News Release

March 22, 2006

PNM Continues Search for More Renewable Energy Projects

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

Albuquerque: Despite the company's strong desire to expand its renewable generation capacity with non-wind resources, PNM recently concluded that a group of renewable energy project proposals submitted to the utility would all be too costly to pursue.

"We believe all of the proposals represented excellent efforts to bring utility scale solar or biomass generation to New Mexico," said Hugh Smith, PNM senior vice president of Energy Resources. "Unfortunately, the projects exceeded regulatory cost caps that keep electric rates affordable and assure utilities the ability to recover costs."

Smith said PNM is committed to helping develop New Mexico's renewable energy industry. "We want to work with state regulators and other parties to determine the best way we can do this while also keeping energy affordable for all of our customers," he said.

The decision came after PNM evaluated five proposals from various third-party energy suppliers for both biomass and solar projects, as well its own self-build biomass plant assessment. PNM found that the energy produced by all but one of the projects would exceed a state-established per megawatt-hour cost cap. The remaining project was lower than the state cost cap but was large enough to cause potentially significant rate increases for PNM customers, which is prohibited by state rules.

Investor-owned utilities in New Mexico, including PNM, are required by the state's renewable portfolio standard (RPS) to have 5 percent of their generation capacity come from renewable sources starting this year, increasing 1 percent each year until 2011, when the requirement will be 10 percent.

Currently, PNM is exceeding the 5 percent RPS requirement with the wind energy it purchases from a 200 MW wind farm near House, N.M. In order to satisfy the 10 percent requirement in 2011, PNM will need additional renewable resources.

The proposals were in response to a request for proposals PNM issued in October to identify a feasible, non-wind renewable energy project that could be in service by 2009 to meet RPS requirements, which favors diversity of renewable resources.

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 424,000 customers and natural gas service to 478,000 customers in New Mexico. The company also sells power on the wholesale market in the West. PNM Resources stock is traded primarily on the NYSE under the symbol PNM. For more information, see the company's Web site at PNM.com.