News Release

June 5, 2003

Micro-Sized PNM Power Plant Brings Electricity to Hilton of Santa Fe

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Santa Fe: An innovative power generation project is under way on the Hilton of Santa Fe's rooftop, where a PNM-owned, natural gas-powered microturbine is now producing electricity.

One unique feature of the project is that the unit's exhaust energy is being used to heat the hotel's outdoor swimming pool. In the future, the Hilton also plans to use the heat for domestic water use within the hotel.

The microturbine, about the size of a large refrigerator, is the second of two units installed in Santa Fe as part of a PNM demonstration project designed to document and study the performance of the microturbines. The first unit has been producing electricity at St. Vincent Hospital for more than a year. The St. Vincent unit is also being used to heat water.

"These units will give us hands-on experience with a new kind of generation technology," said Roger Flynn, PNM executive vice president and chief operating officer. "We'll study the microturbines for two years to get a sense of their cost, efficiency, reliability and overall environmental impact."

Ron Rockelein, general manager of the Hilton of Santa Fe, said the hotel's participation in the project makes it an industry leader in on-site generation. "We are one of the first hotels in the Hilton chain to undertake a project like this. I believe company executives will be watching this project closely to see if this is something that might make sense in other locations as well," Rockelein said.

The unit at the Hilton of Santa Fe, 100 Sandoval Street, is rated to produce up to 28 kilowatts of electricity, or enough to power about 20 average-sized homes. The unit at St. Vincent Hospital is rated to produce up to 60 kilowatts of electricity, or enough to supply 43 average-sized homes. Each unit supplies only a portion of the electricity needed to meet demand at the facility where it is located.

The demonstration project arose out of Project Power, a PNM-sponsored, public-participation process that is evaluating options for ensuring adequate supplies of electricity for Santa Fe and nearby Las Vegas. Though Project Power participants have narrowed their focus to building new transmission capacity in the area, they also expressed a desire to learn more about distributed generation and microturbine technology.

Sandia National Laboratories (SNL) and New Mexico State University (NMSU) also are participants in the project. SNL tested the microturbines prior to their installation in Santa Fe. NMSU will collect data from the microturbines over a two-year period and work with PNM to evaluate the overall performance of this new technology. The data also will be shared with the Electric Power Research Institute, a national nonprofit energy research consortium currently studying microturbines.

The units are produced by Capstone Turbine Corp., of Chatsworth, Calif., the world's leading manufacturer of microturbine generating units. The Capstone microturbine has one moving part and uses no water, oil, lubricants or coolants.

PNM is the principal subsidiary of PNM Resources, an energy holding company based in Albuquerque. PNM provides natural gas service to 441,000 gas customers and electric utility service to 378,000 customers in New Mexico. The company also sells power on the wholesale market in the Western U.S. PNM Resources stock is traded primarily on the NYSE under the symbol PNM.

The Hilton of Santa Fe has 157 guest rooms, three suites and three luxurious casitas. All public areas have been designated non-smoking as well as 149 of the guest rooms. Rooms specially designed for the comfort of guests with disabilities are also available. Decorated throughout with beautiful regional artwork and antiquities, the Hilton of Santa Fe also preserves the historic Ortiz Hacienda, one of Santa Fe's well known historical sites.

Capstone Turbine (www.microturbine.com; Nasdaq: CPST) is the world's leading producer of low-emission microturbine systems. Capstone Turbine has sold and shipped more than 2,500 commercial production Capstone MicroTurbine systems to customers worldwide since 1999. These award-winning systems have logged nearly 4 million hours of operation.