2016 Analyst Day December 14, 2016

Introduction Jimmie Blotter Assistant Treasurer

Director, Investor Relations and Shareholder Services

Agenda

3

Time Topic Presenter

10:00 – 10:05 Welcome / Introductions Jimmie Blotter

10:05 – 10:30 Strategic Overview Pat Vincent-Collawn

10:30 – 11:00 PNM 2018 General Rate Case Gerard Ortiz

11:00 – 11:30 2017 Guidance / Financial Update Chuck Eldred

11:30 – 12:00 Wrap Up / Q&A Pat Vincent-Collawn

12:00 – 1:00 Lunch

4

Safe Harbor Statement and Non-GAAP Financial Measures

Safe Harbor Statement 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, ongoing earnings per diluted share and EBITDA), 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

Strategic Overview Pat Vincent-Collawn

Chairman, President and CEO

PNM Resources Strategic Direction

6

• PNM: 2015 and 2016 ReliabilityOne Award recipient • PNM: Below regional and national average residential rates • PNM: Record-high customer perception survey results • TNMP: 11th consecutive ENERGY STAR Market Leader Award • TNMP: Strong record of high reliability • TNMP: 60% reduction in 2016 meter reading/estimated billing complaints

Build a Highly Efficient, Customer-Focused and

Adaptable Organization

• PNM economic development rate and special renewable energy rate for new customers

• San Juan Generating Station Plan (BART) approved • NMPRC approval of future test year definition • FERC formula rate methodology implemented • TNMP semi-annual TCOS filings

Improve Regulatory Outcomes

• Transformation to a more carbon-free generation portfolio well under way • Investments in transmission and distribution upgrades, environmental

equipment and grid modernization • Over $2 billion of capital investments over past 5 years

Continue to Invest in the Business

Create enduring value for customers, communities and shareholders

PNM Resources Strategic Goals

7

Strategic Financial Goals

Earn authorized return on regulated businesses

Above industry average earnings and dividend growth

Maintain solid investment grade credit ratings

• Investing aligned to policy directives, reliability, evolving customer needs and transforming industry opportunities

Rate Base Growth

• Realizing earnings potential in business

• Reducing regulatory lag • Earning our allowed return

Earnings Growth

• Sustaining and growing the dividend

• Providing above-average dividend growth

Dividend Growth

PNM Resources: Staying Focused in a Changing Environment

8

• Potential New PNM

Customers from Economic Development Efforts

• Robust Economy in Texas

• 2017 Integrated Resource Plan

• San Juan Generating Station Scenarios

• PNM 2018 General Rate Case • PNM AMI Filing • TNMP Upcoming General

Rate Case Improving Regulatory Environment

Supporting Customer Growth

Transforming PNM’s Generation Portfolio

PNM Regulatory

9

• Appeal filed September 30, 2016

NM Supreme Court Appeal

• Requested revenue increase of $99 million with 10.125% ROE • Based on calendar year 2018 future test year • Rates effective January 1, 2018

2018 General Rate Case Filed December 7, 2016

• Suspension lifted December 6, 2016; hearing scheduled February 27, 2017

AMI Filing

• Participation in Notice of Inquiry and workshops to explore impacts of utility-owned distributed generation

Distributed Generation Workshops

TNMP Regulatory

10

• TCOS filings update for transmission investments, but distribution assets and other rate base items have not been updated since last rate case filing (test period ending March 2010)

True-up Transmission and Distribution Recovery

• Operating costs and retail load have not been updated since 2010 rate case

True-up Operating Costs and Load

• To be filed no later than September 2018 to coincide with AMS filing requirements

Timing

Upcoming General Rate Case: Key Elements

PNM Customer Focus

11

High Reliability Affordability

Community Partner

Customer Satisfaction

Highlights • Customer Satisfaction

Research and Polling, Inc. survey results • New Mexico Economic Development Efforts

Secured Facebook data center which opens the door for similar customers to consider NM

• Legislation Consumer protection

Enhancing the Customer Experience

PNM 2017 Integrated Resource Plan

12

Additional Requirements from BART Agreement

• Two potential resource

portfolios to be included in 2017 IRP One with and one

without SJGS Units 1 and 4 continuing operations post-2022

• By December 31, 2018, PNM must make a separate NMPRC filing to determine whether SJGS should continue to serve customers

