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PNM Resources’ New Mexico Utility Files for Electric Rate Increase

September 22, 2008

PNM Resources’ (NYSE: PNM) New Mexico electric utility, PNM, today filed for an increase in general rates of $123.3 million – an increase in revenue of 18 percent.

If approved by the N.M. Public Regulation Commission, the proposed increase is expected to go into effect in August 2009. With the proposal, PNM electric rates are projected to be 17 percent below the regional average and 13 percent below the national average.

“New Mexico’s economy and its population are growing rapidly, and so is its need for more electricity,” said Pat Vincent-Collawn, PNM Resources president and chief operating officer. “These proposed rates are part of our larger effort to prepare for New Mexico’s energy future and ensure that PNM is financially healthy so that it can provide new sources of power, continue to reduce emissions and increase its investment in renewable energy.”

Filed today with the Commission, PNM’s request includes:

— The continued use of a fuel and purchased power cost adjustment clause, which includes a proposal for a 75-25 sharing of off-system sales margins, with 75 percent going to customers. Profits from off-system power sales would reduce the overall increase request.

— The recovery of the costs associated with the environmental improvement project at the San Juan Generating Station. PNM is seeking recovery of incurred costs already made on units 3 and 4 and an out-of-period adjustment for the projected investment of $81.7 million related to improvements on units 1 and 2, which will be completed about the same time the new rates would take effect.

— A return on equity of 11.75 percent, based on a rate base of $1.6 billion and a test period revenue requirement of $807.4 million.

Earlier this month, PNM filed an agreement with key parties that would allow the utility to recover the costs of adding 357 megawatts to its retail generation portfolio and acquiring the beneficial interests of 29.8 megawatts of Unit 2 of the Palo Verde Nuclear Generating Station that the company previously leased. Adding those resources to PNM’s rate base accounts for nearly 36 percent of the requested annual rate increase. The agreement – or stipulation – also needs Commission approval.

PNM’s filing summary, along with selected testimony, are available on PNM Resources’ Web site at http://pnm.client.shareholder.com/investors/regulatory.cfm.

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 more than 859,000 homes and businesses in New Mexico and Texas and natural gas to more than 495,000 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 approximately 2,700 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.




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