10-K
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X)COMBINED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
TNP ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
4100 International Plaza
Texas P. O. Box 2943, Fort Worth, Texas 76113 Commission File
(State of (Address and zip code of Number: 1-8847
incorporation) principal executive offices)
817-731-0099
(Telephone number, including area code)
75-1907501
I.R.S. employer
Identification no.
Securities registered pursuant to Section 12(b) of the Act:
Shares Outstanding Name of each exchange
Title of each class on January 31, 1995 on which registered
Common stock, no par value 10,867,388 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of common stock held by nonaffiliates of TNP
Enterprises, Inc. on January 31, 1995, was $167,682,054, computed by
reference to the common stock's closing price on the New York Stock
Exchange on the same date of $15.50 per share.
Documents Incorporated By Reference
Part Where
Document Incorporated
Proxy Statement
(distributed to holders of
common stock on or about March 28, 1995) III
TEXAS-NEW MEXICO POWER COMPANY
(Exact name of registrant as specified in its charter)
4100 International Plaza,
Texas P. O. Box 2943, Fort Worth, TX 76113 Commission File
(State of (Address and zip code of
incorporation) principal executive offices) Number: 2-97230
(Telephone number, including area code)
817-731-0099
75-0204070
I.R.S. employer
identification no.
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
First mortgage bonds: on which registered
Series M, 8.7% due 2006; None
Series R, 10.0% due 2017;
Series S, 9.625% due 2019;
Series T, 11.25% due 1997
and Series U, 9.25% due 2000
Secured debentures: 12.5% due 1999;
Series A, 10.75% due 2003 None
Securities registered pursuant to
Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No__
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
As of January 31, 1995, TNP Enterprises, Inc. held all 10,705
outstanding common shares of Texas-New Mexico Power Company.
TNP ENTERPRISES INC. AND SUBSIDIARIES
TEXAS NEW-MEXICO POWER COMPANY AND SUBSIDIARIES
Combined Form 10-K for the fiscal year ended December 31, 1994
This combined Form 10-K is separately filed by TNP Enterprises, Inc.
and Texas-New Mexico Power Company. Information contained herein
relating to Texas-New Mexico Power Company is filed by TNP
Enterprises, Inc. and separately by Texas-New Mexico Power Company on
its own behalf. Texas-New Mexico Power Company makes no representation
as to information relating to TNP Enterprises, Inc., except as it may
relate to Texas-New Mexico Power Company, or to any other affiliate or
subsidiary of TNP Enterprises, Inc.
TABLE OF CONTENTS
Glossary of Terms 3
Part I
Item 1.BUSINESS 4
Introduction 4
Financial Information Regarding Business 5
Narrative Description of Business 6
Executive Officers of the Registrants 12
Item 2.PROPERTIES 14
Item 3.LEGAL PROCEEDINGS 15
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
Part II
Item 5.MARKET FOR REGISTRANTS' COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 15
Item 6.SELECTED FINANCIAL DATA 16
Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 18
Overview 18
Key Events During 1994 18
Results of Operations 20
Liquidity and Capital Resources 26
Other Matters 28
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 29
TNP Enterprises, Inc. and subsidiaries 31
Texas-New Mexico Power Company and subsidiaries 39
Notes to Consolidated Financial Statements 47
Selected Quarterly Consolidated Financial Data 60
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 61
Part III
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 61
Item 11.EXECUTIVE COMPENSATION 61
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 61
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 61
Part IV
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K 61
TNP ENTERPRISES INC. AND SUBSIDIARIES
TEXAS NEW-MEXICO POWER COMPANY AND SUBSIDIARIES
Combined Form 10-K for the fiscal year ended December 31, 1994
Glossary of Terms
As used in this combined report, the following abbreviations,
acronyms, or defined terms have the meanings set forth below:
Abbreviation, Acronym, or Defined Term Meaning
Bayport Bayport Cogeneration, Inc., a
wholly owned subsidiary of TNPE
Bond Indenture FMBs document containing covenants
to which TNMP must adhere that are
designed to protect holders of FMBs
Clear Lake Clear Lake Cogeneration Limited
Partnership
Credit Agreements Two separate lending agreements
between TNMP and several lenders
for financing separately TNMP's
purchases of TNP One Units 1 and 2
EPA Environmental Protection Agency
EWG Exempt Wholesale Generators
EPS Earnings (Loss) Per Share
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
FMBs First Mortgage Bonds issued by TNMP
HL&P Houston Lighting & Power Company
IRS Internal Revenue Service
ITC Investment Tax Credits
KWH Kilowatt-Hours
MW Megawatts
NMPUC New Mexico Public Utility Commission
PUCT Public Utility Commission of Texas
SEC Securities and Exchange Commission
SFAS Statement of Financial Accounting
Standards
TEP Tucson Electric Power Company
TGC Texas Generating Company, a wholly
owned subsidiary of TNMP
TGC II Texas Generating Company II, a
wholly owned subsidiary of TNMP
TNP One A two-unit, lignite-fueled, circulating
fluidized-bed generating plant located in
Robertson County, Texas
TNMP Texas-New Mexico Power Company, a
wholly owned subsidiary of TNPE
TNPE TNP Enterprises, Inc.
TU Texas Utilities Electric Company
Unit 1 The first completed unit of TNP One
Unit 2 The second completed unit of TNP
One
Units 1 and 2 Unit 1 and Unit 2 of TNP One
PART I
Item 1. BUSINESS.
Introduction
TNPE and its Subsidiaries
TNPE, a Texas corporation organized in February 1983, is based in
Fort Worth, Texas. TNPE has three direct wholly owned
subsidiaries, TNMP, Bayport, and TNP Operating Company, and two
indirect wholly owned subsidiaries, TGC and TGC II, which are
direct wholly owned subsidiaries of TNMP, also a Texas
corporation. The following chart represents the corporate
structure and includes the total asset book values at the end of
1994 of each company (amounts in millions):
TNMP is TNPE's principal operating subsidiary. TNMP's operations
are described in greater detail in "TNMP and its Subsidiaries"
below. Bayport and TNP Operating Company are general purpose
Texas corporations, neither of which engaged in any material
activities during 1994.
The financial information presented within this document is on a
consolidated basis for TNMP and for TNPE, and all intercompany
transactions and balances have been eliminated.
Although TNPE and TNMP are "holding companies" as defined in the
Public Utility Holding Company Act of 1935 ("PUHCA"), both
companies are exempt from regulation as a "registered holding
company" as also defined in PUHCA. TNPE and TNMP each files Form
U-3A-2 with the SEC annually in support of its PUHCA exemption.
TNPE is not subject to FERC jurisdiction or to PUCT regulation.
TNPE generally is also not subject to NMPUC regulation; NMPUC
statutes do not regulate holding companies except under certain
circumstances of consolidation, merger or acquisition.
TNMP and its Subsidiaries
TNMP is a public utility engaged in generating, purchasing,
transmitting, distributing, and selling electricity to customers
in Texas and New Mexico. TNMP is qualified to transact business
as a foreign corporation in New Mexico, as well as in Arizona,
where activities are limited to owning as tenant-in-common with
two other electric utilities an electric transmission line.
TNMP is subject to both PUCT and NMPUC regulation. In some of its
activities, including its issuance of securities, TNMP is subject
to FERC jurisdiction. TNMP maintains its accounting records in
accordance with the FERC's Uniform System of Accounts.
TNMP's two wholly owned subsidiaries, TGC and TGC II, were
organized to facilitate TNMP's acquisitions of assets, and
assumptions of related debt obligations, pertaining to TNP One,
Units 1 and 2 in 1990 and 1991, respectively. Units 1 and 2 were
acquired at originally capitalized costs of $357 million and $283
million, respectively. Subsequently, TNMP purchased undivided
interests in each unit from TGC and TGC II to support the
issuance of FMBs. In 1994, as part of a Texas rate case
settlement, TNMP wrote off $35 million of the TNP One costs,
which the PUCT had disallowed in 1992. Items 7 and 8 - note 8 of
Notes to Consolidated Financial Statements provide additional
information on the settlement.
Construction costs applicable to Units 1 and 2 were funded
primarily through separate Credit Agreements for the two units,
which TNMP guaranteed. "Sources of Energy" discusses additional
information pertaining to TNP One. Also, Item 8 - note 2 of Notes
to Consolidated Financial statements provides additional
information relating to current debt obligations pertaining to
Units 1 and 2.
Item 7 - "Key Events During 1994" provides additional information
regarding 1994 activities.
Financial Information Regarding Business
The following table provides financial data pertaining to TNMP's
operations by customer classes.
1994 1993 1992 1991 1990
Operating revenues
(thousands of dollars):
Residential $194,933 193,484 175,885 176,651 153,844
Commercial 141,886 138,680 128,550 119,745 102,320
Industrial 122,714 124,474 121,027 128,356 125,640
Other 18,456 17,604 18,365 16,591 15,485
Total $477,989 474,242 443,827 441,343 397,289
Sales
(thousand KWH):
Residential 2,085,621 2,047,360 1,947,593 2,017,349 1,998,727
Commercial 1,618,840 1,567,083 1,499,927 1,485,211 1,441,275
Industrial 2,652,844 2,567,552 2,508,837 2,798,369 2,848,020
Other 114,190 104,882 109,954 115,406 133,549
Total 6,471,495 6,286,877 6,066,311 6,416,335 6,421,571
Number of customers
(at year-end):
Residential 185,364 181,298 178,154 174,859 172,560
Commercial 30,624 30,235 30,359 30,300 30,161
Industrial 142 141 155 160 173
Other 237 237 229 230 227
Total 216,367 211,911 208,897 205,549 203,121
Revenue statistics:
Average annual use per
residential customer
(KWH) 11,354 11,362 11,003 11,584 11,613
Average annual revenue per
residential customer
(dollars) 1,061 1,067 987 1,010 892
Average revenue per KWH
sold - residential
(cents) 9.35 9.45 9.03 8.76 7.70
Average revenue per KWH
sold - total sales
(cents) 7.39 7.54 7.32 6.88 6.19
Utility statistics:
Net generation and purchases
(thousand KWH):
Generated 2,336,830 2,363,493 2,247,664 1,337,366 395,852
Purchased 4,472,306 4,385,697 4,261,129 5,452,132 6,375,418
Total (a) 6,809,136 6,749,190 6,508,793 6,789,498 6,771,270
Average cost per KWH generated
and purchased
(cents) (b) 4.03 4.13 3.86 3.94 3.92
Net utility plant
(thousands of
dollars) $967,273 1,005,995 1,015,709 1,016,602 728,989
Estimated population
served at retail 630,000 616,000 605,000 595,000 587,000
Total employees
(year-end) 894 1,051 1,086 1,104 1,121
(a) The difference between total sources and total sales
represents TNMP internal use and line losses.
