
                                          Chrysler Financial Corporation

                                      By:      /S/
                                               Assistant Cashier


                                      PUBLIC SERVICE COMPANY OF NEW
                                          MEXICO


                                       By:
                                               Vice President and Corporate
                                               Controller


6091.CHRYSLER.DEBT.71:1
                                      - 5 -

<PAGE>

                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 3 to Facility Lease to be duly executed in Boston,  Massachusetts,
or  Albuquerque,  New Mexico,  as the case may be, by an officer  thereunto duly
authorized.


                                      THE FIRST NATIONAL BANK OF BOSTON,  not in
                                          its individual capacity, but solely as
                                          Owner Trustee under a Trust Agreement,
                                          dated as of December  16,  1985,  with
                                          Chrysler Financial Corporation

                                       By:
                                               Assistant Cashier


                                      PUBLIC SERVICE COMPANY OF NEW
                                          MEXICO


                                      By:      /S/ B. D. Lackey
                                               Vice President and Corporate
                                               Controller

6091.CHRYSLER.DEBT.71:1
                                      - 6 -

<PAGE>



State of New Mexico )
                    )       ss.
County of Bernalillo)



                  The foregoing  instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate  Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation,  on behalf of
the corporation.



                                                     /S/
                                                     Notary Public



Commonwealth of Massachussets)
                             ) ss.
County of Suffolk            )



                  The foregoing  instrument was acknowledged before me this 27th
day of March,  1987,  by James E.  Mogavero,  an Assistant  Cashier of THE FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Chrysler Financial Corporation.




                                               Notary Public


6091.CHRYSLER.DEBT.71:1

<PAGE>



State of New Mexico )
                    )       ss.
County of Bernalillo)



                  The foregoing  instrument was acknowledged before me this 27th
day of March, 1987, by B.D. Lackey, the Vice President and Corporate  Controller
of PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation,  on behalf of
the corporation.




                                                 Notary Public



Commonwealth of Massachussets)
                             ) ss.
County of Suffolk            )



                  The foregoing  instrument was acknowledged before me this 27th
day of March,  1987 by James E.  Mogavero,  an  Assistant  Cashier  of THE FIRST
NATIONAL  BANK OF  BOSTON,  a  national  banking  association,  on behalf of the
banking  association as trustee under that certain Trust  Agreement  dated as of
December 16, 1985 with Chrysler Financial Corporation.



                                                     /S/ Julie E. Comeau
                                                         Notary Public


6091.CHRYSLER.DEBT.71:1

<PAGE>



                                  SCHEDULE A-1
                                       to
                                 AMENDMENT NO. 3


                           Amendment to Definitions of
                      "Event of Loss" and "Final Shutdown"


                  Event of Loss shall mean any of the  following  events:  (a) a
Final Shutdown,  (b) a Requisition of Title,  (c) a Requisition of Use which can
reasonably be expected to exceed, or for a stated period which ends on or after,
the penultimate day of the Lease Term, (d) any degradation of the rated capacity
of Unit 1 to below 630  megawatts  electric for an  indefinite  period which can
reasonably be expected to exceed the lesser of 5 years and the  remaining  Lease
Term or for a stated  period  in  excess  of the  lesser  of five  years and the
remaining Lease Term (other than as a result of damage to or destruction of Unit
1), or (e) any  degradation  of the rated  capacity  of Unit 1 to below,  or the
inability  of Unit 1 to produce  electricity  at a level  above,  630  megawatts
electric  for the  Minimum  Period  (other  than as a  result  of  damage  to or
destruction  of Unit 1,  Governmental  Action  or an event  referred  to in part
(10)(x) or (10)(y) of the definition of "Final Shutdown").  For purposes of this
definition,  Minimum  Period shall mean the shorter of (x) the shorter of (1) an
indefinite  period  unless such period can  reasonably be expected to be shorter
than the applicable  Benchmark  Period and (2) an actual period in excess of the
applicable  Benchmark  Period  and  (y)  a  period  beginning  on  the  date  of
determination  through and including the  penultimate day of the Lease Term, and
Benchmark Period shall mean a period equal to any 60 consecutive calendar months
except that a period of 36 consecutive  calendar months shall be applicable with
respect to events specified in part 10(y) of the definition of "Final Shutdown".
The period  specified in the  foregoing  clause (x)(1) shall be determined by an
independent nuclear consultant agreed to by the Lessee and the Owner Participant
or, failing prompt  agreement  upon such  consultant,  appointed by the American
Arbitration Association (or comparable or successor organization).



