Good morning and thanks for joining us, in addition to those in the room as you know we also have a webcast on so we’ll try to be careful and point out where we are in the presentation for those people that aren’t with us in person today. For those of you that I haven’t met, I’m Jeff Sterba the Chairman, President and CEO of PNM Resources. Joining me in today’s presentation are Pat Vincent who is president of our Regulated Utility Operations, John Loyack who is, as many of you will remember used to be our CFO is now back as our CEO of the EnergyCo joint venture with Cascade and Chuck Eldred our Executive Vice President and CFO. Also with us are a few members of Investor Relations, [Jina DeCoby] who is the head of IT and with her are [Fredrick Bermuda] and [Francine Amadas] she’s around here somewhere. I appreciate you joining us today and we are going to spend a little longer than we typically would in presentations because I think we clearly owe you a complete explanation about the results of 2007 in addition for the first time we are going to be giving guidance by sector of our business as well as giving two years of guidance for the first time. With those two giving guidance in that way along with the disappointing 2007 results we are going to make sure that we give you a complete picture and story. After my overview we will spend a little bit of time on each of the three major market segments or business segments that we have within the operation and then Chuck will come back and tie it up together. Before we get started I wanted to remind you of the ever expanding safe harbor,…

For those of you that are on the phone if you turn to slide 10 I want to reemphasize a couple things Jeff said. The success in our regulatory business depends on two key things, regulatory success in New Mexico and Texas and improved operations especially power plant performance. We are also going to invest wisely in our electric business to meet our growth and environmental goals. I first want to talk about regulatory treatment on slide 11, a little bit on the New Mexico rate case, the hearings were held last December and we just finished up in January a series of public comment sessions that the PRC held around the state. We were allowed at those sessions to spend about 10 or 15 making comments on the rate case and why we should have the rate increase in the fuel clause. The public was invited to comment, we had about 42 speakers show up statewide and of those more than three quarters spoke in favor of the rate agreement, the rate case both the fuel clause and the base rate increase. Many of them mentioned for example the standard and poors downgrade as a reason that we should have our fuel clause and the need for us to be healthy to help New Mexico. There was a real wide range of folks that showed up, we had environmental groups that showed up, we had retirees, we had shareholders, and we had folks from the chamber of commerce, folks from United Way and other low income agencies talking about how important PNM was for the economy of New Mexico. We also had our labor union show up, the IBEW came and the construction and trade union showed up to support the rate case. The decision from the ALJ is…

Just to keep everybody on track I’m going to move to slide 19 to start the presentation and talk a little bit about EnergyCo. I think we have a pretty exciting opportunity here to create something special with EnergyCo and 2007 was really a year of formation and progress and foundation building and so we’ll go through some of the highlights of 2007. Obviously you were able to establish the structure and start to build out the management team and we’ll continue that process in 2008. From a strategic growth perspective the contribution of Twin Oaks in addition to the Cogen facility were two big steps forward. Then we also started a project with NRG Cedar Bayou IV a combined cycle low heat rate gas plant that will come online in the summer of 2009. We think that is a really good addition to the portfolio. A lot of the equipment was purchased ahead of the curve so some of the price increase that you’ve been I’m sure following relative to demand for gas equipment so we think it will be very well positioned as it comes on. Our model at EnergyCo is to be really active asset managers and asset optimization and the infrastructure to be able to do that got underway in 2007 including some system work to be able to manage changes going on in ERCOT, for those of you not as familiar with ERCOT today there is a handful of pricing zones, markets refer to zonal, it’s moving to where there will literally be hundred of pricing points to be managed. We are building software and teams to be able to manage that in the marketplace that system development started in 2007. There was a lot of integration work around the assets that were contributed in…

We left [Jeff Weiser] is in Dallas to run the business so just image I’m Jeff Weiser, you’ve got to put a little hair on my head to make that work. Let me just touch on a few things of FCP. When we acquired First Choice Power what we found is a business that was rapidly losing customers, had little or no infrastructure for growth and had a fairly poor power procurement strategy. Thankfully we didn’t pay too much for that business. We brought in a talented management team and they’ve really turned this around, they are building a platform for growth and they are generating reasonable margins in the interim. If you look at page 24 the four graphs that let me talk briefly about. First in the upper left hand graph you’ll notice that in 2006 we grew our customer count by a little over 15% which is pretty healthy in that marketplace. Between 2006 and 2007 however, that growth was stunted. There are two reasons for that; the first is that we went through what is always a difficult transition in a customer care system. They really didn’t have one and we needed to build one. As we built it we shut down our marketing efforts because unless you’ve got a system and a platform to use it doesn’t make a lot of sense to try to add a whole bunch of new customers. We’ve now gotten through that process and they are moving back into the marketing stage and beginning to re-attract a number of new customers. We added a few in 2007 but it was relatively small expansion. As we look into 2008 we believe that we will return to the 12% to 15% customer growth rate and the rate of attraction so far at…

