Q4 2016 Earnings Review February 28, 2017

Safe Harbor Statement

2

Statements made in this presentation that relate to future events or PNM Resources, Inc.’s (“PNMR”), Public Service Company of New Mexico’s (“PNM”), or Texas-New Mexico Power Company’s (“TNMP”) (collectively, the “Company”) expectations, projections, estimates, intentions, goals, targets, and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995. Readers are cautioned that all forward-looking statements are based upon current expectations and estimates. PNMR, PNM, and TNMP assume no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR, PNM, and TNMP caution readers not to place undue reliance on these statements. PNMR's, PNM's, and TNMP's business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see the Company’s Form 10-K and 10-Q filings with the Securities and Exchange Commission, which factors are specifically incorporated by reference herein.

Non-GAAP Financial Measures For an explanation of the non-GAAP financial measures that appear on certain slides in this presentation (ongoing earnings and ongoing earnings per diluted share), as well as a reconciliation to GAAP measures, please refer to the Company’s website as follows: http://www.pnmresources.com/investors/results.cfm.

http://www.pnmresources.com/investors/results.cfm

Opening Remarks and Overview Pat Vincent-Collawn

Chairman, President and CEO

Q4 2016 Financial Results and Key Highlights

4

Q4 2016 Q4 2015 2016 2015

GAAP EPS $0.31 ($1.15) $1.46 $0.20

Ongoing EPS $0.34 $0.23 $1.65 $1.64

• 2017 Ongoing EPS Guidance of $1.77 - $1.87 affirmed

Financial Results:

2016 Key Highlights: • Continued achievements in reliability and customer service

PNM: 2016 ReliabilityOneTM Award recipient for second consecutive year, record-high customer perception survey results

TNMP: continued record of high reliability, 100% deployment of AMS has increased billing accuracy

• PNM: Economic development rate, special renewable energy rate for new customers

Note: EPS is presented on a diluted basis other than Q4 2015, which is on a non-diluted basis due to the GAAP net loss. For a reconciliation of GAAP EPS to Ongoing EPS and a description of adjustments made, please refer to the fourth quarter earnings release issued February 28, 2017.

Regulatory Update

5

Filing Action Timing Docket No.

PNM 2018 General Rate Case Filing

Filed December 7, 2016

Settlement agreement (if applicable) to be filed March 27, 2017

16-00276-UT

PNM Advanced Metering Infrastructure (AMI)

Hearings began February 27, 2017

Decision expected in May 2017 15-00312-UT

PNM Integrated Resource Plan

Public input process ongoing

To be filed no later than July 3, 2017 N/A

PNM Appeal of August 2015 General Rate Case to New Mexico Supreme Court

Appeal filed September 30, 2016 No statutory timeline S-1-SC-36115

TNMP TCOS Filed January 20, 2017 Rates expected to be effective in March 2017 46786

TNMP General Rate Case N/A To be filed no later than September 2018 N/A

Financial Overview Chuck Eldred

Executive Vice President and CFO

Load and Economic Conditions

7

Regulated Retail Energy Sales and Customers (weather-normalized, leap-year adjusted)

PNM % of 2016

Sales Volumes

Q4 2016 vs.

Q4 2015

2016 vs.

2015

Retail Load: Residential 40% 1.3% 0.1%

Commercial 47% (1.0%) 0.5% Industrial 11% (8.7%) (8.8%)

Total Retail Load (1.1%) (0.7%) 2017 Load Growth Forecast: (1%) – 0%

Avg. Customers 0.7% 0.7% 2017 Customer Growth Forecast: 0.7%

(1) Volumetric load is billed on per-kWh usage (2) Demand-based load is billed on monthly kW peak (3) U.S. Bureau of Labor Statistics, December 2016

TNMP % of 2016

Sales Volumes

% of 2016 Sales

Revenues

Q4 2016 vs.

Q4 2015

2016 vs.

2015

Volumetric Load(1): Residential 51% 3.0% 3.4%

Commercial 46% 2.7% 2.9% Total Volumetric Load 52% 2.6% 3.0%

2017 Load Growth Forecast: 2% – 3%

Avg. End Users 1.4% 1.5% 2017 End User Growth Forecast: 1.6%

Demand-Based Load(2) 48% 2.7% 2.4%

1.0%

3.5%

1.7%

0.0%

2.0%

4.0%

2014 2015 2016

% C

hang

e

Employment Growth(3) 12-Month Rolling Average

Albuquerque Dallas U.S.