6091.CHRYSLER.DEBT.71:1

<PAGE>



                  Final Shutdown shall mean the earlier to occur of:

                  (1) (i) the expiration,  suspension (for an indefinite  period
which can  reasonably  be  expected  to exceed  the lesser of five years and the
remaining  Lease  Term or for a stated  period in  excess of the  lesser of five
years and the remaining Lease Term) or revocation of that portion of the License
that  permits the  operation  of Unit 1 or the  possession  by the Lessee of the
Undivided  Interest  and the  Real  Property  Interest,  (ii) the  cessation  of
operation of Unit 1 as a result of a nuclear  incident  relating to PVNGS for an
indefinite  period which can reasonably be expected to exceed the lesser of five
years  and the  remaining  Lease  Term or for a stated  period  in excess of the
lesser  of  five  years  and  the  remaining  Lease  Term,  (iii)  damage  to or
destruction of Unit 1 and the failure of the Lessee, or of the Lessee and one or
more other  ANPP  Participants,  to agree  within  five years of such  damage or
destruction to restore and reconstruct  Unit 1 and (iv) damage to or destruction
of Unit 1, without  restoration or  reconstruction  having been completed by the
end of the Lease  Term,  such that Unit 1 will have a rated  capacity  as of the
penultimate day of the Lease Term of at least 630 megawatts electric; or

                  (2) the  suspension  of the  License  or that  portion  of the
License that permits the possession by the Lessee of the Undivided  Interest and
the Real Property Interest; or

                  (3) the suspension  (pursuant to 10 C.F.R.  Section 2.202,  as
amended,  any successor provision) of the License or that portion of the License
that  permits the  operation of Unit 1, which  suspension  remains in effect for
three consecutive calendar months; or

                  (4) the permanent or temporary  cessation of operation of Unit
1 as a result of a Nuclear  Incident at Unit 1 (or if Unit 1 is not in operation
immediately  prior to the  occurrence of such Nuclear  Incident,  the failure to
resume operation thereof as a result of such Nuclear Incident) if (A) the Period
of such cessation or failure equals or exceeds twenty-four  consecutive calendar
months,  or  (B)  such  Nuclear  Incident  causes  the  radiation  level  in the


6091.CHRYSLER.DEBT.71:1

<PAGE>



containment building of Unit 1 (or if only one such monitor is operating at such
time,  such  monitor)  over  one  hour to equal  or  exceed  500 rads per  hour;
provided,  however,  this  clause  (B) shall not apply in  respect  of a Nuclear
Incident arising solely from a fuel handling accident;

                  (5) the permanent or temporary  cessation of operation of Unit
1 as a result of a Nuclear  Incident at Unit 2 or 3 (the  Affected  Unit) (or if
Unit 1 is not in operation  immediately  prior to the occurrence of such Nuclear
Incident,  the failure to resume  operation  thereof as a result of such Nuclear
Incident)  if (A) the  Period of such  cessation  or  failure  equals or exceeds
thirty-six  consecutive calendar months; or (B) such Nuclear Incident causes the
radiation level in the containment building of the Affected Unit, as measured by
the average of two high range radiation  monitors in such  containment  building
(or if only one such monitor is operating at such time,  such  monitor) over one
hour to equal or exceed 500 rads per hour;  provided,  however,  this clause (B)
shall not apply in  respect of a Nuclear  Incident  arising  solely  from a fuel
handling accident; or

                  (6) the  occurrence  of a Nuclear  Incident  at Unit 1, 2 or 3
causing (A)  substantial  injury or death to any person on or off the PVNGS Site
or (B) a discharge or dispersal of Source, Special Nuclear or Byproduct Material
from its intended  place of confinement in amounts off the PVNGS Site or causing
radiation  levels off the PVNGS Site such that,  in the case of this  clause (B)
(x) the NRC declares the occurrence of an  Extraordinary  Nuclear  Occurrence or
declares any other event  connoting an  equivalent  level of accident or (y) the
surface  contamination  dose rate  measured  off the PVNGS  Site by a  radiation
monitor at 1 meter above the surface level equals or is greater at any time than
10  millirads/hour  (0.10  milligray/hour)  or,  in the case of noble  gas plume
passage,  the radiation  dose rate equals or is greater than 10 rads (0.10 gray)
integrated  over 24 hours,  (or if the NRC shall at any time lower the radiation
levels required for the occurrence of an Extraordinary Nuclear Occurrence,  such
lower levels as shall be consistent with such change by the NRC); or