(b) Cost per KWH is derived from costs for purchased power and
for fuel, operation and maintenance of TNP One.
Item 7 provides additional information on changes in operating
revenues from 1992 through 1994.
Narrative Description of Business
TNMP purchases and generates electricity for sale to customers in
Texas and New Mexico. Electricity is purchased primarily from
other utilities and cogenerators (as discussed under "Sources of
Energy" in this section). TNMP generates electricity at TNP One.
TNMP's sales are primarily to retail customers; TNMP has limited
wholesale business.
TNMP owns and operates electric transmission and distribution
facilities in 90 Texas and New Mexico municipalities and adjacent
rural areas. During 1994, TNMP reorganized these municipalities
and areas into three operating regions. Revenues contributed by
each operating region and its percentage of total operating
revenues in the years ended December 31, 1994, 1993 and 1992,
respectively, are set forth in the following table.
Operating Revenues
1994 1993 1992
Region (000's) % (000's) % (000's) %
South-Western $269,194 56.3% $262,979 55.4 $249,653 56.2%
North-Central 132,595 27.8 131,725 27.8 119,047 26.9
New Mexico 76,200 15.9 79,538 16.8 75,127 16.9
Total $477,989 100.0% $474,242 100.0% $443,827 100.0%
During 1992 through 1994, no single customer accounted for
greater than 10% of operating revenues, although two affiliated
industrial customers in the New Mexico Region combined to
contribute between 8% and 9% of total operating revenues in each
of the three years.
Certain information concerning the approximate geographical
location and economy of each TNMP operating region is set forth
below.
1. The South-Western Region includes two noncontiguous areas:
- One area is situated along the Texas Gulf Coast and adjacent to
the Johnson Space Center and lies between the cities of Houston and
Galveston. The oil and petrochemical industries, agricultural
industry
and general commercial activity in the Houston area support the
economy of this area.
- The other area is located in far west Texas between the cities of
Midland and El Paso. The economy in this area is based primarily on
oil and gas production, agriculture and food processing.
2. The North-Central Region includes two noncontiguous areas:
- One area extends from the city of Lewisville, which is north of
the Dallas-Fort Worth International Airport, to municipalities along
the Red River and includes a portion of the Texas Panhandle. TNMP
provides electric service to a variety of commercial, agricultural
and petroleum industry customers in this area.
- The other area includes municipalities and communities south and
west of Fort Worth. This area's economy depends largely on
agriculture and, to a lesser extent, tourism and oil production.
3. The New Mexico Region includes areas in southwestern and south
central New Mexico. This region's economy is primarily dependent upon
mining and agriculture. Copper mines are the major industrial
customers in this region.
Franchises
TNMP holds 88 franchises with 25-year terms and two franchises
with 20-year terms from the 90 municipalities in which it
provides electric service. These franchises will expire on
various dates ranging from 1996 to 2039. Three significant Texas
franchises are scheduled to expire in 1996, 1998 and 1999.
Pursuant to applicable Texas law, an electric utility is not
required to execute a franchise agreement with a Texas
municipality to be entitled to provide or continue to provide
electrical service to the municipality. A franchise agreement
merely documents the mutually agreeable terms under which the
service will be provided. TNMP intends to negotiate and execute
new or amended franchise agreements to be effective before
existing franchises expire.
TNMP also holds PUCT certificates of public convenience and
necessity covering all territories that TNMP serves in Texas.
These certificates include terms that are customary in the public
utility industry. Applicable provisions of New Mexico's Public
Utility Act generally permit TNMP to provide electric power in
that state without certificates of public convenience and
necessity. Some of the Texas service areas are certified to more
than one utility, as discussed further under "Competitive
Conditions."
Seasonality of Business
TNMP experiences increased sales and operating revenues during
the summer months as a result of increased air-conditioner usage
in hot weather. In 1994, approximately 40% of annual revenues
were recorded in June, July, August and September.
Sources of Energy
The following table sets forth certain information concerning
TNMP's sources of electric energy in 1994.
Year of Percent
Contract ofEnergy Fuel
Sources Area Served Expiration Provided Source
TEXAS(1)
Generation
TNP One Texas Gulf Coast, - 44% Texas Lignite (Western
Central & Coal, Petroleum Coke
Northern Texas & Natural Gas Capabilities)
Purchased Power
Clear Lake
Cogeneration Texas Gulf Coast 2004 28 Natural Gas (Oil Standby)
Limited Partnership
Texas Utilities
Electric Central, Northern 2006(2) 22 Natural Gas, Lignite &
Company (Texas & West Texas 2010 Nuclear (Oil Standby)
Utilities
Company subsidiary)
Southwestern Public Texas Panhandle 2005 3 Coal & Natural Gas
Service Company (Oil Standby)
West Texas
Utilities West Texas 2005 2 Natural Gas & Coal
Company West (Central and South (Oil Standby)
Corporation
subsidiary)
Houston Lighting & Texas Gulf Coast 2001 1 Natural Gas, Coal, Lignite,
Power Company Nuclear & Cogeneration
(Houston Industries (Oil Standby)
Incorporated subsidiary)
Total 100%
NEW MEXICO
Purchased Power
Southwestern Public South Central 2001 30% Coal & Natural Gas
Service Company New Mexico (Oil Standby)
El Paso
Electric Company Southwest 2002 21 Coal, Natural Gas,
New Mexico Oil & Nuclear
Public Service
Company South Central & 2006 20 Coal, Natural Gas
of New Mexico Southwest & Nuclear (Oil Standby)
New Mexico
Other South Central & Various 29 Coal, Natural Gas, Oil &
Southwest Cogeneration
New Mexico
Total 100%
(1) The table does not include information concerning electric
energy from natural gas sources that TNMP receives from Union
Carbide for the Texas Gulf Coast pursuant to an automatically
renewing contract. In 1994, such energy was less than 1%.
(2) Excluding one point of delivery (a major supply source under
the contract expiring 2010) the contract expires in 2006.
However, in January 1995, TNMP notified TU of its intent to cease
purchasing full requirements power and energy at TNMP's points of
delivery currently served by TU, effective by January 1, 1999.
Both TNMP and its suppliers consider TNMP's future load growth in
planning their construction expenditures. Currently, TNMP's
existing supply arrangements and available capacities on the
wholesale market are adequate to satisfy TNMP's foreseeable power
requirements.
The availability and cost of energy to TNMP is subject to
supplier cost increases in constructing new generating
facilities, changing regulations and laws, or changing fuel costs
or fuel supply shortages. TNMP does not expect that these issues
will prevent its suppliers from providing power needed to satisfy
TNMP's requirements.
TNMP's suppliers regulated by FERC (El Paso Electric Company,
Southwestern Public Service Company, West Texas Utilities
Company, and Public Service Company of New Mexico) may not
terminate service to TNMP without FERC authorization. TNMP plans
to renew and amend its purchased power supply contracts as
necessary to meet the changing competitive environment. TNMP's
efforts to contract for lower purchased power costs resulted in a
decrease of approximately $7.1 million in annualized firm
purchased power costs implemented in 1994. This decrease was
partially offset by a $400,000 base rate increase and is now
benefiting TNMP's New Mexico customers.
TNMP is pursuing other opportunities to reduce purchased power
costs. TNMP arranged for TEP to provide it with wholesale power
to replace more expensive current sources in New Mexico by
January 1, 1996. TNMP expects cost savings of $1.8 million during
1996 from this arrangement. TNMP also intends to terminate full
requirements purchases from TU by January 1, 1999. TNMP intends
to solicit competitive bids to replace power currently provided
by TU. Related discussion is provided under "Competitive
Conditions" in this section and under Item 7.
Prior to 1990, TNMP purchased virtually all of its electric
energy from other utilities. In 1990 and 1991, TNMP began
replacing portions of its Texas purchased power requirements as
Units 1 and 2, respectively, of TNP One became operational. The
two units, which have a combined name-plate rating of 300 MW,
operated for their first full year together in 1992. TNP One
provided approximately 30% of TNMP's electric capacity
requirements and 44% of its energy requirements in Texas during
1994. The TU and HL&P contracts permitted reductions in future
purchased power commitments to these suppliers to be supplanted
by TNP One generated power.
Power generated at TNP One is transmitted over TNMP's own
transmission line to other utilities' transmission systems for
delivery to TNMP's Texas service area systems. To aid in
maintaining a reliable supply of power for its customers and to
coordinate interconnected operations, TNMP is a member of the
Electric Reliability Council of Texas (ERCOT), the Inland Power
Pool, and the New Mexico Power Pool.
Recovering Purchased Power and Fuel Costs
The PUCT and the NMPUC have both authorized power cost recovery
adjustment clauses in TNMP's rate schedules. The PUCT has also
approved a fixed fuel recovery factor in Texas. The power cost
recovery adjustment clauses and the fixed fuel recovery factor
benefit TNMP substantially in its efforts to recover these
significant elements of operating expenses in a timely and
sufficient manner. TNMP expects to refund or collect any over- or
under-collected purchased power costs within two months or less
of billing by its suppliers. Items 7 and 8 - notes 1 and 9 of
Notes to Consolidated Financial Statements provide additional
information regarding this topic and the successful renegotiation
of the fuel supply agreement.
Working Capital
TNMP's most significant demands on working capital are (1)
monthly payments to TNMP's suppliers for purchased power, (2)
monthly and semi-annual interest payments on long-term debt, (3)
semi-monthly payments to purchase lignite fuel for TNP One and
(4) biweekly payroll costs. Purchased power and fuel costs are
eventually recovered from TNMP customers through power cost
recovery adjustment clauses and a fixed fuel recovery factor as
described in the preceding paragraph. TNMP is not required to
maintain a large fuel inventory (lignite) due to TNP One's
proximity to the lignite mine site. Items 7 and 8 - note 9 of
Notes to Consolidated Financial Statements provide additional
information regarding the fuel supply agreement.
TNMP sells customer receivables to an unaffiliated company on a
nonrecourse basis. This practice permits TNMP to reduce the cash
flow lag between customer billings and collections.
