PNM believes that the energy needed to support strong economic growth, customer affordability and reliability needs to come from diverse resources including coal, natural gas, nuclear, wind, solar and other renewables. The company has made significant investments in reducing the environmental impact of existing facilities while increasing investments in renewable energy and energy efficiency. Below are just a few of the environmental stewardship efforts made by PNM.

San Juan Generating Station (SJGS)• Amajorenvironmentalupgradeprojectwascompletedin2009.Overall,

theserecentupgradeshavereducednitrogenoxide(NOx)emissionsby44%,sulfurdioxide(SO2)emissionsby71%,andparticulatematteremissionsby72%basedonacomparisonofthe2005and2010actualemissions.

• ThisenvironmentalupgradehasresultedinSanJuanbeinganindustryleaderinmercuryemissionscontrol,achievinga99%removalratebasedonEPA-requiredstacktestingandusingnewactivatedcarboninjectiontechnology.

• PNMhasrecentlyagreedtoavoluntarylowerSO2limitcalculatedona30dayrollingaverage.ThiswilldecreasethepermittedemissionofSO2(intonsperyear)by23%.

• Inthelate1990s,alimestoneforcedoxidationSO2removalsystemwasinstalled,andtheWellman-Lordsystemwasdecommissioned.Thelimestoneremoved25%moreSO2thantheWellman-Lordsystemhad.(Basedonactual1996emissionsandactual2010emissions)

• TheWellman-Lordsystemforsulfurdioxideremovalwasinstalledinthe1970’s.Itremovedapproximately55%oftheSO2inthegasstream(basedon2006emissions).

• AllfourunitsatSanJuanwerebuiltwithelectrostaticprecipitatorsforparticulatecontrol.Theprecipitatorsremovedapproximately99.5%oftheashfromthegasstream.

• Units1,3,and4werebuiltwithlowNOxburners.ThisdecreasedpotentialNOxemissionsbyapproximately35%.

PNM Environmental Stewardship

San Juan has completed numerous installations and upgrades related to pollution control throughout the lifetime of the plant that has resulted in significant emissions reductions.

November9,2011

Other SJGS environmental efforts:• In2010,SanJuanrecycled2054tonsofmaterialand

disposedof1604tonsinthelandfillforanoveralldiversionrateof56%.

• Recycledmaterialsinclude720tonsofflyash,950tonsofmetal,and384tonsofothermaterialsincludingmachinery,belting,woodpallets,usedoil,woodpallets,furniture,cardboard,paper,electronicwaste,belting,andofficesupplies.

• SanJuanhasoneofthemostactivereduce,re-use,recycleprogramsinthecompanyandhasdemonstratedcontinualimprovementsince2003whentheirTeamGreen(agroupofemployeescommittedtosustainabilityimprovements)wasformed.

• SanJuan’sprogramhasgrownsignificantlysinceitwasfoundedin2003.In2004,SanJuanrecycled2typesofmaterialincluding253tonsofmetalandonetonofpaper.

• Between1979and1983,PNMinstalledacomprehensivewatermanagementsystemandbecameazerodischargefacility.Thewatermanagementsystemreusesriverwater8to14timesbeforeitisplacedinevaporationpondsonsite.

Other Environmental Stewardship Efforts:

paidbothfortheexcessenergytheyproduceaswellasfortheenvironmentalattributesofthatenergy,isexpectedtoaddanother25megawattsofsolartothePNMsystem.Currentlymorethan1,800PVcustomerinterconnectionsprovide12megawattsofcapacityonoursystem.

• PNMwasalsotheleadinthenation’sfirstsolarstoragefacilityintegratedintothepowergrid.PartiallyfundedbytheAmericanRecoveryandReinvestmentActof2009,thePNMProsperityEnergyStorageProjectisthefirstARRA-fundeddemonstrationtogoonline.Theprojectfeaturesoneofthelargestcombinationsofbatterystorageandphotovoltaicenergyinthenationandinvolvesextensiveresearchanddevelopmentofsmartgridconcepts.Theprojectcanproduce500kilowattsofpoweranduseshigh-techbatteriestocreatefirmanddispatchableenergyderivedfromarenewableenergysource.

• InAprilofthisyear,PNMissuedanallsourceRequestforProposalforrenewableenergy,receivingmorethan300proposalsrepresentingdiversetypesofrenewablesincludingsolar,geothermal,wind,biomassandhydropower.BasedonPNM’s20-yearplanningprocess,34percentofPNM’sfutureenergyresourcesneededtoservecustomersby2030willcomefromrenewables.

Energy Efficiency• Since2007,PNMcustomershavetakenadvantageof

avarietyofPNMprogramstohelpthemsaveenergy.From2007to2011,customershavesaved135millionkWhannually–equivalenttotheenergyconsumedannuallyby18,600homes.Thesestepsreducecarbondioxideemissionsbyanestimated192millionpoundsperyear–theequivalentoftaking17,500offtheroadforayear.

Alternative Fleet Vehicles• In2005,PNMbeganpurchasingbiodieselfuelfor

fleetvehicles.PNMusesa20percentbiodieselblend(B20),which,accordingtotheU.S.DepartmentofEnergy,reducecarbondioxideemissionsby15percent.

Renewables:

• In2003,PNMcommittedtoaddingrenewableenergytoitsportfoliowiththeadditionofa204-megawattwindfacility,theNewMexicoWindEnergyCenter.PNM’sSkyBlueprogram,inplacesince2003,hasallowedPNMcustomerstodemonstratetheirsupportofrenewableenergy.Morethan15,000customersvoluntarilysubscribetotheprogram,makingPNM’sprograminthetop15forenergysalesinthenationandoneofthemostsuccessfulprogramsinthecountrybyDOEstandards.

• SolarisalsoagrowingpartofPNM’sportfolio.PNMiscompletingafinallargescalephotovoltaic(PV)solarfacility,oneoffivesuchfacilitiestotaling22megawatts.PNM’scustomersolarprogram,inwhichcustomersare