April 20, 2015 CONTACT: Pahl Shipley; 505-241-2782; Pahl.Shipley@pnmresources.com

PNM Files Robust and Detailed Exceptions to Recommended Decision on San Juan Plan

Proposed Modifications to Agreement Would Likely Cost Electric Customers Significantly More (SANTA FE, N.M.) - PNM today filed comprehensive exceptions to the recommendations in the April 8th Certification of Stipulation by the New Mexico Public Regulation Commission's Hearing Examiner regarding the Stipulated Settlement Agreement for San Juan Generating Station. The company's filing demonstrates that the Hearing Examiner's recommendations do not fully consider the benefits to customers of the settlement agreement, improperly deny approval for specific elements of the agreement and inappropriately place arbitrary conditions on approval of other elements.

"The recommendations do a disservice to the commission and the public by inappropriately ignoring the valid and responsible agreement negotiated according to established regulatory policy by PNM and the parties in the case," said Ron Darnell, PNM vice president for Public Policy. "In addition, the Hearing Examiner's primary reason for denying the request for additional capacity in San Juan Unit 4 was the lack of a new ownership agreement and coal supply contract for the plant. Our filing clearly shows that those elements will be resolved in a timely manner, and therefore the agreement should receive conditional approval, rather than rejection."

PNM key exceptions filed today regarding the Hearing Examiner's recommendations assert:

- In recommending rejection of the Stipulation without substantial modifications which eliminate fundamental terms and conditions of the agreement, the Certification fails to adhere to the important public policy favoring settlements.

- In recommending denial of a Certificate of Convenience and Necessity (CCN) for additional capacity in San Juan Unit 4, the Certification fails to properly apply its own standards for approval. The concerns about uncertainties can be adequately addressed through appropriate conditions attached to approval of a CCN. Denial of additional capacity in San Juan Unit 4 and granting only conditional approval to retire San Juan Units 2 and 3 creates unwarranted uncertainty and jeopardizes the continued operation of all San Juan units which would negatively impact customers.

- The Certification's recommendation that the Commission should not base its decision on confidential evidence properly admitted into the record is in error in that the Commission can and should consider all evidence in the record as a whole.

- In recommending a lower valuation for Palo Verde Unit 3, the Certification improperly imposes additional burdens on investors to gain additional benefits to customers even though the Certification acknowledges that customers benefit from the valuation proposed in the Stipulation.

- The record does not support a premature determination that serious doubt about the reasonableness of balanced draft has been created. Balanced draft is required by San Juan's New Source Review permit. There is no evidence in the record that justifies the Commission second guessing the decision of another agency with jurisdiction to require balanced draft.

PNM's filing also demonstrates that the Commission should allow the conditional approval of the stipulated settlement agreement pending the filing of a restructuring agreement among the San Juan owners and a completed post-2017 coal supply contract at a rate beneficial to customers by May 1. This would allow the company to move forward with the plan that provides the maximum environmental benefits at the lowest cost to customers.

"This ruling puts the entire plan, which over and over was shown to be the best and most cost effective path forward, in jeopardy and would likely result in customers paying significantly more than they would under the agreement," added Darnell. "The company has worked diligently to find the best balance among affordability, reliability, and environmental protection, and the hearing Examiner's recommendations could have the opposite impact." Parties may file responses to any filed exceptions. The Commission's General Counsel will then review all of the exceptions filed and develop a draft Order to be considered by the entire Commission.

With headquarters in Albuquerque, PNM is the largest electricity provider in New Mexico, serving 500,000 customers in dozens of communities across the state. PNM is a subsidiary of PNM Resources, an energy holding company also headquartered in Albuquerque. For more information, visit PNM.com.