Employees
TNMP employed 894 persons at December 31, 1994, as compared to
1,051 persons at December 31, 1993. The decrease is primarily a
result of staff reductions made in the fourth quarter of 1994 in
connection with its reorganization as described in Item 8 - note
5 of Notes to Consolidated Financial Statements.
Competitive Conditions
As a regulated public utility, TNMP currently operates with
little direct competition throughout most of its service
territory.
The PUCT has issued all electric utilities in Texas certificates
of public convenience and necessity authorizing them to provide
electric service. Rural electric cooperatives, investor-owned
electric utilities, and municipally-owned electric utilities are
all treated as public utilities under applicable law. In 72 of
the 81 Texas municipalities that TNMP serves, TNMP is the only
electric utility issued a certificate to serve customers within
the municipal limits. TNMP is also the only electric utility
authorized to serve customers in some of the rural areas where it
has electric facilities. In other rural areas that TNMP serves,
other electric utilities have also been authorized to serve
customers. Where other electric utilities have been certificated
to serve customers within TNMP's service area, TNMP may be
subject to competition.
In New Mexico, TNMP holds exclusive franchise agreements with
those municipalities and adjacent areas it serves, as is required
by state law. A utility subject to NMPUC jurisdiction may not
extend into territory either served by another utility or not
contiguous to its service territory without a certificate of
public convenience and necessity from the NMPUC. Investor-owned
electric utilities and rural electric cooperatives are subject to
NMPUC jurisdiction.
From time to time, industrial customers express interest in
cogeneration to reduce or eliminate their reliance upon TNMP for
electric service, or to lower fuel costs and improve process
steam generation operating efficiency. During 1994, a significant
industrial customer in TNMP's South-Western Region contracted
with a developer to construct a 300-MW cogeneration plant. This
plant is expected to begin operations in 1998. TNMP's 1994
operating revenues from this customer were approximately $29
million ($9 million in base revenues). TNMP's goal is to retain
this customer and to lower overall system operating costs through
negotiation with the developer and the customer. Although TNMP
cannot predict the ultimate outcome of the process or its impact
on TNMP, TNMP and the customer are discussing an arrangement
through which TNMP may retain electric service to this customer
at current levels. TNMP is actively pursuing negotiation of
agreements with the developer and the customer to define the
degree to which electric service to this customer is retained and
overall system operating costs for TNMP and the customer may be
lowered.
The Energy Policy Act of 1992 significantly changed U.S. energy
policy affecting the electric utility industry. Among other
things, EWG's were created and FERC was authorized to order, on a
case-by-case basis, wholesale transmission access. An EWG is a
wholesale power producer that is allowed to operate free from
most federal and state regulation. These changes are not only
resulting in competition in generating and supplying electricity,
but are also contributing to an emerging "buyers" market for
wholesale power. TNMP believes that these developments should
ultimately benefit TNMP and its customers. Since TNMP purchases a
significant portion of its electric requirements from various
wholesale suppliers, TNMP anticipates that it will be able to
procure wholesale power at lower prices. Also, TNMP has no
significant wholesale power sales but expects to position itself
to take advantage of increased opportunities to serve additional
wholesale customers.
The evolving concept of "competitive retail wheeling" (in
general, transporting third party power to an end-user) is being
debated throughout the electric utility industry. Underlying this
concept is the potential that certain electric power consumers,
such as industrial customers, could consider sources of electric
power other than a utility, which traditionally provided the
service. Competitive retail wheeling is not presently permitted
in either Texas or New Mexico. However, the NMPUC currently is
conducting a study to determine the feasibility of so-called
"managed competition," which significantly resembles competitive
retail wheeling. TNMP anticipates that retail wheeling would
subject it to a more competitive environment with regard to its
customers. TNMP's strategy for dealing with competition resulting
from retail wheeling will be to reduce purchased power costs and
the price of its product while emphasizing community-based
service.
Environmental Requirements
Management does not expect applicable laws and regulations
relating to protection of the environment to materially impact
TNMP's future capital outlays or operations directly. As TNMP's
electric suppliers may be affected by environmental requirements
and resulting costs, TNMP and its customers may be affected
indirectly through increased purchased power costs.
Federal and state environmental agencies regulate TNMP's
facilities in Texas and New Mexico. These agencies have
jurisdiction over air emissions, water quality, wastewater
discharges, solid wastes and hazardous substances. TNMP has
adopted and follows procedures designed to facilitate compliance
with all applicable environmental laws, rules, and regulations.
Various utility-related activities require permits, licenses,
registrations, and approvals from these agencies. TNMP believes
that it has received all necessary authorizations to construct
and continue operating its generation, transmission, and
distribution systems.
Because of TNP One's circulating fluidized bed technology, TNMP
does not anticipate making any significant capital expenditures
to control air emissions. Pursuant to applicable federal law,
TNMP is allotted a number of allowances that permit sulfur
dioxide emissions up to a specified level for TNP One. Unit 1 is
allotted 2,106 allowances and Unit 2 is allotted 3,472 allowances
annually for emissions of sulfur dioxide. One allowance is equal
to one ton of sulfur dioxide. TNMP believes that it may be
required to increase limestone injections into the combustion
chamber or purchase additional allowances in the market for the
year 2000 and thereafter to comply with the Clean Air Act
Amendments of 1990.
TNP One construction costs included approximately $89 million for
environmental protection facilities. During 1994, 1993 and 1992,
TNP One incurred expenses related to air, water and solid waste
pollution abatement (including ash removal) of approximately $5.9
million, $4.3 million and $4.0 million, respectively. TNMP also
made capital expenditures of approximately $0.3 million in 1994
for air emissions monitoring equipment for TNP One and expects to
spend $0.3 million in 1995 for similar additional equipment.
In December 1988, the EPA issued regulations requiring
underground storage to conform with certain standards by December
1998. The regulations require these underground storage tanks to
be equipped with corrosion protection, leak detection and spill
prevention devices. TNMP estimates that its costs to comply with
these regulations over the next four years will total
approximately $100,000.
TNMP works closely with environmental agencies in both Texas and
New Mexico to comply with applicable state and federal
regulations. During the past three years, TNMP incurred cleanup
and testing costs on both leaking and nonleaking storage tanks of
$130,000, $98,000, and $89,000, respectively. In addition, TNMP
expects partial reimbursement from the Texas and New Mexico state
environmental agencies for certain cleanup costs.
Executive Officers of the Registrants
Executive Officers of TNPE
Positions & Offices Held
with TNPE Period of
Name Age Within the Past 5 Years1 Such Office
Kevern R. Joyce 48 President & Chief Executive
Officer and Director 1994 -
D. R. Spurlock2 62 Director 1993 -
Interim President & Chief
Executive Officer 1993 - 1994
D. R. Barnard3 62 Vice President & Chief
Financial Officer 1989 - 1994
Manjit S. Cheema 40 Vice President & Chief 1994 -
Financial Officer
Ralph Johnson 51 Vice President 1995 -
M. D. Blanchard 44 Corporate Secretary & 1987 -
General Counsel
Monte W. Smith 41 Treasurer 1989 -
Executive Officers of TNMP
Positions & Offices Held
with TNMP Period of
Name Age Within the Past 5 Years1 Such Office
Kevern R. Joyce 48 President & Chief Executive
Officer and Director 1994 -
D. R. Spurlock2 62 Director 1993 -
Interim President & Chief
Executive Officer 1993 - 1994
Sector Vice President
- Operations 1990 - 1992
D. R. Barnard3 62 Senior Vice President &
Chief Financial Officer 1994 - 1994
Sector Vice President &
Chief Financial Officer 1990 - 1994
J. V. Chambers, Jr. 45 Senior Vice President & Chief
Customer Officer 1994 -
Sector Vice President -
Revenue Production 1990 - 1994
Manjit S. Cheema 40 Vice President & Chief
Financial Officer and
Treasurer 1994 -
Dennis R. Cash 41 Vice President - Human
Resources & Communications 1994 -
General Manager - Human
Resources 1993 - 1994
Manager - Human Resources 1990 - 1993
M. C. Davie3 59 Vice President - Corporate
Affairs 1983 - 1994
A. B. Davis 57 Vice President & Regional
Customer Officer 1994 -
Vice President - Chief Engineer 1992 - 1994
Chief Engineer 1991 - 1992
Assistant Chief Engineer 1991
Manager - Engineering 1986 - 1991
Positions & Offices Held
with TNMP Period of
Name Age Within the Past 5 Years1 Such Office
L.W. Dillon 40 Vice President & Regional
Customer Officer 1994 -
Vice President - Operations 1993 - 1994
Division Manager 1990 - 1993
W.D. Hobbs 51 Vice President & Regional
Customer Officer 1994 -
TNP One Plant Manager 1992 - 1994
Ralph Johnson 51 Vice President - Power
Resources 1995 -
M. D. Blanchard 44 Corporate Secretary &
General Counsel 1987 -
Monte W. Smith 41 Controller 1994 -
Treasurer 1989 - 1994
1 All officers are elected annually by the respective
Boards of Directors for a one-year term until the
next annual meeting of the Boards of Directors or
until their successors shall be elected and
qualified. The term of an officer elected at any
other time by the Boards also will run until the next
succeeding annual meeting of the Boards of Directors
or until a successor shall be elected and qualified.
2 Resigned as Interim President & Chief Executive
Officer effective April 12, 1994.
3 Retired as of December 31, 1994.
D. R. Spurlock resigned, and D. R. Barnard and M. C. Davie
retired on or before December 31, 1994, and each of the other
above-named officers is a full-time employee of TNMP and has been
for more than five years prior to the date of the filing of this
Form 10-K with the exception of Messrs. Joyce, Cheema, Hobbs and
Johnson.
Mr. Joyce joined TNMP and TNPE as President and Chief Executive
Officer and a Director in April 1994. Before joining TNMP and
TNPE, he was Senior Vice President and Chief Operating Officer of
TEP from January 1992 to March 1994. Prior to that, he was Vice
President-Rates and Conservation from July 1990 to January 1992.
Before joining TEP, Mr. Joyce was Assistant Controller of Public
Service Company of New Hampshire, an electric utility.
Mr. Cheema joined TNMP in June 1994 as Treasurer. Prior to
joining TNMP, Mr. Cheema was Assistant Treasurer and Manager of
Financial Planning and Budgeting for TEP since March 1990. From
1989 to March 1990, Mr. Cheema was Manager of Investor Relations
at Pinnacle West Capital Corporation.
Mr. Hobbs joined TNMP in April 1992 as TNP One Plant Manager.
