TEXAS NEW MEXICO POWER CO, 10-Q, 1994-05-11

TEXAS NEW MEXICO POWER CO
10-Q, 1994-05-11
ELECTRIC SERVICES

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1994

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

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Commission File Number: 1-8847

TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

Texas 75-1907501
State of Incorporation I.R.S. Employer Identification Number

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address of Registrant's Principal Executive Offices)
Telephone Number: 817-731-0099

--------------------------------------------------------------------

Commission File Number: 2-97230

TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)

Texas 75-0204070
State of Incorporation I.R.S. Employer Identification Number

4100 International Plaza, P. O. Box 2943, Fort Worth, Texas 76113
(Address of Registrant's Principal Executive Offices)
Telephone Number: 817-731-0099

- - - -----------------------------------------------------------------------------

Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Yes X No

As of April 25, 1994, TNP Enterprises, Inc. had outstanding 10,720,777 shares
of common stock, no par value. As of April 25, 1994, all 10,705 outstanding
shares of Texas-New Mexico Power Company's common stock ($10 par value), were
held, beneficially and of record, by TNP Enterprises, Inc.

TNP ENTERPRISES INC. AND SUBSIDIARIES
TEXAS-NEW-MEXICO POWER COMPANY AND SUBSIDIARIES
Form 10-Q for the period ended March 31, 1994

This combined Form 10-Q is separately filed by TNP Enterprises, Inc. and Texas-
New Mexico Power Company. Information contained herein relating to Texas-New
Mexico Power Company is filed by TNP Enterprises, Inc. and separately by
Texas-New Mexico Power Company on its own behalf. Texas-New Mexico Power
Company makes no representation as to information relating to TNP Enterprises,
Inc. except as it may relate to Texas-New Mexico Power Company or to any other
affiliate or subsidiary of TNP Enterprises, Inc.
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION PAGE NO.

Item 1. Consolidated Financial Statements (Unaudited for Periods Ended
March 31, 1994 and 1993)

TNP Enterprises, Inc. and Subsidiaries:

Consolidated Statements of Operations
Three Month Periods Ended March 31, 1994 and 1993 3

Consolidated Balance Sheets
March 31, 1994 and December 31, 1993 4

Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 1994 and 1993 5

Texas-New Mexico Power Company and Subsidiaries:

Consolidated Statements of Operations
Three Month Periods Ended March 31, 1994 and 1993 6

Consolidated Balance Sheets
March 31, 1994 and December 31, 1993 7

Consolidated Statements of Cash Flows
Three Month Periods Ended March 31, 1994 and 1993 8

Notes to Consolidated Financial Statements 9

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index 22
Exhibit

(b) Reports on Form 8-K

Signature page (TNPE) 32
Signature page (TNP) 33
<page 2> PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.

The following interim consolidated financial statements of TNP
Enterprises, Inc. ("TNPE") and subsidiaries and Texas-New Mexico
Power Company (the "Utility") and subsidiaries are unaudited, but in
the opinion of management, reflect all adjustments consisting of
normal recurring accruals which are necessary for the fair statement
of the results of the interim periods presented. Results for interim
periods are not necessarily indicative of the results to be expected
for a full year or for periods which have been previously reported,
due in part to the seasonal fluctuations in revenues and possible
developments in regulatory and judicial proceedings. Amounts shown
for TNPE and the Utility at December 31, 1993, are based on audited
consolidated financial statements appearing in TNPE's 1993 Annual
Report and the Utility's 1993 Annual Report on 10-K, respectively.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1994 1993
(In Thousands Except
Per Share Amounts)
<S> <C> <C>
Operating revenues . . . . . . . . . . . . . . . . . . $107,599 103,150

Operating expenses:
Power purchased for resale . . . . . . . . . . . . 46,308 44,021
Fuel . . . . . . . . . . . . . . . . . . . . . . . 10,172 9,875
Other operating and general expenses . . . . . . . 17,450 17,468
Maintenance. . . . . . . . . . . . . . . . . . . . 3,053 3,000
Depreciation of utility plant. . . . . . . . . . . 9,105 8,971
Taxes, other than on income. . . . . . . . . . . . 7,192 7,152
Income taxes (note 3). . . . . . . . . . . . . . . (1,385) (1,791)
Total operating expenses. . . . . . . . . . . . . 91,895 88,696

Net operating income. . . . . . . . . . . . . . . 15,704 14,454

Other income, net of taxes (note 3). . . . . . . . . . 7 338

Earnings before interest charges. . . . . . . . . 15,711 14,792

Interest charges:
Interest on long-term debt . . . . . . . . . . . . 17,753 15,501
Other interest and amortization of
debt discount, premium and expense. . . . . . . . 950 1,210
Allowance for borrowed funds used
during construction . . . . . . . . . . . . . . . (108) (53)
Total interest charges. . . . . . . . . . . . . . 18,595 16,658

Net loss. . . . . . . . . . . . . . . . . . . . . (2,884) (1,866)

Dividends on preferred stock . . . . . . . . . . . . . 211 233

Loss applicable to common stock . . . . . . . . . $(3,095) (2,099)

Weighted average number of common shares
outstanding . . . . . . . . . . . . . . . . . . . 10,702 10,604

Loss per share of common stock . . . . . . . . . . . . $ (0.29) (0.20)

Dividends per share of common stock. . . . . . . . . . $ 0.4075 0.4075

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<page 3>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

<TABLE>
<CAPTION>
March 31, 1994 December 31,
(Unaudited) 1993

ASSETS
(In Thousands)
<S> <C> <C>
Utility plant, at original cost (notes 1,4):
Electric plant. . . . . . . . . . . . . . . . . . . $1,209,626 1,203,636
Construction work in progress . . . . . . . . . . . 3,163 5,282
1,212,789 1,208,918
Less accumulated depreciation . . . . . . . . . . . 210,049 202,923
Net utility plant. . . . . . . . . . . . . . . . 1,002,740 1,005,995

Nonutility property, at cost . . . . . . . . . . . . 1,313 1,673
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . 14,632 12,423
Customer receivables. . . . . . . . . . . . . . . . 4,662 764
Inventories, at lower of average cost or market:
Fuel . . . . . . . . . . . . . . . . . . . . . . . 1,693 1,422
Materials and supplies . . . . . . . . . . . . . . 7,664 7,793
Deferred purchased power and fuel costs . . . . . . 14,871 15,151
Accumulated deferred taxes on income (note 3) . . . 4,933 4,251
Other current assets. . . . . . . . . . . . . . . . 712 1,071
Total current assets . . . . . . . . . . . . . . 49,167 42,875
Regulatory tax assets. . . . . . . . . . . . . . . . 17,801 16,915
Deferred charges . . . . . . . . . . . . . . . . . . 36,880 37,779
$1,107,901 1,105,237

CAPITALIZATION AND LIABILITIES

Capitalization:
Common stock equity:
Common stock - no par value per share. Shares
authorized 50,000,000; issued 10,717,069 in
1994 and 10,695,860 in 1993. . . . . . . . . . . $ 131,986 131,615
Retained earnings. . . . . . . . . . . . . . . . . 74,557 82,012
Total common stock equity. . . . . . . . . . . . 206,543 213,627

Redeemable cumulative preferred stock (note 2). . . 9,260 9,560
Long-term debt, net of amount due within one year
(note 1) . . . . . . . . . . . . . . . . . . . . . 705,732 678,994
Total capitalization . . . . . . . . . . . . . . 921,535 902,181

Current liabilities:
Long-term debt due within one year. . . . . . . . . 1,070 1,070
Accounts payable. . . . . . . . . . . . . . . . . . 21,985 22,450
Accrued interest. . . . . . . . . . . . . . . . . . 7,152 16,115
Accrued taxes . . . . . . . . . . . . . . . . . . . 7,814 17,221
Customers' deposits . . . . . . . . . . . . . . . . 4,522 4,464
Revenues subject to refund. . . . . . . . . . . . . 3,797 3,400
Other current and accrued liabilities . . . . . . . 14,440 13,412
Total current liabilities. . . . . . . . . . . . 60,780 78,132

Customers' advances for construction . . . . . . . . 76 169
Regulatory tax liabilities . . . . . . . . . . . . . 50,972 49,314
Accumulated deferred taxes on income (note 3). . . . 56,639 57,093
Accumulated deferred investment tax credits. . . . . 17,899 18,348
Commitments and contingencies (note 4) . . . . . . . __________ __________
$1,107,901 1,105,237

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<page 4>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)
CASH FLOWS FROM OPERATIONS:
Net loss. . . . . . . . . . . . . . . . . . . . . . $(2,884) (1,866)
Items not requiring cash:
Depreciation of utility plant. . . . . . . . . . . 9,105 8,971
Amortization of debt expense discount and premium
and other deferred charges . . . . . . . . . . . 1,294 959
Allowance for borrowed funds used during construction (108) . (53)
Deferred taxes on income . . . . . . . . . . . . . (351) 737
Investment tax credit adjustments. . . . . . . . . (448) (786)
6,608 7,962
Changes in certain current assets and liabilities:
Customer receivables . . . . . . . . . . . . . . . (3,898) (844)
Inventories. . . . . . . . . . . . . . . . . . . . (142) (369)
Deferred purchased power and fuel costs. . . . . . 280 3,172
Other current assets . . . . . . . . . . . . . . . 359 (155)
Accounts payable . . . . . . . . . . . . . . . . . (465) (3,164)
Accrued interest . . . . . . . . . . . . . . . . . (8,963) (1,841)
Accrued taxes. . . . . . . . . . . . . . . . . . . (9,407) (11,466)
Customers' deposits. . . . . . . . . . . . . . . . 58 161
Revenues subject to refund . . . . . . . . . . . . 397 1,717
Other current and accrued liabilities. . . . . . . 1,028 1,131
Other - net . . . . . . . . . . . . . . . . . . . . (133) (392)
TOTAL. . . . . . . . . . . . . . . . . . . . . . (14,278) (4,088)

CASH FLOWS FROM INVESTING ACTIVITIES ---
Additions to utility plant, net of
capitalized depreciation and interest. . . . . . . (5,742) (4,723)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on preferred and common stocks. . . . . . (4,571) (4,554)
Issuances:
Common stock . . . . . . . . . . . . . . . . . . . 371 351
Long-term debt . . . . . . . . . . . . . . . . . . 77,000 -
Redemptions:
Preferred stock. . . . . . . . . . . . . . . . . . (300) (300)
Long-term debt . . . . . . . . . . . . . . . . . . (50,271) (400)
TOTAL. . . . . . . . . . . . . . . . . . . . . . 22,229 (4,903)

NET CHANGE IN CASH AND CASH EQUIVALENTS. . . . . . . 2,209 (13,714)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . 12,423 86,785
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . $ 14,632 73,071

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest . . . . . . . . . . . . . . . . . . . . $ 26,782 17,403
Income taxes . . . . . . . . . . . . . . . . . . . - 946

SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
On January 1, 1993, TNPE recognized certain assets and liabilities and certain
reclassifications as the result of implementation of Statement of Financial
Accounting Standards No. 109.

