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PNM '06 Earnings Soar; Twin Oaks Plant, Wholesale Market Help

Even with its share of the woes from the spotty operating record of Palo Verde Nuclear Plant last year, Albuquerque, NM-based PNM Resources Wednesday reported a 15.4% increase in ongoing earnings for 2006 -- $122 million, or $1.80/diluted share, compared with $67.7 million, or $1.56/share, in 2005. The Twin Oaks power plant in Texas accounted for 19% of the ongoing earnings per share, according to PNM, while New Mexico utility results were modest.

Ongoing earnings excluded acquisition-related costs and other nonrecurring charges. First Choice Power, a competitive power provider in Texas, and PNM's baseload coal-fired power plants also contributed to the strong results, PNM said.

Marking the fourth consecutive year of surpassing annual earnings growth targets of 5% to 6%, PNM CEO Jeff Sterba said the 2006 results definitely reflect the addition of Twin Oaks (acquired from Sempra Energy), strong growth in the Texas competitive power sales, and increased wholesale marketing activity.

Nevertheless, Sterba acknowledged what he called the "underearning" by PNM gas and electric utility operations. Gas operations earned a 2.8% return on equity (ROE); and the electric business earned an estimated 6.4% ROE. Electric revenues were up 3.2% to $592 million, and gas revenues were down slightly to $508.8 million, the company said.

Palo Verde outages resulted in higher power purchase costs and reduced margin of $2.2 million for the year.

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