Q4 2016 Financial Summary

8

$0.23

$0.34 $0.10 $0.01

Q4 2015 Q4 2016

Ongoing EPS

PNM

TNMP

Q4 2016 vs Q4 2015 EPS (Ongoing): PNM and TNMP

$0.13

$0.23

Q4 2015 Q4 2016

9

PNM Q4 2016 Key Performance Drivers ∆ EPS

Retail rate relief, net of renewable rider $0.08 Outage costs $0.05 Lower operations and maintenance costs $0.03 Elimination of Palo Verde Unit 2 lease costs, net of depreciation $0.03 Exploration of alternative San Juan fuel supply contracts in 2015 $0.02

AFUDC ($0.03) Weather ($0.03) Palo Verde Unit 3 market prices ($0.02) Depreciation and property tax ($0.02) FERC Generation Navopache contract ($0.01)

$0.11 $0.12

Q4 2015 Q4 2016

TNMP Q4 2016 Key Performance Drivers ∆ EPS

Load $0.01 TCOS rate relief $0.01 Weather $0.01

Depreciation and property tax ($0.01) Other ($0.01)

10

Business Segments

Key Tax Reform Considerations Reduced Tax Rate Interest Non-deductibility 100% Bonus Depreciation

PNM & TNMP

Decreases the tax expense flowing through rates;

Increases rate base as excess deferred taxes

are returned to customers over

normalization period

Increases the tax expense flowing through rates

In rate base, decreases from higher ADIT liability are offset by

increases from higher NOL carryforward in the near term;

Increases to long-term cash flow could be used to fund additional

capital investments and/or reduce outstanding debt

Corporate/ Other

Decreases the tax benefit from Holding

Company losses

Increases tax expense • Debt is short-term in

nature • Interest income may

offset expense (i.e. Westmoreland financing)

Increases to long-term cash flow could be used to fund additional

capital investments and/or reduce outstanding debt

PNM Resources well-positioned for tax reform, customers benefit

Tax Reform Considerations

$1.31 $1.41 $1.49 $1.77

$1.64 $1.65

2012 2013 2014 2015 2016 2017E 2018E 2019EOngoing EPS

$1.87 7% - 8% Growth

supported by 2019 Potential Earnings

Power of $2.05 - $2.23(2)

$0.58 Feb ‘12

$0.66 Feb ‘13

$0.74 Dec ‘13

$0.80 Dec ‘14

$0.88 Dec ‘15

$0.97 Dec ‘16

Indicated Annual Dividends

Earnings and Dividend Growth

11 (1) Assumes mid-point of 2017 guidance (2) Potential Earnings Power detailed on slide 16 2012 – 2016 Ongoing EPS represents actual results, 2017E Ongoing EPS represents ongoing earnings guidance of $1.77 - $1.87 per diluted share

• PNM growth achieved through recovery of capital investments: Rates implemented October 2016 bring rates forward from levels set in previous 2010 filing,

accounting for significant capital investments 2018 General Rate Case filing aligns rates with lower-carbon resource portfolio agreed to in

BART settlement, including replacement of coal capacity with Palo Verde Unit 3 nuclear capacity Potential recovery of NMPRC disallowed assets through New Mexico Supreme Court appeal

• TNMP growth achieved by continuing capital investment and recovery through TCOS and general rate case filings

53%(1) payout ratio

Questions and Answers

Appendix

2017 EPS and Quarterly Distribution Guidance (Ongoing)

14

$1.77 Consolidated EPS $1.87

PNM $1.30 - $1.37

TNMP $0.51 - $0.53

Corp/Other ($0.04) – ($0.03)

2017 Guidance

16% 24%

47%

13%

Q1 2017E Q2 2017E Q3 2017E Q4 2017E

2017 Quarterly Ongoing Earnings Distribution

$223 $242 $244

Depreciation

$138 $112 $119

$170

$119 $163

$151

$134

$137

$58

$30

$15

2017 2018 2019

(In millions)

PNM Generation PNM T&D TNMP Corporate/Other

$517

$395 $435

Palo Verde Unit 3 added to rate base

$96

$157

$136

$15

2020

$404

$251

Capital Forecast

15

2017 – 2020 Total Capital Plan: $1.7B

PNM 2016-2020 Rate Base CAGR: 4 - 6%(1) TNMP 2016-2020 Rate Base CAGR: 8 - 10%

(1) Includes the addition of PV3 to rate base in 2018, which does not have associated capital spending. Amounts may not add due to rounding.

