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PNM Awarded Emergency Fuel Clause

Posted on: Friday, 23 May 2008, 00:00 CDT

PNM Resources' (NYSE: PNM) electric utility, PNM, will be allowed to implement an emergency fuel and purchased power cost adjustment clause, which is projected to allow PNM to recover an additional $58 million to $62 million of actual fuel and purchased power costs annually, state regulators decided today.

The decision by the N.M. Public Regulation Commission was in response to a joint motion filed by PNM and the International Brotherhood of Electrical Workers Local 611 to implement an emergency fuel and purchased power clause that would enable the utility to recoup rising costs not recovered in base rates. N.M. Attorney General Gary King, whose office serves as the residential and small business consumer advocate in rate case proceedings, supported the motion.

"This decision goes a long way toward giving PNM the ability to recover changes in fuel and purchased power costs in a timely manner," said Pat Vincent-Collawn, utilities president. "This is an important step toward restoring the financial health of the utility." She said the PRC is expected to issue its final order as early as Friday. When available, the order will be posted at http://pnm.client.shareholder.com/investors/regulatory.cfm.

PNM's fuel clause includes a cap on recovery so that the combination of the amount embedded in base rates and the amounts collected through the fuel adjustment clause cannot exceed $0.024972 per kilowatt-hour.

Additionally, the fuel clause

-- Requires PRC approval of replacement power costs that are the result of base load power plant capacity factors being below the weighted average of 86.4 percent,

-- Credits customers with 100 percent of the proceeds from off-system sales from jurisdictional resources,

-- Is based on the projected fuel and purchased power costs with the factor to be adjusted after six months, and

-- Is effective by June 2, 2008, and expires the earlier of 24 months or when new PNM electric rates go into effect after its next rate case.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements made in this news release that relate to future events or PNM Resources' ("PNMR's") or PNM's expectations, projections, estimates, intentions, goals, targets and strategies, are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and PNMR and PNM assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR and PNM caution readers not to place undue reliance on these statements. PNMR's and PNM's business, financial condition, cash flow and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. These factors include conditions affecting PNMR's and PNM's ability to access the financial markets, including actions by ratings agencies affecting their credit ratings, state and federal regulatory and legislative decisions and actions, the risk that the closings of the pending sales of the PNM natural gas utility and certain wholesale electricity, natural gas and transmission contracts may not occur due to regulatory or other reasons, the performance of generating units and transmission systems, including the Palo Verde Nuclear Generating Station, the San Juan Generating Station ("SJGS"), and the Four Corners Plant, collections experience, insurance coverage available for claims made in litigation, fluctuations in interest rates, weather, water supply, changes in fuel costs, availability of fuel supplies, the effectiveness of risk management and commodity risk transactions, seasonality and other changes in supply and demand in the market for electric power, variability of wholesale power prices and natural gas prices, volatility and liquidity in the wholesale power markets and the natural gas markets, changes in the competitive environment in the electric and natural gas industries, the ability to secure long-term power sales, the risk that PNM may have to commit to substantial capital investments and additional operating costs to comply with new environmental control requirements, including possible future requirements to address concerns about global climate change, the risks associated with completion of generation, including pollution control equipment at SJGS, transmission, distribution, and other projects, including construction delays and unanticipated cost overruns, the outcome of legal proceedings, including PNM's pending gas rate case appeal, changes in applicable accounting principles, and the performance of state, regional, and national economies.

Background:

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2007 consolidated operating revenues from continuing and discontinued operations of $2.4 billion. Through its utility and energy subsidiaries, PNM Resources serves electricity to approximately 835,000 homes and businesses in New Mexico and Texas and natural gas to nearly 492,000 customers in New Mexico. Its utility subsidiaries are PNM and Texas-New Mexico Power. Another subsidiary is First Choice Power, a deregulated competitive retail electric provider in Texas. With generation resources of more than 2,650 megawatts, PNM Resources and its subsidiaries market power throughout the Southwest, Texas and the West. In addition, the company has a 50-percent ownership of EnergyCo, which owns approximately 920 megawatts of generation. For more information, visit www.PNMResources.com.

Source: Business Wire

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