J.P. Morgan SMid Cap Conference

December 2011

Safe Harbor Statement

Statements made in this news release that relate to future events or PNM Resources’, Public Service Company of New Mexico’s (“PNM”), or Texas-New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) 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 PNM Resources, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNM Resources, PNM, and TNMP caution readers not to place undue reliance on these statements. PNM Resources’, PNM’s, and TNMP’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: the ability of PNM and TNMP to recover their costs and earn their allowed returns in their regulated jurisdictions; the ability of the Company to successfully forecast and manage its operating and capital expenditures, particularly in the context of a future test year rate case with respect to PNM; the performance of state, regional, and national economies and the resulting impacts on the electricity usage of the Company’s customers; the performance of generating units, including the Palo Verde Nuclear Generating Station (“PVNGS”), the San Juan Generating Station (“SJGS”), and the Four Corners Plant, transmission systems, and distribution systems, which could be negatively affected by major equipment failures, major weather disruptions, disruptions in fuel supply, cyber and physical security breaches, and other significant operational issues; state and federal regulation or legislation relating to climate change, reduction of greenhouse gas emissions, coal combustion byproducts, nitrogen oxides, and other power plant emissions, including the risk that the Company may have to commit to substantial capital investments and additional operating costs to comply with new environmental requirements, including possible future requirements to address regional haze regulations and related best available retrofit technology requirements and concerns about global climate change, and the resultant impacts on the operations and economic viability of generating plants in which PNM has interests; uncertainties surrounding the mine fire incident at the mine supplying coal to SJGS, including potential impacts on the operations of SJGS, the costs of fuel, and the cap on the annual amounts recoverable through PNM's fuel and purchase power adjustment clause (“FPPAC”); state and federal regulatory, legislative, and judicial decisions and actions, including the outcomes of PNM’s pending transmission and firm requirements power rate cases and appeals of prior regulatory proceedings; uncertainty surrounding the status of PNM’s participation in jointly-owned generation projects resulting from the scheduled expiration of the operational documents for the projects beginning in 2016 and potential changes in the objectives of the participants in the projects; uncertainty regarding the requirements and related costs of decommissioning power plants owned or partially owned by PNM and coal mines supplying certain PNM power plants, as well as the ability to recover decommissioning costs from customers; financial and operational risks at PVNGS relating to any increased regulatory review and actions in response to the events at the Fukushima Daiichi Nuclear Power Plant in Japan; the risk that recently enacted reliability standards regarding available transmission capacity may reduce certain PNM transmission rights used to transmit its generation resources and provide access to transmission customers resulting in a need to purchase additional transmission capacity, reduce sales of transmission capacity, or operate generation facilities less economically; the risks associated with completion of generation, transmission, distribution, and other projects, including construction delays and unanticipated cost overruns; the ability of PNM to successfully defend the utilization of a future test year in its electric rate filings with the New Mexico Public Regulation Commission (“NMPRC”), including PNM’s ability to withstand challenges by regulators and intervenors; the ability of PNM to meet the renewable energy requirements established by the NMPRC, including the resource diversity requirement, within the specified cost parameters; the risk that replacement power costs incurred by PNM related to not meeting the specified capacity factor for its generating units under its Emergency FPPAC will not be approved by the NMPRC; the risk that PNM may not be able to recover a portion of the increased costs of rights-of-way renewals on Native American lands through rates charged to transmission customers; conditions affecting the Company’s ability to access the financial markets, including disruptions in the credit markets and actions by ratings agencies affecting the Company’s credit ratings; the potential unavailability of cash from PNM Resources’ subsidiaries due to regulatory, statutory, or contractual restrictions; the impacts of decreases in the values of marketable equity securities on the trust funds maintained to provide nuclear decommissioning funding and pension and other postretirement benefits, including the levels of funding and expense; the impacts of the true-up of the purchase price for the sale of First Choice Power to the actual amounts of certain components of working capital at closing; changes in the Electric Reliability Council Of Texas protocols; collections experience; 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; the impact of mandatory energy efficiency measures on customer energy usage; variability of wholesale power prices and natural gas prices; volatility and liquidity in the wholesale power markets and the natural gas markets; uncertainty regarding the ongoing validity of government programs for emission allowances; changes in the competitive environment in the electric industry; the outcome of legal proceedings; the extent of insurance coverage available for claims made in litigation; and changes in applicable accounting principles.