Let me start out by clearly indicating that it’s obvious that 2007 was an unacceptable year for our shareholders and we certainly understand that the performance of the business and the challenges that the company faces over the next year or two years certainly we feel that with the message you hear today is the intense focus that we have to everything we can within our power to turn this business to show profitable returns to our shareholders. Let me start by talking about 2007 to bring some clarity around what happened and also provide some outlook in 2008 and 2009. To begin with on page 27, as we communicated we talked about the challenges we had financially. We reaffirm the guidance beginning in November to $1.30 to $1.40 the plants at that time were operating okay. We are confident that for the last quarter the plants will continue to hold their performance but not until November and December did we start seeing some of the problems became very evident. Let me give you some examples to point that out. San Juan Unit Four was supposed to be back on schedule on November 1st, it extended through the rest of the year which started issues. We had force outages at Units One and Two at San Juan due to tube leaks. Palo Verde Unit Three startup was delayed until mid December and didn’t come back on until January ’08. We issued 8-K in December to give you some indication that the plants were not performing and as a result of that unfortunately our result ended up at $1.08. Let’s look at a walk across in 2007 turning to slide 28. I’m showing you this by segment so you can begin to see the perspective that we have relative to each…

You know over the last eight years since I came back to this company I’ve been able to stand before you all and talk about the very strong growth that we generated in this business. Total shareholder returns….[operator interrupted]…It’s unacceptable as Chuck said and we’re committed to turning it around. Hopefully we’ve explained what the seeds of this were and affectively that our global settlement quest is one year too long. We’re behind a bit of an eight ball and it’s going to make 2008 a challenge but in no way does it alter or deter my belief in the value of the business and our ability to resurrect that value proposition that we’ve executed on quite affectively I think for most of the last eight years. Now I started off early in the conversation indicating that we were affectively going to have 2008 as a new baseline from which we would then grow and I said that the reason for that is that we are fundamentally changing the business. We are eliminating the gas operation, we are exiting the merchant utility model that we used within TNM and we are narrowing our focus just for the gas business and we are collapsing or collecting our unregulated operations within what we believe will be a stronger growth vehicle, the EnergyCo joint venture with [Cascade]. What it will do is put us in a position of being able to look at two more clean, clearly delineated businesses. By the end of 2008 we’ll have about $2.4 billion invested in rate base and regulated operations. Of that $2.4 billion most of it is within PNM Electric but a growing percentage is invested. If we look at the earnings power of that operation, be it regulated operations would have an earnings power in…

Two questions, the first relates to will you file another rate case immediately following your May decision and how early do you think you would be able to go back in. The second question is I guess I don’t understand that you’re showing about $100 million two-year improvement in EBITDA at EnergyCo but the EPS is flat in ’09 versus ’07, so I’m just not sure what’s eating up the improvement in EBITDA on an EPS basis.

On your first question, the decision about whether we file or when we file the second rate case is really dependent on what the outcome is. So it’s going to have to be shaped by what they do in that rate case. But obviously we’re going to be looking very closely at the need for additional rate relief. On the second question, Chuck do you want to….

That goes back to [inaudible] actually run the numbers back through human resources and adjust for purchase accounting and the amortization of contracts. EBITDA for EnergyCo is reported on a cash basis and we have to run it through 50% of our [inaudible] based on the basis that we have on the 50% ownership of that particular company we adjust to the amortization of the first accountings of the contract, take away the interest costs and you’ll work your way back down to about a [inaudible] calculation on the high end for 2009 and is roughly about $0.02 or high end for 2010 of the EBITDA calculation. So we can go over that [inaudible].

…..[inaudible] going down by about $20 million.

[inaudible]

There’s a question up front. And after this, we’ll see if there are any questions on the web.