From 1989 until February 1992 Mr. Hobbs was employed with Fluor
Corporation as Project Manager on international/domestic projects
which were involved in the development and implementation of
educational, maintenance and operational programs for utility and
industrial organizations.
Mr. Johnson joined TNMP and TNPE in February 1995. Before joining
TNMP and TNPE, Mr. Johnson was Assistant General Manager for Tri-
State Generation & Transmission Association ("Tri-State") in
Denver, Colorado, which sells power to rural electric
cooperatives, from March 1991 to January 1995. From January 1991
to March 1991, he was a consultant to the General Manager at Tri-
State. From 1988 to June 1990, Mr. Johnson was a Senior Vice
President at Public Service Company of New Hampshire. Mr.
Johnson's experience is in managing electric power generation and
transmission functions.
Item 2. PROPERTIES.
Substantially all of TNMP's real and personal property secures
its long-term debt. For information concerning TNMP's debt, see
note 2 of Notes to Consolidated Financial Statements, which is
incorporated in this Item 2 by reference.
Generating Facilities
TNP One generates power for TNMP's Texas Gulf Coast, Central and
Northern Texas service areas. TNP One is a two-unit, lignite-
fueled generating plant, using circulating fluidized bed
technology, located in Robertson County, Texas. TNP One is
satisfactorily operating as a base load facility.
Transmission and Distribution Facilities
TNMP's facilities are of sufficient capacity to serve existing
customers adequately and to be extended and expanded to serve
future customer growth. These facilities primarily consist of
overhead and underground lines, substations, transformers and
meters. TNMP generally constructs its transmission and
distribution facilities upon easements or public rights of way in
favor of TNMP and not upon real property held in fee simple.
Item 3. LEGAL PROCEEDINGS.
The information set forth in notes 8 and 9 of Notes to
Consolidated Financial Statements regarding regulatory and legal
matters is incorporated in this Item 3 by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders in the
fourth quarter of 1994.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
TNPE
The high and low sales prices of, and the amount of dividends
declared and paid on, TNPE's common stock each quarter during
1994 and 1993 are as follows:
Market Price Range Dividends
1994 1993 Paid
quarter high low high low 1994 1993
First $18 5/8 16 5/8 19 3/8 18 1/8 $0.4075 0.4075
Second 17 3/8 14 5/8 19 1/2 17 1/2 0.4075 0.4075
Third 15 5/8 13 1/4 17 7/8 14 5/8 0.2000 0.4075
Fourth 15 3/8 13 5/8 17 3/4 16 3/8 0.2000 0.4075
$1.2150 1.6300
TNPE's closing common stock price at the end of 1994 was $14 7/8.
TNPE's common stock is traded on the New York Stock Exchange
under the symbol "TNP."
Dividends paid by TNPE generally represent taxable income to
stockholders for federal income tax purposes. The approximate
number of record holders of TNPE's common stock as of January 31,
1995 was 6,300.
In February 1995, TNPE's Board of Directors declared quarterly
common stock dividends of $0.20 per share. The quarterly dividend
is indicative of an annual dividend rate of $0.80 per share.
TNMP
TNPE holds all 10,705 outstanding common shares of TNMP.
For the years ended December 31, 1994 and 1993, TNMP paid common
dividends to its parent, TNPE, as follows (amounts in thousands):
TNMP Dividends Paid
Quarter 1994 1993
First $ 4,400 4,336
Second 4,400 4,336
Third - 4,336
Fourth 2,200 4,336
Total $11,000 17,344
Due to the recognition of the regulatory disallowances during the
second quarter of 1994, restrictive convenants in TNMP's Bond
Indenture did not permit a cash dividend payment during the third
quarter. Sufficient earnings were generated during the third
quarter to permit a cash dividend payment to TNPE during the
fourth quarter. However, as of December 31, 1994, all of TNMP's
retained earnings were restricted and the cash dividend to TNPE
is suspended until unrestricted retained earnings are restored.
Additional information is provided at Items 7 and 8 - note 4 of
the Notes to Consolidated Financial Statements.
Item 6. SELECTED FINANCIAL DATA.
TNP ENTERPRISES, INC.
1994 1993 1992 1991 1990
(Dollars in Thousands)
Consolidated results:
Operating revenues $ 477,989 474,242 443,827 441,343 397,289
Power purchased for resale 194,595 200,183 174,257 216,818 253,416
Total operating expenses 399,998 396,002 366,824 378,778 360,220
Net operating income 77,991 78,240 77,003 62,565 37,069
Net earnings (loss) (17,441) 11,605 10,930 19,533 16,352
Earnings (loss) applicable
to common stock (18,231) 10,726 9,962 18,455 15,137
Total assets $1,071,792 1,103,853 1,182,707 1,122,591 807,854
Cash flows:
Construction expenditures $ 29,038 26,360 22,410 42,536 58,496
Cash internally generated as a
percentage of construction
expenditures 105% 123% 213% 101% 41%
Common shares outstanding:
Weighted average 10,750 10,641 8,545 8,275 8,207
End of year 10,866 10,696 10,598 8,318 8,238
Per share of common stock:
Earnings (loss) $ (1.700) 1.01 1.17 2.23 1.84
Cash dividends declared 1.215 1.63 1.63 1.63 1.63
Book value 17.010 19.97 20.62 21.45 20.86
Capitalization:
Common stockholders' equity $ 184,869 213,627 218,535 178,388 171,839
Preferred stock 8,680 9,560 10,440 11,320 12,600
Long-term debt,
less current maturities 682,832 678,994 742,087 525,060 350,301
Total capitalization $ 876,381 902,181 971,062 714,768 534,740
Capitalization ratios:
Common stockholders' equity 21.1% 23.7 22.5 25.0 32.1
Preferred stock 1.0 1.1 1.1 1.6 2.4
Long-term debt,
less current maturities 77.9 75.2 76.4 73.4 65.5
Total capitalization 100.0% 100.0 100.0 100.0 100.0
Short-term debt:
Current maturities of
long-term debt $ 2,670 1,070 10,288 201,276 78,570
Unsecured notes
payable to banks - - - 36,000 41,900
$ 2,670 1,070 10,288 237,276 120,470
Cash internally generated is defined as cash generated from
operations less cash dividends. The increases in cash internally
generated as a percentage of construction expenditures in 1991
and 1992 resulted from rate increases that became effective late
in each prior year.
Increases in long-term debt resulted from the following:
In September 1993, TNMP used proceeds from the
issuance of debt securities to prepay additional
amounts under the Credit Agreements.
In January 1992, TNMP used proceeds from the
issuance of debt securities to repay and prepay
the Credit Agreements and to repay unsecured notes
payable to banks.
In 1991, TNMP acquired the assets of Unit 2,
assuming related debt obligations.
Items 7 and 8 - notes 7 and 8 of the Notes to Consolidated
Financial Statements provide discussion of key events and
uncertainties that may cause the information listed above to not
be indicative of future financial condition or results of
operations.
SELECTED FINANCIAL DATA.
TEXAS-NEW MEXICO POWER COMPANY
1994 1993 1992 1991 1990
(Dollars in Thousands)
Consolidated results:
Operating revenues $477,989 474,242 443,827 441,343 397,289
Power purchased for resale 194,595 200,183 174,257 216,818 253,416
Total operating expenses 399,998 396,002 366,824 378,778 360,220
Net operating income 77,991 78,240 77,003 62,565 37,069
Net earnings (loss) (16,634) 11,523 10,845 19,840 15,376
Earnings(loss)applicable
to common stock (17,424) 10,644 9,877 18,762 14,161
Total assets $1,060,482 1,093,735 1,156,567 1,111,281 789,651
Cash flows:
Construction expenditures $29,038 26,360 22,410 42,536 58,496
Cash internally generated
as a percentage of
construction expenditures 105% 123% 213% 101% 41%
Capitalization:
Common stockholder's equity $185,777 214,184 205,875 171,393 166,419
Preferred stock 8,680 9,560 10,440 11,320 12,600
Long-term debt,
less current maturities 682,832 678,994 742,087 525,060 350,301
Total capitalization $877,289 902,738 958,402 707,773 529,320
Capitalization ratios:
Common stockholder's equity 21.2% 23.7 21.5 24.2 31.4
Preferred stock 1.0 1.1 1.1 1.6 2.4
Long-term debt,
less current maturities 77.8 75.2 77.4 74.2 66.2
Total capitalization 100.0% 100.0 100.0 100.0 100.0
Short-term debt:
Current maturities of
long-term debt $2,670 1,070 10,288 201,276 78,570
Unsecured notes
payable to banks - - - 36,000 41,900
$2,670 1,070 10,288 237,276 120,470
Per common share information omitted; see Item 5.
Cash internally generated is defined as cash generated from
operations less cash dividends. The increases in cash internally
generated as a percentage of construction expenditures in 1991
and 1992 resulted from rate increases that became effective late
in each prior year.
Increases in long-term debt resulted from the following:
In September 1993, TNMP used proceeds from the
issuance of debt securities to prepay additional
amounts under the Credit Agreements.
In January 1992, TNMP used proceeds from the
issuance of debt securities to repay and prepay
the Credit Agreements and to repay unsecured notes
payable to banks.
In 1991, TNMP acquired the assets of Unit 2,
assuming related debt obligations.
Items 7 and 8 - notes 7 and 8 of the Notes to Consolidated
Financial Statements provide discussion of key events and
uncertainties that may cause the information listed above to not
be indicative of future financial condition or results of
operations.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Overview
This discussion presents management's analysis of TNPE's and
TNMP's financial performance and discusses their strategies for
addressing the challenges of a developing competitive environment
in the utility industry. Throughout this discussion the
references to "note(s)" will refer to the accompanying notes of
the Notes to Consolidated Financial Statements.
Key Events During 1994
The utility industry is evolving into an increasingly competitive
environment. TNPE and TNMP have recognized the changes developing
in the utility industry and implemented a plan of action during
1994 to improve their competitive positions within the industry.
This action plan consisted of the following:
- reaching unanimous settlement agreements during 1994 in both
Texas and New Mexico to settle the most recent rate applications,
which reduce regulatory uncertainty for TNMP and long-term rate
uncertainties for customers,
- the development of a strategic plan that emphasizes providing
quality service to customers at competitive pricing and that
included an organizational restructuring and staffing reductions
and
- a 51% reduction in the quarterly dividends on TNPE common stock.