Non-GAAP Financial Measures

For an explanation of the non-GAAP financial measures that appear on certain slides in this presentation (ongoing earnings, ongoing earnings per diluted share, and ongoing EBITDA), as well as a reconciliation to GAAP measures, please refer to the Company's website as follows: http://www.pnmresources.com/investors/results.cfm

2

Company Overview

New Strategic Direction

Hybrid Utility

Exit Competitive

Business

Regulated Utility

Strategic Goals

Earn Authorized Return on our

Regulated Businesses

Return to Solid Investment Grade

Ratings

Provide an attractive total return

proposition to our shareholders

Repositioning as Strong Regulated Utility

4

PNM Resources Overview

Focus:

Earn our allowed returns

Achieve solid investment grade credit ratings

Provide stable long-term earnings and dividend growth

Located in New Mexico

503,700 customers

14,529 miles transmission and distribution lines

2,543MW generation capacity

Located in Texas

231,300 end-users

9,060 miles transmission and distribution lines

New Mexico and Texas Service Territories

5

PNM: Recent Accomplishments

Significant progress has been made to improve PNM’s financial health

• Three rate increases in the past four years

• Exited gas operations, used 100% of the proceeds to reduce debt

• Substantially improved credit metrics

Eight consecutive quarters of load growth

2011

9% base rate increase

$72.1M rate increase

2009

8% base rate increase

$77M rate increase Permanent fuel clause

Merchant plants included in rates

2008

6% base rate increase

$33M rate increase Temporary fuel clause

6

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Electric Affordability by State

PNM rates reflect the most recent rate increase. All others reflect U.S. Energy Information Administration's Forecasted Residential Rate increases through 2012

7

US Average

PNM: Pathway to Continued Success

Earn allowed return

• Synchronize revenues and expenses

• Balance future rate increases for customers while ensuring the appropriate return is earned for our shareholders

Continue to get positive regulatory outcomes

Continue to strengthen investment grade credit metrics

8

NM Regulatory Environment

NM recognized as a challenging regulatory framework

Current effort in the state to reform the New Mexico Public Regulation Commission (NMPRC)

• An independent results-oriented advocacy group

• Has demonstrated success through several policy changes

• Advocating legislation to place the NMPRC reforms on the 2012 ballot o Refocus and narrow the jurisdiction to regulating utilities and

telecommunications

o Increase qualifications of commissioners

9

TNMP: Recent Accomplishments

Restored earnings potential working with a constructive Texas regulatory framework

• Achieved successful outcomes in four cases over the past three years

• On track to achieve its allowed ROE in 2011

• No current plans to file another general rate case in the near-term

Steady load growth since 2007

2011

6% base rate increase

General rate case

$10M rate increase

AMS case

$12M surcharge

2010

4% base rate increase TCOS case

$6M rate increase

2009

7% rate increase General rate case

$13M rate increase

10

TNMP: Pathway to Continued Success

Continue to earn allowed rate of return

Use transmission cost of service filings to

• Reduce regulatory lag

• Grow rate base

Employ distribution cost of service filings, when available

Retain solid credit metrics

Invest in the business

11

Financial Direction

Exit of Competitive Business

Strengthens PNM Resources’ financial position

Eliminates financial and business risks associated with competitive entities

Focuses strategic direction on regulated utilities

13

Recapitalized the business after competitive business exit

Equity – repurchased preferred shares

$73.5M 4.8M shares Closed Oct. 5

Equity – repurchased common shares

$125.7M 7.0M shares Closed Nov. 10

Debt – 9.25% SUNs tender offer

$50.0M principal

Fixed price at a 17% premium

Closed Nov. 22

Recent Credit Rating Accomplishments

Moody’s

S&P

Utilities at investment grade

Strength, stability and predictability recognized

Ratings upgraded Sept. 26 and Nov. 1

PNMR PNM TNMP

Debt rating Ba1(1) Baa3(1) A3(2)