See accompanying notes to consolidated financial statements.
<page 5>

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)
<S> <C> <C>
Operating revenues . . . . . . . . . . . . . . . . . . $ 107,599 103,150

Net operating income. . . . . . . . . . . . . . . 15,704 14,454

Other income, net of taxes (note 3). . . . . . . . . . 93 343

Earnings before interest charges. . . . . . . . . 15,797 14,797

Interest charges:
Interest on long-term debt . . . . . . . . . . . . 17,753 15,501
Other interest and amortization of
debt discount, premium and expense. . . . . . . . 950 1,210 Allowance for borrowed funds used
Allowance for borrowed funds used
during construction . . . . . . . . . . . . . . . (108) (53)
Total interest charges. . . . . . . . . . . . . . 18,595 16,658

Net loss. . . . . . . . . . . . . . . . . . . . . (2,798) (1,861)

Dividends on preferred stock . . . . . . . . . . . . . 211 233

Loss applicable to common stock . . . . . . . . . $ (3,009) (2,094)

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

<page 6>
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, 1994 December 31,
ASSETS (Unaudited) 1993
(In Thousands)
<S> <C> <C>
Utility plant, at original cost (notes 1,4):
Electric plant . . . . . . . . . . . . . . . . . . $1,209,626 1,203,636
Construction work in progress. . . . . . . . . . . 3,163 5,282
1,212,789 1,208,918
Less accumulated depreciation. . . . . . . . . . . 210,049 202,923
Net utility plant . . . . . . . . . . . . . . . . 1,002,740 1,005,995

Nonutility property, at cost . . . . . . . . . . . . . 183 541
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . 3,898 2,078
Customer receivables . . . . . . . . . . . . . . . 4,662 764
Inventories, at lower of average cost or market:
Fuel. . . . . . . . . . . . . . . . . . . . . . . 1,693 1,422
Materials and supplies. . . . . . . . . . . . . . 7,664 7,793
Deferred purchased power and fuel costs. . . . . . 14,871 15,151
Accumulated deferred taxes on income (note 3). . . 4,933 4,251
Other current assets . . . . . . . . . . . . . . . 731 1,091
Total current assets. . . . . . . . . . . . . . . 38,452 32,550
Regulatory tax assets. . . . . . . . . . . . . . . . . 17,801 16,915
Deferred charges . . . . . . . . . . . . . . . . . . . 38,219 39,118
$1,097,395 1,095,119

CAPITALIZATION AND LIABILITIES

Capitalization:
Common stock equity:
Common stock, $10 par value per share.
Authorized 12,000,000 shares; issued
10,705 shares . . . . . . . . . . . . . . . . . $ 107 107
Capital in excess of par value. . . . . . . . . . 175,094 175,094
Retained earnings . . . . . . . . . . . . . . . . 31,574 38,983
Total common stock equity. . . . . . . . . . . 206,775 214,184

Redeemable cumulative preferred stock (note 2) . . 9,260 9,560
Long-term debt, net of amount due within one
year (note 1) . . . . . . . . . . . . . . . . . . 705,732 678,994
Total capitalization . . . . . . . . . . . . . 921,767 902,738

Current liabilities:
Long-term debt due within one year . . . . . . . . 1,070 1,070
Accounts payable . . . . . . . . . . . . . . . . . 21,985 22,450
Accrued interest . . . . . . . . . . . . . . . . . 7,152 16,115
Accrued taxes. . . . . . . . . . . . . . . . . . . 8,522 18,006
Customers' deposits. . . . . . . . . . . . . . . . 4,522 4,464
Revenues subject to refund . . . . . . . . . . . . 3,797 3,400
Other current and accrued liabilities. . . . . . . 14,424 13,404
Total current liabilities. . . . . . . . . . . 61,472 78,909

Customers' advances for construction . . . . . . . . . 76 169
Regulatory tax liabilities . . . . . . . . . . . . . . 50,972 49,314
Accumulated deferred taxes on income (note 3). . . . . 46,469 46,907
Accumulated deferred investment tax credits. . . . . . 16,639 17,082
Commitments and contingencies (note 4) . . . . . . . .
$1,097,395 1,095,119

<FN>
See accompanying notes to consolidated financial statements.
</TABLE>

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net loss . . . . . . . . . . . . . . . . . . . . . . . $(2,798) (1,861)
Items not requiring cash:
Depreciation of utility plant . . . . . . . . . . 9,105 8,971
Amortization of debt expense discount and
premium and other deferred charges. . . . . . . 1,294 959
Allowance for borrowed funds used during
construction. . . . . . . . . . . . . . . . . . (108) (53)
Deferred taxes on income. . . . . . . . . . . . . (335) 738
Investment tax credit adjustments . . . . . . . . (443) (785)
6,715 7,969
Changes in certain current assets and
liabilities:
Customer receivables. . . . . . . . . . . . . (3,898) (844)
Inventories . . . . . . . . . . . . . . . . . (142) (369)
Deferred purchased power and fuel costs . . . 280 3,172
Other current assets. . . . . . . . . . . . . 360 279
Accounts payable. . . . . . . . . . . . . . . (465) (3,164)
Accrued interest. . . . . . . . . . . . . . . (8,963) (1,841)
Accrued taxes . . . . . . . . . . . . . . . . (9,484) (12,011)
Customers' deposits . . . . . . . . . . . . . 58 161
Revenues subject to refund. . . . . . . . . . 397 1,717
Other current and accrued liabilities . . . . 1,020 1,220
Other - net. . . . . . . . . . . . . . . . . . (134) (395)
TOTAL. . . . . . . . . . . . . . . . . . . (14,256) (4,106)

CASH FLOWS FROM INVESTING ACTIVITIES ---
Additions to utility plant, net of
capitalized depreciation and interest . . . . (5,742) (4,723)

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on preferred and common stocks . . . (4,611) (4,569)
Issuances:
Long-term debt. . . . . . . . . . . . . . . . 77,000 -
Redemptions:
Preferred stock . . . . . . . . . . . . . . . (300) (300)
Long-term debt. . . . . . . . . . . . . . . . (50,271) (400)
TOTAL. . . . . . . . . . . . . . . . . . . 21,818 (5,269)

NET CHANGE IN CASH AND CASH EQUIVALENTS. . . . . . . . 1,820 (14,098)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . 2,078 63,843
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . $ 3,898 49,745

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the periods for:
Interest. . . . . . . . . . . . . . . . . . . $ 26,782 17,403
Income taxes. . . . . . . . . . . . . . . . . - 971

<FN>
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
On January 1, 1993, the Utility recognized certain assets and liabilities and
certain reclassifications as the result of implementation of Statement of
Financial Accounting Standards No. 109.

See accompanying notes to consolidated financial statements.
</TABLE>

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1) Long-term Debt

Long-term debt outstanding was as follows: March 31, December 31,
1994 1993
(In Thousands)
First mortgage bonds:
Series L, 10.500 due 2000 $ 9,720 9,840
Series M, 8.700 due 2006 8,400 8,400
Series R, 10.000 due 2017 63,700 63,700
Series S, 9.625 due 2019 20,000 20,000
Series T, 11.250 due 1997 130,000 130,000
Series U, 9.250 due 2000 100,000 100,000
Total 331,820 331,940
Unamortized discount, net of premium (667) (676)
First mortgage bonds, net 331,153 331,264

Secured debentures:
12.5% due 1999 130,000 130,000
Series A, 10.75% due 2003 140,000 140,000
270,000 270,000

Secured notes payable 105,649 78,800

Total long-term debt 706,802 680,064
Less long-term debt due within one year (1,070) (1,070)
Total long-term debt, net $ 705,732 678,994

Secured notes payable represented loans issued under a financing facility for
the construction of Unit 2 of the TNP One generating plant. The Unit 2
financing facility was assumed in 1991 by Texas Generating Company II ("TGC
II") and consists of a series of renewable loans from various lenders in a
financing syndicate. TGC II is a wholly owned subsidiary of the Utility.

Under the terms of the Unit 2 financing facility, as amended, the total
commitment available is $147.75 million. The Utility is permitted to prepay up
to $141.5 million of the $147.75 million commitment and reborrow up to the
amount of the prepayments. The reborrowings under the Unit 2 financing facility
will be subject to compliance with the EBIT test (as described below) and
maintenance of an equity to total capital ratio of 20% or more as defined in the
financing facility. As of March 31, 1994, the unused commitment available to
be borrowed under the Unit 2 financing facility was approximately $42.1
million. A commitment fee of 1/4 of 1% per annum is payable on the unused
portion of the reducing commitment.

As required by the terms of the Unit 2 financing facility, as amended, the
Utility has received the required regulatory approvals from the Federal Energy
Regulatory Commission and the New Mexico Public Utility Commission for the
extension of the maturities of the remaining loans to be outstanding under the
Unit 2 financing facility. Upon completion of the necessary documentation and
upon payment to the lenders of an extension fee of 1/4 of 1% of their pro-rata
share of the $147.75 million commitment during the second quarter of 1994, the
extended maturities provide for scheduled reductions of the commitment of
approximately $36.9 million each at December 31, 1995, 1996, 1997 and 1998.
Based upon the March 31, 1994 outstanding balance, $1.6 million will be due on
December 31, 1995, $30.2 million will be due on December 31, 1996, and the
remaining amounts will be due in two equal installments of approximately $36.9
million on December 31, 1997 and 1998.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1) Long-term Debt - continued

The Unit 2 financing facility and instruments securing both issues of the
Utility's secured debentures contain certain covenants which, under specified
conditions, restrict the payment of cash dividends on common stock of the
Utility. The most restrictive of such covenants are an interest coverage test
and an equity ratio test. Under the interest coverage test, the Utility may not
pay cash dividends on its common stock unless the amount of its prior twelve
months' earnings (exclusive of any writedowns resulting from actions of the
PUCT, to the extent included in operating expenses) before interest and income
taxes equals or exceeds the sum of all of the interest expense on indebtedness
for the same period (said calculation, the "EBIT Test"). This restriction
becomes effective only after the third consecutive calendar quarter during
which the Utility does not meet the EBIT Test and continues in effect until
after the quarter in which the Utility has met the twelve-month EBIT Test.
Under the equity ratio test, the Utility may not pay cash dividends on its
common stock if, at the preceding quarterly date, the Utility's ratio of equity
capitalization to total capitalization is less than 20%. The Utility has met
the tests at each quarterly date since each test became effective.

