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                      PUBLIC SERVICE COMPANY OF NEW MEXICO

                                       TO

                            THE CHASE MANHATTAN BANK

                                     Trustee


                          ----------------------------



                          THIRD SUPPLEMENTAL INDENTURE

                           Dated as of October 1, 1999

                                       To

                                    INDENTURE

                           Dated as of March 11, 1998


                          ----------------------------


                                  Providing for

      6.60% 1999 Pollution Control Series A Senior Unsecured Notes Due 2029

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<PAGE>


         THIRD  SUPPLEMENTAL  INDENTURE,  dated as of October  1, 1999,  between
PUBLIC SERVICE COMPANY OF NEW MEXICO,  a corporation duly organized and existing
under the laws of the State of New Mexico (the "Company"),  having its principal
office  at  Alvarado  Square,  Albuquerque,  New  Mexico  87158,  and THE  CHASE
MANHATTAN BANK, a New York banking corporation, as Trustee (the "Trustee") under
the  Indenture  dated as of March 11,  1998  between the Company and the Trustee
(the "Indenture").

                             RECITALS OF THE COMPANY

         The Company has executed and  delivered the Indenture to the Trustee to
provide for the issuance  from time to time of its senior  notes (the  "Notes"),
said Notes to be issued in one or more series as in the Indenture provided.

         The  Company  has  executed  and  delivered  to  the  Trustee  a  First
Supplemental Indenture,  dated as of March 11, 1999, between the Company and the
Trustee to  establish  the forms and terms of seven series of Notes and a Second
Supplemental Indenture,  dated as of March 11, 1998, between the Company and the
Trustee  to  establish  the  forms  and  terms of  three  series  of Notes  (the
Indenture,  as supplemented by said First Supplemental Indenture and said Second
Supplemental   Indenture,    collectively,   the   "Indenture,   as   heretofore
supplemented").

         Pursuant to the terms of the Indenture,  the Company desires to provide
for the  establishment  of a new  series of Notes to be known as its 6.60%  1999
Pollution  Control Series A Senior  Unsecured Notes Due 2029 (the "1999 Notes"),
the  form and  substance  of the  1999  Notes  and the  terms,  provisions,  and
conditions  thereof to be set forth as provided in the  Indenture and this Third
Supplemental Indenture.

         The Company and the City of  Farmington,  in the County of San Juan, an
incorporated  municipality,  a body politic and  corporate,  existing  under the
constitution  and laws of the State of New Mexico  (together with its successors
and assigns, the "City"), are concurrently herewith entering into an Installment
Sale Agreement, dated as of October 1, 1999 (the "Sale Agreement"),  whereby the
City has  agreed to  cooperate  with the  Company  and will  issue  and  deliver
pollution  control  revenue bonds under the Pollution  Control Revenue Bond Act,
NMSA 1978, ss.ss. 3-59-1 to 3-59-14 (1973), as amended.

         Pursuant to Ordinance No.  99-1102,  adopted by the City on October 12,
1999, as supplemented  by Resolution No. 99-965,  adopted by the City on October
12, 1999 (as so supplemented,  the "Ordinance"), the City has (1) authorized and
provided  for the  issuance of  $11,500,000  principal  amount of its  Pollution
Control  Revenue Bonds,  1999 Series A (Public Service Company of New Mexico San
Juan Project) (the "Revenue  Bonds"),  to bear interest at the rate of 6.60% per
annum and to mature  October 1, 2029;  and (2) appointed  First Security Bank of
New Mexico,  N.A., as trustee under the Ordinance  (together  with any successor
trustee under the Ordinance, the "Revenue Bond Trustee").

         Under the Sale  Agreement,  the Company is  obligated  to make  certain
payments to the City,  which the City has  pledged  and  assigned to the Revenue
Bond  Trustee by the terms of the  Ordinance,  to provide for the payment of the
principal of, and premium, if any, and interest on, the Revenue Bonds.


                                       1
<PAGE>

         The Company by the Guaranty Agreement, dated as of October 1, 1999 (the
"Guaranty"), by and between the Company and the Revenue Bond Trustee, guarantees
payment of the principal of and interest on the Revenue  Bonds (the  "Guaranteed
Amounts")  and agrees to issue its 1999 Notes,  to be  delivered  to the Revenue
Bond Trustee, as security for the performance of the Company's  obligation under
the Guaranty to pay the Guaranteed Amounts.