Outlook Stable Stable Stable

PNMR PNM TNMP

Debt rating BB (1) BBB- (1) BBB (2)

Outlook Positive Positive Positive

(1) Senior unsecured (2) Senior secured 14

Liquidity/Dividend

PNMR PNM TNMP Total

Available liquidity as of Nov. 1, 2011

Total Capacity $305 $400 $75 $780

Less LCs (1) (70) (2) (5) (0) (75)

Plus Cash 167 (3) 0 0 167

Total Available Liquidity $402 $395 $75 872

Recently refinanced PNMR and PNM revolvers ($700M)

Targeting cap structure of

• 50/50 at PNM

• 55/45 at TNMP

Dividend will be reviewed by the Board in February

(1) There was no short-term debt as of Nov. 1, 2011 (2) Includes First Choice Power LCs which will be eliminated by the end of November (3) Includes proceeds from First Choice Power sale

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Maintain profitability of First Choice Power by achieving customer growth and increasing retention

Conserve Optim Energy cash and position generation assets to capitalize as market conditions improve

Key Strategic Goals and Checklist

Earn Authorized Return on Our Regulated Businesses

Return to Solid Investment Grade Credit Ratings at PNMR

Achieve successful outcomes in:

PNM retail rate case

PNM FERC transmission rate case

TNMP AMS case

Maintain strong electric reliability and power plant availability

Control O&M and capital costs

Maximize the Value of Our Competitive Businesses

Become fully investment grade at:

PNM

TNMP

Achieved by monetizing

competitive entities and

returning value to shareholders

16

Third Quarter Earnings

Third Quarter Financial Highlights

Q3 2011 Q3 2010 YTD 2011 YTD 2010

Ongoing EPS $0.61 $0.63 $0.85 $0.90

GAAP EPS $0.48 $0.53 $0.70 $0.69

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Closed the sale of First Choice Power on Nov. 1 • Exit from competitive businesses and return to

regulated utility model

Aligning utility costs with revenues • Regulatory relief and cost-cutting plans set the path for

PNM to earn its return on rate base by the end of 2012

• TNMP on pace to achieve its allowed ROE in 2011

(1) On a fully diluted basis

(1)

(1)

Load Growth Continues Positive Trend

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PNM ∆(1) TNMP ∆(2) PNM ∆(1) TNMP ∆(2)

Residential 0.2% -0.1% 0.9% 2.1%

Commercial -2.0% 0.1% -0.1% 0.2%

Industrial 8.8% 8.1% 5.4% 0.5%

Total Retail 0.3% 0.3% 1.2% 1.3%

Customer Growth 0.4% 1.0% 0.5% 0.9%

Q3 2011 vs Q3 2010 YTD 2011 vs YTD 2010

Regulated Retail Energy Sales Growth

(weather-normalized KWh)

(1) Excluding Economy Service customers (2) Excluding Transmission Service customers

San Juan - BART Update

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EPA BART determination: SCR technology • Total estimated costs: $750M or more

• PNM’s share of estimated costs (46%): minimum of $345M

PNM appealed EPA mandate, requesting stay

Petitioned EPA for reconsideration of state plan calling for SNCR technology

N.M. Gov. Martinez and the N.M. Environmental Dept. are challenging EPA’s decision in federal appeals court and are petitioning EPA for reconsideration

