News Release

Sept. 22 , 2008

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PNM Proposes New Electric Rates to Address Growing Demand for Electricity, Need for Cleaner Energy Sources

Please note that the information in this release, posted on Sept. 22, 2008, is now outdated. Information on PNM's stipulated agreement with various parties to its rate case is available in a release dated March 6, 2009

Albuquerque: Faced with growing demand for electricity, the need for cleaner energy sources and a commitment to maintain its excellent record of reliability, PNM today proposed new electric rates that, if approved, are expected to go into effect in August 2009.

"New Mexico's economy and its population are growing rapidly, and so is its need for more electricity," said Pat Vincent-Collawn, president and chief executive officer of PNM. "These proposed rates are part of our larger effort to prepare for New Mexico's energy future, which includes new sources of power, reduced emissions at our main power plant, and increased investment in renewable energy and energy efficiency."

The average increase across all rate classes, including residential, small businesses and industrial customers, would be 18 percent. The rate proposal will be considered by the N.M. Public Regulation Commission and be the subject of a public hearing early next year.

Vincent-Collawn said PNM is committed to helping customers manage their bills through new and expanded energy efficiency programs. The company recently proposed energy efficiency programs that would increase energy savings from existing programs by 110 percent and, over their lifetime, save enough electricity to power nearly 80,000 homes for a year. The proposed programs, including a few specifically designed for low income customers, would:

• Provide discounts for 900,000 compact fluorescent light bulbs a year,
• Result in the recycling of 12,000 old refrigerators a year, and
• Provide rebates and other incentives for businesses to use energy more efficiently.

"We know customers are feeling the pinch of rising energy costs. In this rising-price environment, it is more important than ever for us to work together to help manage monthly bills," Vincent-Collawn said.

New and Cleaner Sources of Energy to Meet Growing Electric Demand

Electricity needs in PNM's service territory are expected to grow by 2.1 percent per year between now and 2013 – 50 percent faster than the national forecast of 1.4 percent per year. This is the result of new customers joining the PNM system as well as moderate increases in average per-customer consumption.

Fair and reasonable rates that remain affordable but cover PNM's increased costs are critical to its continued ability to meet this growing demand in a safe, reliable and environmentally responsible manner. The proposed $123.3 million rate increase is driven largely by:

• Devoting two existing, clean-burning, natural gas-fired power plants in southern New Mexico to meeting the growing energy needs of PNM customers, saving customers an estimated $144 million over 20 years (compared to building two new, similar plants),
• A major environmental upgrade at the coal-fired San Juan Generating Station that will reduce emissions by more than 24,000 tons annually and keep the plant available as a low-cost provider of electricity for PNM customers, and
• Increased interest, fuel and other expenses.

To meet growing customer needs, and maintain electric reliability, PNM expects to spend about $1.3 billion on power plants, power lines and other infrastructure in the next five years – 63 percent more than it spent on such projects in the past five years.

In addition to the base rate increase, PNM is asking to continue use of a fuel and purchased power cost adjustment clause, which would allow the company to pass along to customers changes in fuel and purchased power costs incurred to provide electricity to customers without adding a profit. Such a mechanism is prevalent throughout the country as well as in New Mexico and helps to keep overall rates lower than they otherwise would be.

Utility Involves Public in Planning For the Future

Last week, PNM filed with state regulators an electric integrated resource plan, a roadmap of the resources on which it will rely to meet the growing electric needs of its customers. The planning document is the result of a year-long public collaboration process.

The result is an action plan for 2008 through 2012 that, in addition to the two gas-fired plants mentioned above, includes:

• A new customer-owned solar photovoltaic program for those who want to install photovoltaic systems larger than 10 kilowatts in size (PNM has already filed the proposed program with state regulators),
• More aggressive energy efficiency programs, and
• The addition of the most cost effective renewable resources chosen through two current request for proposal initiatives.

"Customers have told us that electric reliability, cleaner energy and energy efficiency are high priorities," said Vincent-Collawn. "Our recent filings, including the rate case filed today, move us further down that path and will strengthen the company's ability to meet these important customer needs."

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 495,000 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.