News Release

Feb. 8, 2007

PNM Announces Plans for Valencia Energy Facility

PNM NEWS News releases Financial news Contact PNM

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

Albuquerque: In response to a rapid increase in the demand for electricity, PNM announced today its plans to pursue the construction of the Valencia Energy Facility near Belen, NM.

The 140 megawatt (MW), natural gas-fired power plant, which will be located in the Rio Grande Industrial park to the southeast of Belen, is needed to serve projected peak electricity demand starting in 2008. The Valencia Energy Facility has already received an air permit from the New Mexico Environment Department and is ready for construction.

“The Valencia Energy Facility will help PNM serve faster-than-projected demand growth in the Middle Rio Grande Valley,” said Hugh Smith, Senior Vice President of Energy Resources. “The plant has all the right attributes: low environmental impact, necessary permits in place to allow it to be operational when it is needed, and proximity to the area where much of the demand growth has occurred, minimizing the need for new transmission lines.”

The Valencia Energy Facility was originally developed by an out-of-state energy company, which secured an air permit and land-use approval for the project. PNM purchased an option to buy the property and associated permits for the project in the spring of 2006 in the event that future peak generating capacity would be needed.

PNM is negotiating with a third-party who would build, own and operate the facility while PNM would be the sole purchaser of the electricity generated. The plant will run primarily during peak demand times – on hot summer afternoons when home cooling creates high electricity demand among PNM customers. The company estimates the plant will typically operate for fewer than 125 hours per month during the summer, or less than 18 percent of the time. During the rest of the year it is anticipated it would run for only a handful of hours.

The Valencia Energy Facility is projected to have significant positive economic impact for Valencia County, including:

• $3.6 million to $4 million in projected total tax benefits to the county government during the first 10 years
• $2.9 million to $3.2 million in projected total tax benefits to local schools during the first 10 years
• total projected construction spending of $100 million to $105 million

The facility is scheduled to be operational by June 2008.

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 435,000 customers and natural gas service to 487,000 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.