Evaluating timeline for regulatory recovery

• Early design, construction total plant estimated costs in 2012: $44M

• Total plant estimated costs in 2013: $246M

• PNM to issue RFP for SCR installation by late 2011, early 2012

Q3 2011 Financial Summary

$0.63 $0.61 $0.03 $0.03

$0.02 ($0.11) $0.01

Q3 2010 Q3 2011

Ongoing EPS

PNM First Choice Power

Optim Energy (1)

Other TNMP

21

(1) Includes PNM Resources’ share of Optim Energy’s ongoing EPS through August 2011

Regulated Businesses: Q3 2011 EPS (Ongoing)

PNM

TNMP

$0.42 $0.45

Q3 2010 Q3 2011

Q3 Key Performance Drivers ∆ EPS

Rate relief $0.07

Weather $0.03

Lower outage costs $0.01

PV3 toll expiration ($0.07)

Other ($0.01)

Q3 Key Performance Drivers ∆ EPS

Rate relief $0.01

Weather $0.01 $0.08 $0.10

Q3 2010 Q3 2011

22

First Choice Power Sale Update

First Choice Power Sale • Received $329M in cash which includes $59M working capital

Repurchased Series A convertible Preferred Stock • Finalized on Oct. 5

• Purchased from Cascade for $73.5M, share price $15.38

• Reduces EPS share count by 4.8 million shares beginning on Sept. 23

Tender offer to repurchase approximately $50M 9.25% SUNs • Premium is priced at 17%

• Anticipated to close Nov 22

Common Stock Repurchase • Various alternatives being considered (see page 13 for recent updates)

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Credit Rating Agency Actions

Moody’s Upgraded PNMR and TNMP credit ratings one notch on Nov. 1, 2011 and

affirmed PNM rating on Sept. 23, 2011

S&P Upgraded ratings one notch on Sept. 26, 2011 and placed all entities on

positive outlook

PNMR PNM TNMP

Debt rating BB (1) BBB- (1) BBB (2)

Outlook Positive Positive Positive

PNMR PNM TNMP

Debt rating Ba1(1) Baa3(1) A3(2)

Outlook Stable Stable Stable

(1) Senior unsecured (2) Senior secured 24

Recent Financing Transactions

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• Refinanced $50 million term loan

• Reduced interest rate by approximately 1.5%

TNMP

• Issued $160 million 10-year notes

• 5.35% interest rate

PNM

• Renewed credit facilities

• Total capacity of $700 million

PNM and PNM Resources

2011 Guidance (Ongoing)

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$1.00 Consolidated EPS(1) $1.05

Corp/Other

($0.17 - $0.15)

Regulated

$1.00 - $1.05

PNM

$0.72 - $0.75

TNMP

$0.28 - $0.30

Competitive

$0.16 - $0.18

(1) Segments are not additive

Appendix

PNM Diversified Fuel Mix

Capacity 2,543MW

Coal 38%

Natural Gas 38%

Nuclear 16%

Renewables 8%

(1) Includes PNM generation and PPAs

Generation (1)

11,686 GWh Based on last 12 months ending 9/30/11

Coal 58% Nuclear

28%

Natural Gas 9%

Renewables 5%

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PNM Plant EAF and Outages

86.8%

77.9%

98.1%

91.3% 85.0%

94.6%

San Juan Four Corners Palo Verde

Q3 2010 Q3 2011

Annual Top Quartile Numbers(1)

Coal 91% Nuclear 93%

Unit Duration Time

Period

San Juan

2 47 Q1 – Q2 2012

3 54 Q3 – Q4 2012

Four Corners

4 10 Q4 2011

5 13 Q1 2012

Palo Verde

1 37 Q4 2011

3 40 Q1 - Q2 2012

2 40 Q4 2012

29 (1) Annual top quartile number from the North American Electricity Reliability Council as of August 2011

PNM Resources 5-Year Capital Plan(1) as of Q3 2011

$111 $111 $107 $101 $106

$74 $77 $71 $67 $68

$73 $59 $57 $63 $62

$88

$16

$14 $15 $16 $16

2011 2012 2013 2014 2015

(In millions)