         All things necessary to make this Third Supplemental  Indenture a valid
agreement  of the  Company,  and to make the 1999  Notes,  when  executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been done.

NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:

         For and in consideration of the premises and the acceptance of the 1999
Notes by the Revenue Bond Trustee under the Ordinance as collateral security for
the  Revenue  Bonds,  and for the purpose of setting  forth,  as provided in the
Indenture,  the form and substance of the 1999 Notes and the terms,  provisions,
and conditions  thereof,  it is mutually agreed, for the equal and proportionate
benefit of all Holders of the 1999 Notes, as follows:

                                   ARTICLE ONE

                          GENERAL TERMS AND CONDITIONS
                          ----------------------------
                                OF THE 1999 NOTES
                                -----------------

         SECTION 1.01.  There shall be and is hereby  authorized a new series of
Notes  designated  the "6.60% 1999 Pollution  Control Series A Senior  Unsecured
Notes Due 2029".  The 1999 Notes shall be limited in aggregate  principal amount
to $11,500,000.  The 1999 Notes shall mature, and the principal thereof shall be
due and  payable  together  with all  accrued and unpaid  interest  thereon,  on
October 1, 2029.  Subject to the  provisions  of Section 1.03  hereof,  the 1999
Notes shall bear no interest until an Initial Interest Accrual Date, if any, has
been determined in accordance with Section 1.03 hereof.  The 1999 Notes shall be
issued in the form of registered  Notes without  coupons,  in  denominations  of
$1,000 and any integral multiple thereof.  Each of the 1999 Notes shall be dated
as of the date of its authentication.

         SECTION 1.02.  The 1999 Notes shall be issued to and  registered in the
name  of  the  Revenue  Bond   Trustee   under  the   Ordinance   and  shall  be
non-transferable,  except as may be required to effect transfer to any successor
trustee to the Revenue  Bond  Trustee  under the  Ordinance.  Principal  of, and
premium,  if  any,  and  interest  on  the  1999  Notes  will  be  payable,  and
registration  of transfer and  exchanges of the 1999 Notes may be effected,  and
notices  and demands to or upon the Company in respect of the 1999 Notes and the
Indenture,  as  supplemented  from time to time,  may be served at the office or
agency of the Company  maintained  for that purpose in The City and State of New
York,  which shall be the Corporate Trust Office of the Trustee.  The 1999 Notes
shall be deemed fully paid, and the obligation of the Company  thereunder  shall
be terminated, to the extent and in the manner provided in Section 1.05 hereof.


                                       2
<PAGE>

         SECTION  1.03.  The 1999 Notes  have been  issued to the  Revenue  Bond
Trustee to secure the  obligations  of the Company under the Guaranty to pay the
Guaranteed  Amounts.  In the event of failure by the Company to make any payment
of any  Guaranteed  Amounts  when  and as  required  by the  Company  under  the
Guaranty, the 1999 Notes shall bear interest at the rate of 6.60% per annum from
the last day to which  interest on the Revenue Bonds has been paid in full prior
to the failure of the Company to pay such  Guaranteed  Amounts  (such date being
herein defined as the "Initial  Interest  Accrual  Date"),  and interest at such
rate shall be payable on the semi-annual  dates due with respect to such Revenue
Bonds,  i.e., April 1st and October 1st in each year (each an "Interest  Payment
Date")  commencing  on the first  Interest  Payment  Date of the  Revenue  Bonds
following the Initial Interest Accrual Date.

         The Trustee may  conclusively  presume that no payments with respect to
interest  on the 1999  Notes are due  unless  and until the  Trustee  shall have
received a written  certificate  from the  Revenue  Bond  Trustee,  signed by an
authorized officer of the Revenue Bond Trustee,  certifying that the Company has
failed to make a payment of any  Guaranteed  Amount  when and as  required to be
made by it under  the  Guaranty  and  specifying  such  Guaranteed  Amount,  the
interest rate, the Initial  Interest Accrual Date, the Interest Payment Date and
such other terms as shall be  applicable  to the payment of interest on the 1999
Notes. The Trustee may rely and shall be fully protected in acting upon any such
certificate  and shall have no duty with  respect to the terms  specified in any
such  certificate  other  than to make  them  available  for  inspection  by the
Company.