Just to sort of follow up on Paul’s question, assuming that you guys got 100% which is what is in guidance, when do you guys think you’d have to go in for another rate case, that’s number one. Number two, trimming purchase accounting just what was the sort of impact of purchase accounting in your expectation for 2009. And also trading margins, expectations for ’08 and ’09? What are we expect in that in terms of contributions and also the PB Trust benefit in 2009, what should we be thinking about that?

On the rate case obviously we have to wait to see what the outcome is. We will still not be recovering our allowed return because of cost increases. And so you can expect that we will be filling a second rate case. I’m not going to give a date as to when that will be filed but clearly an additional mechanism is going to be necessary. Chuck do you want to take the….

Yes I think we may have to sit down and go over some of the details and calculations but the purchase accounting amortization for 2009 is down about $21 million. Depreciation and other amortization is down about $36 million and then you have interest expense roughly around $30 million so that gives you the GAAP return [and] income, again using that range of $100 million to $150 million, around the low single-digits or $24 million and then we adjust that back to our 50% share which gets us to around [inaudible] Again its what you add back the first accounting [inaudible] and we’ll provide as we go forward and report the segment for EnergyCo and report EBITDA, we’ll have a schedule that will take you through the calculations of exactly where [inaudible] report on EBITDA on a cash basis and add back the accounting impacts for that [inaudible].

On the trading side, your question about what do we anticipate on trading margins, relative to FPC in 2009, we expect no trading margins. We reflected it on this side but we really believe that by 2009 all of the trading will be occurring within the EnergyCo side. John do you want to make a comment about what you expect there?

Sure, if you look at the EBITDA range, it’s about 10% in ’08 and ’09 that we would expect to get from the trading operations. EnergyCo EBITDA, yes.

Okay, that isn’t such a large number in 2008.

Right, that’s right so if we’re 60 to 70 at $6 million to $7 million, if we’re 100 to 110 at $10 million to $11 million [it should move] to 2009.

[What is the taxation for 2009?]

We rebalance it every year and generally we, I’ll just say, in past performance it’s usually $0.03 or so but again it depends on what the portfolio looks after this year. But we generally get around $0.03.

We have a question from Sam Brothwell – Wachovia Capital Markets Sam Brothwell – Wachovia Capital Markets: Jeff all things being equal, if you’re New Mexico jurisdiction were to grant you a fuel clause and let’s say for the sake of argument the staff recommendation on the general rate case, how would that impact your ’09 guidance? Would it still be north of $1.00?

Well you can run that calculation Sam because we’ve told you what the elements would be, or how much is included in both ’08 and ’09 for fuel clause relief and base rate relief, the only thing that would change that is whether we could file a rate case, a follow on rate case that would still result in additional revenues that would be generated in ’09. And that’s getting fairly tight. If we filed a rate case say at the end of August, if it’s only suspended for 12 months, then we would have another five months of that rate case but in reality in this case for example is we’ve had a 15 month suspension. So we would obviously update guidance as we will once we see the ultimate outcome of the rate case in May. Sam Brothwell – Wachovia Capital Markets : But if you look at the plus and minus items and I forget what slide it was on, a large portion of the negative drivers that you illustrate for the electric utility would be captured in the fuel clause, is that not correct?

A number of them would be yes, not all of them but a number of them would be. Sam Brothwell – Wachovia Capital Markets : Okay, thanks a lot.

Jeff what is your outlook for EnergyCo’s asset acquisition markets, are you seeing assets that are fairly reasonable for purchase or are you basically saying the price of the assets are too high right now?

Well we’re seeing a market that is a little hesitant because an awful lot of, as you all know, a lot of the private equity that was interested in these assets has pulled back because of the debt market [royal] so there’s, in one sense, there’s not nearly as much appetite in the marketplace but people, because of what they receive for other assets then they have pulled back to sale. I do believe that we will start to see some assets come out of the market, in fact we’re seeing that today, and I you know, prices are still high. However the real challenge is what can you do with that asset and that’s if you remember, one of the things we have always talked about and believe in is the building of systems rather than individual assets. Because when you build systems you can do things that you can’t by just owning a single asset in a marketplace that you either having to pull or hedge or what have you. So I think you will see hopefully that some of those things will occur in ERCOT that will allow us to enhance that portfolio. So has the market dramatically dropped in price for assets? No it hasn’t. Has it come down a little bit? Yes but it’s really going to be a focus on what is the asset, where is it located and how does it fit within our portfolio? John do you want to add anything?

