Good day, and welcome to the PNM Resources conference call. Today’s call is being recorded. At this time, I would like to turn the conference over to your host, Ms. Gina Jacobi. Please go ahead, ma’am.

Thank you everyone for joining us this morning for a discussion of the company’s first quarter 2009 earnings. Please note that the presentation and accompanying materials for this conference call and supporting documents are available on the PNM Resources website at www.pnmresources.com. Joining me today are PNM Resources Chairman and CEO, Jeff Sterba; PNM Resources Chief Operating Officer, Pat Vincent-Collawn; and Chuck Eldred, our Chief Financial Officer, as well as several members of our executive management team. Before I turn the call over to Jeff, I need to remind you that some of the information provided this morning should be considered forward-looking statements, pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update the information. For a detailed discussion of factors affecting PNM Resources results, please refer to our current and future annual reports on Form 10-K and quarterly reports on Form 10-Q as well as other current and future reports on Form 8-K filed with the SEC. And with that, I’ll turn the call over to Jeff.

Thanks Gina, and welcome, good morning. Thanks for joining us today. In spite of the challenging economic conditions that all of us face, not just our country, but the world, we frankly had a very solid quarter across virtually all of the areas of operations, but particularly at our New Mexico utility, PNM, and at First Choice Power. Starting on slide four of the presentation, you can see that our ongoing earnings were $0.10 per share, this is compared to $0.05 per share for the same quarter last year, and keep in mind that we only had the gas operations this year for a little less than half of the period versus obviously all of the period for 2008. As we talked before, we had faced a challenging year in 2008 and we took a number of difficult strategic actions that really are beginning to bear fruit. And I think the focus on our operational efficiency and execution is allowing us to hit the numbers in the face of lower sales in both of our New Mexico and Texas markets. Progress on critical regulatory, strategic and financial initiatives have helped us position continued financial performance improvement as we go through this year, and head into 2010, because as you certainly know, in the regulated world it takes time for actions to translate into particularly when the regulatory actions to translate into enhanced revenues. Moving on to slide five, we have delineated a number of the achievements that will help drive operations as we go forward. Just to touch on them quickly, as you know we completed the gas sale and it went very smoothly. I was very pleased as was the buyer and how smoothly the transaction went through, and there are still a few transitional elements that are still…

Thank you, Jeff, and good morning everyone. I am on slide seven right now, and as just mentioned we have spent significant amount of time concentrating on achieving appropriate regulatory treatment at PNM, and we're beginning to see the fruits of those labors. We reached an unopposed stipulation regarding our rate case. That stipulation calls for $77.3 million increase to base rate that would be implemented in two phases starting this year in July in 2009. It also allows us to bring in some of the merchant assets, Luna, Lordsburg, Valentia, and an ownership interest in PV2 [ph] in the rate base. Another very important component of the stipulation is a more conventional fuel and purchase power clause, one that is not capped and does not set a floor for power plant performance. As Jeff mentioned, the commission has had public hearings, public common hearings, and their hearings, and we expect a ruling on the stipulation later this month. Jeff also mentioned Senate Bill 477, which is the future test year legislation. This is a very progressive piece of legislation passed by the State of New Mexico and signed into law by the Governor. The bill actually goes into effect on July 1, and we are currently working processes internally to prepare for a future test year filing. We also do continue to be successful in streamlining our capital deployment, in managing our cost as Jeff said. San Juan has completed its environmental upgrade. The outrage on unit two was finished and that was the last of our four environmental upgrades, and Palo Verde has been recognized by the NRC for the work that they have done, and they have been removed off of the watch list. We also continue to not lose sight of our T&D business. Public service…

Thanks, Pat. Let me spend a minute on First Choice Power and flip to slide 11, if you will, Brian Hayduk, who joined us at the end of December last year and his team has been hard at work. Redirecting FCP to some extent but really focusing on the things that can be done to improve the execution of the marketing strategy, and particularly focused on bad debt. The specific areas that they focused on and I think having good success in involved first increasing the number of our customers, the percent of our customers that are in term contracts, and not on month-to-month transactions. They are now up to about 75% of our residential customers under our term contracts, and they have had a lot of success taking some of those contracts that were entered into in the summer at high prices, and modifying them such that they are extended, and can have more competitive terms. So we don't aggravate one of the situations that we have with bad debt, which is people on high contracts, (inaudible) and leave you hanging with a bill. The second major initiative has been to obviously focus, continue to focus on customer retention, because it is a lot less costly to keep a customer than it is to try to attract a new one, and certainly that is price based, but it is also very heavily affected by service and service quality. Our third area has been to grow the commercial segment, and they have had good success in that. In fact in the first quarter of 2009, the signed margin, if you will, is up about almost double of what it was in the same quarter in 2008. Probably the biggest area though that we have been concerned about has been on…