Under the Unit 2 financing facility, interest rates are determined under several
alternative methods. During 1994, all rates at the time of borrowing will be no
higher than the prime lending rate plus a margin of 1-7/8%. The margin will
increase by 1/2 of 1% in 1995 and by an additional 1/4 of 1% in 1996, 1997 and
1998. The effective costs of borrowing for the secured notes payable at March
31, 1994 and December 31, 1993 were 6.86% and 7.23%, respectively.

The Utility expects, assuming adequate regulatory treatment, to be able to repay
the remaining amounts due under the Unit 2 financing facility primarily through
the receipt of proceeds from the issuance of common equity by TNPE, internal
cash generation and issuance of debt.

(2) Redeemable Cumulative Preferred Stock

Redeemable cumulative preferred stock (authorized 1,000,000 shares at $100 par
value per share) issued by the Utility and outstanding at March 31, 1994 and
December 31, 1993, with related redemption prices (at the Utility's option),
were as follows:

Series Redemption price Shares outstanding Total par value
Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31, Dec. 31,
1994 1993 1994 1993 1994 1993
(In Thousands) (In Thousands)
B 4.650%$100.000 100.000 25.2 25.2 $2,520 2,520
C 4.750 100.000 100.000 14.4 14.4 1,440 1,440
D 11.000 101.040 101.570 2.0 3.2 200 320
E 11.000 101.040 101.570 1.0 1.6 100 160
F 11.000 101.040 101.570 2.0 3.2 200 320
G 11.875 106.927 106.927 48.0 48.0 4,800 4,800
92.6 95.6 $9,260 9,560
<page 10>

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(3) Income Taxes

(a) TNP Enterprises, Inc. and Subsidiaries

Income taxes as set forth in TNPE's consolidated statements of operations
consisted of the following components:

Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)
Charged (credited) to operating expenses:
Current:
Federal $ (607) (1,746)
State - 2
(607) (1,744)
Deferred Federal income taxes (335) 738
Investment tax credit adjustments:
Investment tax credits made available
through net operating loss carryback (181) (522)
Amortization of accumulated
deferred investment tax credits (262) (263)
(443) (785)

Total (1,385) (1,791)

Charged (credited) to other income:
Current - Federal 49 176
Deferred Federal income taxes (16) (1)
Investment tax credits made available
through net operating loss carryback (5) (1)
28 174

Total income taxes $(1,357) (1,617)

Total income tax benefit for 1994 and 1993 was different than the amount
computed by applying the appropriate statutory Federal income tax rate to loss
before income taxes. The reasons for the differences were as follows:

Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)

Income tax benefit at statutory rate $(1,437) (1,185)
Amortization of accumulated deferred
investment tax credits (262) (263)
Amortization of excess deferred taxes 90 (226)
Other - net 252 57
$(1,357) (1,617)

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(3) Income Taxes - continued

(a) TNP Enterprises, Inc. and Subsidiaries - continued

The tax effects of temporary differences that give rise to significant portions
of net current accumulated deferred taxes on income and net noncurrent
accumulated deferred taxes on income at March 31, 1994 and December 31, 1993
are presented below:
March 31, December 31,
1994 1993
(In Thousands)
Current accumulated deferred taxes
on income:
Deferred tax assets:
Unbilled revenues $ 7,204 6,914
Revenues subject to refund 1,162 1,053
Other 1,621 1,435
9,987 9,402
Deferred tax liability - Deferred
purchased power and fuel costs (5,054) (5,151)
Current accumulated deferred taxes
on income, net $ 4,933 4,251

Noncurrent accumulated deferred taxes
on income:
Deferred tax assets:
Regulatory related items $20,083 10,116
Minimum tax credit carryforwards 9,323 10,067
Federal regular tax NOL carryforwards 13,396 10,005
Investment tax credit carryforward 17,620 17,434
Other 2,270 2,388
62,692 50,010
Deferred tax liabilities:
Regulatory related item (2,273) -
Utility plant, principally due to
depreciation and capitalized basis
differences (111,285) (101,839)
Deferred rate case expenses (2,439) (2,553)
Deferred loss on reacquired debt (1,821) (1,823)
Deferred accounting treatment (1,580) (1,617)
Other 67 729
(119,331) (107,103)
Noncurrent accumulated deferred
taxes on income, net $ (56,639) (57,093)

TNPE generated both a Federal regular tax net operating loss ("NOL") and a
Federal minimum tax ("MT") NOL for the first quarter of 1994 and, therefore,
has no current income tax liability for this period. When carried back to the
appropriate years, the MT NOL resulted in a net refundable amount of
approximately $558,000.

At March 31, 1994, TNPE has NOL carryforwards for Federal income tax purposes of
approximately $38,300,000 which are available to offset future Federal taxable
income through 2009. TNPE also has ITC carryforwards for Federal income tax
purposes of approximately $17,600,000 which are available to reduce future
Federal income taxes through 2005. In addition, TNPE has minimum tax credit
carryforwards of approximately $9,300,000 which are available to reduce future
Federal regular income taxes over an indefinite period.

In order to fully realize the Federal regular tax NOL carryforwards, TNPE will
need to generate future taxable income of approximately $38,300,000 prior to
expiration of the Federal regular tax NOL carryforwards which will begin to
expire in 2008. Based on TNPE's historical and projected pretax earnings,
management believes it is more likely than not that the Utility will realize
the benefit of the Federal regular tax NOL carryforwards existing at March 31,
1994 before such carryforwards begin to expire in 2008. Deferred tax assets
related to regulatory items will be realized in accordance with regulatory
commission requirements. Certain 1993 amounts have been reclassified to
conform with the 1994 method of presentation.

<page 12>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(3) Income Taxes - continued

(b) Texas-New Mexico Power Company and Subsidiaries

Income taxes as set forth in the Utility's consolidated statements of operations
consisted of the following components:

Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)
Charged (credited) to operating expenses:
Current:
Federal $ (607) (1,746)
State - 2
(607) (1,744)
Deferred Federal income taxes (335) 738
Amortization of regulatory assets and
liabilities-net 77 -
Investment tax credit adjustments:
Investment tax credits made available
through net operating loss carryback (181) (522)
Amortization of accumulated
deferred investment tax credits (262) (263)
(443) (785)

Total (1,385) (1,791)

Charged to other income:
Current - Federal 66 177
Total income taxes $ (1,319) (1,614)

Three Months Ended
March 31, March 31,
1994 1993
(In Thousands)

Income tax benefit at statutory rate $ (1,400) (1,182)
Amortization of accumulated deferred
investment tax credits (262) (263)
Amortization of excess deferred taxes 90 (226)
Other - net 253 57
$ (1,319) (1,614)

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(3) Income Taxes - continued

(b) Texas-New Mexico Power Company and Subsidiaries - continued

The tax effects of the Utility's temporary differences that give rise to
significant portions of net current accumulated deferred taxes on income and net
noncurrent accumulated deferred taxes on income at March 31, 1994 and December
31, 1993 are presented below:
March 31, December 31,
1994 1993
(In Thousands)
Current accumulated deferred taxes
on income:
Deferred tax assets:
Unbilled revenues $ 7,204 6,914
Revenues subject to refund 1,162 1,053
Other 1,621 1,435
9,987 9,402
Deferred tax liability - Deferred
purchased power and fuel costs (5,054) (5,151)
Current accumulated deferred taxes
on income, net $ 4,933 4,251

Noncurrent accumulated deferred taxes
on income:
Deferred tax assets:
Regulatory related items $20,083 10,116
Minimum tax credit carryforwards 14,168 14,890
Federal regular tax NOL carryforwards 18,947 15,679
Investment tax credit carryforward 18,967 18,786
Other 764 792
72,929 60,263
Deferred tax liabilities:
Regulatory related items (2,273) -
Utility plant, principally due to
depreciation and capitalized basis
differences (111,285) (101,839)
Deferred rate case expenses (2,439) (2,553)
Deferred loss on reacquired debt (1,821) (1,823)
Deferred accounting treatment (1,580) (1,617)
Other - 662
(119,398) (107,170)
Noncurrent accumulated deferred
taxes on income, net $ (46,469) (46,907)

The Utility generated both a Federal regular tax NOL and a Federal MT NOL for
the first quarter of 1994 and, therefore, has no current income tax liability
for this period. When carried back to the appropriate years, the MT NOL
resulted in a net refundable amount of approximately $541,000.

At March 31, 1994, the Utility has NOL carryforwards for Federal income tax
purposes of approximately $54,100,000 which are available to offset future
Federal taxable income through 2009. The Utility also has ITC carryforwards
for Federal income tax purposes of approximately $18,900,000 which are
available to reduce future Federal income taxes through 2005. In addition, the
Utility has minimum tax credit carryforwards of approximately $14,200,000 which
are available to reduce future Federal regular income taxes over an indefinite
period.

In order to fully realize the Federal regular tax NOL carryforwards, the
Utility will need to generate future taxable income of approximately
$54,100,000 prior to expiration of the Federal regular tax NOL carryforwards
which will begin to expire in 2006. Based on the Utility's historical and
projected pretax earnings, management believes it is more likely than not that
the Utility will realize the benefit of the Federal regular tax NOL
carryforwards existing at March 31, 1994 before such carryforwards begin to
expire in 2006. Deferred tax assets related to regulatory items will be
realized in accordance with regulatory commission requirements. Certain 1993
amounts have been reclassified to conform with the 1994 method of presentation.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(3) Income Taxes - continued

The consolidated Federal income tax return filed by TNPE, includes the
consolidated operations of the Utility and its subsidiaries. The amounts of
income taxes and investment tax credits recognized in the accompanying
consolidated financial statements of the Utility were computed as if the
Utility and its subsidiaries filed a separate consolidated Federal income tax
return, and the amounts could differ from those recognized as a member of
TNPE's consolidated group.