Expect future refinements

Future refinements

include:

• Outcome of Integrated Resource Plan

• Resources for

potential data center customers

• Additional

transmission opportunities to support renewable growth

Chart1

2017

2018

2019

Depreciation

223

242

244

Sheet1

20162017201820192020

PNM Generation

PNM T&D

PNM Renewables

TNMP

Other

Total

Depreciation198223242244249

Check

Chart1

2020

$251

Depreciation

251

Sheet1

2020

PNM Generation

PNM T&D

PNM Renewables

TNMP

Other

Total

Depreciation251

Check

2017 - 2019 Potential Earnings Power

16

Allowed Return /

Equity Ratio

2017 Guidance Midpoint 2018 Earnings Potential 2019 Earnings Potential Avg Rate

Base Return EPS Avg Rate

Base EPS Avg Rate

Base EPS

PNM Retail (1) 9.575% / 50% $2.3 B 9.3% $1.33 $2.4 B $1.42 $2.4 B $1.41

Supreme Court Appeal (2) $0 - $150 M $0.00 - $0.09

PNM Renewables (3) 9.575% / 50% $95 M 9.575% $0.06 $90 M $0.05 $85 M $0.05

PNM FERC (4) 10% / ~50% $180 M 7.9% $0.09 $245 M $0.11 - $0.14 $275 M $0.12 - $0.16

PV3 (5) ($0.12) Included in PNM Retail Included in PNM Retail

Items not in Rates (6) ($0.03) ($0.03) - $0.00 ($0.03) - $0.00

Total PNM $2.6 B $1.33 $2.7 B $1.55 - $1.61 $2.7 - $2.9 B $1.55 - $1.71

TNMP (7) 10.125% / 45% $815 M 10.125% $0.52 $890 M $0.53 $965 M $0.56

Corporate/Other (8) ($0.03) ($0.06) - ($0.04) ($0.06) - ($0.04)

Total PNM Resources $3.4 B $1.82 $3.6 B $2.02 - $2.10 $3.7 - $3.9 B $2.05 - $2.23

(1) Recently authorized 9.575% ROE has been used for all forecasted years. (2) Reflects a range of outcomes for the New Mexico Supreme Court appeal of the August 2015 General Rate Case final order. For purposes of writing down the value of the

assets under appeal at Sept. 30, 2016, a minimum 15-month appeal timeframe was used. Potential average rate base presented in 2019 to be conservative includes: PV2 64MW Acquisition Adjustment (~$75M), PV2 Leasehold Improvements (~$25M) and Balanced Draft Technology (~$50M).

(3) PNM Renewables reflect assets collected through the Renewable Rate Rider. (4) PNM FERC earnings potential reflects a return of 7-9% versus the allowed return of 10%, as FERC formula rate methodology uses prior year average rate base and provides

for mid-year rate increases. (5) 2017 Guidance Midpoint assumes a forward market price of $29/MWh; a price of $44/MWh is required to break even. PV3 is included in PNM rates beginning in 2018. (6) Consists primarily of Palo Verde Nuclear Decommissioning Trust gains and losses, AFUDC, certain incentive compensation, earnings in 2017 associated with the assets

previously allocated to the Navopache contract, and the 65MW ownership of San Juan Unit 4 beginning in 2018. (7) TNMP EPS includes $0.02 of Competitive Transition Charge recovery in 2017 Guidance Midpoint and 2018 Earnings Potential and $0.01 in 2019 Earnings Potential. (8) Corporate/Other includes earnings associated with the 65MW ownership of San Juan Unit 4 before PNM assumes ownership in 2018,

short and intermediate term bank debt, and the net impact of Westmoreland financing through NM Capital Utility Corporation.

This table is not intended to represent a forward-looking projection of 2018 - 2019 earnings guidance.