Thanks, Jeff, and good morning everyone. I am going to begin on slide 14, as mentioned in this morning's news release, we are in $0.10 per share, which is up from $0.05 from last year's results, but keep in mind the results reflect a 3-month contribution from the gas business, which was sold on January 30th of this year. So 2009 reflects only one month of contribution from the gas business. As you can see without the gas business, ongoing earnings per share increased $0.22 from last year, largely due to the improved performance of PNM electric. We are extremely pleased with our performance this quarter, because of the sale of the gas company, we are expected to shift in quarterly earnings distribution, and have been anticipating the relatively weak first quarter. However, continued focus on the regulatory activities, efforts to delever the business itself, our focus on process improvement and cost management at the utilities, coupled with better-than-expected performance at First Choice Power drove our favorable results. Our goal is to keep O&M as flat as possible year-over-year, at PNM electric, O&M costs were actually down 1% quarter-over-quarter despite increased pension, medical and labor costs. Clearly, our initiatives are delivering the results and we expect them to be sustainable in the future. Now turning to the individual business units, on slide 15, this lists the major drivers of our quarter-over-quarter improvement in our regulated businesses, PNM electric and TNMP. Starting with PNM, last year the utility lost $0.19, while this year's significant improvement brought PNM to breakeven. The implementation of the new base rates and the fuel and power purchase costs adjustment clause added $0.08 to earnings per share, lower fuel and purchase power prices increased earnings by $0.20 per share. This $0.20 improvement primarily reflects the cost of…

Thanks, Chuck. If you go to slide 21, you'll see the checklist, which we have used over to the last set of years, as an annual check on the things that you can hold us accountable for, and you can see that in each of the items that at least through the first quarter we are making good progress. Pat talked about the status of the two rate cases and I have talked about FCP. We believe it is very much on track. Optim Energy, even in spite of the tough market is on track. On the capital deployment and managing costs, obviously this is a major element of focus starting with our ABI [ph] initiative, where we drove $35 million out of our operating costs, but the capital side as Pat mentioned is also still under high scrutiny. We returned about $350 million out of the 5-year. Frankly, we will return some more both out of this year and next year, but we're very cognizant of those capital costs that will be affected by the stimulus and their investment can be improved by the stimulus provisions both the bonus depreciation as well as in ITC and the like. Through the process, one of the things we wanted to make sure is that we don't let our service quality and our reliability slip. I think the folks are doing a good job in maintaining top quartile reliability, and a very strong focus on service quality. The baseload units are doing well, obviously the removal of Palo Verde from the multiple degraded cornerstone was a significant step, but we are seeing very good performance out of San Juan as it comes out of this very extended environmental related outages and the environmental performance of these units has been exceptionally strong. All of this helps improve our financial performance and obviously our credit metrics. So in summary, we are pleased with the first quarter, but we also know that we got a lot of work ahead of us to continue that path towards restoring the financial performance of the company to where it should be. With that operator, we will be happy to move into questions.

Thank you. (Operator instructions) And we will take our first question from Paul Fremont with Jefferies. Paul Fremont – Jefferies: Thank you very much. I guess the first question would be in terms of First Choice gross margin, what was the gross margin first-quarter in ‘09 and what was it in first-quarter of 2008?

Hi Paul. Welcome back by the way. Hope you're feeling well and have recovered well from your accident. Paul Fremont – Jefferies: Thank you very much.

Yes, we know that it was pretty serious, but glad to hear your voice again. You know, we've certainly expressed that we've received higher margins during the first quarter that carried from last year with higher energy prices. We are reluctant to give out margin information first on sensitivities, given the market conditions within Texas right now. But as I mentioned, going forward we expect the margins to return to more traditional levels, which put us around a low to mid $20 per megawatt hour. And first quarter was obviously significantly higher but again we're factoring in our projections are more traditional margin returning over the year into that lower range. Paul Fremont – Jefferies: Okay, and will that debt expense be also part of why the first-quarter is unlikely to be replicated in the remaining three quarters of the year, is that something that potentially reduces the other quarters?