(4) Commitments and Contingencies

For a discussion of the judicial appeals of the Utility's rate orders in Docket
Nos. 9491 and 10200 and certain other matters concerning the Texas rate base
treatment of TNP One, reference is made to note 5 of both the Notes to
Consolidated Financial Statements included in TNPE's 1993 Annual Report,
incorporated by reference in TNPE's 1993 Annual Report on Form 10-K, and the
Notes to Consolidated Financial Statements included in the Utility's 1993
Annual Report on Form 10-K, which notes are incorporated herein by reference.

On March 30, 1994, the Utility filed a retail rate application, Docket No.
12900, with the Public Utility Commission of Texas ("PUCT") requesting an
increase of $34.8 million, or 8.9%, over annualized test year revenues. The
proposed rate increase for the residential class of customers averages 8.3%.
The Utility's request includes the remaining $11.1 million of Unit 2 costs in
rate base, as prescribed in Docket No. 10200. The PUCT's hearing on the merits
should begin in July 1994. The Utility anticipates placing the rates into
effect under bond, subject to refund, in October 1994.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

This discussion presents management's analysis of significant factors in TNPE's
and the Utility's consolidated financial condition and results of operations
and should be read in conjunction with related consolidated financial
statements and notes thereto.

The only business of TNPE is conducted by the Utility. The principal effects
of nonutility activities on the consolidated financial statements are from
short-term investments, certain tax benefits and issuance of TNPE's common
stock.

The Utility and TNPE continue to face challenges to their financial stability
as a result of uncertainties with respect to judicial appeals of rate orders
issued by the Public Utility Commission of Texas ("PUCT") and the servicing of
debt incurred for refinancings of both the Unit 1 and the Unit 2 financing
facilities. These matters have arisen by reason of the acquisition and
operation by the Utility of TNP One, a two-unit, lignite-fueled, circulating
fluidized bed generating facility located in Robertson County, Texas, and the
related rate proceedings in Texas which disallowed recovery in rates of certain
costs of TNP One. While the outcome of the regulatory matters, discussed
further below, cannot be predicted, the Utility is pursuing their favorable
conclusion. The adverse resolution of certain of these matters would require a
write-off of some portion of the disallowances and could result in a
significant negative impact on earnings in the period of final resolution. The
following discussion of certain regulatory proceedings related to TNP One is
essential to an analysis of the Utility's and TNPE's financial condition and
results of operations.

FINANCIAL CONDITION

Regulatory Matters

Appeals of the PUCT orders in Docket Nos. 9491 and 10200 remain pending in the
Texas courts. The primary issues in the Docket No. 9491 appeal are the PUCT's
order which disallowed $39.5 million of the requested costs of Unit 1 and the
Finding of Fact No. 84 ("FF No. 84") which found that the Utility failed to
prove that its decision to start construction of Unit 2 was prudent. Although
the Utility received the majority of requested Unit 2 costs in Docket No.
10200, the effect of the appeal of FF No. 84 on Unit 2 costs cannot presently
be determined. In the Docket No. 10200 appeal, the primary issues are the
$21.1 million disallowances of Unit 2 costs, an additional $800,000
disallowance of Unit 1 costs and the PUCT ruling departing from the "stand-
alone-return" method of calculating the Utility's Federal income tax component
of cost of service. A more thorough discussion of the procedural aspects of
both PUCT dockets is included in note 5 of the Notes to Consolidated Financial
Statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations included in TNPE's 1993 Annual Report, both incorporated
by reference in TNPE's 1993 Annual Report on Form 10-K and Note 5 of the Notes
to Consolidated Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Utility's 1993
Annual Report on Form 10-K, all of which are incorporated herein by reference.

If the Utility is not successful in obtaining a final favorable disposition in
the appellate proceedings relating to the disallowances in Docket Nos. 9491 and
10200, a write off of some portion of the disallowances would be required,
which could result in a significant negative impact on earnings in the period
of final resolution.

Liquidity And Capital Resources

The Unit 2 Financing Facility

Under the terms of the Unit 2 financing facility, as amended, the total
commitment available is $147.75 million. The Utility is permitted to prepay up
to $141.5 million of the $147.75 million commitment and reborrow up to the
amount of the prepayments. The reborrowings under the Unit 2 financing facil-
ity will be subject to compliance with the EBIT test (as described in note 1 to
the consolidated financial statements) and maintenance of an equity to total
capital ratio of 20% or more as defined in the financing facility. As of March
31, 1994, the unused commitment available to be borrowed under the Unit 2
financing facility was approximately $42.1 million. A commitment fee of 1/4 of
1% per annum is payable on the unused portion of the reducing commitment.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

On March 30, 1994, the Utility filed a retail rate application, Docket No.
12900, with the PUCT requesting an increase of $34.8 million, or 8.9%, over
annualized test year revenues. If the Utility receives satisfactory results
from the application, the Utility expects to be able to repay the remaining
amount due under the Unit 2 financing facility through the receipt of proceeds
from the issuance of common equity by TNPE, internal cash generation and
issuance of debt.

Capital Requirements

The Utility's 1994 capital requirements consist of (1) additions to utility
plant and (2) bond sinking fund payments and maturities and preferred stock
redemptions. During the three months ended March 31, 1994, the Utility
experienced negative cash flows from operations. Capital requirements for the
first quarter were funded with reborrowings under the Unit 2 financing facility.
Due to the seasonal nature of the Utility's business may fluctuate between
quarters, but the Utility expects positive cash flows from
operations on an annual basis. The Utility expects that the remaining capital
requirements for 1994 will be funded internally with cash flows from operations.

During the period from January 1, 1994 to December 31, 1999, the Utility
currently estimates that its total debt and preferred stock repayments will be
$376.2 million. This amount includes the repayments in 1995, 1996, 1997 and
1998 in discharge of the $105.6 million outstanding under the Unit 2 financing
facility at March 31, 1994. In addition, the Utility expects its utility plant
additions to be approximately $180.9 million during the period from January 1,
1994 to December 31, 1999. The Utility expects the requirements for utility
plant additions will be funded internally with cash flows from operations. The
amounts and types of the foregoing requirements through 1999 are estimated as
follows:

Capital Requirements (1)

1994 1995 1996 1997 1998 1999 Total
(Dollars in Millions)

Preferred stock redemptions $ 0.9 0.9 0.8 0.6 0.6 0.2 4.0

Unit 2 financing facility (2) - 1.6 30.2 36.9 36.9 - 105.6

First Mortgage Bond sinking
fund payments and retirements 1.1 1.1 1.1 131.1 1.1 1.1 136.6

Secured Debentures,
due 1999 maturity - - - - - 130.0 130.0

Total debt and preferred
stock repayments 2.0 3.6 32.1 168.6 38.6 131.3 376.2

Utility plant additions 25.9 28.3 32.7 30.4 31.5 32.1 180.9

Total capital requirements $27.9 31.9 64.8 199.0 70.1 163.4 557.1

(1) See note 1 to the consolidated financial statements for details of the
maturities of all outstanding debt.
(2) Based upon the balance outstanding at March 31, 1994.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Included in the First Mortgage Bond sinking fund payments and retirements
amount for 1997 is $130 million of First Mortgage Bonds, Series T, which mature
January 15, 1997. The Utility anticipates that it will refinance these bonds
and the Secured Debentures due in 1999 through the issuance of additional First
Mortgage Bonds or other debt securities, and/or the receipt of proceeds from
the issuance of common equity by TNPE. The Utility does not need additional
Available Additions (described below under "Capital Resources") in order to
issue First Mortgage Bonds for the purpose of refunding outstanding First
Mortgage Bonds.

Capital Resources

At any time, the Utility's ability to access the capital markets on a
reasonable basis or otherwise obtain needed financing for operating and capital
requirements is subject to the receipt of adequate and timely regulatory relief
and market conditions. The Utility's ability to access the capital markets at
reasonable costs will specifically be impacted by the ultimate resolution of (1)
the amount of rate relief granted for Unit 1 and Unit 2, (2) the contested
disallowances of up to $40.3 million and $21.1 million of the costs of Unit 1
and Unit 2, respectively, and (3) the PUCT ruling concerning the treatment of
the Federal income tax component of the Utility's cost of service.

In addition to the aforementioned Unit 2 financing facility, the Utility's
external sources for acquiring capital are outlined below:

First Mortgage Bonds. Assuming an interest rate of 10.25% and satisfactory
market conditions, based upon March 31, 1994 financial information, the Utility
could have issued approximately $61 million of additional First Mortgage Bonds
under the Interest Coverage Ratio requirement. With certain exceptions, the
amount of additional First Mortgage Bonds that may be issued is also limited by
the Bond Indenture to a certain amount of physical properties which are to be
collateralized by the first lien mortgage of the Bond Indenture ("Available
Additions"). Because of the issuance of the Series U, First Mortgage Bonds in
September 1993, the Utility has limited ability to issue additional First
Mortgage Bonds until more Available Additions are provided upon further
repayment of amounts under the financing facilities.

Secured Debentures. The indenture, under which the Series A Secured Debentures
were issued in September 1993, permits, generally, the issuance of additional
secured debentures to the extent that the proceeds from such issuance are used
to purchase an equal amount of loans under the Unit 1 and Unit 2 financing
facilities.

Preferred Stock. Due to interest and dividend coverage tests required for
issuance of its preferred stock, the Utility cannot presently issue any
preferred stock. The Utility does not expect to have the ability to issue
preferred stock through 1996.

Receipt of Common Equity. One source for repayment of the Unit 2 financing
facility is anticipated to be the receipt of proceeds from the issuance of
common equity by TNPE. Receipt of future equity contributions by the Utility
from TNPE will be largely dependent upon TNPE's ability to issue common stock.
Since most of the assets, liabilities and earnings capability of TNPE are those
of the Utility, the ability of TNPE to issue common stock and pay dividends
will be largely dependent upon the Utility's operations and the Utility's
restrictions regarding payment of cash dividends on its common stock.

