SUPPLEMENT EMPLOYEE RETIREMENT AGREEMENT
                    ----------------------------------------

         The Supplemental Employee Retirement Agreement is made and entered into
this 4th day of August 1989, by and between Public Service Company of New Mexico
("Employer"), and JOHN T. ACKERMAN, ("Employee").

         WHEREAS,  Employer is the Plan Sponsor of the Public Service Company of
New Mexico Restated and Amended Accelerated  Management  Performance Plan (1988)
("AMP") and the Public Service Company of New Mexico Employees'  Retirement Plan
("Retirement Plan");

         WHEREAS,  it is the intent of this Agreement to provide for the payment
of supplemental employee retirement benefits to Employee not otherwise available
to Employee under the AMP and the Retirement Plan;

         NOW, THEREFORE, it is agreed as follows:

         1.  Termination  of Employment  before  November 1, 1990. If Employee's
employment with Employer  terminates before November 1, 1990, Employer agrees to
pay Employee  supplemental  employee  retirement benefits as if Employee had, on
the date of termination of employment,  attained his Early Retirement Date under
the Retirement Plan.

         2.  Termination  of  Employment  after  October 31, 1990. If Employee's
employment  with Employer  terminates  after October 31, 1990,  Employer  hereby
agrees to pay Employee  supplemental employee retirement benefits as if Employee
had, on the date of Employee's  termination of employment,  accumulated  Maximum
Performance Credits pursuant to the AMP.

         3.  Benefit  Calculation.  Benefits  payable to Employee  under  either
paragraph 1 or 2 above  shall be the  benefits  as  calculated  under the AMP in
effect on the date of this  Agreement,  as modified  by either  paragraph 1 or 2
above, as may be applicable.  Such benefits shall be payable to Employee, at his
election,  at any time following such  termination of employment  with Employer,
pursuant  to  any  annuity  form  available   under  the  Retirement  Plan  with
appropriate  actuarial adjustments for forms other than a single life annuity on
Employee's life.

         4. No  Duplication  of  Benefits.  The purpose of this  Agreement is to
accelerate the benefits that may be due under the AMP and the  Retirement  Plan.
All payments due hereunder  shall be reduced by all benefits  deemed  payable to
Employee  under the AMP and the  Retirement  Plan.  The benefits  deemed payable
under the Retirement Plan and the AMP shall be calculated.

                  (a)  assuming a deemed  commencement  date for the  payment of
         such  benefits  being  the later of:  (i) the date  Employee  commences
         receiving  benefits  under the  Agreement,  or (ii) the  earliest  date
         Employee could have begun receiving  benefits under the Retirement Plan
         and the AMP;


<PAGE>

                  (b) using the same form of benefit (i.e.  single life annuity,
         joint  survivor  annuity,  etc.) as is selected for payment of benefits
         under this Agreement; and

                  (c) based  upon the  Retirement  Plan and AMP in effect on the
         date such  benefits  are deemed to have  commenced  pursuant to Section
         4(a) above.

         5.  Designation of  Beneficiary.  The  designation of beneficiary  form
filed by  Employer  under  the  Retirement  Plan  shall  also be  deemed to be a
designation  of the  person(s) or  fiduciary to receive any amount  payable upon
Employee's  death.  Until the  Employee  and his  spouse  shall  file a written,
notarized  designation  to the  contrary,  the spouse of the  Employee  shall be
deemed to have been designated as beneficiary or, in the event that Employee has
no spouse,  the Employee's estate shall be deemed to have designed his estate as
beneficiary.

         6. No  Assignment.  This  Agreement  shall inure only to the benefit of
Employee,  Employee's designated beneficiary, and Employee's estate or heirs and
may not be assigned, transferred, pledged or hypothecated in any way by Employee
or  Employee's  personal  representative,  heir,  distributee,  or other  person
claiming  under  Employee and shall not be subject to  execution,  attachment or
similar process.