No, in fact we expect to see that debt expense continue to decline Paul. We're still having roll off of bad debt that was associated with flare-up in energy prices, and so the higher quantities we're still working through, but we do expect to see bad debt come down. Our concern is as a percentage of revenue it’s still going to stay too high compared to where it needs to be, and there are only so many things, a lot of which we've got in place today that we can take actions, we can take to help mitigate that, and so we are obviously doing that in terms of the kind of customers that we are cultivating, et cetera. But some of this piece really is going to have to take a change on the regulatory side. Because of this pattern of a certain group of customers that are doing (inaudible) in a way in which they are leaving you with two months of bad debt, and the entity picking it up has no idea what they are picking up. So, in fact the commission in Texas has started a process to investigate two of the – a couple of the alternatives, and I think look favorably to it. We don't expect to see results of that affect performance during the course of 2010. So we expect that debt with start, will continue to trend down, but it's going to stay too high for our liking. Paul Fremont – Jefferies: And the last question is just a point of clarification. The annual guidance this year includes the – it is an ongoing contribution, which is your share of the PNM gas.

Yes, that's right Paul. Paul Fremont – Jefferies: Okay, thank you.

(Operator instructions) We will take our next question from Brian Russo with Ladenburg Thalmann. Brian Russo – Ladenburg Thalmann: Good morning.

Good morning.

Hi Brian. Brian Russo – Ladenburg Thalmann: I'm sorry if I missed this earlier, but did the customer count increase or decrease at First Choice Power in the first quarter?

The customer count slightly decreased in the first-quarter. Brian Russo – Ladenburg Thalmann: Okay, and also in terms of the Optim stuff, can you just remind us of the contract terms you have on the assets, the generating assets?

Yes, the primary contract is a lay-off contract that runs through September of 2010, and that's on Twin Oaks, and it is for 75% of the capacity of Twin Oaks, and that rolls off at that point. We today take 25% and then there is no real contract on power out of the other units. There are hedges in place obviously, but. Brian Russo – Ladenburg Thalmann: Okay. What's the hedge profile like on the other assets?

We are about 50%. I mean one of the things that we do believe is the gas is bottoming out, and a lot of this obviously is tied to the economy. So we're careful about hedging too much in a period of time when the economy is in recession mode it is today. We think that market prices will move up as the economy moves up. So, we're careful about hedging too much long-term, even out 9, 12 months at this stage because of that but we're carrying about 50% hedge. Brian Russo – Ladenburg Thalmann: Okay, and with the recent step on the PNM electric case, what type of ROE do you think you guys can earn, say you know in 2010?

Brian it is Pat. The stipulation had a $1.5 billion rate base with a 10.5% ROE, and obviously the next case that we file will be a future cash share, which virtually is a very progressive, which can virtually eliminate regulatory lags. Brian Russo – Ladenburg Thalmann: Right, so we should see, maybe a couple of 100 basis point delta between the allowed and the actual due to the regulatory lag?

Yes, absolutely. Brian Russo – Ladenburg Thalmann: When do you expect to file your next rate case?

We’re going wait and see when we get the outcome of this one, which should be sometime this month, and then will go ahead and make that decision. Brian Russo – Ladenburg Thalmann: Sure, and in terms of your pursuit to get back to investment grade, are we going to have to see another rate case and see that forward test year to alleviate the regulatory lag, you know, before the rating agencies would really consider bringing guys backup to investment grade?

Brian, we have learnt not to speak for rating agencies at all, but you know we have a tendency to think that we’re going to have to show numbers for a period before they will take the action, but we certainly expect as we said before as we move into 2011, which does mean in all probability another rate case coming into effect in 2011. Because remember that under the stipulation we have signed the next rate case can’t go into effect before March of 2011.

March 31st.

March 31st or really April 1st that it's really going to be in that window.

Yes Brian, this is Chuck. Obviously, they look at it very favorably that we're working to take all any initiatives necessary to restore the investment grade credit of the utility, and then they take each decision by the commission. The more recent one of the stipulation is critical to their outlook towards our regulatory success. So we just take it one decision at a time and continue to look to pursue a strategy to get us back to investment grade. I do want to add one more comment on the earlier question regarding some of the contracts, if you recall with Lyondell, we do have a steam [ph] contract with Lyondell, which gives us some additional, and they continue to use that, even despite some of the economic conditions and concerns with their operation, but that particular facility is very solid within their operations. Just keep that in mind and then we have excess power on that too that gets hold in the ancillary market in Texas. Brian Russo – Ladenburg Thalmann: Okay, and then just lastly assuming you guys get back to investment grade, are there any step downs on your debt or do you have any ability to refinance or call some of the high cost debt?

There are no step downs in regards to the existing debt, PNM utility we issued 795 last year, and then we at the holding company the issuance there, we have bought back at a discount about $157 million, and then the TNMP issuance that we did earlier this year does have a (inaudible) provision, but no call option. Brian Russo – Ladenburg Thalmann: Okay, thank you very much.

And there are no further questions. Thank you. At this time, I'd like to turn the conference back over to Jeff Sterba for any additional or closing comments.