The Utility may not pay dividends on its common stock unless all past and
current dividends on outstanding preferred stock of the Utility have been paid
or declared and set apart for payment and all requisite sinking or purchase
fund obligations for the preferred stock of the Utility have been fulfilled.
Charter provisions relating to the preferred stock and the Bond Indenture under
which First Mortgage Bonds are issued contain restrictions regarding the
retained earnings of the Utility. At March 31, 1994, pursuant to the terms of
the Bond Indenture, approximately $13.1 million of the Utility's $31.5 million
of retained earnings was restricted. In addition, the financing facilities
place certain restrictions on the Utility's ability to pay dividends on its
common stock, unless certain threshold tests are met. The Utility has satisfied
the threshold tests since they became effective, and the Utility does not
expect that any of the aforementioned contractual restrictions on the payment
of dividends will become operative in 1994. However, the Utility can give no
assurance that the Utility will satisfy such tests in the future.

As discussed in the Utility's 1993 Form 10-K Report, the Utility's 1993 common
stock dividends of $17.3 million exceeded 1993 earnings available for common
stock of $10.6 million; however, the Utility's retained earnings were
sufficient to allow the dividends to be paid. For the first quarter of 1994,
the Utility experienced a loss applicable to common stock of $3 million;
therefore, total 1994 common stock dividends, to the extent authorized by the
Board of Directors, may exceed total 1994 earnings available for common stock.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Management is seeking equitable regulatory treatment and increased rates in
efforts to improve future results of operations. Cash dividend payments are
subject to approval of the Board of Directors and are dependent, especially in
the longer term, on the Utility's and TNPE's future financial condition and
adequate and timely regulatory relief, including favorable resolution of
pending judicial appeals of rate cases.

New Mexico Rate Application

As reported in the 1993 Report on Form 10-K, on January 28, 1994, the Utility
and other parties reached a unanimous settlement in the Utility's rate
application filed with the New Mexico Public Utility Commission ("NMPUC") in
August 1993. On April 25, 1994, an examiner's certification of the settlement
was submitted to the Commissioners for consideration; the certification
supports the parties' settlement. If approved by the NMPUC, the settlement
would increase the Utility's annual base revenues in New Mexico by
approximately $400,000.

Texas Rate Application

On March 30, 1994, the Utility filed a retail rate application, Docket No.
12900, with the PUCT requesting an increase of $34.8 million, or 8.9%, over
annualized test year revenues. The proposed rate increase for the residential
class of customers averages 8.3%. The Utility's request includes the remaining
$11.1 million of Unit 2 costs in rate base, as prescribed in Docket No. 10200.
The PUCT's hearing on the merits should begin in July 1994. The Utility
anticipates placing the rates into effect under bond, subject to refund, in
October 1994.

Other

Implementation in 1993 of Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," has
resulted in increased costs of employee benefits. The Utility's proposed
settlement of its New Mexico rate application includes recovery of
postretirement benefits for its New Mexico Operations; however, as previously
noted, the settlement is pending approval by the NMPUC. The Utility's newly
filed rate application with the PUCT on March 30, 1994 requests inclusion in
rates of the postretirement benefits for its Texas operations; this request is
subject to the hearing and approval process of the PUCT.

RESULTS OF OPERATIONS

TNPE's consolidated loss applicable to common stock ("Loss") and loss per share
of common stock ("LPS") for the three months ended March 31, 1994 and 1993,
were as follows:

Three Months Ended March 31,
1994 1993

Loss* LPS Loss* LPS

Utility Operations $(3,009) (.28) (2,094) (.20)

Nonutility Operations (86) (.01) (5) (.00)

$(3,095) (.29) (2,099) (.20)

* Amounts in thousands

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

The following table sets forth, for the periods indicated, the percentage
relationship of items to operating revenues in TNPE's consolidated statements
of operations.

Three Months Ended
March 31,
1994 1993

Operating revenues 100.0% 100.0%
Operating expenses:
Power purchased for resale 43.0 42.7
Fuel 9.5 9.6
Other operating and general expenses 16.2 16.9
Maintenance 2.8 2.9
Depreciation of utility plant 8.5 8.7
Taxes, other than on income 6.7 6.9
Income taxes (1.3) (1.7)
Total operating expenses 85.4 86.0
Net operating income 14.6 14.0
Other income, net of taxes 0.0 0.3
Earnings before interest charges 14.6 14.3
Total interest charges 17.3 16.1
Net loss (2.7)% (1.8)%

UTILITY OPERATIONS

Operating Revenues

Operating revenues for the first quarter of 1994 increased $4,449,000 over the
first quarter of 1993. The following table presents the components of the
changes in operating revenues:

Increase (Decrease) From Prior Year
Three Months Ended
March 31, 1994
(Dollars in Thousands)

Base operating revenues $(536) (0.5)%

Recovery of purchased power costs 2,287 2.2

Recovery of fuel costs 135 0.1

Customer usage 2,295 2.2

Other revenues 268 0.3
Total $4,449 4.3%

The decrease in base operating revenues was primarily due to a reduced demand
charge to a New Mexico customer.

Purchased power costs are recovered through cost recovery factor clauses in
both Texas and New Mexico. Fuel costs are recovered through a fixed fuel
factor approved by the PUCT. Recovery of purchased power costs is discussed
under "Operating Expenses."

The increase in customer usage reflects a 5.1% KWH sales increase, primarily
among residential, commercial and industrial customers in both Texas and New
Mexico. The increase in KWH sales among residential customers results from
both an increase in the number of customers and an increase in the average
consumption of KWH per customer. Among commercial and industrial customers, an
increase in the average consumption of KWH per customer offset a decrease in
the average number of customers.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Selected information for the Utility's operations is presented in the following
table:

Three Months Ended
March 31,
1994 1993

Operating Revenues (thousand of dollars):
Residential $42,143 39,411
Commercial 30,963 29,640
Industrial 29,576 29,680
Other 4,917 4,419

Total $107,599 103,150

Sales (thousand kilowatt-hours):
Residential 465,769 434,235
Commercial 345,553 330,070
Industrial 614,150 592,578
Other 26,913 24,752

Total 1,452,385 1,381,635

Number of Customers (at period-end):
Residential 182,488 179,203
Commercial 30,235 30,438
Industrial 152 152
Other 327 229

Total 213,202 210,022

Operating Expenses

The Utility's variance in operating expenses for the three months ended March
31, 1994 compared to the same period for 1993, was primarily due to an
increase of power purchased for resale.

Factors affecting the expense of power purchased for resale are (1) the number
of KWH purchased from suppliers, (2) the cost per KWH purchased, (3) the
recovery or refund of prior under- or over-collections, respectively, of
purchased power costs (deferred purchased power costs), and (4) occasional fuel
cost refunds from the Utility's suppliers.

Power purchased for resale increased $2,287,000 for the three months ended March
31, 1994. The increase occurred mainly from increased KWH purchased and an
increase in the unit costs from suppliers.

Other Income, Net of Taxes

For the Utility other income, net of taxes decreased during the first quarter of
1994 by $250,000 compared to 1993 primarily because of a decrease in interest
income on short-term investments. As reported in the Utility's 1993 Annual
Report on Form 10-K, the Utility utilized a significant amount of its cash-on-
hand to make optional payments under the Unit 2 financing facility, thereby
reducing cash available for the short-term investments.

Interest Charges

Total interest charges for the first quarter of 1994 increased $1,937,000 over
the 1993 amount. Series U, First Mortgage Bonds and Secured Debentures, Series
A, issued in September 1993, bear higher interest rates than the debt they
replaced. The Utility believes that the September 1993 financings were
favorably timed compared to financings which would have been required in 1994
and 1995 under the prior repayment schedule for the construction financing
facilities for Unit 1 and Unit 2 of TNP one.

The proceeds from the issuance of equity by TNPE and proceeds from future
issuances of debt securities by the Utility are anticipated to help satisfy the
scheduled repayments of the Unit 2 financing facility. Interest rates on debt
securities, are expected to be greater than those interest rates under the
financing facility. Interest rates on additional debt may be further increased
if the Utility's outstanding regulatory matters are not satisfactorily resolved.

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Net Loss

The Utility experienced a larger net loss this quarter than that of last year
mainly due to the increased interest charges discussed above. In 1994, the
Utility continued its 1993 cost saving measures which suspended the Utility's
matching contributions to the employee's thrift plan, resulted in low pension
costs and maintained its reduced labor force. During the first quarter of
1994, the Utility raised its employees' salaries by a 3% general wage increase,
the first such increase since March 1991. By filing the March 30, 1994 rate
application with the PUCT, the Utility is attempting to recover the annualized
amount of the increased interest charges and other increased costs.

Further regulatory treatment and court decisions regarding Dockets No. 9491 and
10200, as previously discussed, will have a direct bearing on future earnings.

NONUTILITY OPERATIONS

Due to TNPE's $15 million equity contribution to the Utility in November 1993,
TNPE's short-term investments and related income were less in 1994 than in
1993. Nonutility operations are included in other income, net of taxes in the
consolidated statements of operations.

PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) See Exhibit Index, pages 23-31.

(b) None during the quarter covered by this report.

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

EXHIBIT INDEX

Exhibits filed herewith are denoted by "*." The other exhibits have
heretofore been filed with the Commission and are incorporated herein by
reference.

Exhibit
No. Description

3(a) - Restated Articles of Incorporation of the Utility (Exhibit
4(a), File No. 2-86282).

3(b) - Amendment to Restated Articles of Incorporation dated October
26, 1983 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1984, File No. 1-2660-2).

3(c) - Amendment to Restated Articles of Incorporation dated April 8,
1984 (Exhibit 3(c) to Form 10-K for the year ended December 31,
1984, File No. 1-2660-2).

3(d) - Amendment to Restated Articles of Incorporation dated October
2, 1984 (Exhibit 3(d) to Form 10-K for the year ended December
31, 1984, File No. 1-2660-2).

3(e) - Articles of Merger dated October 3, 1984 (Exhibit 3(e) to Form
10-K for the year ended December 31, 1984, File No. 1-2660-2).

3(f) - Amendment to Restated Articles of Incorporation dated May 22,
1985 (Exhibit 3(a) to Form 10-K for the year ended December 31,
1985, File No. 2-97230).

3(g) - Amendment to Restated Articles of Incorporation dated August
20, 1985 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1985, File No. 2-97230).

3(h) - Amendment to Restated Articles of Incorporation dated
October 7, 1985 (Exhibit 3(c) to Form 10-K for the year ended
December 31, 1985, File No. 2-97230).

3(i) - Amendment to Restated Articles of Incorporation dated June 12,
1986 (Exhibit 3(a) to Form 10-K for the year ended December 31,
1986, File No. 2-97230).

3(j) - Amendment to Restated Articles of Incorporation dated October
17, 1986 (Exhibit 3(b) to Form 10-K for the year ended December
31, 1986, File No. 2-97230).

