News Release

April 4, 2006

Luna Energy Facility Begins Producing Electricity

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

Deming, N.M.: Luna Energy Facility, a clean-burning, natural gas-fired power plant north of Deming, is now producing electricity.

The 570-megawatt power plant, the third-largest in New Mexico, went online today after more than a year of construction activity. Workers at the construction site logged more than 880,000 labor hours without a single lost-time accident.

The plant is jointly and equally owned by PNM, a subsidiary of PNM Resources (NYSE: PNM); Tucson Electric Power Co., a subsidiary of UniSource Energy Corp. (NYSE: UNS); and Phelps Dodge Energy Services, LLC, a subsidiary of Phelps Dodge Corp. (NYSE: PD).

Operating the plant will require 25 employees and add about $2 million in annual wages to the economy of Luna County. The plant will also increase revenues for state, county and local government as well as the Deming School District.

"Luna Energy Facility is a neighbor that brings new tax revenues and new jobs to our city and county," said Deming City Administrator John Strand. "It will have a tremendous, positive impact on this part of New Mexico."

PNM Resources Senior Vice President Hugh Smith said PNM, which managed the construction project, is proud to create jobs in Luna County with a plant that minimizes its impact on the environment. "This is the cleanest-burning fossil fuel plant in New Mexico, and it moves us closer to meeting company-wide goals of reducing air emissions and reducing our use of fresh water," he said.

The owners have installed selective catalytic reduction technology, an emissions control technology that dramatically reduces the plant's output of nitrogen oxides. The SCR technology works much like a catalytic converter on a car to reduce emissions.

The plant will use recycled wastewater from the City of Deming to reduce its use of fresh water by one-third. The plant's owners paid for upgrades to Deming's wastewater treatment plant to enable use of the treated water, known as effluent, and also installed a pipeline to carry the effluent to the plant site. As it has done with its other plants, PNM will develop an ISO 14001-certified environmental management system to guide all operations at the facility.

PNM will use its portion of the plant's output, about 190 MW, to meet the needs of wholesale electric customers throughout the Southwest. The plant's construction and operating costs will not affect the electric rates of PNM's residential and business customers.

The plant was originally owned by Duke Energy (NYSE: DUK), which suspended construction in September 2002 when the plant was about half complete. PNM Resources, Tucson Electric Power and Phelps Dodge purchased the facility and its permits in November 2004. The project was completed for $10 million less and three months earlier than originally expected.

High-resolution photos of Luna Energy Facility

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.