Roadmap for meeting customer demand over 20-year horizon, provides foundation for the selection of

future resources

Solicits and incorporates public input

Documents four- year

action plan

Revisited every three years

2017 IRP submission required by July 3, 2017

Filed with NMPRC for review and acceptance

Proposed resources approved separately

Determines need to secure remaining Palo Verde leases beyond expiration date

PNM 2018 General Rate Case Gerard Ortiz

Vice President, PNM Regulatory Affairs

PNM 2018 General Rate Case

14

• Requested revenue increase of $99 million Based on calendar year 2018 and 10.125% ROE

Revenue Requirement

• BART items Palo Verde Unit 3 Retirement of San Juan Units 2 & 3 132 MW San Juan Unit 4 Accelerated depreciation on SNCR

equipment • Four Corners SCRs • T&D reliability and core investments • Energy sales • Re-allocation of FERC Wholesale

Generation & Transmission • ROE

Rate Design

• Increase fixed charge • Lost Contribution to Fixed Cost

mechanism (LCFC) • Phase-in implementation

Phase I: $50M in 2018 Phase II: $49M in 2019

PNM 2018 General Rate Case Drivers

15

Rate Base (in millions)

Incremental Revenue

Requirement (in millions)

Compliance Items: BART Items: Palo Verde Unit 3 $96 $45 Retirement of San Juan Units 2 and 3 (95) (29) 132 MW of San Juan Unit 4 11 16 Accelerated Depreciation on San Juan SNCRs - 3

Subtotal BART Items $12 $35 Four Corners SCRs 61 9

Subtotal Compliance Items (44% of requested increase) $73 $44 Core Rate Base, Depreciation and Property Taxes 33 20 Energy Sales 11 ROE to 10.125% from 9.575% 10 Re-allocation of FERC Wholesale Generation & Transmission 12 9 Other 5

Total $118 $99

PNM 2018 General Rate Case Energy Sales and LCFC

16

Energy Sales • Compared to the last filed retail load forecast, load decline has

contributed to a $11 million revenue requirement deficiency Customer growth is offset by declining usage driven by energy efficiency, changes to

codes and standards, and distributed generation Industrial usage reflects recent declines

LCFC Mechanism: • Reimburses lost fixed costs per kWh

due to energy efficiency and load management programs

• Consistent with mechanism described in Hearing Examiner’s recommended decision in 2016 general rate case

• Annual true-up based on verified energy efficiency program savings

581

564

14 11 9

500

550

600

2016 GRC 2018 GRC

Residential Use per Customer (kWh/month)

Energy Efficiency Codes and Standards Distributed Generation

599

Lost Contribution to Fixed Costs (LCFC)

• Forecasted PNM customer bills remain below current national and regional averages

• Proposed rate design continues to reduce residential subsidization

PNM 2018 General Rate Case Bill Impact

17 (2)PNM rates reflect current approved rates (2016) and proposed rates filed under the 2018 General Rate Increase. All others reflect U.S. Energy Information Administration's Residential Rate increases through June 2016.

Customer Impact Bill Impact(1)

Phase I Total Residential 6.4% 12.8% Commercial 4.8% - 5.2% 9.5% - 10.3% Industrial 4.3% - 5.1% 8.5% - 10.1% System Average 5.7% 11.2% (1) Bill Impact considers impacts of proposed rates under the 2018 General Rate

Case along with Fuel and Purchased Power Cost Adjustment Clause, Renewable Energy Rider and Energy Efficiency Rider changes. The $99 million request represents a non-fuel revenue increase of 14.3%.

$59.80

$73.19

$84.86

$105.90 $108.86

$142.36

$50 $100 $150

City of Seattle - (WA)Montana-Dakota Util. (MT)

EPE (TX)PS Colorado (CO)

PNM (NM) - CurrentCity of Colorado Springs - (CO)

NorthWestern Energy - (MT)LADWP (CA)

EPE (NM)City of Tacoma - (WA)

Avista Corp (ID)PacifiCorp (WY)

PNM (NM) - 2018 GRCPacifiCorp (UT)

Montana-Dakota Util. (WY)Avista Corp (WA)

SPS (NM)TEP (AZ)SCE (CA)SPS (TX)

PGE (OR)SMUD (CA)PG&E (CA)

SDG&E (CA)Idaho Power Co (ID)

PacifiCorp (ID)PacifiCorp (OR)

Black Hills Power Inc (WY)PacifiCorp (WA)

Region Average BillUS Average BillPacifiCorp (CA)

City of San Antonio - (TX)Entergy (TX)

Nevada Power Co (NV)SRP (AZ)APS (AZ)

Modesto Irrigation District (CA)Imperial Irrigation District (CA)

