ALBUQUERQUE, N.M., Nov 01, 2005 -- BUSINESS WIRE

 

PNM Resources' (NYSE: PNM) New Mexico utility, PNM, has signed a 10-year agreement to sell 150 megawatts of power to Arizona Public Service Co. during the summer months beginning in 2007.

The agreement gives APS the option to take delivery of power over the 10-year term. As structured, APS will pay a demand charge for the capacity. It also provides the potential of additional revenue from the sale of delivered energy. PNM will deliver energy to APS at the Palo Verde Hub, west of Phoenix, from June through September in 2007 and 2008, and from May through October in 2009 through 2016. APS is Arizona's largest electric utility, serving more than 1 million customers in 11 of the state's 15 counties.

Hugh Smith, PNM Resources senior vice president of Energy Resources, said the addition of the Luna Energy Facility, near Deming, N.M., will provide additional system capacity that will enable PNM to fulfill the APS agreement. PNM Resources owns one-third of Luna, a natural gas-powered combined-cycle generator under construction and expected to be online by mid-May 2006. PNM Resources' share is 190 megawatts. As a merchant plant, Luna's construction and operation costs are not included in retail rates.

Smith said the agreement structure sets the price of the power based on a daily index of natural gas prices at the Permian Basin, which helps to mitigate risk to PNM from volatile natural gas prices.

The 150-megawatt agreement is part of APS' May request for proposal seeking at least 1,000 megawatts of long-term energy resources for delivery beginning in June 2007. One megawatt of electricity is enough power to provide electricity to 200 to 225 homes in Arizona.

Background: PNM Resources is an energy holding company based in Albuquerque, N.M., with consolidated operating revenues of $2.3 billion. Through its utility and energy service subsidiaries, PNM Resources supplies electricity to 738,000 homes and businesses in New Mexico and Texas and natural gas to 470,000 customers in New Mexico. Its utility subsidiaries are PNM and Texas-New Mexico Power. Other subsidiaries include First Choice Power, a deregulated competitive retail electric provider in Texas, and Avistar, an energy research and development company. PNM Resources and its subsidiaries also sell power on the wholesale market in the West. For more information, visit PNMResources.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Statements made in this release that relate to future events or the company's expectations, projections, estimates, intentions, goals, targets and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. You are cautioned that all forward-looking statements are based upon current expectations and estimates and the company assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by the forward-looking statements, the company cautions you not to place undue reliance on these statements. Many factors could cause actual results to differ, and will affect the company's future financial condition, cash flow and operating results. These factors include the availability of cash from TNP Enterprises Inc. and its subsidiaries, the risks that the businesses will not be integrated successfully, the risk that the benefits of the acquisition will not be fully realized or will take longer to realize than expected, disruption from the acquisition making it more difficult to maintain relationships with customers, employees, suppliers or other third parties, the outcome of litigation with SW Acquisition, L.P. relating to the TNP Enterprises Inc. acquisition and of any appeals of the Public Utility Commission of Texas order in the stranded cost true-up proceeding or the acquisition proceeding, the ability of First Choice Power to attract and retain customers, changes in Electric Reliability Council of Texas protocols, changes in the cost of power acquired by First Choice Power, collections experience, insurance coverage available for claims made in litigation, interest rates, weather (including impacts on the company of the hurricanes in the Gulf Coast region), water supply, fuel costs, availability of fuel supplies, risk management and commodity risk transactions, seasonality and other changes in supply and demand in the market for electric power, wholesale power prices, market liquidity, the competitive environment in the electric and natural gas industries, the performance of generating units and transmission system, the market for electrical generating equipment, the ability of the company to secure long-term power sales, the risks associated with completion of the construction of Luna Energy Facility, including construction delays and unanticipated cost overruns, state and federal regulatory and legislative decisions and actions, the outcome of legal proceedings, changes in applicable accounting principles and the performance of state, regional and national economies. For a detailed discussion of the important factors that affect the company and that could cause actual results to differ from those expressed or implied by the company's forward-looking statements, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's current and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and the company's current and future Current Reports on Form 8-K, filed with the SEC.

SOURCE: PNM Resources

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