         SECTION 1.04. The 1999 Notes shall be redeemed, in whole or in part, at
the principal amount thereof plus any premium, as hereinafter provided,  and any
accrued and unpaid  interest  from the Initial  Interest  Accrual  Date to their
redemption  date,  if the Revenue Bond  Trustee  notifies the Trustee in writing
that Revenue  Bonds are subject to redemption as provided in Section 3.02 of the
Ordinance.  Any such  notice  must be received by the Trustee no later than five
days (unless a shorter period of time is acceptable to the Trustee) prior to any
redemption date fixed for the Revenue Bonds to be redeemed and shall specify the
principal amount of such Revenue Bonds anticipated as of the date of such notice
to be redeemed,  the redemption  date, the redemption  premium,  if any, and the
amount of accrued and unpaid  interest  anticipated  to be paid thereon.  In the
event such notice is given to the Trustee as provided above, the redemption date
of the 1999  Notes  shall be the date on which the  Revenue  Bonds are fixed for
redemption, and on such date the said 1999 Notes shall become due and payable in
the same  principal  amount as the Revenue  Bonds in fact  redeemed  pursuant to
Section 3.01 of the Ordinance.  The  redemption  price payable in respect of the
1999 Notes shall include a premium in the event (and only in the event) that any
redemption  premium is payable in respect of the corresponding  Revenue Bonds in
fact redeemed pursuant to Section 3.01 of the Ordinance, and, in such event, the
amount of such  premium  in respect  of the  redemption  price of the 1999 Notes
shall be an amount equal to the redemption premium so payable in respect of such
Revenue  Bonds.  The  Company  shall  deposit in trust  with the  Trustee on the
redemption date an amount of money sufficient to pay the principal amount,  plus


                                       3
<PAGE>

any  premium  and  accrued  and unpaid  interest,  if any, to the date fixed for
redemption  on the 1999 Notes to be  redeemed  (the  "Redemption  Price").  Upon
presentation to the Trustee of any of the 1999 Notes by the Revenue Bond Trustee
for  payment of the  Redemption  Price,  such 1999 Notes so  presented  shall be
redeemed and paid in full. However, if, in lieu of presenting the 1999 Notes due
for  redemption,  the Revenue Bond Trustee  shall deliver such 1999 Notes to the
Trustee  for  cancellation,  then,  and in that event,  subject to Section  1.05
hereof,  such of the 1999 Notes so presented  for  cancellation  shall be deemed
fully paid,  and if any moneys  shall have been  deposited  with the Trustee for
such  redemption,  then such moneys shall be paid over to the  Company,  and the
1999 Notes so  surrendered  shall be canceled in  accordance  with  Section 1.05
hereof.

         SECTION 1.05 Upon  surrender by the Revenue Bond Trustee or the Company
to the Trustee hereunder of any of the 1999 Notes for  cancellation,  such notes
shall be  canceled  by the  Trustee  and  delivered  to the Company and shall be
deemed fully paid and the obligations of the Company thereunder terminated.

         SECTION  1.06 The 1999 Notes  shall be  defeasible  pursuant to Section
13.02 and Section 13.03 of the Indenture.

                                   ARTICLE TWO

                             FORM OF THE 1999 NOTES
                             ----------------------

         SECTION  2.01.  The  1999  Notes  and  the  Trustee's   certificate  of
authentication  to be endorsed  thereon are to be substantially in the following
form:

         Pursuant to Section 1.02 of the Third  Supplemental  Indenture dated as
of October 1, 1999,  supplemental to the Indenture,  dated as of March 11, 1998,
between Public Service  Company of New Mexico and The Chase  Manhattan  Bank, as
Trustee,  as  supplemented,  this  Note  is  nontransferable,  except  as may be
required to effect transfer to any successor trustee to the Revenue Bond Trustee
(as defined herein).

                      PUBLIC SERVICE COMPANY OF NEW MEXICO

      6.60% 1999 Pollution Control Series A Senior Unsecured Note Due 2029

No.                                                                $__________

         PUBLIC  SERVICE  COMPANY OF NEW MEXICO,  a  corporation  organized  and
existing  under the laws of the State of New Mexico (herein called the "Company"
which  term  includes  any  successor  Person  under the  Indenture  hereinafter
referred to), for value  received,  hereby promises to pay to , as trustee under
the  Ordinance (as defined  herein),  on October 1, 2029 (unless this Note shall
have been called for previous  redemption  and provision made for the payment of
the redemption price thereof),  the principal sum of ____ Dollars ($_______) and
to pay  interest  thereon  from the Initial  Interest  Accrual  Date (as defined
herein)  to the date of  payment  of this  Note at the rate of 6.60%  per  annum
payable  on the  first  Interest  Payment  Date of  April  1st and  October  1st
following the Initial Interest Accrual Date.