Comparison of Average Residential Bills(2) Western Region Average Bills by Utility

- PNM 2018 GRC

- PNM Current

- Current US Avg - Current Region Avg

PNM 2018 General Rate Case Timeline

18

12/7/2016 Rate Case Filed

12/7/2016 thru 10/8/2017

Statutory 9+1 Month Suspension

Period

10/8/2017 thru 1/5/2018

3 Month Allowance for Additional

Consideration by NMPRC

1/1/2018 Expected Effective

Date

~January: Expect Hearing Examiner to be assigned and schedule set

~May: Staff and Intervener Testimony ~July: Hearing

Potential Settlement Period

2017 Guidance Chuck Eldred

Executive Vice President and CFO

Consolidated Earnings Guidance Range (Ongoing)

20

$1.77 Consolidated EPS $1.87

PNM $1.30- $1.37

TNMP $0.51 - $0.53

Corp/Other ($0.04) – ($0.03)

2016 Narrowed Earnings Guidance(1)

2017 Earnings Guidance Midpoint: $1.82

(1) 2016 Ongoing earnings guidance originally $1.55 - $1.76. Narrowed to $1.55 - $1.65 on August 4, 2016 and

$1.60 - $1.65 on December 13, 2016

$1.60 Consolidated EPS $1.65

New Mexico Economic Conditions

21

2017 Load Projection (1.0%) – 0%(1) 2017 Expected Customer Growth 0.7%

(1)Weather-normalized

0

100,000

200,000

300,000

400,000

500,000

600,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

PNM Customer Counts and Retail Energy Sales

Energy Sales Customers

Ener

gy S

ales

(GW

h) Total Custom

ers

-1%

0%

1%

2%

3%

2011 2012 2013 2014 2015 Oct. 2016

Employment Growth Rates New Mexico and Albuquerque Metro

(Year-end measurement, except 2016)

New Mexico Albuquerque Metro

PNM Guidance (Ongoing)

22

PNM Ongoing EPS

2016E – 2017E Key Performance Drivers Year-over-Year ∆ EPS

Retail rate relief $0.26 Restructuring cost savings $0.09 - $0.10 Transmission $0.04 - $0.06 AFUDC $0.04 - $0.06 Palo Verde Unit 3 market prices $0.03 Interest expense savings $0.02 2016 weather $0.02 Outage costs $0.01 - $0.02 Load ($0.05) - $0.00 Q2 2016 interest income from IRS, net of fees ($0.02) Palo Verde Nuclear Decommissioning Trust gains ($0.05) FERC Generation Navopache contract ($0.06) O&M increases ($0.07) - ($0.05) Depreciation and property tax ($0.08) - ($0.06)

2015 2016E 2017E

$1.18 $1.10 - $1.13 $1.30 - $1.37

Texas Economic Conditions

23

2017 Load Projection 2% - 3%(1) 2017 Expected End User Growth 1.6%

(1)Weather-normalized

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

TNMP End User Counts and Retail Energy Sales

Energy Sales Customers

Ener

gy S

ales

(GW

h)

Total End Users

-1%

1%

3%

5%

2011 2012 2013 2014 2015 Oct. 2016

Employment Growth Rates Texas and Dallas Metro

(Year-end measurement, except 2016)

Texas Dallas Metro

TNMP Guidance (Ongoing)

24

$0.52

2015 2016E 2017E

$0.51 - $0.53 $0.52 - $0.53

TNMP Ongoing EPS

2016E – 2017E Key Performance Drivers Year-over-Year ∆ EPS

TCOS rate relief $0.04 - $0.05

Load $0.02 - $0.03

2016 weather $0.01

O&M increases ($0.01) - $0.00

Interest expense ($0.02)

Depreciation and property tax ($0.06) - ($0.05)

Corporate and Other Guidance (Ongoing)

25

($0.06)

2015 2016E 2017E

($0.02) – ($0.01) ($0.04) – ($0.03)

Corporate and Other Ongoing EPS

2016E – 2017E Key Performance Drivers and Assumptions Year-over-Year ∆ EPS

Westmoreland financing agreements ($0.02)

EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)

26

Ongoing EBITDA (In millions)

2016E Midpoint 2017E Midpoint Consolidated PNM Resources $541 $589

PNM $360 $396

TNMP $156 $162

16% 24%

47%

13%

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

2017 Quarterly Ongoing Earnings Distribution

Earnings Growth

27

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 / Renewables 9.575% / 50% $2.3 B 9.3% $1.32 $2.5 B $1.47 $2.5 B $1.46