Rate Case Settlement Agreements
The settlement agreements combined to provide for an increase in
annualized base revenues of $17.9 million. The increase was
comprised of $17.5 million in Texas, effective October 2, 1994,
and $0.4 million in New Mexico, effective May 16, 1994. In
addition, the Texas settlement resolved substantially all
outstanding issues in connection with TNMP's two previous filings
and required TNMP to write off $35 million of the PUCT's earlier
total disallowances of $61.4 million applicable to TNP One. In
the approval of the settlement, the PUCT found the remaining
costs of TNP One to be reasonable and included in rate base. Note
8 provides additional information regarding the Texas rate case
settlement. The New Mexico settlement combined a $7.1 million
reduction in purchased power costs with a $0.4 million base
revenue increase to provide lower overall rates to TNMP's New
Mexico customers.
Management believes that the additional base revenues provided by
the settlement agreements will enable TNMP to rebuild its
financial strength. Of equal importance, the settlements enabled
TNMP to free up resources devoted toward resolution of disputes
arising from prior rate cases, and to redirect these resources
toward meeting the challenges of a competitive utility industry.
Strategic Plan
The new strategic plan provides TNMP a framework to pursue
improvement of its competitive position in an increasingly
competitive environment. Key objectives of this strategic plan
are to:
- provide customers with high quality, personal service at
competitive prices,
- concentrate on maintaining a presence in and serving smaller
communities (clearly defining TNMP's market niche),
- reduce costs and improve competitive position and
- create value resulting in a superior return for investors.
The overall focus of the strategic plan is to pursue activities
that primarily benefit customers and, ultimately, investors.
An initial step undertaken by TNMP in pursuit of its strategic
objectives is the company-wide reorganization as described at
note 5. The reorganization costs recognized in the fourth quarter
of 1994 were $8.8 million. Approximately $6.5 million of these
costs will be funded from TNMP's defined pension and
postretirement benefits trusts, and the remaining $2.3 million
was funded from TNMP's operations. The reorganization creates an
overall organizational structure designed to facilitate the
pursuit of the strategic objectives. The cost savings from
staffing reductions as a result of the reorganization are
expected to be approximately $7 million annually in payroll and
payroll-related items. Because portions of payroll and payroll-
related items are capitalized, the related reduction in operating
expenses is estimated to be approximately $5.5 million. Some
functions will be outsourced, and the expense of outsourcing
these functions is estimated to be $1.2 million in 1995.
Common Stock Dividends
TNMP's common stock is wholly owned by TNPE. Due to the
recognition of the regulatory disallowances during the second
quarter in 1994, restrictive covenants in TNMP's Bond Indenture
prohibited TNMP's payment of cash dividends to TNPE until
unrestricted retained earnings were available. Sufficient third
quarter earnings were generated to permit TNMP to remit a $2.2
million cash dividend to TNPE. However, as of December 31, 1994,
all of TNMP's retained earnings were again restricted and cash
dividend payments to TNPE are prohibited until unrestricted
retained earnings are available. Management expects that TNMP
should generate sufficient earnings from operations to permit
resumption of the cash dividend to TNPE by the fourth quarter of
1995.
The dividend restriction applicable to TNMP did not preclude TNPE
from remitting a cash dividend to its stockholders during 1994.
However, this restriction combined with other factors (the
relatively low common equity component of TNPE's capital
structure, industry considerations, etc.), contributed to the
TNPE Board of Directors' decision to reduce the quarterly
dividend by 51% to $0.20 per share. TNPE believes quarterly cash
dividends can be sustained at this level during the time period
that TNMP is restricted from paying a cash dividend. As of
December 31,1994, TNPE had temporary cash investments of $12.2
million.
Note 4 provides additional information applicable to common stock
dividends.
Results of Operations
TNPE's consolidated results of operations are summarized as
follows:
1994 1993 1992
(In Thousands Except Per Share Amounts)
Earnings (loss)
applicable to common stock
TNMP operations $(17,424) 10,644 9,877
Other operations (807) 82 85
Total $(18,231) 10,726 9,962
Earnings (loss) per
share of common stock
TNMP operations $ (1.62) 1.00 1.16
Other operations (0.08) .01 .01
Total $ (1.70) 1.01 1.17
As shown in the above table, the operations of TNMP (the
principal subsidiary) represent virtually all of TNPE's
operations. Therefore, the succeeding discussion will focus
primarily on TNMP's operations.
The overall TNPE results of operations for 1994 were
significantly affected by the one-time items previously mentioned
pertaining to the reorganization costs and the regulatory
disallowances. The components of these two items are detailed in
notes 5 and 8, and the combined after-tax effects are shown
below:
1994 1993 1992
Amount EPS Amount EPS Amount EPS
(In Thousands Except Per Share Amounts)
Earnings applicable to common
stock before one-time items $7,997 0.74 10,726 1.01 9,962 1.17
One-time items, net of
income taxes:
Reorganization costs (5,723) (0.53) - - - -
Regulatory disallowances (20,505) (1.91) - - - -
Total one-time
items, net (26,228) (2.44) - - - -
Earnings (loss) applicable
to common stock (18,231) (1.70) 10,726 1.01 9,962 1.17
Weighted average number of
common shares outstanding 10,750 10,641 8,545
Overall, 1994 earnings applicable to common stock before the one-
time items were $2.7 million less than in 1993. As discussed
under "Interest Charges," this resulted from increased interest
costs which exceeded an increase in net operating income.
Although 1993 earnings increased by $0.8 million over 1992, EPS
decreased by $0.16 per share due to the effect of issuing two
million additional common shares in December 1992.
TNPE and TNMP do not believe the effects of inflation, as
measured by the Consumer Price Index over the last three years,
have had a material negative impact on their consolidated
financial position or results of operations.
Results from operations for TNPE during the past three years are
summarized as follows (in millions):
Increase (Decrease)
Annual Amounts From Prior Year
1994 1993 1992 1994 1993
Operating revenues $ 478.0 474.2 443.8 3.8 30.4
Operating expenses (400.0) (396.0) (366.8) (4.0) (29.2)
Net operating income 78.0 78.2 77.0 (0.2) 1.2
Other income (loss), net (20.2) 1.3 2.2 (21.5) (0.9)
Interest charges (75.2) (67.9) (68.3) (7.3) 0.4
Net earnings (loss) $ (17.4) 11.6 10.9 (29.0) 0.7
Detailed explanations related to the annual fluctuations shown
above are included in the discussion below.
Operating Revenues
Annual Fluctuations
The following table presents the components of the changes in
operating revenues:
Increase (Decrease) From Prior Year
1994 1993
(Dollars In Millions)
Changes in:
Base rate operating revenues $1.8 0.4% $(1.6) (0.3)%
Recovery of purchased
power costs (5.6) (1.2) 25.9 5.8
Recovery of fuel costs 1.9 0.4 (1.2) (0.3)
Customer usage 5.5 1.2 8.3 1.9
Other revenues 0.2 0.0 (1.0) (0.2)
Total $3.8 0.8% $30.4 6.9%
Annual revenues increased by $3.8 million (0.8%) during 1994 as
compared to 1993. The revenue increase is the result of increases
in:
- customer usage (2.9% overall KWH sales increase) attributed to
increases in the number of residential and commercial customers,
- base rate revenues from settlements of rate application filings
in May 1994 for New Mexico, and in October 1994 for Texas, and
- the Texas fixed fuel recovery factor (discussed under "Operating
Expenses").
These increases were partially offset by a decrease in the
recovery of the costs of power purchased for resale. Purchased
power costs are passed directly through to customers. TNMP took
advantage of provisions in its New Mexico purchased power
contracts to shift purchases to lower cost suppliers, saving
approximately $7.1 million on an annualized basis (discussed
under "Operating Expenses").
During 1993, annual revenues increased by $30.4 million (6.9%) as
compared to 1992. This revenue increase is attributed primarily
to the recovery of increased purchased power costs and to
increased KWH sales in 1993 (3.6%) as a more normal weather
pattern was experienced in 1993 as compared to 1992. Also
contributing to the favorable revenue increases were increases in
(1) the number of residential customers and (2) commercial and
industrial usage spurred by increased economic activity. During
1993, the number of industrial customers decreased by 14, but
that decrease was primarily as a result of the consolidation of
customers for billing purposes and the reclassification of
certain customers to the commercial class. The actual net
reduction was only 3 industrial customers in 1993.
Anticipated Developments
In 1994, 84.1% of TNMP's revenues were generated in Texas. As
stated in note 8, a moratorium exists which prohibits TNMP from
filing for a rate increase prior to March 1997, and permits rate
increase filings from March 1997 through March 1999 only if
certain force majeure events occur. Those events must result in a
base revenue loss or an increase in costs or expenses of at least
$9 million in any one year or $12 million over two years. The
force majeure events include:
- changes in federal income taxes exceeding $2.5 million,
- legislative or regulatory actions exceeding $2.5 million,
- inflation greater than 8% for one year,
- 30-year U.S. Treasury Bond yield greater than 8.75% for six
months and/or
- base revenue decrease greater than $2.5 million.
TNMP does not currently foresee that these events will result in
a Texas rate application during the moratorium.
Presently, TNMP does not have any plans to file for a rate
increase in New Mexico in the near term. Since base rates are
expected to remain fairly level for the next several years,
TNMP's future opportunities for revenue growth is expected to be
derived from increasing its customer base and offering new
services. TNMP intends to aggressively pursue the opportunities
related to expanding the customer base, in addition to
maintaining and serving existing customers.
An example of expanding the customer base involves a former
customer that switched to self-generation during the late 1970s.
TNMP recently executed an agreement to commence selling electric
power to this customer beginning in 1996. This agreement is
expected to contribute $15 million to annual revenues ($2 million
to base revenues).
One major industrial customer providing annual revenues of $29
million in 1994 ($9 million in base revenues) has contracted with
a developer to construct a 300-MW cogeneration plant, which is
expected to commence operations in 1998. TNMP is actively
negotiating with the customer and the developer for arrangements
that potentially would enable TNMP to continue providing
electrical services to the customer and lower system operating
costs. Additional discussion is provided at Item 1 - Competitive
Conditions, which is incorporated here by reference.
The sale of the Texas Panhandle properties is expected to result
in lower revenues, as discussed under "Other Pending Issues."
Operating Expenses
Annual Fluctuations
Annual operating expenses during 1994 increased by $4.0 million
as compared to 1993. However, excluding the effect of the one-
time $8.8 million reorganization costs, operating expenses
decreased by $4.8 million. The overall decrease is primarily
attributed to reductions in purchased power ($5.6 million), and
income taxes ($5.5 million) partially offset by increases in fuel
($2.7 million) and other operating and general ("Other O & G")
expenses ($3.1 million).