                                       4
<PAGE>

         Payment of the principal of, and premium, if any, and any such interest
on this Note will be made at the office or agency of the Company  maintained for
that  purpose in The City of New York,  in such coin or  currency  of the United
States of  America as at the time of  payment  is legal  tender  for  payment of
public and private debts.

         This  Note is one of a duly  authorized  issue of  senior  notes of the
Company  (herein  called  the  "Notes"),  issued and to be issued in one or more
series  under an  Indenture,  dated as of March  11,  1998  (herein  called  the
"Indenture",  which  term  shall  have  the  meaning  assigned  to  it  in  such
instrument),  between  the  Company  and The Chase  Manhattan  Bank,  as Trustee
(herein  called the "Trustee,"  which term includes any successor  trustee under
the Indenture), and reference is hereby made to the Indenture for a statement of
the respective rights,  limitations of rights,  duties and immunities thereunder
of the  Company,  the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered, to all of which
the Holder,  by  accepting  this Note,  assents.  This Note is one of the series
designated  on the  face  hereof,  limited  in  aggregate  principal  amount  to
$11,500,000.

         The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee to enter into one or more  supplemental  indentures  for
the  purpose  of  adding  any  provisions  to,  or  changing  in any  manner  or
eliminating  any of the  provisions  of, the  Indenture  with the consent of the
Holders of not less than a majority in aggregate  principal  amount of the Notes
of all series then  Outstanding  under the  Indenture,  considered as one class;
provided,  however,  that if  there  shall be  Notes  of more  than  one  series
Outstanding under the Indenture and if a proposed  supplemental  indenture shall
directly affect the rights of the Holders of Notes of one or more, but less than
all,  of such  series,  then the  consent  only of the  Holders of a majority in
aggregate  principal  amount of the Outstanding  Notes of all series so directly
affected,  considered  as one  class,  shall be  required.  The  Indenture  also
contains provisions permitting the Holders of specified percentages in principal
amount of the Notes of each, or all series, as the case may be, then Outstanding
under the  Indenture,  on behalf of the Holders of all Notes of such series,  to
waive  compliance  by the Company with certain  provisions  of the Indenture and
permitting the Holders of specified percentages in principal amount of the Notes
of each series Outstanding under the Indenture,  on behalf of the Holders of all
Notes of such series,  to waive  certain past  defaults  under the Indenture and
their  consequences,  provided,  however,  that if any such past default affects
more than one series of Notes, the Holders of a majority in aggregate  principal
amount of the  Outstanding  Notes of all such series,  considered  as one class,
shall  have the right to waive  such past  default,  and not the  Holders of the
Notes of any one such  series.  Any such consent or waiver by the Holder of this
Note  shall be  conclusive  and  binding  upon such  Holder  and upon all future
Holders of this Note and of any Note  issued upon the  registration  of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.

         As provided  in and subject to the  provisions  of the  Indenture,  the
Holder of this Note shall not have the right to institute  any  proceeding  with
respect to the Indenture or for the  appointment of a receiver or trustee or for
any other remedy thereunder,  unless such Holder shall have previously given the
Trustee  written  notice of a  continuing  Event of Default  with respect to the
Notes of this  series,  the  Holders  of not less than a majority  in  aggregate
principal  amount of the Notes of all series at the time  Outstanding in respect
of which an Event of Default shall have occurred and be  continuing,  considered
as one  class,  shall have made  written  request  to the  Trustee to  institute


                                       5
<PAGE>

proceedings  in respect of such Event of  Default  as Trustee  and  offered  the
Trustee reasonable  indemnity,  and the Trustee shall not have received from the
Holders of a  majority  in  principal  amount of Notes of all series at the time
Outstanding  in respect of which an Event of Default  shall have occurred and be
continuing, considered as one class, a direction inconsistent with such request,
and shall  have  failed to  institute  any such  proceeding,  for 60 days  after
receipt of such notice, request and offer of indemnity.  The foregoing shall not
apply to any suit  instituted by the Holder of this Note for the  enforcement of
any payment of principal  hereof or interest  hereon on or after the  respective
due dates expressed herein.

