News Release

Feb. 28, 2005

Cost of Natural Gas Drops Significantly in March

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NEWS MEDIA CONTACT Susan Sponar Telephone: (505) 241-2768

Albuquerque: The approach of spring brings good news for PNM natural gas customers: not only will their consumption begin to drop, but the cost per unit of natural gas will drop significantly as well.

The March price of natural gas is 41.77 cents per therm, down nearly 30 percent from the February price of is 58.41 cents per therm. Based on expected average residential use of 96 therms in March, this will result in an average residential bill of $74.55, including franchise fees and gross receipts tax. The average bill for residential customers in February was expected to be $118.61.

PNM Vice President Melvin Christopher, who oversees PNM's purchase of natural gas on behalf of customers throughout New Mexico, said relatively mild weather in January – typically the coldest month – reduced demand for natural gas and caused prices to fall lower than expected.

"The natural gas market today remains tight, with prices still high compared to historic levels," Christopher said. "But the conditions of the past two months have reduced near-term pressure on prices. As a result, customers will see the benefit of this in March."

PNM purchases gas from every major supplier in New Mexico and uses a variety of techniques, including hedging, gas storage and fixed-price contracts, to purchase gas as competitively as possible for customers. Under state regulation, the cost of gas is a pass through for PNM.

Note to reporters and editors: This release is PNM's last natural gas price press release for the 2004-2005 heating season. Monthly releases will resume in November 2005. As always, expected natural gas costs are posted on PNM.com, listed at the bottom of each customer's monthly bill, and available by phone at (800) TALK-GAS.