Supreme Court Appeal

$0 - $150 M $0.00 - $0.09

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

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

Items not in Rates ($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 10.125% / 45% $815 M 10.125% $0.52 $890 M $0.53 $965 M $0.56

Corporate/Other ($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

• Potential Earnings Power supports 2015 – 2019 earnings growth target of 7% - 8% PNM growth achieved through new retail rates implemented October 2016 and 2018 General

Rate Case filing o Palo Verde Unit 3 added to rate base in 2018 o 2019 reflects potential recovery of NMPRC disallowed assets through New Mexico

Supreme Court appeal TNMP growth achieved through continuing capital investment and recovery through general

rate case and TCOS filings Corporate/Other includes Westmoreland financing

This table is not intended to represent a forward-looking projection of 2018 - 2019 earnings guidance. Refer to Slide 39 for additional details and disclosures.

Capital Forecast

28

$96

$157

$136

$15

2020

$404

$249

2016 – 2020 Total Capital Plan: $2.3B

PNM 2015-2020 Rate Base CAGR: 4 - 6%(1) TNMP 2015-2020 Rate Base CAGR: 8 - 10%

(1)Includes the addition of PV3 to rate base in 2018, which does not have associated capital spending. (2)The additional 65 MW ownership of San Juan Unit 4 included in the December BART approval is part of Corporate/Other for 2016-2017 and PNM beginning in 2018. Amounts may not add due to rounding.

$198 $221$238 $243

$292

$138 $112 $119

$120

$170

$119 $163

$125

$151

$134

$137

$36

$57

$30

$15

2016 2017 2018 2019

(In millions)

PNM Generation PNM T&D TNMP Corporate/Other Depreciation

$573

$516

$395 $435

Palo Verde Unit 3

added to rate base

(2)

Expect future refinements

Chart1

2020

$249

Depreciation

249

Sheet1

2020

PNM Generation

PNM T&D

PNM Renewables

TNMP

Other

Total

Depreciation249

Check

Chart1

2016

2017

2018

2019

Depreciation

197.601

220.966

237.566

242.764

Sheet1

20162017201820192020

PNM Generation

PNM T&D

PNM Renewables

TNMP

Other

Total

Depreciation198221238243249

Check

Liquidity, Capital Structure and Credit Ratings

29

Available Liquidity

PNM TNMP Corporate/

Other PNM Resources

Consolidated Financing Capacity as of November 30, 2016: (In millions) Total Capacity(1) $450.0 $75.0 $300.0 $825.0 Less short-term debt(1) and LOC balances $34.9 $0.1 $184.6 $219.6 Plus invested cash - - 1.5 1.5

Total Available Liquidity $415.1 $74.9 $116.9 $606.9

Target regulatory cap structures: 50/50 at PNM, 55/45 at TNMP

Moody’s S&P

PNM Resources Baa3(2) BBB+(2)

PNM(4) Baa2 BBB+(3)

TNMP A1(4) A(4)

Issuer Outlook Stable Stable

(1)Excludes intercompany debt and term loans (2) Issuer/Corporate rating (3) Senior unsecured (4) Senior secured (5) Reflects estimated principle payments under the Westmoreland financing agreements

Strong liquidity and balanced capital structure supports investment grade credit metrics at Moody’s and S&P

PNMR FFO-to-Debt is maintained well within Moody’s Baa investment grade target range of 13% to 22%

$198 $40 $3

$682

$100

$859

$172

$233

2016-2018 2019-2020 Beyond 2020

Long-term Debt Maturities Principal Amounts

(in millions)

Corporate PNM TNMP(5)

$1.31 $1.41 $1.49

$1.60 $1.77 $1.64 $1.65

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

Ongoing EPS

$1.87

Deliver Above Industry Average Earnings and Dividend Growth

30

(1) Assumes mid-point of 2017 guidance (2) Indicative annual rate 2012 – 2015 Ongoing EPS represents actual results 2016E Ongoing EPS represents ongoing earnings guidance of $1.60 - $1.65 per diluted share 2017E Ongoing EPS represents ongoing earnings guidance of $1.77 - $1.87 per diluted share

• Annual common stock dividend raised by 10% to $0.97(2) per share in December 2016

• Expect above industry average dividend growth in the future while targeting the 50% - 60% payout ratio range