         7. No Trust.  Nothing  contained in this  Agreement and no action taken
pursuant to the  provisions  of this  Agreement  shall create or be construed to
create a trust of any kind,  or a fiduciary  relationship  between  Employer and
Employee, or any designated beneficiary of Employee. Employer's obligation under
this Agreement is and shall be and remain at all times unfunded and unsecured by
any property, and shall at all times be a mere contractual obligation.

         8. Administrator.  This Agreement shall be administered by the Board of
Directors  of Employer  or any  individual  or  committee  appointed  by it with
written notice to Employee.

         9. Amendment.  This Agreement may be amended only by written consent of
both parties.

         10. Controlling Law. This Agreement shall be interpreted under the laws
of the State of New Mexico.

         11. Binding Effect.  This Agreement shall be binding upon any successor
Employer and any such successor  shall be deemed  substituted for Employer under
the terms of this  Agreement.  As used in this Agreement,  the term  "successor"
shall include any person,  firm,  corporation or other business  entity which at
anytime, whether by merger, purchase or otherwise, acquires all or substantially
all of the assets or business of Employer.

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<PAGE>


         IN  WITNESS  WHEREOF,  the  parties  hereto,  personally  or  by  their
authorized representatives,  have executed this Supplemental Employee Retirement
Agreement as of the date first above written.

                                   EMPLOYER:


                                   Public Service Company of
                                   New Mexico


                                   By /s/ J. D. Geist
                                    ------------------------------------
                                      JERRY D. GEIST, Chairman and
                                      President

                                   EMPLOYEE:


                                   /s/ J. T. Ackerman
                                   -------------------------------------
                                      JOHN T. ACKERMAN


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<PAGE>


                   SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT
                   ------------------------------------------

         This  Supplemental  Employee  Retirement  Agreement is made and entered
into as of this 4th day of August,  1989, by and between Public Service  Company
of New Mexico, a New Mexico Corporation ("PNM"), and Max Maerki ("Maerki").

                                   WITNESSETH

         WHEREAS,  Maerki is  currently  the  Senior  Vice  President  and Chief
Financial Officer of PNM;

         WHEREAS, Maerki has knowledge, experience,  reputation and contacts the
benefits  of which PNM would  like to  continue  receiving,  and is  willing  to
provide Maerki additional incentives for such services;

         WHEREAS,  PNM is the sponsoring  employer of the Public Service Company
of New Mexico Employees' Retirement Plan (the "Retirement Plan"); and

         WHEREAS,  it is the intent of this Agreement to provide for the payment
of supplemental  employee  retirement benefits to Maerki not otherwise available
to him under the Retirement Plan.

         NOW  THEREFORE,  in  consideration  of the  mutual  promises  contained
herein, it is hereby agreed as follows:

         1. Supplemental  Employee Retirement  Benefit.  PNM shall pay to Maerki
supplemental  employee  retirement  benefits equal to the benefit which would be
payable to Maerki under the  Retirement  Plan,  calculated  as though Maerki has
been in  continuous  employment  of PNM since  February  15,  1974,  reduced  by
benefits deemed payable to Maerki under the Retirement Plan.

         2.  Calculation  of  Supplemental  Retirement  Benefits.  The  benefits
payable under this Agreement:

         (a) shall be  determined  based upon the  Retirement  Plan in effect on
January 1, 1989,  including  amendments that will be made to the Retirement Plan
during the 1989 calendar year retroactively to January 1, 1989;

         (b)      shall assume 100% vesting; and

         (c) shall be calculated  without regard to any  limitations  that would
otherwise  be  applicable  pursuant to the  Internal  Revenue  Code of 1986,  as
amended,  ("Code") Section 415 and the $200,000 compensation limitation pursuant
to Code Section 404 and 401(a)(17).


<PAGE>


         3.  Form, Timing and Amount of Benefit.

                  (a) The  benefits  payable  under  paragraph  1 above shall be
         payable  pursuant to any annuity form  available  under the  Retirement
         Plan with  appropriate  actuarial  adjustments  for forms  other than a
         single life annuity on Maerki's  life. The form shall be selected prior
         to Maerki's termination of employment.