PNM and TNMP: 2016 vs 2015 EPS (Ongoing)

17

PNM

TNMP

$1.18 $1.14

2015 2016

2016 Key Performance Drivers ∆ EPS Elimination of Palo Verde Unit 2 lease costs, net of depreciation $0.12 Retail rate relief, net of renewable rider $0.09 Lower operations and maintenance costs $0.07 Outage costs $0.04 Exploration of alternative San Juan fuel supply contracts in 2015 $0.02 Interest income from IRS, net of fees $0.02 Customer mix and load $0.01

AFUDC ($0.09) Palo Verde Unit 3 market prices ($0.09) Depreciation and property tax ($0.08) Interest expense ($0.05) FERC Generation Navopache contract ($0.04) El Paso Natural Gas FERC tariff refund in 2015 ($0.03) Weather ($0.01) Palo Verde spent fuel in Q1 2015 ($0.01) Other ($0.01)

2016 Key Performance Drivers ∆ EPS Load $0.04 TCOS rate relief $0.04

Depreciation and property tax ($0.03) O&M increases ($0.02) Weather ($0.01) Interest expense ($0.01)

$0.52 $0.53

2015 2016

Weather Impact

18

PNM Q4 2016 Q4 2015 2016 Normal(1)

Heating Degree Days 1,354 1,560 1,596

Cooling Degree Days 21 43 15

Net EPS Impact compared to normal

($0.02) $0.01

TNMP Q4 2016 Q4 2015 2016 Normal(1)

Heating Degree Days 491 492 694

Cooling Degree Days 405 306 263

Net EPS Impact compared to normal

$0.00 ($0.01) (1) 2016 normal weather assumption reflects the 10-year average for the period 2005 - 2014.

PNM Scheduled Plant Outages and Retirements

19

2017-2018 Planned Outage Schedule

Scheduled Unit Retirements

San Juan

Unit Duration in Days Time

Period

1 29 Q1 2018

4 29 Q2 2018

Palo Verde

Unit Duration in Days Time

Period

2 33 Q2 2017

1 33 Q4 2017

3 33 Q2 2018

2 33 Q4 2018

Four Corners

Unit Duration in Days Time

Period

4 11 Q2 2017

5 11 Q2 2017

5 95 Q3-Q4 2017

4 95 Q1-Q2 2018

San Juan

Unit Retirement Date

2 12/31/2017

3 12/31/2017

Balance Sheet and Credit Metrics

Liquidity as of February 21, 2017

21

PNM TNMP Corporate/

Other

PNM Resources

Consolidated

Financing Capacity(1): (In millions)

Revolving credit facilities $450.0 $75.0 $300.0 $825.0

As of 2/21/17:

Short-term debt and LOC balances $58.8 $8.1 $150.5 $217.4

Remaining availability 391.2 66.9 149.5 607.6

Invested cash - - 1.5 1.5

Total Available Liquidity $391.2 $66.9 $151.0 $609.1

(1) Excludes intercompany debt and term loans

Selected Balance Sheet Information

22

(1) Net of unamortized debt issuance costs (2) Excludes intercompany debt Amounts may not add due to rounding

(In millions) Dec 31, 2015 Dec 31, 2016

Long-Term Debt (incl. current portion) (1)

PNM $1,580.7 $1,631.4

TNMP 361.4 420.9

Corporate/Other 149.9 340.5

Consolidated $2,091.9 $2,392.7

Total Debt (incl. short-term) (2)

PNM $1,580.7 $1,692.4

TNMP 420.4 420.9

Corporate/Other 341.5 566.6

Consolidated $2,342.5 $2,679.8

Credit Ratings

23

PNMR S&P Moody’s

Credit rating BBB+(1) Baa3(1)

Issuer outlook Stable Stable

(1) Issuer/Corporate rating (2) Senior unsecured (3) Senior secured

PNM S&P Moody’s

Credit rating BBB+(2) Baa2(2)

Issuer outlook Stable Stable

TNMP S&P Moody’s

Credit rating A(3) A1(3)

Issuer outlook Stable Stable

Slide Number 1Safe Harbor StatementSlide Number 3Q4 2016 Financial Results and Key HighlightsRegulatory UpdateSlide Number 6Load and Economic ConditionsQ4 2016 Financial SummaryQ4 2016 vs Q4 2015 EPS (Ongoing): PNM and TNMPTax Reform ConsiderationsEarnings and Dividend GrowthSlide Number 12Slide Number 132017 EPS and Quarterly Distribution Guidance (Ongoing)Capital Forecast2017 - 2019 Potential Earnings PowerPNM and TNMP: 2016 vs 2015 EPS (Ongoing)Weather ImpactPNM Scheduled Plant Outages and RetirementsSlide Number 20Liquidity as of February 21, 2017Selected Balance Sheet InformationCredit Ratings