         No reference  herein to the  Indenture and no provision of this Note or
of the Indenture  shall alter or impair the obligation of the Company,  which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times,  place and rate, and in the coin or currency,  herein
prescribed.

         The Notes of this series have been issued to First Security Bank of New
Mexico, N.A., Albuquerque,  New Mexico, as trustee (the "Revenue Bond Trustee"),
under Ordinance No. 99-1102  adopted by the City of Farmington,  New Mexico (the
"City"),  on October 12, 1999, as  supplemented by Resolution No. 99-965 adopted
by the City on October 12, 1999 (as so supplemented, the "Ordinance"), to secure
the guarantee by the Company under a Guaranty  Agreement  dated as of October 1,
1999  between the Company and the Revenue  Bond  Trustee  (the  "Guaranty"),  of
payment of the principal of and interest due (the  "Guaranteed  Amounts") on the
Pollution  Control  Revenue Bonds,  1999 Series A (Public Service Company of New
Mexico San Juan  Project),  issued by the City under the Ordinance (the "Revenue
Bonds").

         In the event of  failure  by the  Company  to make any  payment  of any
Guaranteed Amount when and as required to be made by it under the Guaranty, this
Note shall bear  interest  from the last date to which  interest on such Revenue
Bonds has been paid in full  prior to the  failure  of the  Company  to pay such
Guaranteed  Amount  (such date being  herein  defined as the  "Initial  Interest
Accrual Date"), at the rate of 6.60% per annum payable on the first day of April
and the first day of  October  of each year,  commencing  on the first  Interest
Payment Date following the Initial Interest Accrual Date.

         The Trustee may  conclusively  presume that no payments with respect to
interest on the Notes of this series are due unless and until the Trustee  shall
have received a written  certificate  from the Revenue Bond Trustee or successor
trustee under the Ordinance, signed by an authorized officer of the Revenue Bond
Trustee or such  successor  trustee,  certifying  that the Company has failed to
make a payment of any  Guaranteed  Amount  when and as required to be made by it
under the Guaranty and specifying such Guaranteed  Amount,  the Initial Interest
Accrual  Date and such  other  matters,  if any,  as shall be  pertinent  to the
payment of interest on the Notes of this series.  The Trustee may rely and shall
be fully  protected in acting upon any such  certificate  and shall have no duty
with respect to the matters specified in any such certificate other than to make
it available for inspection by the Company.


                                       6
<PAGE>

         Upon the surrender for cancellation,  at any time or from time to time,
of Notes of this series by the Revenue Bond Trustee, successor trustee under the
Ordinance,  or the Company to the  Trustee,  the Notes so  surrendered  shall be
deemed  fully  paid  and the  obligations  of the  Company  thereunder  shall be
terminated, and such Notes shall be canceled by the Trustee and delivered to the
Company.

         This Note is nontransferable except to effect transfer to any successor
trustee to the Revenue Bond Trustee, any such transfer to be made as provided in
the  Indenture  and subject to certain  limitations  therein  set forth,  by the
registration  of transfer of this Note in the Note  Register,  upon surrender of
this Note for registration of transfer at the office or agency of the Company in
any place where the  principal  of and any premium and interest on this Note are
payable, duly endorsed by, or accompanied by a written instrument of transfer in
form  satisfactory  to the Company and the Note  Registrar duly executed by, the
Holder hereof or his attorney duly  authorized in writing,  and thereupon one or
more new Notes of this series and of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the successor Revenue
Bond Trustee.

         If an Event of Default with respect to Notes of this series shall occur
and be continuing, the principal of the Notes of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.

         No  recourse  shall  be had  for the  payment  of the  principal  of or
premium, if any, or interest,  if any, on any Notes, or any part thereof, or for
any claim based thereon or otherwise in respect thereof,  or of the indebtedness
represented  thereby,  or upon any  obligation,  covenant or agreement under the
Indenture, against any incorporator, stockholder, employee, officer or director,
as such,  past,  present  or  future of the  Company  or of any  predecessor  or
successor  corporation  (either directly or through the Company or a predecessor
or successor  corporation),  whether by virtue of any constitutional  provision,
statute or rule of law, or by the  enforcement  of any  assessment or penalty or
otherwise;  it being expressly  agreed and understood that the Indenture and all
Notes  are  solely  corporate  obligations,   and  that  no  personal  liability
whatsoever  shall attach to, or be incurred by, any  incorporator,  stockholder,
employee, officer or director, past, present or future, of the Company or of any
predecessor  or  successor  corporation,  because  of  the  indebtedness  hereby
authorized  or  under  or by  reason  of any of the  obligations,  covenants  or
agreements  contained  in the  Indenture or in any of the Notes or to be implied
herefrom or therefrom,  and that any such personal liability is hereby expressly
waived and released as a condition of, and as part of the consideration for, the
execution of the Indenture and the issuance of the Notes.

