News Release

Jan. 22, 2008

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PNM Seeks to Lock In Future Price of Zero-Emission Nuclear Capacity

Albuquerque: Seeking to secure long-term, zero-emission electricity for its customers well into the future, PNM today filed for New Mexico Public Regulation Commission (PRC) approval of a plan to purchase approximately 30 megawatts (MW) of generating capacity at the Palo Verde Nuclear Generating Station near Phoenix. PNM currently leases the plant capacity.

The purchase would allow PNM to secure a fixed price for the plant when the lease expires in 2016. If PNM does not purchase the plant capacity, it would face the prospect in 2016 of having to seek replacement generating capacity from an alternate source or attempt to purchase the capacity at Palo Verde at that time when the cost is likely to be much higher.

“We think the price of ownership at Palo Verde will only climb in the years to come. With increased concern over climate change and the regulations we expect to come into play in the near future, we expect zero-emitting sources like nuclear generators to increase significantly in value,” said Jim Ferland, PNM Senior Vice President of Utility Operations. “We have an opportunity to make an investment in low-emission and low-cost nuclear generation that we strongly believe will provide long-term benefits to our customers.”

PNM currently leases or owns approximately 395 MWs of Palo Verde Generating Station. Approximately 268 MWs of that was financed through sale and leaseback transactions with investors when the facility opened in the mid 1980s. In a previous transaction in the early 1990s, PNM purchased 60 MW of that leased capacity, and is proposing to purchase an additional 30 MW of the leased capacity.

Last summer PNM Resources, PNM’s parent company, bought the 30 MW from the investment firm that held the lease. The company is asking for PRC approval to transfer that ownership to PNM for the cost of the purchase – approximately $49.7 million. Thirty MW is enough electricity to power approximately 21,000 average New Mexico homes.

PRC approval of this plan would allow PNM to recover the investment in the 30 MW generating resource in rates beginning in 2016. Until then, PNM is requesting approval to recover the carrying costs of the investment through a proposed surcharge on customer bills that would be in effect from mid 2008 until the beginning of 2016. The proposed surcharge for residential customers is .0831 cents per kilowatt-hour, which would add about 52 cents to the average monthly electric bill.

Ferland said PNM continues to rely on the Integrated Resource Plan (IRP) process to make decisions about the company’s future generating portfolio, but saw the need to act quickly in order to take advantage of this unexpected opportunity. “We wanted to lock in this price while we could so that the option would remain on the table for our customers’ future,” he said. The IRP is a process through which PNM works with stakeholders to weigh various options for meeting future electricity demand. The company’s first electric IRP will be submitted for PRC approval this summer.

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to more than 487,000 customers and natural gas service to 492,000 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.