[inaudible] taking that active asset management model, the inner play of assets within a market that is critical to that and how we’re going to create value and that’ll be a big driver in our asset acquisition, strategy and decision making.

And the next question comes from [Analyst] – PNC Bank [Analyst] – PNC Bank: Just as recently as November you got it to improving or at least some intermediate term improvement in operating rates on your plants and the fourth quarter really substantially under performed that, you’re now projecting that Four Corners EAF will be lower in ’08, I’m concerned about the projected improvement in San Juan and Palo Verde since the recent projections were well above what you delivered. Its just getting a bit frustrating with the projections that we’ve been getting and what’s been delivered and I’m just wondering how you can shore us street confidence in your projections since the recent projections have actually been well above what you’re performed.

Let me make a comment and then I’m going to have Pat add some real color to it. We didn’t guide up the power plant performance, what we did was indicate what we expected and what it would take to hit the low end of the range for that guidance. In reality it’s absolutely correct that the units did not perform as we expected and a lot of this has to do with these are old units that are at the end of their cycle before they’re going into major maintenance. That’s what happened at Four Corners. And it’s what triggered a number of tube leaks at the San Juan plant. The other major piece was San Juan 4 which was down for a major overhaul and all of the environmental equipment installations and particularly the installation of a completely new digital control system, the transition did not go nearly as smoothly as we expected or as we had hoped. And it took that outage, had to be extended significantly. We’ve learned from that process and Pat talked about the root cause work that was done to make sure that those learnings go forward on the other three instead of going forward this year. Pat do you want to talk about the reason for increases.

Yes, San Juan as just mentioned, we had a digital upgrade on unit 4 along with the environmental outages and the digital upgrades did not go as we had planned it to. What we did is we’ve gone outside and gotten a root cause firm to look at the digital upgrades to see what changes we can make. As a matter of fact we pushed off the outage on unit 3 this year for about a week so that we could make the changes that were recommended in that and we are also going outside and getting some more [bench string] out at San Juan. Unit 3 is the only outage this year that also has a digital upgrade. The other two units will not have digital upgrades associated with them and as we mentioned earlier, the work that we’re doing on the tube leaks as we go through and do the environmental outages, will help fix the root cause of most of the unplanned outages at San Juan. Four Corners the reason that EAF does not look as good in 2008 as we would like is because of that major 100-day overhaul that that unit has but again, that’s a 40-year old plant and it needs that overhaul. When we see that overhaul done we’ll get the 13 percentage points EAF improvement in 2009. Palo Verde, despite the fact that their one outage was longer than we had thought made major progress. Their EAF was up about seven percentage points in 2007 from 2006 and we expect to see it go up about six more points. As we said, we see positive things happening on the operating side at Palo Verde. We think they’re making progress on EAF. We just think the budget is going to take a little longer to catch up. [Analyst] – PNC Bank: Thank you.

Just looking at the potential improvement that you have at the electric utility, should we read that as on a normalized basis, that PNM would have earnings power more or less in the range of let’s say $1.85 assuming you were to get the ROEs that are assumed for the electric utilities?

The earnings power that was shown on the last slide relates to the regulated utilities. Obviously it’s going to depend on what happens with FTP and the EnergyCo side. We think it should be north of that but again I would remind you that we look at that business, and I’m not sure EPS is the right way to evaluate that but it would have that kind of impact.

Just a question on EnergyCo, what was the debt at your end ’07 and what would you expect the debt in EnergyCo to be in 2009 without any new transactions? [Operator interruption]

….questions, with the regulatory lag in New Mexico is there any impetus on your part to lobby for a hybrid test year and then the second is looking at ’08 to ’09 guidance could you break down a little more detail the accretion you expect from the Cap Rock acquisition. Because I would expect some interest costs savings with debt reduction but I’m not seeing that.

We are evaluating the future quest here in New Mexico. There is nothing that statutelatory prohibits. A forward test here in New Mexico, one of the small gas companies just filed for a forward test here, it’s a very simple case so we’re going to watch and see what happens with that and then look at it for PNM Electric.

There really are rules that allow a future test here but it’s not quite a future test year in the way we would or you would typically think of it. Because it has a [true up] mechanism. And so we’re looking at as Pat said, a full future test year.