PNM Generation PNM T&D TNMP T&D PNM Renewables Other (Primarily IT)

$362

$261 $250 $248 $252

(1) Excludes BART capital expenditures 30

Guidance (ongoing): First Choice Power & Optim Energy

(1) Actual results (2) 100% of Optim Energy

31

Current Guidance First Choice Power (Jan – Oct 2011)

Optim Energy (Jan – Aug 2011)(1)

Earnings (Loss) per Share $0.22 – $0.24 $(0.06)

EBITDA $34M-$37M $40.6M(2)

Regulatory Information

NMPRC Commissioners and Districts

33

NMPRC Districts and PNM Services Areas

Name District Term Ends

Party

Jason Marks District 1 2012 Democrat

Patrick Lyons Chairman

District 2 2014 Republican

Douglas Howe (1) District 3 2012 Independent

Theresa Becenti-Aguilar Vice Chair

District 4 2014 Democrat

Ben Hall District 5 2014 Republican

(1) Jerome Block resigned on Oct. 7, 2011. Douglas Howe was selected by Governor Susana Martinez to serve the remainder of Block’s term.

Douglas Howe Qualifications

30 years of experience in the energy industry with a focus on utilities

• Former Vice President of Regulatory Policy at General Public Utilities Service Corp.

• Former consultant to the U.S. Nuclear Regulatory Commission

• Current consultant to Cambridge Energy Research Associates

34

Utility Rate Base and Return

Test Period (1) Rate Base % of Rate

Base Allowed Equity

Ratio ROE Increase

PNM Retail

Current Rates June 30, 2010 $1.8B 89% 51.28% 10.00% $72.1M

PNM FERC Transmission

Current Rates (2) Dec. 31, 2011 $156.2M 8% 49.40% 12.25% $11.1M

PNM FERC Generation (3)

Current Rates Dec. 31, 2012 $67.6M 3% 49.46% 11.00% $8.7M (4)

35

(1) Period is for the 12 months ending on stated date (2) Rates implemented June 1, 2011, subject to refund pending final order by FERC (3) FERC Generation is comprised of three individual wholesale customer contracts under the jurisdiction of FERC: Navopache Electric

Cooperative, Inc., City of Gallup, and City of Aztec (4) Rate increase reflects the amount of annual increase filed with FERC under an amended sales agreement between PNM and

Navopache Electric Cooperative, Inc., which represents 62% of the total FERC Generation rate base amount

Test Period (1) Rate Base % of Rate

Base Allowed Equity

Ratio ROE Increase

TNMP

Current Rates March 31, 2010 $448.2M 100% 45.00% 10.125% $10.3M

Balance Sheet and Credit Metrics

Selected Balance Sheet Information

37

(1) Excludes debt from affiliate. Tables may not appear visually accurate due to rounding

Dec 31, 2010 Sep 30, 2011

Long-Term Debt (incl. current portion)

PNM $1,055.7 $1,055.8

TNMP 310.3 $310.8

PNMR 199.8 $199.8

Consolidated $1,565.8 $1,566.3

Total Debt (incl. short-term) (1)

PNM $1,245.7 $1,312.8

TNMP 310.3 310.8

PNMR 231.8 231.8

Consolidated $1,787.8 $1,855.3

Liquidity as of Nov. 1, 2011

38

PNM Resources PNM TNMP

PNM Resources

Consolidated

Total Capacity: (in millions)

Revolving Credit Facility $300.0 $400.0 $75.0 $775.0

Local lines of credit (LOC) 5.0 - - 5.0

Total Capacity $305.0 $400.0 $75.0 $780.0

As of 11/1/11:

LC balances (1) 69.6 (2) 5.2 0.3 75.1

Remaining availability 235.4 394.8 74.8 705.0

Invested cash 166.7 (3) - - 166.7 (2)