                  (7)  damage to or  destruction  of any  portion of Unit 1 and,
unless Lessee theretofore shall have exercised its purchase option under Section
13(b) of the Facility Lease, the failure of the Lessee, or of the Lessee and one

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more other ANPP  Participants,  (A) to agree within eighteen  calendar months of
such damage or  destruction  (or prior to such  earlier  date as of which one or
more other ANPP  Participants  shall agree to restore or reconstruct any damaged
portion of Unit 1 in  accordance  with  Section  16.2 of the ANPP  Participation
Agreement) to restore or reconstruct Unit 1 to completion prior to the day sixty
calendar  months after the date of such agreement and (B) thereafter to complete
the restoration and  reconstruction  of Unit 1 within a period of sixty calendar
months after the date of such  agreement,  provided that no Final Shutdown shall
be deemed to have occurred  pursuant to this clause (6) if and so long as Unit 1
is in operation at a rated core power level of at least 1900 megawatts  thermal;
or

                  (8) the  non-operation of Unit 1 or the operation of Unit 1 at
a net rated power level below 630 megawatts electric or any combination  thereof
for any reason  (including,  without  limitation,  the occurrence of any Nuclear
Incident at any generating  facility located anywhere in the world) for a Period
of thirty-six  consecutive  calendar months (or a period through the penultimate
day of the Lease  Term if the Lessee  shall  have given  notice of its intent to
exercise the purchase  option  permitted by Section 13(b) of the Facility Lease)
other than as a result of damage to or destruction of Unit 1; or

                  (9) the taking of any  Governmental  Action or the adoption or
making  of any  interpretations,  directives  or  requests  by any  Governmental
Authority (including,  without limitation, the staff thereof) or the concurrence
by any Governmental  Authority in the voluntary action of the operator  thereof,
in each such case whether  formal or  informal,  by reason of which Unit 1 shall
cease to operate,  or shall be unable under Applicable Law to resume  operation,
at a capacity level of at least 630 megawatts  electric for the Minimum  Period;
or

                  (10) the  cessation  of  operation  of Unit 1 as a  result  of
either (x) the occurrence of an Extraordinary Nuclear Occurrence or an Incipient
Extraordinary  Nuclear  Occurrence  relating to Unit 1 or (y) a Nuclear Incident
relating to Unit 1 and, in the case of this clause (y), the continuation of such
cessation for the Minimum Period; or


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                  (11) damage to Unit 1, without  restoration or  reconstruction
having been completed by the expiration of the Minimum Period,  such that Unit 1
has a rated capacity of at least 630 megawatts electric; or

                  (12) destruction of Unit 1.

                  For purposes of clause  (iii) of part (1) of this  definition,
Final  Shutdown  will be deemed to have  occurred  upon the  earlier  of (x) the
written  declaration  of the  Lessee of its  intent  not so to agree and (y) the
expiration of such five-year period without written  agreement,  and pursuant to
the  foregoing  clause (iv) of part (1),  Final  Shutdown will be deemed to have
occurred on the day preceding the Lease  Termination  Date. For purposes of part
(6) of this  definition,  a Final  Shutdown  shall be  deemed  to have  occurred
immediately and automatically  upon the decline of the water coolant within Unit
1 to a level  three fee above the  nuclear  fuel and for  purposes of parts (9),
(10)(y) and (11) of this definition, on the last day of the Minimum Period.

                  For purposes of parts (9),  (10) and (11) of this  definition,
Minimum  Period shall have the same meaning  assigned to it in the definition of
"Event of Loss".