         The Notes of this series are issuable only in  registered  form without
coupons  in  denominations  of $1,000  and any  integral  multiple  thereof.  As
provided in the Indenture and subject to certain  limitations therein set forth,
Notes of this series are exchangeable  for a like aggregate  principal amount of
Notes of this series and of like tenor of a different  authorized  denomination,
as requested by the Holder surrendering the same.

         No service charge shall be made for any such  registration  of transfer
or exchange,  but the Company may require  payment of a sum  sufficient to cover
any tax or other governmental charge payable in connection therewith.


                                       7
<PAGE>

         Prior to due presentment of this Note for registration of transfer, the
Company,  the  Trustee and any agent of the Company or the Trustee may treat the
Person in whose  name  this  Note is  registered  as the  owner  hereof  for all
purposes,  whether or not this Note be overdue,  and neither  the  Company,  the
Trustee nor any such agent shall be affected by notice to the contrary.

         The Notes of this series shall be  redeemable  as provided in the Third
Supplemental  Indenture,  dated  as of  October  1,  1999,  supplemental  to the
Indenture.

         All terms used in this Note which are  defined in the  Indenture  shall
have the meanings assigned to them in the Indenture.

         Unless the  certificate of  authentication  hereon has been executed by
the  Trustee  referred  to below by manual  signature,  this  Note  shall not be
entitled to any benefit under the  Indenture or be valid or  obligatory  for any
purpose.

         IN WITNESS  WHEREOF,  the Company has caused this instrument to be duly
executed under its corporate seal.

                                     PUBLIC SERVICE COMPANY OF NEW MEXICO

                                     By:
                                         --------------------------------
                                              [Title]

Attest:


---------------------
[Assistant] Secretary


                         CERTIFICATION OF AUTHENTICATION
                         -------------------------------

         This is one of the Notes of the series  designated  therein referred to
in the within-mentioned Indenture.

Dated:
                                       THE CHASE MANHATTAN BANK, as Trustee

                                       By:
                                         ----------------------------------
                                                 Authorized Officer



                                       8
<PAGE>


                                  ARTICLE THREE

                          ORIGINAL ISSUE OF 1999 NOTES
                          ----------------------------

         SECTION  3.01.  1999  Notes  in  the  aggregate   principal  amount  of
$11,500,000 may, upon execution of this Third  Supplemental  Indenture,  or from
time to time thereafter,  be executed on behalf of the Company by any officer or
employee  authorized to do so by a Board  Resolution  under its  corporate  seal
affixed thereto or reproduced thereon attested by its Secretary or by one of its
Assistant  Secretaries and delivered to the Trustee for authentication,  and the
Trustee shall thereupon  authenticate  and deliver said 1999 Notes in accordance
with a Company Order delivered to the Trustee by the Company.

                                  ARTICLE FOUR

                           PAYING AGENT AND REGISTRAR
                           --------------------------

         SECTION  4.01.  The Chase  Manhattan  Bank will be the Paying Agent and
Note Registrar for the 1999 Notes.

                                  ARTICLE FIVE

                                SUNDRY PROVISIONS
                                -----------------

         SECTION 5.01. The Company  hereby  covenants that so long as any of the
1999 Notes shall remain outstanding, the Company shall deliver to the Trustee as
soon as available copies  (certified by an officer or employee of the Company to
be true) of the Ordinance,  the Sale  Agreement,  the Guaranty and copies of any
supplements,  amendments  or  replacements  thereto,  together  with such  other
documents and  instruments  as the Trustee may  reasonably  request from time to
time in connection with the transactions  contemplated hereby. The Trustee shall
have no duty to  examine  or take any  other  action  with  respect  to any such
documents  or  instruments  so received by it, other than to retain in its files
any of same  which it so  receives  and to make same  available  for  inspection
during normal business hours by any owner of the 1999 Notes.