3(k) - Amendment to Restated Articles of Incorporation dated July 14,
1987 (Exhibit 3(k) to Form 10-K for the year ended December 31,
1987, File No. 2-97230).

3(l) - Amendment to Restated Articles of Incorporation dated October
23, 1987 (Exhibit 3(l) to Form 10-K for the year ended December
31, 1987, File No. 2-97230).

3(m) - Amendment to Restated Articles of Incorporation dated May 4,
1988 (Exhibit 3(m) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).

3(n) - Amendment to Restated Articles of Incorporation dated May 5,
1988 (Exhibit 3(n) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).

3(o) - Amendment to Restated Articles of Incorporation dated May 5,
1988 (Exhibit 3(o) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).

3(p) - Amendment to Restated Articles of Incorporation dated December
5, 1988 (Exhibit 3(p) to Form 10-K for the year ended December
31, 1988, File No. 2-97230).

3(q) - Amendment to Restated Articles of Incorporation dated April 11,
1989 (Exhibit 3(q) to Form 10-K for the year ended December 31,
1989, File No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description

3(r) - Amendment to Restated Articles of Incorporation dated July 27,
1989 (Exhibit 3(r) to Form 10-K for the year ended December 31,
1989, File No. 2-97230).

3(s) - Amendment to Restated Articles of Incorporation dated October
23, 1989 (Exhibit 3(s) to Form 10-K for the year ended
December 31, 1989, File No. 2-97230).

3(t) - Amendment to Restated Articles of Incorporation dated May 16,
1990 (Exhibit 3(t) to Form 10-K for the year ended December 31,
1990, File No. 2-97230).

3(u) - Amendment to Restated Articles of Incorporation dated June 26,
1990 (Exhibit 3(u) to Form 10-K for the year ended December 31,
1990, File No. 2-97230).

3(v) - Amendment to Restated Articles of Incorporation dated November
27, 1990 (Exhibit 3(v) to Form 10-K for the year ended December
31, 1990, File No. 2-97230).

3(w) - Amendment to Restated Articles of Incorporation
dated May 1, 1991 (Exhibit 3(w) to Form 10-K
for the year ended December 31, 1991, File No.
2-97230).

3(x) - Amendment to Restated Articles of Incorporation dated July 18,
1991 (Exhibit 3(x) to Form 10-K for the year ended December 31,
1991, File No. 2-97230).

3(y) - Amendment to Restated Articles of Incorporation dated October
18, 1991 (Exhibit 3(y) to Form 10-K for the year ended December
31, 1991, File No. 2-97230).

3(z) - Amendment to Restated Articles of Incorporation dated April 30,
1992 (Exhibit 3(z) to Form 10-K for the year ended December 31,
1992, File No. 2-97230).

3(aa) - Amendment to Restated Articles of Incorporation dated June 19,
1992 (Exhibit 3(aa) to Form 10-K for the year ended December
31, 1992, File No. 2-97230).

3(bb) - Amendment to Restated Articles of Incorporation dated November
3, 1992 (Exhibit 3(bb) to Form 10-K for the year ended December
31, 1992, File No. 2-97230).

3(cc) - Amendment to Restated Articles of Incorporation dated April 7,
1993. (Exhibit 3(cc) to Form 10-K for the year ended December
31, 1993, File No. 2-97230).

3(dd) - Amendment to Restated Articles of Incorporation dated July 22,
1993. (Exhibit 3(dd) to Form 10-K for the year ended December
31, 1993, File No. 2-97230).

3(ee) - Amendment to Restated Articles of Incorporation dated October
21, 1993. (Exhibit 3(ee) to Form 10-K for the year ended
December 31, 1993, File No. 2-97230).

3(ff) - Bylaws of the Utility, as amended February 18, 1992 (Exhibit
3(cc) to Form 10-K for the year ended December 31, 1992, File
No. 2-97230).

4(a) - Indenture of Mortgage and Deed of Trust dated as of November 1,
1944 (Exhibit 2(d), File No. 2-61323).

4(b) - Seventh Supplemental Indenture dated as of May 1, 1963 (Exhibit
2(k), File No. 2-61323).

4(c) - Eighth Supplemental Indenture dated as of July 1, 1963 (Exhibit
2(1), File No. 2-61323).

4(d) - Ninth Supplemental Indenture dated as of August 1, 1965
(Exhibit 2(m), File No. 2-61323).

4(e) - Tenth Supplemental Indenture dated as of May 1, 1966 (Exhibit
2(n), File No. 2-61323).

4(f) - Eleventh Supplemental Indenture dated as of October 1, 1969
(Exhibit 2(o), File No. 2-61323).

4(g) - Twelfth Supplemental Indenture dated as of May 1, 1971 (Exhibit
2(p), File No. 2-61323).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIIDIARIES

Exhibit
No. Description

4(h) - Thirteenth Supplemental Indenture dated as of July 1, 1974
(Exhibit 2(q), File No. 2-61323).

4(i) - Fourteenth Supplemental Indenture dated as of March 1, 1975
(Exhibit 2(r), File No. 2-61323).

4(j) - Fifteenth Supplemental Indenture dated as of September 1, 1976
(Exhibit 2(e), File No. 2-57034).

4(k) - Sixteenth Supplemental Indenture dated as of November 1, 1981
(Exhibit 4(x), File No. 2-74332).

4(l) - Seventeenth Supplemental Indenture dated as of December 1, 1982
(Exhibit 4(cc), File No. 2-80407).

4(m) - Eighteenth Supplemental Indenture dated as of September 1, 1983
(Exhibit (a) to Form 10-Q for the quarter ended September 30,
1983, File No. 1-4756).

4(n) - Nineteenth Supplemental Indenture dated as of May 1, 1985
(Exhibit 4(v), File No. 2-97230).

4(o) - Twentieth Supplemental Indenture dated as of July 1, 1987
(Exhibit 4(o) to Form 10-K for the year ended December 31,
1987, File No. 2-97230).

4(p) - Twenty-First Supplemental Indenture dated as of July 1, 1989
(Exhibit 4(p) to Form 10-Q for the quarter ended June 30, 1989,
File No. 2-97230).

4(q) - Twenty-Second Supplemental Indenture dated as of January 15,
1992 (Exhibit 4(q) to Form 10-K for the year ended December 31,
1991, File No. 2-97230).

4(r) - Twenty-Third Supplemental Indenture dated as of September 15,
1993. (Exhibit 4(r) to Form 10-K for the year ended December
31, 1993, File No. 2-97230).

4(s) - Indenture and Security Agreement for Secured Debentures dated
as of January 15, 1992 (Exhibit 4(r) to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).

4(t) - Indenture and Security Agreement for Secured Debentures dated
as of September 15, 1993. (Exhibit 4(t) to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

Material Contracts Relating to TNP One

10(a) - Fuel Supply Agreement, dated November 18, 1987, between
Phillips Coal Company and the Utility (Exhibit 10(j) to Form
10-K for the year ended December 31, 1987, File No. 2-97230).

10(b) - Unit 1 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1992 (the "Unit 1 Credit
Agreement"), among the Utility, Texas Generating Company
("TGC"), the banks named therein as Banks (the "Unit 1 Banks")
and The Chase Manhattan Bank (National Association), as Agent
for the Unit 1 Banks (the "Unit 1 Agent"), amending and
restating the Project Loan and Credit Agreement among such
parties dated as of December 1, 1987 (Exhibit 10(c) to Form 10-
K for the year ended December 31, 1991, File No. 2-97230).

10(b)1 - Participation Agreement, dated as of January 8, 1992, among the
banks named therein as Banks, the parties named therein as
Participants and the Unit 1 Agent (Exhibit 10(c)1 to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).

10(b)2 - Amendment No. 1, dated as of September 21, 1993, to the Unit 1
Credit Agreement. (Exhibit 10(b)(2) to Form 10-K for the year
ended December 31, 1993, File No. 2-97230).

10(c) - Assignment and Security Agreement, dated as of January 8, 1992,
among TGC and the Unit 1 Agent, for the benefit of the Secured
Parties, as defined in the Unit 1 Credit Agreement, amending
and restating the Assignment and Security Agreement among such
parties dated as of December 1, 1987 (Exhibit 10(d) to Form 10-
K for the year ended December 31, 1991, File No. 2-97230).

10(d) - Assignment and Security Agreement, dated December 1, 1987,
executed by the Utility in favor of the Unit 1 Agent for the
benefit of the Secured Parties, as defined therein (Exhibit
10(u) to Form 10-K for the year ended December 31, 1987, File
No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description

10(e) - Amended and Restated Subordination Agreement, dated as of
October 1, 1988, among the Utility, Continental Illinois
National Bank and Trust Company of Chicago and the Unit 1
Agent, amending and restating the Subordination Agreement among
such parties dated as of December 1, 1987 (Exhibit 10(uu) to
Form 10-K for the year ended December 31, 1988, File No. 2-
97230).

10(f) - Mortgage and Deed of Trust (With Security Agreement and UCC
Financing Statement for Fixture Filing), dated to be effective
as of December 1, 1987, and executed by Project Funding
Corporation ("PFC"), as Mortgagor, to Donald H. Snell, as
Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(ee) to Form 10-K for the year ended
December 31, 1987, File No. 2-97230).

10(f)1 - Supplemental Mortgage and Deed of Trust (With Security
Agreement and UCC Financing Statement for Fixture Filing),
executed by TGC, as Mortgagor, on January 27, 1992, to be
effective as of December 1, 1987, to Donald H. Snell, as
Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(g)4 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).

10(f)2 - First TGC Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)1 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).

10(f)3 - Second TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)2 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).

10(f)4 - Third TGC Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 1 Banks, the Unit 1 Agent, the
Utility and TGC (Exhibit 10(g)3 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).

10(f)5 - Fourth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 1 Banks, the Unit 1 Agent,
the Utility and TGC. (Exhibit 10(f)5 to Form 10-K for the year
ended December 31, 1993, File No. 2-97230).

10(f)6 - Fifth TGC Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 1 Banks, the Unit 1 Agent,
the Utility and TGC. (Exhibit (10)(f)6 to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(g) - Indemnity Agreement, made as of the 1st day of December, 1987,
by Westinghouse, CE and Zachry, as Indemnitors, for the benefit
of the Secured Parties, as defined therein (Exhibit 10(ff) to
Form 10-K for the year ended December 31, 1987, File No. 2-
97230).