                  For  purposes  of part (6) of this  definition,  Extraordinary
Nuclear Occurrence shall have its meaning as defined in Section 11 of the Atomic
Energy Act and the related NRC regulations,  as amended to the date hereof,  and
as the  meaning  of such  term  shall be  expanded  from  time to time by future
amendments  thereof.  The  definition  of  "extraordinary   nuclear  occurrence"
contained  in Section 11 of the Atomic  Energy Act on the date  hereof is:  "any
event causing a discharge or dispersal of source,  special nuclear, or byproduct
material from its intended place of confinement in amounts  offsite,  or causing
radiation levels offsite, which the Commission determines to be substantial, and
which  the  Commission  determines  has  resulted  or will  probably  result  in
substantial damages to persons offsite or property offsite. Any determination by
the Commission  that such an event has, or has not,  occurred shall be final and
conclusive,  and no other official or any court shall have power or jurisdiction
to review any such  determination.  The Commission  shall establish  criteria in
writing setting forth the basis upon which such determination  shall be made. As


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used in this  subsection,  'offsite'  means  away  from 'the  location'  or 'the
contract location' as defined in the applicable  Commission indemnity agreement,
entered into pursuant to section 2210 of this title."

                  For  purposes  of  part  (10)  of this  definition:  the  term
"Extraordinary  Nuclear Occurrence" shall have its meaning as defined in Section
11 of the Atomic Energy Act of 1954,  as amended to the Closing  Date;  the term
"Incipient  Extraordinary  Nuclear  Occurrence"  shall  mean an event  causing a
discharge or dispersal of nuclear source,  special nuclear or nuclear by-product
material from its intended  place of  confinement in amounts off site or on site
or causing a radiation  level off site or on site which an  independent  nuclear
consultant agreed to by the Lessee and the Owner Participant (or, failing prompt
agreement,  appointed by the American Arbitration  Association) determines to be
substantial  and which such  consultant  determines  has resulted in substantial
injury to persons on or off the PVNGS Site or substantial damage to property off
the PVNGS  Site;  and the term  "Nuclear  Incident"  shall  mean any  occurrence
causing  bodily  injury,  sickness,  disease  or death,  or loss of or damage to
property,  or the loss of use of property,  arising out of or resulting from the
radioactive,  toxic,  explosive or other hazardous properties of nuclear source,
special nuclear or nuclear by-product material.

                  For  purposes  of  parts  (4),   (5),  (6)  and  (8)  of  this
definition,  Nuclear Incident shall have its meaning as defined in Section 11 of
the Atomic  Energy Act, as amended to the date hereof and as the meaning of such
term  may be  expanded  from  time to time by  future  amendments  thereof.  The
definition of "nuclear incident"  contained in the Atomic Energy Act on the date
hereof is: "any  occurrence,  including  an  extraordinary  nuclear  occurrence,
within the United States  causing,  within or outside the United States,  bodily
injury,  sickness,  disease, or death, or loss of or damage to property, or loss
of use of property,  arising out of or resulting  from the  radioactive,  toxic,
explosive,  or  other  hazardous  properties  of  source,  special  nuclear,  or
byproduct  material:  Provided,  however,  that as the  term is used in  section
2210(1) of this title, it shall include any such  occurrence  outside the United
States:  And provided  further,  That as the term is used in section  2210(d) of
this title,  it shall include any such  occurrence  outside the United States if


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such occurrence  involves source,  special nuclear,  or byproduct material owned
by, and used by or under contract with, the United States: And provided further,
That as the term is used in section  2210(c) of this title, it shall include any
such  occurrence  outside  both the United  States and any other  nation if such
occurrence arises out of or results from the radioactive,  toxic,  explosive, or
other hazardous  properties of source,  special nuclear,  or byproduct  material
licensed  pursuant to subchapters  V, VI, VII, and IX of this chapter,  which is
used in  connection  with the operation of a licensed  stationary  production or
utilization facility or which moves outside the territorial limits of the United
States in transit from one person  licensed by the  Commission to another person
licensed by the Commission."

                  For  purposes  of parts (4),  (5) and (8) of this  definition,
Period of a stated  duration  in respect of any event  shall mean an  indefinite
period which can  reasonably  be expected to exceed the lesser of such  duration
and the period  remaining  to the date which is three  years prior to the end of
the  remaining  Basic Lease Term (or if such event  occurs  after the date three
years prior to the end of the  remaining  Basic  Lease  Term,  the lesser of six
months and the period  remaining to the day next  preceding the end of the Basic
Lease  Term) or a stated  period in excess of the  lesser  thereof  or an actual
period which continues in excess of the lesser thereof.

                  For purposes of part (6) of this definition,  Source,  Special
Nuclear or Byproduct  Material shall have their  respective  defined meanings as
defined in Section 11 of the Atomic  Energy Act of 1954,  as amended to the date
hereof and as the meanings of such terms may be
expanded by future amendments thereof.



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