         SECTION  5.02.  Except as  otherwise  expressly  provided in this Third
Supplemental  Indenture  or in the form of the 1999 Notes or  otherwise  clearly
required by the context hereof or thereof, all terms used herein or in said form
of the 1999  Notes  that are  defined in the  Indenture  shall have the  several
meanings respectively assigned to them thereby.

         SECTION  5.03.  The  Indenture,   as  heretofore  supplemented  and  as
supplemented by this Third Supplemental  Indenture,  is in all respects ratified
and confirmed, and this Third Supplemental Indenture shall be deemed part of the
Indenture in the manner and to the extent herein and therein provided.



                                       9
<PAGE>


         SECTION 5.04. The Trustee  hereby  accepts the trusts herein  declared,
provided, created,  supplemented, or amended and agrees to perform the same upon
the terms and  conditions  herein  and in the  Indenture  set forth and upon the
following terms and conditions:

         The Trustee shall not be responsible in any manner whatsoever
         for or in  respect of the  validity  or  sufficiency  of this
         Third  Supplemental  Indenture  or for or in  respect  of the
         recitals  contained herein, all of which recitals are made by
         the  Company  solely.  In  general,  each and every  term and
         condition  contained  in  Article VI of the  Indenture  shall
         apply to and form part of this Third  Supplemental  Indenture
         with the same force and effect as if the same were herein set
         forth  in  full  with   such   omissions,   variations,   and
         insertions,  if any, as may be  appropriate  to make the same
         conform  to  the   provisions  of  this  Third   Supplemental
         Indenture.

         To the extent permitted by Section 6.01 of the Indenture, and
         without  limitation  of Section  6.03 of the  Indenture,  the
         Trustee  may rely and shall be  protected  in acting upon any
         resolution,   certificate,  statement,  instrument,  opinion,
         report, notice,  request,  direction,  consent,  order, bond,
         debenture,  note,  other evidence of  indebtedness,  or other
         paper  or  document  (including,   without  limitation,   the
         Ordinance,  the Sale  Agreement,  the  Guaranty,  any notice,
         certificate, or other document provided for in the Ordinance,
         the Sale Agreement,  the Guaranty) believed by the Trustee to
         be genuine and to have been signed or presented by the proper
         party or parties.

         SECTION 5.05. This Third Supplemental  Indenture may be executed in any
number  of  counterparts,  each of which so  executed  shall be  deemed to be an
original,  but all such counterparts  shall together  constitute but one and the
same instrument.



                                       10
<PAGE>



         IN  WITNESS  WHEREOF,   the  parties  hereto  have  caused  this  Third
Supplemental Indenture to be duly executed, and their respective corporate seals
to be  hereunto  affixed  and  attested,  all as of the day and year first above
written.

                                       PUBLIC SERVICE COMPANY OF NEW MEXICO

                                       By:       /s/ T. R. Horn
                                            -------------------------------
                                                     T. R. Horn
                                             Vice President and Treasurer

Attest:


-------------------
Assistant Secretary

                                       THE CHASE MANHATTAN BANK, as Trustee


                                       By:        /s/ T. J. Foley
                                           ---------------------------------
                                                  T. J. Foley
                                                 Vice President

Attest:


-------------------
Trust Officer



                                       11
<PAGE>


STATE OF NEW MEXICO    )
                       ) ss:
COUNTY OF BERNALILLO   )

         On the __ day of October, 1999 before me personally came T. R. Horn, to
me  known,  who,  being by me duly  sworn,  did  depose  and say that he is Vice
President  and  Treasurer of Public  Service  Company of New Mexico,  one of the
corporations  described in and which executed the foregoing instrument;  that he
knows the seal of said corporation;  that the seal affixed to said instrument is
such  corporate  seal;  that it was so  affixed  by  authority  of the  Board of
Directors  of said  corporation;  and that he signed  his name  thereto  by like
authority.

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


                                        My Commission Expires:
                                                               --------------






STATE OF NEW YORK      )
                       ) ss:
COUNTY OF NEW YORK     )

         On the __ day of October,  1999 before me personally  came T. J. Foley,
to me known,  who, being by me duly sworn,  did depose and say that he is a Vice
President of The Chase Manhattan Bank, one of the corporations  described in and
which  executed  the  foregoing  instrument;  that  he  knows  the  seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that  it was so  affixed  by  authority  of  the  Board  of  Directors  of  said
corporation; and that he signed his name thereto by like authority.


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


TLH0199


                                       12