Available liquidity as of 11/1/11: $402.1 $394.8 $74.8 $871.7

(1) There was no short-term debt as of 11/1/11 (2) Includes First Choice Power LCs which will be eliminated by end of November (3) Includes proceeds from First Choice Power sale

Environmental Compliance

San Juan – BART Timeline

Proposed Federal Implementation Plan issued in January Requires SCR technology as BART PNM estimated costs @ between $750M - $1B (total plant costs) on all four units within three years

Final State Implementation Plan filed with EPA in July Requires SNCR technology as BART PNM estimated costs @ ~$77M (total plant costs)

Final BART determination issued Aug. 4, published in the Federal Register on August 22, 2011 Requires installation of SCR technology on all four units at SJGS in five years PNM current estimate is at least $750 million Decision disregarded the alternative technology (SNCR) approved by NM in its SIP PNM has challenged EPA’s decision:

o A Petition for Review of EPA’s decision was filed by PNM in the US Court of Appeals for the Tenth Circuit – Various environmental groups have intervened in PNM’s proceeding

o A Petition for Review of EPA’s decision with respect to the 5 year compliance period was filed by environmental groups in the US Court of Appeals for the Tenth Circuit

– PNM intervened in that proceeding

o A Petition for Review of EPA’s decision was filed by Governor Martinez and NMED in the US Court of Appeals for the Tenth Circuit

– PNM intervened in that proceeding

During the week of November 21, Governor Martinez and NMED and also PNM filed Motions for Stay The Tenth Circuit will entertain these Motions before setting a briefing schedule on the merits of the case At EPA, PNM as well as Governor Martinez and NMED have filed Requests for Reconsideration of EPA’s

decision and have asked for a stay of the rule pending review The Navajo Nation has sent a communication to EPA supporting the Requests for Reconsideration and stay

filed by Governor Martinez, NMED and PNM

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Environmental Control Equipment at Coal Units

Coal Unit PNM Share

Capacity (MW)

Activated Carbon

Injection (1)

SNCR (2) SCR (2) Baghouse (3) Scrubbers

San Juan Unit 1 170 X X X

San Juan Unit 2 170 X X X

San Juan Unit 3 249 X X X

San Juan Unit 4 194 X X X

Four Corners Unit 4 97.5 X X

Four Corners Unit 5 97.5 X X

(1) Activated carbon injection systems reduce mercury emissions. For San Juan, the installation was completed in 2009, as part of a 3-year, $320M environmental upgrade. (2) SNCR refers to selective non-catalytic reduction systems. SCR refers to selective catalytic reduction systems. Both systems reduce NOx emissions. (3) Baghouses collect flyash and other particulate matter. For San Juan, the installation was completed in 2009, as part of a 3-year, $320M environmental upgrade.

41

Impact of Proposed Environmental Regulation

Estimated Compliance Costs

(PNM Share) Comments

San Juan Generating Station

Clean Air Act – Regional Haze (FIP) – SCR ~$340M - $460M

EPA approved plan on Aug. 5, Filed petition for review with 10th Circuit and filed request for stay with EPA

on Sep 16., Filed petition for reconsideration and request for stay

with EPA on Oct. 21

Clean Air Act – Regional Haze (SIP) – SNCR ~$36M State of NM submitted with EPA in

early July

Mercury Rules (proposed) None to minimal Testing shows 99% removal

Clean Water Act - 316(b) (proposed) Minimal to some exposure Performing analysis to determine

cost of compliance

Four Corners (Units 4 and 5)

Clean Air Act – Regional Haze - SCR ~$69M APS in negotiations with EPA

Mercury Rules (MACT) (proposed) Slight exposure APS evaluating options

Clean Water Act – 316(b) (proposed) Minimal to some exposure Performing analysis to determine

cost of compliance

Palo Verde

Clean Water Act – 316(b) (proposed) None to minimal Closed system

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