                  (b) The benefits  payable under  paragraph 1 shall commence at
         such time as Maerki shall elect  following (x) Maerki's  termination of
         employment  with PNM, or (y) if later,  the earliest  date Maerki could
         commence  receiving  benefits  under the  Retirement  Plan assuming his
         employment with PNM commenced February 15,1974.

         4. Calculation of Plan Benefits.  The benefits deemed payable under the
Retirement Plan shall be calculated:

                  (a)  assuming a deemed  commencement  date for the  payment of
         such  benefits  being  the  later  of:  (i) the date  Maerki  commences
         receiving  benefits  under this  Agreement,  and (ii) the earliest date
         Maerki could have begun receiving benefits under the Retirement Plan;

                  (b) using the same form of benefit (i.e., single life annuity,
         joint  survivor  annuity,  etc.) as is selected for payment of benefits
         under this Agreement; and

                  (c) based upon the Retirement  Plan in effect on the date such
         benefits are deemed to have commenced pursuant to Section 4(a) above.

         5.  Designation of  Beneficiary.  The  designation of beneficiary  form
filed  by  Maerki  under  the  Retirement  Plan  shall  also be  deemed  to be a
designation  of the person or persons or fiduciary to receive any amount payable
under this Agreement  upon Maerki's  death.  Until a written  designation to the
contrary is filed,  any spouse of Maerki shall be deemed to have been designated
as the beneficiary hereunder,  or in the event that Maerki has no spouse, Maerki
shall be deemed to have  designated  his  estate as  beneficiary.  For  purposes
hereof, "spouse" shall mean "Eligible Spouse" as defined in the Retirement Plan.

         6. No  Assignment.  This  agreement  shall inure only to the benefit of
Maerki, Maerki's designated  beneficiary,  Maerki's estate, or heirs and may not
be  assigned,  transferred,  pledged,  or  hypothecated  in any  way by  Maerki,
Maerki's executor,  administrator,  heir, distributee,  or other person claiming
under  Maerki,  and shall not be subject  to  execution,  attachment  or similar
process.

         7. No Trust.  Nothing  contained in this  Agreement and no action taken
shall  create or be  construed  to create a trust of any  kind,  or a  fiduciary
relationship  between Maerki and PNM, or any  designated  beneficiary of Maerki.
PNM's obligation under this Agreement is unfunded and unsecured by any property,
and is a mere contractual obligation of PNM.

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<PAGE>

         8. Administrator.  This Agreement shall be administered by the Board of
Directors of PNM or any  individual  or  committee  appointed by it with written
notice to Maerki.

         9. Amendment.  This Agreement may be amended only by written consent of
both  parties.  This  Agreement  constitutes  the entire  agreement  between the
parties as to supplemental  retirement benefits and supersedes any and all prior
agreements.

         10. Controlling Law. This Agreement shall be interpreted under the laws
of the State of New Mexico.

         11. Binding  Effect.  This Agreement shall be binding upon and inure to
the  benefit  of any  successor  of PNM and any such  successor  shall be deemed
substituted  for  PNM  under  the  terms  of  this  Agreement.  As  used in this
Agreement, the term "successor" shall include any person, firm, corporation,  or
other  business  entity  which at any time,  whether  by  merger,  purchase,  or
otherwise, acquires all or substantially all of the assets or business of PNM.

         IN  WITNESS  WHEREOF,  the  parties  hereto,  personally  or  by  their
authorized  representatives,  have  subscribed  to  this  supplemental  employee
retirement agreement.

                                          PUBLIC SERVICE COMPANY
                                                OF NEW MEXICO


Date:  August 4, 1989                     By:      /s/ J. D. Geist
----------------------------------------  ----------------------------------
                                                Jerry Geist, President and
                                                Chairman

Date:  August 4, 1989                     /s/ Max Maerki
----------------------------------------  ----------------------------------
                                          Max Maerki






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