10(h) - Second Lien Mortgage and Deed of Trust (With Security
Agreement) executed by the Utility, as Mortgagor, to Donald H.
Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(jj) to Form 10-K for
the year ended December 31, 1987, File No. 2-97230).

10(h)1 - Correction Second Lien Mortgage and Deed of Trust (with
Security Agreement), dated as of December 1, 1987, executed by
the Utility, as Mortgagor, to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as defined
therein (Exhibit 10(vv) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).

10(h)2 - Second Lien Mortgage and Deed of Trust (with Security
Agreement) Modification, Extension and Amendment Agreement,
dated as of January 8, 1992, executed by the Utility to Donald
H. Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(i)2 to Form 10-K for
the year ended December 31, 1991, File No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Exhibit
No. Description

10(h)3 - TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by the Utility to Donald H. Snell,
as Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein.(Exhibit (10)(h)3 to Form 10-K for the year
ended December 31, 1993, File No. 2-97230).

10(i) - Agreement for Conveyance and Partial Release of Liens, made as
of the 1st day of December, 1987, by PFC and the Unit 1 Agent
for the benefit of the Utility (Exhibit 10(kk) to Form 10-K for
the year ended December 31, 1987, File No. 2-97230).

10(j) - Inducement and Consent Agreement, dated as of June 15, 1988,
between Phillips Coal Company, Kiewit Texas Mining Company, the
Utility, Phillips Petroleum Company and Peter Kiewit Son's,
Inc. (Exhibit 10(nn) to Form 10-K for the year ended December
31, 1988, File No. 2-97230).

10(k) - Assumption Agreement, dated as of October 1, 1988, executed by
TGC, in favor of the Issuing Bank, as defined therein, the Unit
1 Banks, the Unit 1 Agent and the Depositary, as defined
therein (Exhibit 10(ww) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).

10(l) - Guaranty, dated as of October 1, 1988, executed by the Utility
and given in respect of the TGC obligations under the Unit 1
Credit Agreement (Exhibit 10(xx) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).

10(m) - First Amended and Restated Facility Purchase Agreement, dated
as of January 8, 1992, among the Utility, as the Purchaser, and
TGC, as the Seller, amending and restating the Facility
Purchase Agreement among such parties dated as of October 1,
1988 (Exhibit 10(n) to Form 10-K for the year ended December
31, 1991, File No. 2-97230).

10(n) - Operating Agreement, dated as of October 1, 1988, among the
Utility and TGC (Exhibit 10(zz) to Form 10-K for the year ended
December 31, 1988, File No. 2-97230).

10(o) - Unit 2 First Amended and Restated Project Loan and Credit
Agreement, dated as of January 8, 1992 (the "Unit 2 Credit
Agreement"), among the Utility, Texas Generating Company II
("TGCII"), the banks named therein as Banks (the "Unit 2
Banks") and The Chase Manhattan Bank (National Association), as
Agent for the Unit 2 Banks (the "Unit 2 Agent"), amending and
restating the Project Loan and Credit Agreement among such
parties dated as of October 1, 1988 (Exhibit 10(q) to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).

10(o)1 - Amendment No. 1, dated as of September 21, 1993, to the Unit 2
Credit Agreement. (Exhibit (10)(0)1 to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(p) - Assignment and Security Agreement, dated as of January 8, 1992,
among TGCII and the Unit 2 Agent, for the benefit of the
Secured Parties, as defined in the Unit 2 Credit Agreement,
amending and restating the Assignment and Security Agreement
among such parties dated as of October 1, 1988 (Exhibit 10(r)
to Form 10-K for the year ended December 31, 1991, File No. 2-
97230).

10(q) - Assignment and Security Agreement, dated as of October 1, 1988,
executed by the Utility in favor of the Unit 2 Agent for the
benefit of the Secured Parties, as defined therein (Exhibit
10(jjj) to Form 10-K for the year ended December 31, 1988, File
No. 2-97230).

10(r) - Subordination Agreement, dated as of October 1, 1988, among the
Utility, Continental Illinois National Bank and Trust Company
of Chicago and the Unit 2 Agent (Exhibit 10(mmm) to Form 10-K
for the year ended December 31, 1988, File No. 2-97230).

10(s) - Mortgage and Deed of Trust (With Security Agreement and UCC
Financing Statement for Fixture Filing), dated to be effective
as of October 1, 1988, and executed by Texas PFC, Inc., as
Mortgagor, to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein (Exhibit
10(uuu) to Form 10-K for the year ended December 31, 1988, File
No. 2-97230).

10(s)1 - First TGCII Modification and Extension Agreement, dated as of
January 24, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)1 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Exhibit
No. Description

10(s)2 - Second TGCII Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)2 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).
<page 30>

TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
Exhibit
No. Description

10(s)3 - Third TGCII Modification and Extension Agreement, dated as of
January 27, 1992, among the Unit 2 Banks, the Unit 2 Agent, the
Utility and TGCII (Exhibit 10(u)3 to Form 10-K for the year
ended December 31, 1991, File No. 2-97230).

10(s)4 - Fourth TGCII Modification and Extension Agreement, dated as of
September 29, 1993, among the Unit 2 Banks, the Unit 2 Agent,
the Utility and TGCII. (Exhibit (10)(s)4 to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(t) - Release and Waiver of Liens and Indemnity Agreement, made
effective as of the 1st day of October, 1988, by a consortium
composed of Westinghouse, CE, and Zachry (Exhibit 10(vvv) to
Form 10-K for the year ended December 31, 1988, File No. 2-
97230).

10(u) - Second Lien Mortgage and Deed of Trust (With Security
Agreement), dated as of October 1, 1988, and executed by the
Utility, as Mortgagor, to Donald H. Snell, as Mortgage Trustee,
for the benefit of the Secured Parties, as defined therein
(Exhibit 10(www) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).

10(u)1 - Second Lien Mortgage and Deed of Trust (with Security
Agreement) Modification, Extension and Amendment Agreement,
dated as of January 8, 1992, executed by the Utility to Donald
H. Snell, as Mortgage Trustee, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(w)1 to Form 10-K for
the year ended December 31, 1991, File No. 2-97230).

10(u)2 - TNP Second Lien Mortgage Modification No. 2, dated as of
September 21, 1993, executed by the Utility to Donald H. Snell,
as Mortgage Trustee, for the benefit of the Secured Parties, as
defined therein. (Exhibit 10(u)2 to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(v) - Intercreditor and Nondisturbance Agreement, dated as of October
1, 1988, among PFC, Texas PFC, Inc., the Utility, the Project
Creditors, as defined therein, and the Collateral Agent, as
defined therein (Exhibit 10(xxx) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).

10(v)1 - Amendment #1, dated as of January 8, 1992, to the Intercreditor
and Nondisturbance Agreement, dated as of October 1, 1988,
among TGC, TGCII, the Utility, the Unit 1 Banks, the Unit 2
Banks and The Chase Manhattan Bank (National Association) in
its capacity as collateral agent for the Unit 1 Banks and the
Unit 2 Banks (Exhibit 10(x)1 to Form 10-K for the year ended
December 31, 1991, File No. 2-97230).

10(v)2 - Amendment No. 2, dated as of September 21, 1993, to the
Intercreditor and Nondisturbance Agreement, among TGC, TGCII,
the Utility, the Unit 1 Banks, the Unit 2 Banks and The Chase
Manhattan Bank (National Association) in its capacity as
collateral agent for the Unit 1 Banks and the Unit 2 Banks.
(Exhibit 10(v)2 to Form 10-K for the year ended December 31,
1993, File No. 2-97230).

10(w) - Grant of Reciprocal Easements and Declaration of Covenants
Running with the Land, dated as of the 1st day of October, 1988
between PFC and Texas PFC, Inc. (Exhibit 10(yyy) to Form 10-K
for the year ended December 31, 1988, File No. 2-97230).

10(x) - Non-Partition Agreement, dated as of May 30, 1990, among the
Utility, TGC and The Chase Manhattan Bank (National
Association), as Agent for the Banks which are parties to the
Unit 1 Credit Agreement (Exhibit 10(ss) to Form 10-K for the
year ended December 31, 1990, File No. 2-97230).

10(y) - Assumption Agreement, dated July 26, 1991, to be effective as
of May 31, 1991, by TGCII in favor of the Issuing Bank, the
Unit 2 Banks, the Unit 2 Agent and the Depositary, as defined
therein (Exhibit 10(kkk) to Amendment No. 1 to File No. 33-
41903).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Exhibit
No. Description

10(z) - Guaranty, dated July 26, 1991, to be effective as of May 31,
1991, by the Utility and given in respect of the TGCII
obligations under the Unit 2 Credit Agreement (Exhibit 10(lll)
to Amendment No. 1 to File No. 33-41903).

10(aa) - First Amended and Restated Facility Purchase Agreement, dated
as of January 8, 1992, among the Utility, as the Purchaser, and
TGCII, as the Seller, amending and restating the Facility
Purchase Agreement among such parties dated July 26, 1991, to
be effective as of May 31, 1991 (Exhibit 10(dd) to Form 10-K
for the year ended December 31, 1991, File No. 2-97230).

10(aa)1 - Amendment No. 1 to the Unit 2 First Amended and Restated
Facility Purchase Agreement, dated as of September 21, 1993,
among the Utility, as the Purchaser, and TGCII, as the Seller.
(Exhibit 10(aa)1 to Form 10-K for the year ended December 31,
1993, File No. 2-97230).

10(bb) - Operating Agreement, dated July 26, 1991, to be effective as of
May 31, 1991, between the Utility and TGCII (Exhibit 10(nnn) to
Amendment No. 1 to File No. 33-41903).

10(cc) - Non-Partition Agreement, executed July 26, 1991, to be
effective as of May 31, 1991, among the Utility, TGCII and The
Chase Manhattan Bank (National Association) (Exhibit 10(ppp) to
Amendment No. 1 to File No. 33-41903).

Power Supply Contracts

10(dd) - Contract dated May 12, 1976 between the Utility and Houston
Lighting & Power Company (Exhibit 5(a), File No. 2-69353).

10(dd)1 - Amendment, dated January 4, 1989, to the Contract dated May 12,
1976 between the Utility and Houston Lighting & Power Company
(Exhibit 10(cccc) to Form 10-K for the year ended December 31,
1988, File No. 2-97230).