On the accretion question, we reported slightly accretive in 2009. If you think of the Cap Rock business earning roughly 9% to 10% and the gas business under earning around 5% to 6% and the proceeds net of the Cap Rock purchase allows us to pay down some debt and we also see some opportunities for investing in unregulated business that would allow [inaudible] benefit as well. So that gets us to slightly accretive in 2009.

Let me just make a comment on that gas business. As Chuck said earning 5%, this is a chronic issue and the difficulty is that it is most of our revenues on the gas business are volumetrically based and we’ve got declining usage on the residential side because things are becoming more efficient and there hasn’t been any new gas gizmos lately. And so that’s a challenge that we, we’ve tried to push for some form of a decoupling mechanism, I think the Commission will at some point maybe get there, but I think that’s a great thing for a new owner to pick on.

On the general rate case obviously the fuel clause is an important aspect and I’m concerned about this other proceeding going on now in New Mexico, this notice of inquiry into the fuel clause, or at least the implementation of the fuel clause, and I was just wondering has this proceeding gone anywhere and negatively impacted the general rate case? For example it gives the Commission an excuse not to decide upon your fuel clause now.

I guess I look at it a little differently, I looked at is as the current rules would be very difficult for them not to provide it to us and then if they’re going to make any changes to the administration of the overall fuel clause, they would make it to all entities at the same point in time. Now in terms of the status of that proceeding, Pat?

The NOI, everyone’s filed their comments. They were very similar in nature. They have not done anything with that. They’ve not even scheduled a workshop. We view that as positive. Waiting for our fuel clause to come and then they could make changes to all of the fuel clauses to make an administrative [inaudible] comparable.

…they filed notice of testimony in early December and so what you’re saying is that over [inaudible]

Correct.

We have had comments made by one or two commissioners regarding that this will be something that will take some time to do and will be something that may cause changes to the fuel clause adjustments on a prospective basis. So those again, we think are good comments to hear.

I just wanted to follow up on the [inaudible] and the potentially was there an [inaudible] just in terms of getting the software and everything just is there, what should we be thinking about that and how much in place are we on that. The bank of first choice, the customer care is totally done with? Are we, is that put to bed now and are we expecting any additional revenues from that vendor or is that, are we just now finished with that, the new systems in place and so we’re going forward and there’s no other upgrade or anything we have to worry about.

The major systems are in place at this stage and all the web portals have been done and they’re all active and operating well. That doesn’t mean that we won’t have continuous enhancements being made to the systems but that’s much more on the normal order of business rather than the issues that you get engaged with with a complete change out. And so no we don’t anticipate additional payments being made because most of the deliverables have really been put there. If they fall, if they don’t perform however, we have a very good contract that requires that has performance measures for both the system and the accuracy of the system as well as their operation of the call center. If they don’t meet those standards, it has a significant impact in terms of their payments to us. It is also is structured such that as we add customers, the marginal cost of adding a customer is exceptionally low as it will continue to [inaudible] the average cost of service.

I think from a nodal perspective we really see that as an opportunity particularly with the trading and marketing organization. Our system program is ahead of plan at this stage and likely will be done well in advance of going nodal except for any sort of fine tuning that might come out of any final changes in the nodal network. But I think we feel pretty good about where we are and see this as an opportunity.

And then just finally on the synergy savings from the realignment of the merchant business, is that in the $35 million savings or is that incremental and could you just give us a sort of quantifying what that actual number is and also just strategically, when you look at some of these business, they look kind of small. I mean you guys are not the largest company, what’s your sort of strategic thought about maybe from an economy scale situation maybe getting, maybe realigning the business to get rid of one or something.

The EnergyCo side is composed of a series of smaller pieces, but in one sense that allows you to be a little more [inaudible] with the movement. We’ve not got 1200 mw of generation in the portfolio, we’ve got about 260,000 a little over that, 260,000 customers and I think on an enrolled basis we’re about 275,000 or 280,000 today. I think that gives room to grow. Now there’s lots of ways to grow and one is that you put it in with somebody else. Another way is you acquire. A third way is you just continue with intrinsic growth. We have made no decisions about exiting that business, any of those businesses. Obviously we’ll continue to look at it as [inaudible].

Jeff, we have a follow-up question from Sam Brothwell, he just sent it to me. In light of the weaker earnings outlook and ongoing pressure from credit rating is the Board comfortable with the current dividend level?