News Release

March 10, 2005

Governor, Attorney General, PNM and Major Environmental
Groups Announce Commitment to New Emissions Reduction
Technology at PNM San Juan Generating Station

LEARN MORE ABOUT SAN JUAN EMISSIONS PAST AND FUTURE Project timelines Project fact sheet Sulfer dioxide (SO2) emissions - lbs/mmbtu (.pdf) Sulfer dioxide (SO2) emissions (.pdf) Nitrogen oxide (NOx) emissions - lbs/mmbtu (.pdf) Nitrogen oxide (NOx) emissions - tons (.pdf) Particulate emissions, based on permit levels (.pdf) Mercury emissions - pounds (.pdf)

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

Waterflow: Gov. Bill Richardson, Attorney General Patricia Madrid, PNM Chairman, President and CEO Jeff Sterba and two major environmental organizations announced today the PNM San Juan Generating Station (SJGS) will significantly reduce air pollution emissions as part of an enhanced commitment to the environment. As part of this commitment, PNM, the plant operator, will install mercury emissions reduction technology, making SJGS one of the first coal-fired plants in the nation to make a voluntary investment in this technology.

Through a cooperative agreement with the New Mexico Environment Department (NMED), the Grand Canyon Trust and the Sierra Club, PNM has committed to installing new technology at SJGS to reduce mercury, particulate matter, nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions over the next four-and-a-half years. PNM and other plant owners will invest more than $200 million in this new pollution control technology at the 1,798-megawatt, coal-fired plant near Farmington, N.M.

"Today, New Mexico has shown once again that we are a national leader in clean energy," Richardson said. "This historic agreement will take more than 16,000 tons of pollution out of our air, which is the equivalent of removing about half a million cars from New Mexico's roads. The pollution controls announced today will mean healthier New Mexicans and a cleaner environment."

In addition to bringing cleaner air to the region, the construction projects will have a significant economic impact on San Juan County and the Four Corners area. The construction phase will create 940 jobs and temporarily increase wages in San Juan County by about $31.5 million. The installation and operation of the pollution control equipment is estimated to generate $14.7 million in additional local and state taxes between 2005 and 2014.

PNM will invest in the following new technologies to reduce emissions at SJGS:

• Installation and operation of mercury control technology on all four units to reduce mercury emissions. After initial evaluation of the performance of this technology on Units 3 and 4, PNM will install the technology on the plant's remaining two units.
• Installation of new advanced low-NOx burners and overfire air on all four units to reduce the NOx emissions rate by 35 percent from the current permitted level.
• Installation of baghouse control technology on the plant's four units to reduce the particulate matter emission rate by 70 percent from the current permitted level.
• Additional SO2 emissions reductions from increased scrubbing by enhancing the removal efficiency of the existing pollution control system.

"This agreement demonstrates our commitment to improving the quality of life in New Mexico, moves us aggressively forward in meeting our environmental sustainability goals, and makes San Juan a national leader in innovative environmental technologies," Sterba said.

The capital costs of the technology are estimated to be $110 million, with an additional $80 to $90 million estimated for operating and maintenance costs over the next 10 years. PNM's portion of costs will be about 47 percent of the total capital and operating costs. The agreement, subject to the approval of the court, resolves a lawsuit that the Grand Canyon Trust and the Sierra Club filed against PNM in 2002 for alleged violations of opacity limits. PNM plans to file for an air permit with NMED prior to starting construction on certain new equipment required by the agreement.

"I am very pleased to approve this settlement for our state," said New Mexico Attorney General Patricia Madrid. "This is a major environmental air quality victory. My job is also to protect residential and small business ratepayers, and we have done that by ensuring that the cost of these important emission controls will be spread out over a reasonable period of time. This is an impressive victory for everyone."

"PNM has agreed to dramatically reduce pollutants from the SJGS that were not subject to our Clean Air Act lawsuit," said Rick Moore, associate director of the GCT. "The company’s willingness to install cutting-edge equipment to reduce mercury emissions by approximately 80 percent shows that PNM is following through on its efforts to reduce its environmental footprint within New Mexico, an effort wholeheartedly supported by the GCT."

In early 2004, the PNM Resources Board of Directors approved an environmental sustainability policy developed to move PNM to a new level of environmental stewardship based on achieving a sustainable business model. Under this direction, PNM has committed to practice sustainable development that allows the company to grow and thrive while also protecting, preserving and wisely using natural resources. As part of the commitment, PNM adopted specific environmental goals that will reduce emissions and consumption of fresh water per energy unit produced, reduce solid waste and exhibit national utility leadership in development of renewable energy.

SJGS has received state, national, international and industry recognition for its environmental management practices. In 2000, an independent auditor certified SJGS's environmental management system to international ISO 14001 requirements.

SJGS is a 1,798-megawatt coal-fired power plant located 15 miles northwest of Farmington, N.M. The plant is PNM's primary generation source, providing 65 percent of the power needed by PNM customers. PNM operates the plant on behalf of the company and eight other owners.

PNM Resources is an energy holding company based in Albuquerque, N.M. PNM, the principal subsidiary of PNM Resources, serves about 460,000 natural gas customers and 405,000 electric customers in New Mexico. The company also sells power on the wholesale market in the Western United States. PNM Resources stock is traded primarily on the NYSE under the symbol PNM.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this release and documents the Company files with the SEC that relate to future events or the Company's expectations, projections, estimates, intentions, goals, targets and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. You are cautioned that all forward-looking statements are based upon current expectations and estimates and the Company assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by the forward-looking statements, PNM Resources cautions you not to place undue reliance on these statements. Many factors could cause actual results to differ, and will affect the Company's future financial condition, cash flow and operating results. These factors include risks and uncertainties relating to the successful installation and operation of the emissions controls, including construction delays and unanticipated cost overruns, state and federal regulatory and legislative decisions and actions, and if the equipment performs as anticipated. For a detailed discussion of the important factors that affect PNM Resources and that could cause actual results to differ from those expressed or implied by the Company's forward-looking statements, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's current and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and the Company's current and future Current Reports on Form 8-K, filed with the SEC.