• Next dividend review in December 2017

$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

• 7% - 8% Earnings Growth 2015 - 2019

53%(1) payout ratio

Wrap Up Pat Vincent-Collawn

Chairman, President and CEO

PNM Resources: Staying Focused in a Changing Environment

32

Staying focused in order to deliver above industry average earnings and dividend growth • Maintain high reliability and enhance the customer experience • File rate cases to minimize regulatory lag, realize earnings

potential and maintain credit ratings • Work with community partners to enhance economic

development and regulatory support Integrated Resource Plan

• Filing represents milestone in determination of PNM’s future generation portfolio

PNM Resources Sustainability Portal

Albuquerque Gas & Electric Company formed (1917)

Bernalillo Sawmill Power Plant generated 2,500 KW (1927)

Public Service Company of New Mexico formed (1946)

Celebrating 100 years of serving New Mexico (2017)

2017 Marks 100 Years of PNM History

33

Questions & Answers

Appendix

2017 Assumptions

36

amounts shown are before tax

PNM TNMP Corporate/ Other

2017 weather $0 (normal) $0 (normal) N/A

Load (1.0%) to 0.0%

1% = $0.05 2.0% to 3.0% 1% = $0.01

N/A

Palo Verde Unit 3 sales price ($/MWh) ~$29 N/A N/A

Outage costs $14M - $16M N/A N/A

PV3 Nuclear Decommissioning Trust gains $10M - $12M N/A N/A

Anticipated effective tax rate 36.9% 36.8% 54.3%

Average PNM Resources diluted shares outstanding 80.0M 80.0M 80.0M

PNM Plant Outages and Retirement Schedule

37

2016 - 2017 Planned Outage Schedule

Palo Verde

Unit Duration in Days Time

Period

3 34 Q4 2016

2 34 Q2 2017

1 34 Q4 2017

Four Corners

Unit Duration in Days Time

Period

4 10 Q2 2017

5 10 Q2 2017

5 95 Q3-Q4 2017

San Juan

Unit Time Period

2 12/31/2017

3 12/31/2017

2017 Scheduled Unit Retirements

2016 Consolidated Earnings Guidance Range (Ongoing)

38

$1.60 Consolidated EPS $1.65

PNM $1.10 - $1.13

TNMP $0.52 - $0.53

Corp/Other ($0.02) – ($0.01)

2016 Narrowed Earnings Guidance(1)

(1) 2016 Ongoing earnings guidance originally $1.55 - $1.76. Tightened to $1.55 - $1.65 on August 4, 2016 and

$1.60 - $1.65 on December 13, 2016

2017 - 2019 Potential Earnings Power

39

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% $1.32 $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. 2019 average rate base presented 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 Earnings Potential 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 Earnings Potential includes $0.02 of Competitive Transition Charge recovery in 2017 and 2018 and $0.01 in 2019. (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.

New Mexico Public Regulation Commissioners

40

District Name Term Ends Party

District 1 Karen Montoya, Vice Chair 2016(1) Democrat

District 2 Patrick Lyons 2018 Republican

District 3 Valerie Espinoza, Chairman 2016(1) Democrat

District 4 Lynda Lovejoy 2018 Democrat

District 5 Sandy Jones 2018 Democrat

(1) The terms for Karen Montoya and Valerie Espinoza expire in 2016. Valerie Espinoza was re-elected to a term ending in 2020. Cynthia Hall, Democrat, was elected to the District 1 seat with a term ending 2020 after defeating Karen Montoya in the primary.

NMPRC Districts and PNM Service Areas

Texas Public Utility Commissioners

41

Commissioners are appointed by Governor of Texas. Length of term is determined by the Governor.

Name Term Began Term Ends Party

Donna Nelson Chairman

Aug. 2008 Sept. 2021 Republican

Kenneth Anderson Sept. 2008 Aug. 2017 Republican

Brandy Marty Marquez Aug. 2013 Aug. 2019 Republican

PNM 2016 General Rate Case Final Order

42

Key Rate Case Elements (PNM Retail Share, net of ADIT)

Commission Order

Original Request

Impact to Rate Increase

ROE 9.575% 10.5% ($17) M

Rate Base:

Palo Verde Unit 2 lease purchase (64 MW) $55 M(1) $153 M(2) ($15) M

Leasehold improvements and common plant associated with the 64 MWs of previously leased Palo Verde Unit 2 capacity

Disallowed $26 M ($4) M

Balanced Draft Technology Disallowed $39 M ($5) M

Five months of CWIP $55 M $55 M No adjustment

Pre-Paid pension asset $83 M $83 M No adjustment

Other Revenue Requirements:

Depreciation Rates $14.2 M $20.6 M ($6.4) M

Palo Verde Lease and Property Tax Expense (remaining 114 MW of leased capacity) $19.5 M $19.5 M