10(ee) - Contract dated May 1, 1986 between the Utility and Texas
Electric Utilities Company, amended September 29, 1986, October
24, 1986 and February 21, 1987 (Exhibit 10(c) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).

10(ff) - Amended and Restated Agreement for Electric Service dated May
14, 1990 between the Utility and Texas Utilities Electric
Company (Exhibit 10(vv) to Form 10-K for the year ended
December 31, 1990, File No. 2-97230).

10(ff)1 - Amendment, dated April 19, 1993, to Amended and Restated
Agreement for Electric Service, dated May 14, 1990, As Amended
between the Utility and Texas Utilities Electric Company
(Exhibit 10(ii)1 to Form S-2 Registration Statement, filed on
July 19, 1993, File No. 33-66232).

10(gg) - Contract dated June 11, 1984 between the Utility and
Southwestern Public Service Company (Exhibit 10(d) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).

10(hh) - Contract dated April 27, 1977 between the Utility and West
Texas Utilities Company amended April 14, 1982, April 19, 1983,
May 18, 1984 and October 21, 1985 (Exhibit 10(e) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).

10(ii) - Contract dated April 29, 1987 between the Utility and El Paso
Electric Company (Exhibit 10(f) of Form 8 applicable to Form
10-K for the year ended December 31, 1986, File No. 2-97230).

10(jj) - Contract dated February 28, 1974, amended May 13, 1974,
November 26, 1975, August 26, 1976 and October 7, 1980 between
the Utility and Public Service Company of New Mexico (Exhibit
10(g) of Form 8 applicable to Form 10-K for the year ended
December 31, 1986, File No. 2-97230).

10(jj)1 - Amendment, dated February 22, 1982, to the Contract dated
February 28, 1974, amended May 13, 1974, November 26, 1975,
August 26, 1976, and October 7, 1980 between the Utility and
Public Service Company of New Mexico (Exhibit 10(iiii) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Exhibit
No. Description

10(jj)2 - Amendment, dated February 8, 1988, to the Contract dated
February 28, 1974, amended May 13, 1974, November 26, 1975,
August 26, 1976, and October 7, 1980 between the Utility and
Public Service Company of New Mexico (Exhibit 10(jjjj) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).

10(jj)3 - Amended and Restated Contract for Electric Service, dated April
29, 1988, between the Utility and Public Service Company of New
Mexico (Exhibit 10(zz)3 to Amendment No. 1 to File No. 33-
41903).

10(kk) - Contract dated December 8, 1981 between the Utility and
Southwestern Public Service Company amended December 12, 1984,
December 2, 1985 and December 19, 1986 (Exhibit 10(h) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).

10(kk)1 - Amendment, dated December 12, 1988, to the Contract dated
December 8, 1981 between the Utility and Southwestern Public
Service Company amended December 12, 1984, December 2, 1985 and
December 19, 1986 (Exhibit 10(llll) to Form 10-K for the year
ended December 31, 1988, File No. 2-97230).

10(kk)2 - Amendment, dated December 12, 1990, to the Contract dated
December 8, 1981 between the Utility and Southwestern Public
Service Company (Exhibit 19(t) to Form 10-K for the year ended
December 31, 1990, File No. 2-97230).

10(ll) - Contract dated August 31, 1983, between the Utility and Capitol
Cogeneration Company, Ltd. (including letter agreement dated
August 14, 1986) (Exhibit 10(i) of Form 8 applicable to Form
10-K for the year ended December 31, 1986, File No. 2-97230).

10(ll)1 - Agreement Substituting a Party, dated May 3, 1988, among
Capitol Cogeneration Company, Ltd., Clear Lake Cogeneration
Limited Partnership and the Utility (Exhibit 10(nnnn) to Form
10-K for the year ended December 31, 1988, File No. 2-97230).

10(ll)2 - Letter Agreements, dated May 30, 1990 and August 28, 1991,
between Clear Lake Cogeneration Limited Partnership and the
Utility (Exhibit 10(oo)2 to Form 10-K for the year ended
December 31, 1992, File No. 2-97230).

10(ll)3 - Notice of Extension Letter, dated August 31, 1992, between
Clear Lake Cogeneration Limited Partnership and the Utility
(Exhibit 10(oo)3 to Form 10-K for the year ended December 31,
1992, File No. 2-97230).

10(ll)4 - Scheduling Agreement, dated September 15, 1992, between Clear
Lake Cogeneration Limited Partnership and the Utility (Exhibit
10(oo)4 to Form 10-K for the year ended December 31, 1992, File
No. 2-97230).

10(mm) - Interconnection Agreement between the Utility and Plains
Electric Generation and Transmission Cooperative, Inc. dated
July 19, 1984 (Exhibit 10(j) of Form 8 applicable to Form 10-K
for the year ended December 31, 1986, File No. 2-97230).

10(nn) - Interchange Agreement between the Utility and El Paso Electric
Company dated April 29, 1987 (Exhibit 10(l) of Form 8
applicable to Form 10-K for the year ended December 31, 1986,
File No. 2-97230).

10(oo) - DC Terminal Participation Agreement between the Utility and El
Paso Electric Company dated December 8, 1981 amended April 29,
1987 (Exhibit 10(m) of Form 8 applicable to Form 10-K for the
year ended December 31, 1986, File No. 2-97230).

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

Exhibit
No. Description

Employment Contracts

10(pp) - Texas-New Mexico Power Company Executive Agreement for
Severance Compensation Upon Change in Control, executed
November 11, 1993, between Sector Vice President and Chief
Financial Officer and the Utility (Pursuant to Instruction 2 of
Reg. 229.601(a), accompanying this document is a schedule: (i)
identifying documents substantially identical to the document
which have been omitted from the Exhibits; and (ii) setting
forth the material details in which such omitted documents
differ from the document). (Exhibit 10(pp) to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(qq) - Texas-New Mexico Power Company Key Employee Agreement for
Severance Compensation Upon Change in Control, executed
November 11, 1993, between Assistant Treasurer and the Utility
(Pursuant to Instruction 2 of Reg. 229.601(a), accompanying
this document is a schedule: (i) identifying documents
substantially identical to the document which have been omitted
from the Exhibits; and (ii) setting forth the material details
in which such omitted documents differ from the document).
(Exhibit 10(qq) to Form 10-K for the year ended December 31,
1993, File No. 2-97230).

10(rr) - Agreement between James M. Tarpley and TNPE and the Utility,
effective January 1, 1994. (Exhibit 10(rr) to Form 10-K for the
year ended December 31, 1993, File No. 2-97230).

10(ss) - Agreement between Dwight R. Spurlock and TNPE and the Utility,
effective November 9, 1993. (Exhibit 10(ss) to Form 10-K for
the year ended December 31, 1993, File No. 2-97230).

*10(tt) - Agreement between Kevern Joyce and TNPE and the Utility,
executed March 25, 1994.

<page 31>
TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the under-
signed thereunto duly authorized.

TNP ENTERPRISES, INC.

May 10, 1994 By /s/D. R. Barnard
D. R. Barnard
Vice President and
Chief Financial Officer

TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

TEXAS-NEW MEXICO POWER COMPANY

Date May 10, 1994 By /s/D. R. Barnard
D. R. Barnard
Senior Vice President and
Chief Financial Officer

[TNP logo] Texas-New Mexico 4100 International Plaza
Power Company Fort Worth, Texas 76109

P. O. Box 2943
Fort Worth, Texas 76113
R. D. WOOFTER
Chairman of the Board

March 25, 1994

Mr. Kevern Joyce
6145 North Zorrela Segundo
Tucson, Arizona 85715

Dear Kevern:

We are please to offer you the position of President & Chief Executive
Officer of TNP Enterprises, Inc. and Texas-New Mexico Power Company, as well as
a seat on the board of directors of both companies, under the terms and
conditions herein indicated:

1. Annual base salary of $300,000.

2. Eligibility for all TNP benefits including major medical,
dental, life, and long-term disability insurance, pension plan, holidays,
vacation, etc.

3. To assist you in your transition from Tucson to Fort Worth, TNP
will pay you a $40,000 Relocation Allowance which is intended to cover all
expenses related to your move. In addition, we will reimburse the cost of
house hunting trips to Fort Worth for you and your wife.

4. In the event you are still employed by the Company at age 65,
your retirement benefits will be determined by including periods of
service performed on behalf of your previous employers as may be
necessary, taking into account your period of service to the Company, to
bring your period of continuous service to thirty (30) years as of such
date.

The payment of these retirement benefits to you or your
surviving spouse will be made from the regular Pension Plan and the
Supplemental Pension Plan, as appropriate. Payments will be subject to
offset by any benefits you may receive or will receive under any pension,
profit sharing, executive benefit plan or similar retirement plan from
previous employers.
<PAGE>

KEVERN JOYCE
March 25, 1994
Page 2

5. We will work together to establish an excellent incentive plan
for all appropriate TNP employees.

If the above terms and conditions meet with your approval, please so indicate
by countersigning this letter in the space provided below, returning one copy
to me. We would be extremely pleased and proud to have you join us as a member
of our TNP team.

Sincerely,

TNP ENTERPRISES, INC.
TEXAS-NEW MEXICO POWER COMPANY

\s\ R. D. Woofter
R. D. WOOFTER
Chairman of the Board
RDW/csv

Agreed and Accepted this 25th day of March, 1994.

\s\ Kevern R. Joyce
Kevern R. Joyce

Agreed
<PAGE>

Mr. R. D. Woofter
Texas-New Mexico Power Company
4100 International Plaza
Fort Worth
Texas 76109
March 25, 1994

Dear Bob:

I am pleased to be joining TNP. I will call you next Wednesday to set the
specific date I will be there, but it will be no later than April 14, 1994. As
we discussed, the following are also conditions of my employment.

1. If, during the initial year of my employment, I am terminated by TNP
for any reason other than fraud or dishonesty which has resulted in
material economic damage to TNP, as determined by a vote of two-thirds of
the Directors of TNP at a meeting at which I had an opportunity to be
heard, I will be entitled to a severance payment equal to one year's
annual salary. This will only be effective if the change in control
provisions of my employment are not in effect.

2. For relocation purposes I will be entitled to those benefits afforded
to transferred TNP employees except those covered in paragraph three of
your letter date March 25, 1993.

Sincerely,

\s\ Kevern R. Joyce
Kevern R. Joyce

Agreed and accepted this 28 day of March, 1994.

\s\ R. D. Woofter
R. D. Woofter

Agreed
<PAGE>