The decrease in purchased power costs resulted from the New
Mexico-related unit cost reductions previously discussed and is
also reflected as a reduction in operating revenues. The increase
in fuel is primarily due to an increase in the fixed fuel
recovery factor approved by the PUCT in connection with the Texas
rate case settlement. The fixed fuel factor provides a basis for
TNMP to recover fuel costs through rates charged to the
customers. The corresponding effect to operating revenues is
described above. As of December 31, 1994, TNMP was under-
recovered on its cumulative fuel costs by $15 million. TNMP's
continued efforts to reduce this under-recovered balance is
discussed below in "Anticipated Developments."
The increase in Other O & G expenses from 1993 to 1994 is
primarily due to increases in costs of $2.3 million for labor
(general wage increase) and labor-related items (thrift plan
contributions and postretirement benefits plan contributions).
The labor increase of $1.2 million resulted from a 3% general
wage increase implemented in January 1994, the first such
adjustment since 1991. Increased thrift contributions of $0.8
million resulted from TNMP restoring employer matching
contributions to the 401(k) thrift plan in July 1994; the
employer thrift contributions had been discontinued since January
1, 1993. The increased postretirement benefits costs ($0.2
million) resulted from increases in the expected growth of health
care costs. In addition to labor and labor-related increases,
Other O & G expenses increased due to increased tree trimming
costs ($0.3 million).
During 1993, annual operating expenses increased by $29.2 million
as compared to 1992. The increase is primarily attributed to
purchased power ($25.9 million) and income taxes ($2.4 million).
The significant increase in purchased power is primarily due to
an increase in the average cost of KWH purchased from suppliers.
Also, contributing to the increase was increased KWH sales
experienced in 1993 as described above in "Operating Revenues."
The increase in income taxes is due to an increase in operating
income.
Anticipated Developments
Purchased power costs represent TNMP's largest operating expense.
As described in Item 1 - Competitive Conditions, TNMP believes
the Energy Policy Act of 1992 will present opportunities to
procure less expensive wholesale power. In pursuit of these
opportunities, TNMP provided notice to TU in January 1995 of its
intent to terminate its full requirements power supply contract
effective no later than January 1, 1999 as discussed in note 9.
In 1994, TU represented TNMP's second largest source of purchased
power in Texas. TNMP intends to solicit competitive bids during
the first half of 1995 to replace the power provided by TU. Also,
TNMP has contracted with TEP to procure wholesale power to reduce
purchases from its more expensive sources for TNMP's New Mexico
customers. This contract will be effective during 1996 and is
expected to result in savings of $1.8 million to TNMP's New
Mexico customers.
In addition, TNMP anticipates a 19% price reduction for wholesale
power purchased from HL&P. TNMP participated as an intervenor in
HL&P's recent Texas rate case and was a party to a stipulated
agreement signed February 22, 1995, which should resolve HL&P's
rate case. Contingent on regulatory approval, the stipulated
wholesale base rates will be retroactively effective January 1,
1995. TNMP's contract with Clear Lake provides that TNMP will pay
Clear Lake 98% of the cost that TNMP actually avoids from HL&P by
purchasing the power from Clear Lake. The cost that TNMP actually
avoids from HL&P is based upon HL&P's wholesale rate. Therefore,
this price reduction will also impact TNMP's cost of purchases
from Clear Lake, TNMP's largest source of purchased power in
Texas. Based on the quantities purchased from HL&P and Clear Lake
in 1994, the annual effect of the rate reductions is expected to
reduce purchased power costs to TNMP's customers by approximately
$11.5 million.
Fuel costs represent another significant operating expense. As
discussed in note 9, TNMP successfully negotiated a 20% reduction
in the cost of lignite coal procured from Walnut Creek Mining
Company effective January 1, 1995. The cost savings initially
will be applied to reduce the $15 million accumulated under-
recovery of fuel costs currently recorded on the accompanying
consolidated balance sheet. Once the under-recovery is
eliminated, TNMP plans to request a revised fuel factor from the
PUCT, enabling cost savings to be passed on to customers. This is
expected to occur during the latter half of 1996.
In 1995, labor and labor-related costs are expected to be reduced
by approximately $7 million due to the company-wide staffing
reductions resulting from the previously discussed
reorganization. The approximately $5.5 million portion of these
savings that would reduce operating expenses is expected to be
offset somewhat by the outsourcing of certain functions at a cost
estimated to be approximately $1.2 million during 1995.
Also, the 1995 results will be impacted by non-cash items
pertaining to depreciation and rate case amortization expenses.
TNMP will recognize increased annual depreciation expense of $1.1
million due to new depreciation studies approved in the Texas and
New Mexico rate case settlements. The studies generally provide
for higher depreciation rates. The depreciation increase will be
offset partially by decreased annual amortization of $0.8 million
resulting from a longer amortization period for deferred rate
case expenses.
During the first quarter of 1995, TNMP's Board of Directors
approved an incentive compensation plan, which is expected to be
effective during 1995 subject to stockholders' approval. Under
the plan, employees are awarded the opportunity to earn incentive
payments for achieving target goals established by the Board.
The sale of the Texas Panhandle properties should reduce
operating expenses, as discussed under "Other Pending Issues."
Other Income (Loss), Net of Taxes
TNMP
TNMP's $19.4 million other loss, net of taxes, for 1994 is due
primarily to the recognition of the $20.5 million regulatory
disallowance (net of income taxes) resulting from the Texas rate
case settlement as detailed in note 8. Excluding the effect of
this one-time item, 1994 other income was comparable to 1993.
In 1993, other income decreased by $0.9 million as compared to
1992. This resulted from TNMP having lower interest income on
investment balances after reducing temporary cash investments to
pay down debt in September 1993.
TNPE
TNPE's $20.2 million other loss, net of taxes, for 1994 is
essentially attributable to the regulatory disallowances and
other factors discussed above for TNMP. TNPE also experienced
decreases in interest income and increases in certain taxes that
added to the other loss in 1994. The change to 1993 from 1992 is
basically the result of the same factors discussed above for
TNMP.
Interest Charges
Annual Fluctuations
Annual interest charges during 1994 increased by $7.3 million as
compared to 1993. The increase resulted from the issuance of $270
million of debt during September 1993 which replaced debt with
lower interest rates. The issuance of these securities enabled
TNMP to extend the maturities of the remaining debt associated
with the Unit 2 Credit Agreement and to utilize the
prepayment/subsequent reborrowing provisions as discussed under
"Liquidity and Capital Resources."
During 1993, annual interest did not change materially from 1992.
Anticipated Developments
First mortgage bonds and secured debentures comprise 87.6% of
total long-term debt. Since the bonds and debentures have fixed
interest rates and insignificant maturities during the next two
years, overall interest charges are not expected to materially
vary during the next two years. Refer to "Liquidity and Capital
Resources" for comments pertaining to refinancing future
maturities of long-term debt beyond two years.
Outstanding amounts applicable to the Unit 2 Credit Agreement
will fluctuate due to the prepayment/subsequent reborrowing
provisions as described under "Liquidity and Capital Resources."
Also, the associated interest rates will fluctuate since they are
primarily linked to LIBOR, CD or prime rates which have been
rising since the first quarter of 1994. The amount outstanding
under the Unit 2 Credit Agreement is expected to be reduced from
1994 year-end levels by free cash flow from operations during
1995. Management plans to investigate alternatives to determine
the competitiveness of this source of capital.
The sale of the Texas Panhandle properties (as described at note
9) is expected to reduce future interest charges as explained
below.
Other Pending Issues
Sale of Texas Panhandle Properties
Pursuant to the Texas rate case settlement, TNMP agreed to
actively pursue the sale of its franchise rights and utility
plant located in the Texas Panhandle. In 1994, TNMP executed a
contract to sell to Southwestern Public Service Company the
electrical operations in the Texas Panhandle for $29.2 million,
subject to satisfaction of certain conditions and the necessary
regulatory approvals. TNMP will be required under the Bond
Indenture to apply the entire amount of sale proceeds toward the
reduction of FMBs. From an operating perspective, the loss of
annual revenues of $9.6 million is expected to be offset by
expected cost reductions of up to $9.8 million applicable to
operating expenses and interest costs. Therefore, the anticipated
divestiture of these properties is not expected to materially
impact TNMP's earnings except for any gain on disposition. In the
event that the regulatory approvals are not obtained or the
conditions are not satisfied, TNMP plans to consider other
alternatives that could result in similar economic benefits to
TNMP, its stockholders and the Panhandle customers. The timing of
the recognition of any gain will be dependent upon the manner in
which the matter is ultimately resolved. Note 9 provides
additional information regarding this sale.
Revenues Subject to Refund
The Texas rate case settlement did not affect a tax-related issue
from a previous Texas rate case filed in 1991. The issue involves
$4.8 million of revenues that have been collected from customers
as of December 31, 1994, but have not been recognized in the
consolidated statements of operations. Recognition of these
revenues is conditioned upon TNMP receiving a private letter
ruling from the IRS supporting TNMP's position on certain income
tax consequences. While no assurances can be given, TNMP expects
to receive a favorable ruling during 1995. An unfavorable ruling
would result in a refund to Texas customers of the $4.8 million
previously collected and the recognition of an additional $8.1
million regulatory liability to the Texas customers. Note 8
provides additional information regarding this item.
ITC Associated with TNP One
As described at note 7, TNPE's claim in the consolidated federal
income tax returns for ITC associated with the construction of
TNP One is expected to be formally contested by an IRS revenue
agent. Of the $22 million of ITC at issue, TNPE and its
subsidiaries have utilized $5 million in consolidated returns
through 1993. Management believes its claim to ITC is valid;
however, if the revenue agent's position is upheld, cash flow
from operations would be adversely impacted by the ITC utilized
to date and for related accelerated depreciation claimed in the
tax returns filed in prior years. The aggregate adverse effect to
cash flow would be $8.6 million, including interest. However, the
adverse impact to results of operations would approximate $0.8
million for the ITC amortized by TNPE and TNMP through 1994.
Management intends to vigorously defend its position that the
property qualifies for ITC.