No adjustment

NMPRC approved final order Sept. 28, 2016: • Non-fuel revenue increase of $61.2M versus $121.5M request • Retail rate base of $2,263M versus $2,458M request

(1) Reflects 13-month average rate base, equivalent to $1,306/kW (2) Reflects period-end rate base, equivalent to $2,500/kW

New Mexico Supreme Court Appeal

43

Appealed Item Conclusion Resulting Impact Palo Verde Nuclear Generating Station:

64MW Unit 2 Capacity Purchase

and

Units 1 and 2 Lease Extensions

Purchase deemed imprudent

Extension deemed imprudent

Fair market value of purchase disallowed; leasehold

improvements rate base disallowed; future responsibility for decommissioning shifted to

shareholders

San Juan Generating Station

Balanced Draft Air permit considered

insufficient justification and investment deemed imprudent

Rate base disallowed

• PNM filed Notice of Appeal with New Mexico Supreme Court on September 30, 2016 • PNM filed Statement of Issues on October 26, 2016:

Note: At September 30, 2016, the asset value of the Palo Verde and balanced draft investments pending appeal with the New Mexico Supreme Court were reduced by $6.8 million pre-tax to reflect a minimum of fifteen months disallowed recovery during appeal.

• No statutory timeline; New Mexico Supreme Court to set calendar for remaining process

PNM Residential Affordability

44

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Est.

Aver

age

2015

Res

iden

tial E

lect

ric B

ill

Es.t

2015

Med

ian

Hous

ehol

d In

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PNM's Residential Affordability Remains Below the National Average

Sources: EIA Form 826, US Census Bureau

U.S. Average: 2.4%

PNM bills reflect current approved rates (2016) and proposed rates filed under the 2018 General Rate Case. All others reflect U.S. Energy Information Administration's Forecasted Residential Rate increases through 2015.

Regulatory Update

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Filing Action Timing Docket No. NMPRC:

2018 General Rate Case Filed December 7, 2016 Rates expected to be implemented January 1, 2018

16-00276-UT

AMI Suspension lifted December 6, 2016

Hearing scheduled to begin February 27, 2017 15-00312-UT

August 2015 General Rate Case

Appealed to New Mexico Supreme Court on September 30, 2016

Statement of Issues filed by PNM and cross-appellants; pending scheduling by court

No docket

FERC: No outstanding filings

TNMP: No outstanding filings

PNM San Juan Generating Station Ownership and Participants

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Unit Total MW PNM MW

PNM Ownership Other Participants/Ownership

1 340 170 50% Tucson Electric 50% (170 MW) 2 340 170 50% Tucson Electric 50% (170 MW)

3 497 248 50% Southern California Power Authority 41.8% (208 MW) Tri-State 8.2% (41 MW)

4 507 195 38.457%

M-S-R Public Power Agency 28.8% (146 MW) City of Anaheim 10.04% (51 MW) City of Farmington 8.475% (43 MW) Los Alamos County 7.2% (36.5 MW) Utah Associated Municipal Power Systems (UAMPS) 7.028% (35.5 MW)

Total 1,684 783

Unit Owner 2018 MW % 1 PNM

Tucson Electric Power Company 170 170

20.1 20.1

4 PNM City of Farmington Los Alamos County UAMPS PNMR Development Company

327 43

36.5 35.5 65

38.6 5.1 4.3 4.2 7.7

Total 847 100.0

Exiting Participants: Southern California Power Authority Tri-State

M-S-R Public Power Agency City of Anaheim

Current Ownership

Ownership Restructuring Changes

PNM Palo Verde Nuclear Generating Station Unit 1 and 2 Leases

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MW Owned vs. Leased

Leases • Unit 1: January 15, 2015; exercised option to extend leases to 2023 • Unit 2: January 15, 2016; exercised right to purchase 3 leases and option to extend one lease to 2024

• Total PV Unit 1 - $16.5M • Total PV Unit 2 - $1.6M

Yearly Payment Amounts

Unit 1

Owned 2.3% 30 MW

Leased 7.9% 104 MW

Total 10.2% 134 MW

Unit 2

Owned 9.5% 124 MW

Leased 0.7% 10 MW

Total 10.2% 134 MW

PNM Investment in Renewable Energy

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Portfolio Standard as a % of Retail Sales

