81023--3/14/2006--PNM_RESOURCES

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{condition, economic, financial}

{operation, natural, condition}

{capital, credit, financial}

{cost, operation, labor}

{tax, income, asset}

{cost, regulation, environmental}

PNMR may fail to successfully integrate acquisitions, including the TNP acquisition and the proposed acquisition of Twin Oaks, into its other businesses or otherwise fail to achieve the anticipated benefits of pending and future acquisitions. Acquisition of TNP in 2005 Proposed Acquisition of Twin Oaks in 2006 PNMR, PNM and TNMP are subject to complex government regulation, which may have a negative impact on their business, financial position and results of operations. PNM's retail electric rate reduction and retail electric rate freeze, and the New Mexico settlement relating to the TNP acquisition, could adversely affect its profit margin if it does not control costs. The impact from the TNP acquisition settlements could adversely affect TNMP s profit margin if TNMP does not control costs. The ability of First Choice to attract and retain customers and its ability to mitigate the fluctuation in costs of energy supply could have a significant adverse effect on PNMR s business, financial position, results of operations and liquidity. There are inherent risks in the operation of nuclear facilities, such as environmental, health and financial risks and the risk of terrorist attack. PNMR s and its electric subsidiaries financial performance may be adversely affected if their power plants and transmission and distribution system are not successfully operated. The operations of PNMR and its operating subsidiaries are subject to risks beyond their control that may reduce their revenues. The inability to raise capital could limit PNMR s ability to execute its growth strategy and finance its capital requirements, which could adversely affect PNMR s business, financial position, results of operations and liquidity. Costs of environmental compliance, liabilities and litigation could exceed estimates by PNMR s and its operating subsidiaries, which could adversely affect their business, financial position, results of operations and liquidity. PNMR s business, results of operations and financial position may be adversely affected if PNMR and its operating subsidiaries do not successfully compete for wholesale customers and generation plant acquisition opportunities. Wholesale plants will be exposed to price risk to the extent they must compete for the sale of energy and capacity. PNMR and its operating subsidiaries may not be able to mitigate fuel and wholesale electricity pricing risks, which could result in unanticipated liabilities or increased volatility in earnings. Impairments of tangible long-lived assets of PNMR, PNM and TNMP could adversely affect their business, financial position, liquidity and results of operations. Impairments of goodwill and intangible assets of PNMR and its subsidiaries could adversely affect their business, financial position, liquidity and results of operations. Actual results could differ from estimates used to prepare PNMR s, PNM s and TNMP s financial statements. Provisions of PNMR s organizational documents, as well as several other statutory and regulatory factors, will limit another party s ability to acquire PNMR and could deprive PNMR s shareholders of the opportunity to gain a takeover premium for shares of PNMR s common stock.

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81023--3/14/2006--PNM_RESOURCES_INC