Liquidity and Capital Resources
Sources of Liquidity
During the past three years, TNMP's sources of working capital
from internally generated cash flow provided through operations
and access to the Unit 2 Credit Agreement have been sufficient to
fund daily operational requirements (including capital
expenditures). This is supported by the cash flow statistics
included in Item 6. Following the 1993 debt refinancing, TNMP
obtained the ability to reborrow prepayments under the Unit 2
Credit Agreement. As discussed in note 2, each reborrowing from
the Unit 2 Credit Agreement is subject to an interest coverage
test and an equity ratio test. As of December 31, 1994, the
unused commitment associated with the Unit 2 Credit Agreement was
$62.5 million. The scheduled reductions to the commitment
commence on January 1, 1996, as discussed in note 2.
The sources of liquidity previously described are expected to be
adequate to fund operations for the foreseeable future and the
possible adverse resolution of the issues involving revenues
subject to refund and the ITC claim applicable to TNP One as
previously described.
See additional discussion below under "Future Capital
Requirements" detailing management's expectations of future cash
flows from operations.
Consolidated Financial Condition
A summary of the components of capitalization and related ratios
is listed at Item 6. TNPE's highly leveraged position (74% to 78%
debt to capitalization) is a direct result of the assumption of
the construction costs and related debt obligations of Unit 1 and
Unit 2 during 1990 and 1991, respectively. Prior to 1990, TNPE's
capital structure contained less than 50% debt. The discussion
listed below at "Capital Resources" will discuss management's
intent to increase the equity component of TNPE's capital
structure.
Capital Resources
During the past three years, TNMP has obtained needed outside
sources of capital as follows (in millions):
1994 1993 1992
Amount Rate Amount Rate Amount Rate
First mortgage bonds $ - - $100.0 9.25% $130.0 11.25%
Secured debentures - - 140.0 10.75 130.0 12.50
Net borrowings under
the Credit
Agreements 6.5 various* - various* 11.5 various*
Equity contributions
received from TNPE - - 15.0 - 38.4 -
* Note 2 describes the methods under which interest rates were
determined.
Funds for the 1992 equity contribution from TNPE were obtained
from a public offering of 2 million shares of TNPE common stock.
TNMP used these funds to retire construction debt for TNP One.
TNMP's Bond Indenture contains covenants that restrict the
issuance of additional FMBs as described at note 2. Based on
December 31, 1994 financial information and assuming an 11.0%
interest rate with satisfactory market conditions, TNMP would be
permitted to issue $23 million of additional FMBs. However, this
amount must further be substantiated by another test that
requires sufficient collateral be available to secure the
issuance of additional FMBs. As of December 31, 1994, the
collateral provision would permit issuance of $33 million of
additional FMBs.
The indenture which governs secured debentures permits issuance
of additional secured debentures if equal amounts of secured
debentures and secured notes payable under the Unit 2 Credit
Agreement are replaced.
TNMP's ability to issue preferred stock is restricted by interest
and dividend coverage tests. TNMP does not presently have the
ability to issue any preferred stock, and does not expect to have
the ability to issue preferred stock before 1998.
TNPE's ability to issue common stock is predicated on market
conditions and its financial performance. As of December 31,
1994, TNPE's book value and market value were $17.01 and $14.78,
respectively. Since most of the assets, liabilities and earnings
capability of TNPE are those of TNMP, TNPE's ability to issue
common stock is largely dependent upon the financial performance
of TNMP.
Future Capital Requirements
Based upon the balance of preferred stock and long-term debt at
December 31, 1994, TNMP's future capital requirements through
1999 are projected to be as follows (amounts in millions):
1995 1996 1997 1998 1999
Preferred stock redemptions $ 0.9 0.8 0.6 0.6 0.2
Long-term debt
maturities (note 2) 2.7 10.9 168.0 38.0 131.0
Capital expenditures 29.0 29.1 33.3 32.5 33.2
Total capital requirements $32.6 40.8 201.9 71.1 164.4
Management believes the key events which occurred during 1994_the
rate case settlements and the development of the new strategic
plan_constitute the basis for enabling TNMP to increase
profitability and restore its financial integrity in the future.
The combination of the following items is expected to generate
increased cash flow from operations:
- increased base revenues from the rate case settlements,
- reduced labor costs from the reorganization,
- reduced fuel costs and
- increased customer base resulting from competitive pricing and
increased focus on customer needs.
TNMP expects to generate sufficient funds from internal
operations to fund capital requirements during 1995 and 1996.
TNMP anticipates that capital requirements from 1997 through 1999
will be primarily funded from the combination of internally
generated cash and issuance of new securities by TNMP and/or
TNPE. The anticipated improvement in TNMP's financial health
should enable TNMP to issue long-term debt at interest rates
lower than the debt replaced.
Other Matters
The FASB issued SFAS 112, "Employers' Accounting for
Postemployment Benefits" which addresses the accounting and
reporting for the estimated costs of benefits provided by an
employer to former employees after employment but before
retirement. SFAS 112 was effective for fiscal years beginning
after December 15, 1993. The costs applicable to TNMP are
immaterial.
Also under consideration by FASB is an anticipated pronouncement
regarding the subject of impairment of long-lived assets. Under
the present regulatory environment in which TNMP operates, this
pronouncement would not be expected to affect TNMP. As the
utility industry evolves into an increasingly competitive
environment, management will continue to assess the effects of
the proposed pronouncement.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report
The Board of Directors and Stockholders
TNP Enterprises, Inc.:
We have audited the consolidated financial statements of TNP
Enterprises, Inc. and subsidiaries as listed in the accompanying
index at Part IV. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of TNP Enterprises, Inc. and subsidiaries as of December
31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1994, in conformity with generally accepted
accounting principles.
In connection with the revenues subject to refund discussed in
note 8 to the consolidated financial statements, uncertainties
exist with respect to the regulatory treatment of the income tax
benefits of the regulatory disallowances recognized in 1994. The
ultimate outcome of this matter cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be
required upon resolution of this matter has been made in the
accompanying consolidated financial statements.
As discussed in note 1 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in
1993 to adopt the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards
("SFAS") No. 109, Accounting for Income Taxes. As discussed in
note 6, the Company also adopted the provisions of the Financial
Accounting Standards Board's SFAS No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions in 1993.
KPMG Peat Marwick LLP
Fort Worth, Texas
January 27, 1995
Independent Auditors' Report
The Board of Directors
Texas-New Mexico Power Company:
We have audited the consolidated financial statements of Texas-
New Mexico Power Company (a wholly owned subsidiary of TNP
Enterprises, Inc.) and subsidiaries as listed in the accompanying
index at Part IV. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Texas-New Mexico Power Company and subsidiaries as of
December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally
accepted accounting principles.
In connection with the revenues subject to refund discussed in
note 8 to the consolidated financial statements, uncertainties
exist with respect to the regulatory treatment of the income tax
benefits of the regulatory disallowances recognized in 1994. The
ultimate outcome of this matter cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be
required upon resolution of this matter has been made in the
accompanying consolidated financial statements.
As discussed in note 1 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in
1993 to adopt the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards
("SFAS") No. 109, Accounting for Income Taxes. As discussed in
note 6, the Company also adopted the provisions of the Financial
Accounting Standards Board's SFAS No. 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions in 1993.
KPMG Peat Marwick LLP
Fort Worth, Texas
January 27, 1995
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands Except Per Share Amounts)
OPERATING REVENUES (note 8) $477,989 474,242 443,827
OPERATING EXPENSES:
Power purchased for resale 194,595 200,183 174,257
Fuel 46,988 44,348 44,977
Other operating and general expenses 72,472 69,406 70,003
Maintenance 11,966 11,460 11,342
Reorganization costs (note 5) 8,782 - -
Depreciation of utility plant 36,782 36,015 35,098
Taxes, other than on income 29,651 30,296 29,250
Income taxes (note 7) (1,238) 4,294 1,897
Total operating expenses 399,998 396,002 366,824
NET OPERATING INCOME 77,991 78,240 77,003
OTHER INCOME (LOSS):
Recognition of regulatory
disallowances (note 8) (31,546) - -
Other income and deductions, net 1,057 1,972 3,349
Income taxes (notes 7,8) 10,305 (666) (1,139)
Other income (loss), net of taxes (20,184) 1,306 2,210
EARNINGS BEFORE INTEREST CHARGES 57,807 79,546 79,213
INTEREST CHARGES:
Interest on long-term debt 71,568 63,833 63,893
Amortization of debt related costs
and other interest 3,955 4,411 4,539
Allowance for borrowed funds
used during construction (275) (303) (149)
Total interest charges 75,248 67,941 68,283
NET EARNINGS (LOSS) (17,441) 11,605 10,930
DIVIDENDS ON PREFERRED STOCK (790) (879) (968)
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK $(18,231) 10,726 9,962
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 10,750 10,641 8,545
EARNINGS (LOSS) PER
SHARE OF COMMON STOCK $(1.70) 1.01 1.17
DIVIDENDS PER SHARE OF COMMON STOCK $1.215 1.630 1.630
See accompanying Notes to Consolidated Financial Statements.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $475,462 460,463 460,803
Power purchased for resale (193,366) (195,063) (176,890)
Fuel costs paid (46,537) (46,049) (45,720)
Cash paid to other suppliers
