TEXT-Moody's release on PNM Resources

(The following statement was released by the rating agency)

Approximately $2.3 billion of securities affected

April 25 - Moody's Investors Service downgraded the long-term and short-term ratings of PNM Resources, Inc. (PNM.N) (PNMR: senior unsecured to Ba2 from Baa3, short term to NP from P-3) and its subsidiary Public Service Company of New Mexico (PSNM: senior unsecured to Baa3 from Baa2, short-term to P-3 from P-2) concluding the review that began January 2008.

The ratings remain on review for possible downgrade.

The ratings of PNMR's Texas transmission and distribution utility, Texas-New Mexico Power (TNMP: Baa3, senior unsecured, negative outlook), are affirmed with a negative outlook.

The downgrade follows a decision by the New Mexico Public Regulation Commission (NMPRC) to authorize an approximate $35 million, approximately 6%, increase in PSNM's base electric retail rates.

The authorized increase is less than half of the base rate increase requested by the company, and less than 25% of the company's estimated total requested increase including the impact of a fuel adjustment clause. A hearing on an alternate emergency fuel clause has been scheduled for May 15, 2008.

While it is possible the NMPRC may ultimately approve some form of a fuel adjustment clause, we believe PSNM's cash flow credit metrics are likely to remain at levels that Moody's considers more appropriate for electric utilities rated Baa3.

The deterioration of PSNM's financial profile over the past several years has come as a result of a combination of increased costs for fuel and purchased power, higher operating and interest expenses, poor operating performance at PSNM's core base load facilities and significantly increased capital expenditures during a period when its rates have actually declined.