15% 2015

20% 2020

Renewable Rider Collection Methodology

Recovery of renewable investments and REC purchases permitted

through Renewable Energy Rider

New Mexico Renewable Energy Act Streamlined proceedings for approval of utilities’ renewable energy procurement

plans

Provides for recovery of program costs under approved procurement plan

Current Renewable Resources

PNM-Owned Renewable Resources

107 MW of solar capacity(1) Solar battery storage facility

Purchase Power Agreements (PPA) 204 MW PPA with NextEra Energy’s New Mexico Wind Energy Center

102 MW PPA with NextEra Energy’s Red Mesa 4 MW PPA with Dale Burgett Geothermal Plant

Customer-Owned Solar Facilities

57.3 MW of solar capacity

(1) The 40 MW of PNM-owned solar capacity placed in service in 2015 is being recovered through base rates rather than through the Renewable Energy Rider.

PNM Diversified Generation Portfolio: Capacity

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Coal 29%

Nuclear 15%

Natural Gas 40%

Renewables 16%

Capacity 2018 Forecasted Generation Mix

Coal 35%

Nuclear 15%

Natural Gas 35%

Renewables 15%

Capacity 2,787 MW As of 12/31/2015

Includes capacity from Purchased Power Agreements

PNM Diversified Generation Portfolio: Energy

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Coal 50%

Nuclear 31%

Natural Gas 12%

Renewables 7%

Energy 10,763 GWh

Based on 12 months ending 12/31/15

Coal 44%

Nuclear 29%

Natural Gas 17%

Renewables 10%

Energy 2018 Forecasted Generation Mix

Includes energy from Purchased Power Agreements

Impact of Environmental Regulation- SJGS

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San Juan Generating Station Estimated Compliance Costs (PNM Share) Comments

Clean Air Act – Regional Haze (State Alternative) – SNCR Minimal remaining costs

Installation of SNCR technology on Units 1 and 4 completed in 2016; retirement of Units 2 and 3 scheduled for Dec. 31, 2017.

Clean Air Act – National Ambient Air Quality Standards (NAAQS)

Included in SNCR

Balanced draft will assist with NAAQS compliance. On Oct. 1, 2015, EPA published the new primary and secondary ozone NAAQS of 70 ppb (from 75 ppb). States and tribes submitted area designations for ozone attainment/non-attainment areas by Oct. 1, 2016. By June 1, 2017, EPA will respond to state and tribal recommendations. The state has designated San Juan County in attainment for ozone.

Mercury Rules (MATS) None to minimal Testing shows 99% or greater removal.

Resource Conservation and Recovery Act – Coal Ash

Minimal to some exposure

EPA published the final coal combustion residuals (CCR) rule on April 20, 2015. The rule regulates CCR as a non-hazardous waste under Subtitle D of RCRA. SJGS operations are in compliance with the CCR rule which became effective Oct. 19, 2015. The rule does not apply to placement of coal ash in mines – Office of Surface Mining (OSM) is expected to issue its own proposed rule (perhaps in 2016 but likely later) and OSM will be influenced by EPA’s rule.

Clean Water Act – 316(b) Cooling Water Intake Structures

Minimal to some exposure

On Sept. 22, 2015, EPA granted approval to terminate SJGS’s National Pollutant Discharge Elimination System (“NPDES”) permit. Although SJGS has been a zero discharge facility for several years, EPA required the plant to maintain a NPDES permit. The cooling water intake structure rule still applies as the plant operates under EPA’s NPDES Multi-Sector General Stormwater Permit. PNM is currently working with EPA Region 6 to address any requirements with the next permit renewal which could be issued as soon as 2020.

Effluent Limitation Guidelines (Wastewater Discharge)

None to minimal exposure EPA published the final Steam Effluent Guidelines Rule on September 30, 2015. Because SJGS is zero discharge for wastewater and no longer holds an NPDES process water permit, minimum to no requirements are expected.

Clean Power Plan (CPP) Slight exposure

On Oct. 23, 2015, EPA published the CPP in the Federal Register under section 111(d) of the Clean Air Act. SJGS and PNM’s other affected units in NM appear to be well positioned to assist the state in meeting the rule’s requirements. Supreme Court stayed the rule pending judicial review by the D.C. Circuit Court. Oral arguments were held Sept. 27, 2016; decision expected in 2017 with Supreme Court appeal and ruling likely to follow.

Impact of Environmental Regulation- Four Corners

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Four Corners (Units 4 and 5) Estimated Compliance Costs (PNM Share) Comments

Clean Air Act – Regional Haze – SCR $94M

Final BART determination filed with EPA on Dec. 30, 2013. Impact to PNM: SCR controls for NOx on Units 4 & 5 by July 31, 2018.

