News Release

Aug. 29 , 2006

PNM Announces Start of Major Environmental
Construction Project at San Juan Generating Station

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

Farmington: PNM today officially announced the start of an estimated $270 million construction project that will significantly improve San Juan Generating Station’s environmental performance and inject million of dollars into the local economy.

Preliminary work began earlier this summer and is now beginning in earnest. During the course of the next five years PNM will upgrade environmental control equipment on each of the 1,800 MW plant’s four generating units. The upgrades are expected to reduce:

• emissions of nitrogen oxides (NOX) by 35 percent below current permit levels
• emissions of sulfur dioxide (SO2) by 65 percent below current permit levels
• emissions of particulates by 70 percent below current permit levels
• emissions of mercury by approximately 75 percent

“These upgrades represent our commitment to continuously improving San Juan Generating Station’s environmental performance,” said Jeff Sterba, PNM Chairman, President and CEO. “This facility is critical to New Mexico’s energy infrastructure and by investing in it we are helping to ensure that we have the sustainable energy we need for the future.”

The construction project results from a 2005 cooperative agreement between the Grand Canyon Trust, the Sierra Club and the New Mexico Environment Department that resolved differences between these parties over alleged opacity violations at the plant.

“I applaud PNM and the other plant owners for making this commitment and reaching a compromise that benefits all of New Mexico,” said Ron Curry, Secretary of the New Mexico Environment Department. “The leadership they demonstrated in agreeing to these improvements is commendable and shows a real commitment to improving the environment.”

In addition to the environmental benefits of the project, the economic benefits of the project will be significant for the region and the state. Based on current, best-available information, PNM is projecting that tax revenues alone from 2006 to 2015 could total as much as:

• $14.7 million - $16.2 million to the State of New Mexico
• $8.5 million - $9.4 million to San Juan County
• $5.6 million - $6.2 million to the Central Consolidated School District

During the construction period from 2006 through 2009 the project could generate between $16 million and $18 million in construction-related wages, with 18 to 20 permanent direct and indirect jobs being created by 2010.

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 427,000 customers and natural gas service to 481,000 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.