Clean Air Act – National Ambient Air Quality Standards (NAAQS) Some to significant exposure

On Oct. 1, 2015, EPA published the new primary and secondary NAAQS for ozone. The standard decreased from 75 ppb to 70 ppb. ). States and tribes submitted area designations for ozone attainment/non-attainment areas by Oct. 1, 2016.By June 1, 2017, EPA(1) will respond to state and tribal recommendations. The state has designated San Juan County in attainment for ozone.

Mercury Rules (MATS) Slight exposure APS has determined that no additional equipment will be required.

Resource Conservation and Recovery Act – Coal Ash Slight exposure

EPA published the final coal combustion residuals (CCR) rule on April 20, 2015. The rule regulates CCR as a non-hazardous waste under Subtitle D of RCRA. APS will be required to make some modifications to their ash handling operations.

Clean Water Act – 316(b) Cooling Water Intake Structures Some exposure

APS does not expect the cost impacts of this rule to be material and is currently in discussions with EPA Region 9, the NPDES permit writer for Four Corners, to determine the scope of requirements which will dictate the costs to comply.

Effluent Limitation Guidelines (Wastewater Discharge) Some exposure

EPA published the final Steam Effluent Guidelines Rule on Sept. 30, 2015. Effluent limitation guidelines restrictions will become effective with the next NPDES permit renewal, which occur in 5-year intervals that arise between 2018 and 2023. Until a draft NPDES permit for Four Corners is proposed, APS is uncertain what will be required to control these discharges in compliance with the finalized effluent limitations at that facility.

Clean Power Plan (CPP) (2) Some to significant exposure

On Oct. 23, 2015, EPA published the CPP in the Federal Register under section 111(d) of the Clean Air Act. Supreme Court stayed the rule pending judicial review of the rule by the D.C. Circuit Court. Oral arguments were held Sept. 27, 2016; decision expected in 2017 with Supreme Court appeal and ruling likely to follow.

(1) NMED does not have jurisdiction over Navajo Nation. (2) EPA has proposed to determine that it is necessary or appropriate to impose a federal plan on the Navajo Nation to comply with CPP.

Investor Relations Contact Information

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Jimmie Blotter Assistant Treasurer Director, Investor Relations and Shareholder Services U.S. 1-505-241-2227 Jimmie.Blotter@pnmresources.com Lisa Goodman Investor Relations Manager U.S. 1-505-241-2160 Lisa.Goodman@pnmresources.com

Slide Number 1Slide Number 2AgendaSafe Harbor Statement and Non-GAAP Financial MeasuresSlide Number 5PNM Resources Strategic DirectionPNM Resources Strategic GoalsPNM Resources: Staying Focused in a Changing EnvironmentPNM RegulatoryTNMP RegulatoryPNM Customer FocusPNM 2017 Integrated Resource PlanSlide Number 13PNM 2018 General Rate CasePNM 2018 General Rate Case DriversPNM 2018 General Rate Case Energy Sales and LCFCPNM 2018 General Rate Case Bill ImpactPNM 2018 General Rate Case TimelineSlide Number 19Consolidated Earnings Guidance Range (Ongoing)New Mexico Economic ConditionsPNM Guidance (Ongoing)Texas Economic ConditionsTNMP Guidance (Ongoing)Corporate and Other Guidance (Ongoing)EBITDA and Quarterly Earnings Distribution Guidance (Ongoing)Earnings GrowthCapital ForecastLiquidity, Capital Structure and Credit RatingsDeliver Above Industry Average Earnings and Dividend GrowthSlide Number 31PNM Resources: Staying Focused in a Changing Environment2017 Marks 100 Years of PNM HistorySlide Number 34Slide Number 352017 AssumptionsPNM Plant Outages and Retirement Schedule2016 Consolidated Earnings Guidance Range (Ongoing)2017 - 2019 Potential Earnings PowerNew Mexico Public Regulation CommissionersTexas Public Utility CommissionersPNM 2016 General Rate Case Final Order New Mexico Supreme Court AppealPNM Residential AffordabilityRegulatory UpdatePNM San Juan Generating Station Ownership and ParticipantsPNM Palo Verde Nuclear Generating Station Unit 1 and 2 LeasesPNM Investment in Renewable EnergyPNM Diversified Generation Portfolio: CapacityPNM Diversified Generation Portfolio: EnergyImpact of Environmental Regulation- SJGSImpact of Environmental Regulation- Four CornersInvestor Relations Contact Information