and for payroll (85,912) (76,254) (90,835)
Interest paid, net of
amounts capitalized (76,402) (59,028) (62,130)
Income taxes paid 365 (3,263) (1,230)
Other taxes paid, net
of amounts capitalized (30,323) (30,344) (27,870)
Other operating cash receipts
and payments, net 1,014 236 6,420
NET CASH PROVIDED BY OPERATING ACTIVITIES 44,301 50,698 62,548
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of
capitalized depreciation and interest (29,038) (26,360) (22,410)
Purchases of temporary investments (5,590) - -
NET CASH USED IN INVESTING ACTIVITIES (34,628) (26,360) (22,410)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on preferred
and common stocks (13,823) (18,223) (14,748)
Issuances:
Common stock 2,502 1,701 43,925
Borrowings under secured notes payable 188,500 - 11,500
Other long-term debt - 240,000 260,000
Deferred expenses associated
with financings - (8,940) (9,124)
Redemptions:
Preferred stock (880) (880) (880)
Repayments under
secured notes payable (182,028) (280,700) (244,000)
Other long-term debt (1,070) (31,658) (1,498)
Short-term debt - - (36,000)
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES (6,799) (98,700) 9,175
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,874 (74,362) 49,313
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 12,423 86,785 37,472
CASH AND CASH EQUIVALENTS AT END OF YEAR $15,297 12,423 86,785
(continued)
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands)
RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings (loss) $(17,441) 11,605 10,930
Adjustments to reconcile net
earnings (loss) to net
cash provided by operating activities:
Depreciation of utility plant 36,782 36,015 35,098
Amortization of debt expense, discount
and premium, and other deferred charges 5,495 4,939 5,667
Allowance for borrowed funds used
during construction (275) (303) (149)
Deferred income taxes (10,915) 5,534 541
Investment tax credit adjustments (1,436) (953) (2,479)
Reorganization costs 6,858 - -
Recognition of regulatory disallowances 31,546 - -
Cash flows impacted by changes in current assets and liabilities:
Deferred purchased power and fuel costs (107) 2,584 (5,493)
Accrued interest (4,422) 7,246 2,256
Revenues subject to refund 1,382 (14,115) 15,961
Changes in other current
assets and liabilities (2,495) (1,158) 2,488
Other - net (671) (696) (2,272)
NET CASH PROVIDED BY OPERATING ACTIVITIES $44,301 50,698 62,548
See accompanying Notes to Consolidated Financial Statements.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
1994 1993
(In Thousands)
ASSETS
UTILITY PLANT:
Electric plant (notes 2, 8) $1,192,277 1,203,636
Construction work in progress 3,816 5,282
Total 1,196,093 1,208,918
Less accumulated depreciation 228,820 202,923
Net utility plant 967,273 1,005,995
NONUTILITY PROPERTY, at cost 1,308 1,673
CURRENT ASSETS:
Cash and cash equivalents 15,297 12,423
Temporary investments 5,590 -
Customer receivables 3,832 764
Inventories, at the lower of
average cost or market:
Fuel 1,157 1,422
Materials and supplies 7,527 7,793
Deferred purchased power and fuel costs 15,258 15,151
Accumulated deferred income taxes (note 7) 2,702 2,867
Other current assets 1,817 1,071
Total current assets 53,180 41,491
REGULATORY TAX ASSETS 17,304 16,915
DEFERRED CHARGES 32,727 37,779
$1,071,792 1,103,853
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (See
Consolidated Statements of Capitalization):
Common stockholders' equity (notes 2, 4) $ 184,869 213,627
Preferred stock (note 3) 8,680 9,560
Long-term debt, less
current maturities (notes 2, 4) 682,832 678,994
Total capitalization 876,381 902,181
CURRENT LIABILITIES:
Current maturities of long-term debt 2,670 1,070
Accounts payable 21,951 22,450
Accrued interest 11,693 16,115
Accrued taxes 17,722 17,221
Customers' deposits 3,973 4,464
Revenues subject to refund (note 8) 4,782 3,400
Other current liabilities 10,621 9,344
Total current liabilities 73,412 74,064
REGULATORY TAX LIABILITIES (note 8) 47,307 49,314
ACCUMULATED DEFERRED INCOME TAXES (note 7) 46,960 55,709
ACCUMULATED DEFERRED
INVESTMENT TAX CREDITS (note 7) 16,912 18,348
DEFERRED CREDITS (note 6) 10,820 4,237
COMMITMENTS AND CONTINGENCIES (notes 7, 8, 9) $1,071,792 1,103,853
See accompanying Notes to Consolidated Financial Statements.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31, 1994 and 1993
1994 1993
(In Thousands)
COMMON STOCKHOLDERS' EQUITY (notes 2, 4):
Common stock with no par value per share.
Authorized shares: 50,000,000
Outstanding shares: 10,866,441 in
1994 and 10,695,860 in 1993 $134,117 131,615
Retained earnings 50,752 82,012
Total common stockholders' equity $184,869 213,627
PREFERRED STOCK (note 3):
Preferred stock with no par value.
Authorized shares: 5,000,000
Outstanding shares: None
Redeemable cumulative preferred stock of wholly owned subsidiary with
$100 par value.
Authorized shares: 1,000,000
Redemption price at
option of subsidiary Outstanding shares
1994 1993 1994 1993 1994 1993
Series B, 4.650% $100.000 100.000 24,000 25,200 $2,400 $2,520
Series C, 4.750 100.000 100.000 13,800 14,400 1,380 1,440
Series D,11.000 101.040 101.570 2,000 3,200 200 320
Series E,11.000 101.040 101.570 1,000 1,600 100 160
Series F,11.000 101.040 101.570 2,000 3,200 200 320
Series G,11.875 106.432 106.927 44,000 48,000 4,400 4,800
Total redeemable
cumulative preferred stock 86,800 95,600 $8,680 9,560
LONG-TERM DEBT (notes 2,4):
FIRST MORTGAGE BONDS:
Series L, 10.500% due 2000 $9,720 9,840
Series M, 8.700 due 2006 8,300 8,400
Series R, 10.000 due 2017 63,050 63,700
Series S, 9.625 due 2019 19,800 20,000
Series T, 11.250 due 1997 130,000 130,000
Series U, 9.250 due 2000 100,000 100,000
Total first mortgage bonds 330,870 331,940
Unamortized discount, net of premium (640) (676)
Total first mortgage bonds, net 330,230 331,264
SECURED DEBENTURES:
12.50% due 1999 130,000 130,000
Series A, 10.75% due 2003 140,000 140,000
Total secured debentures 270,000 270,000
SECURED NOTES PAYABLE 85,272 78,800
Total long-term debt 685,502 680,064
Less current maturities (2,670) (1,070)
Total long-term debt, less current maturities $682,832 678,994
TOTAL CAPITALIZATION $876,381 902,181
See accompanying Notes to Consolidated Financial Statements.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
AND REDEEMABLE CUMULATIVE PREFERRED STOCK
Three Years Ended December 31, 1994
Common Stockholders' Equity Redeemable
Cumulative
Common Stock Retained Preferred
Shares Amount Earnings Total Stock
(In Thousands)
YEAR ENDED DECEMBER 31, 1992:
Balance, January 1, 1992 8,318 $85,989 92,399 178,388 11,320
Net earnings - - 10,930 10,930 -
Dividends on preferred stock - - (968) (968) -
Dividends on common stock-
$1.630 per share - - (13,780) (13,780) -
Sale of common stock 2,280 43,925 - 43,925 -
Purchase and retirement of
preferred stock* - - 40 40 (880)
Balance, December 31, 1992 10,598 129,914 88,621 218,535 10,440
YEAR ENDED DECEMBER 31, 1993:
Net earnings - - 11,605 11,605 -
Dividends on preferred stock - - (879) (879) -
Dividends on common stock -
$1.630 per share - - (17,344) (17,344) -
Sale of common stock 98 1,701 - 1,701 -
Purchase and retirement of
preferred stock* - - 9 9 (880)
Balance, December 31, 1993 10,696 131,615 82,012 213,627 9,560
YEAR ENDED DECEMBER 31, 1994:
Net loss - - (17,441) (17,441) -
Dividends on preferred stock - - (790) (790) -
Dividends on common stock -
$1.215 per share - - (13,046) (13,046) -
Sale of common stock 170 2,502 - 2,502 -
Purchase and retirement of
preferred stock* - - 17 17 (880)
Balance, December 31, 1994 10,866 $134,117 50,752 184,869 8,680
* The following shares were retired each year:
Series Rate Shares
B 4.650% 1,200
C 4.750 600
D 11.000 1,200
E 11.000 600
F 11.000 1,200
G 11.875 4,000
See accompanying Notes to Consolidated Financial Statements.
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands)
OPERATING REVENUES (note 8) $477,989 474,242 443,827
OPERATING EXPENSES:
Power purchased for resale 194,595 200,183 174,257
Fuel 46,988 44,348 44,977
Other operating and
general expenses 72,472 69,406 70,003
Maintenance 11,966 11,460 11,342
Reorganization costs (note 5) 8,782 - -
Depreciation of utility plant 36,782 36,015 35,098
Taxes, other than on income 29,651 30,296 29,250
Income taxes (note 7) (1,238) 4,294 1,897
Total operating expenses 399,998 396,002 366,824
NET OPERATING INCOME 77,991 78,240 77,003
OTHER INCOME (LOSS):
Recognition of regulatory
disallowances (note 8) (31,546) - -
Other income and
deductions, net 1,475 1,846 3,220
Income taxes (notes 7, 8) 10,694 (622) (1,095)
Other income (loss),
net of taxes (19,377) 1,224 2,125
EARNINGS BEFORE
INTEREST CHARGES 58,614 79,464 79,128
INTEREST CHARGES
Interest on long-term debt 71,568 63,833 63,893
Amortization of debt related
costs and other interest 3,955 4,411 4,539
Allowance for borrowed funds
used during construction (275) (303) (149)
Total interest charges 75,248 67,941 68,283
NET EARNINGS (LOSS) (16,634) 11,523 10,845
DIVIDENDS ON PREFERRED STOCK (790) (879) (968)
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK $(17,424) 10,644 9,877
See accompanying Notes to Consolidated Financial Statements.
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 475,462 460,463 460,803
Power purchased for resale (193,366) (195,063) (176,890)
Fuel costs paid (46,537) (46,049) (45,720)
Cash paid to other suppliers
and for payroll (86,632) (79,583) (83,413)
Interest paid, net of
amounts capitalized (76,402) (59,028) (62,130)
Income taxes paid (1,215) (2,388) (1,185)
Other taxes paid, net of
amounts capitalized (29,906) (29,888) (27,513)
Other operating cash
receipts and payments, net 1,442 1,532 3,759
NET CASH PROVIDED BY
OPERATING ACTIVITIES 42,846 49,996 67,711
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant, net of
capitalized depreciation
and interest (29,038) (26,360) (22,410)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid on
preferred and common stocks (11,794) (18,223) (14,808)
Issuances:
Borrowings under
secured notes payable 188,500 - 11,500
Other long-term debt - 240,000 260,000
Deferred expenses
associated with financings - (8,940) (9,124)
Equity contribution received from
parent company - 15,000 38,405
Redemptions:
Preferred stock (880) (880) (880)
Repayments under
secured notes payable (182,028) (280,700) (244,000)
Other long-term debt (1,070) (31,658) (1,498)
Short-term debt - - (36,000)
NET CASH PROVIDED BY
(USED IN) FINANCING ACTIVITIES (7,272) (85,401) 3,595
NET CHANGE IN CASH AND
CASH EQUIVALENTS 6,536 (61,765) 48,896
CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR 2,078 63,843 14,947
CASH AND CASH EQUIVALENTS
AT END OF YEAR $8,614 2,078 63,843
(continued)
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
Three Years Ended December 31, 1994
1994 1993 1992
(In Thousands)
RECONCILIATION OF NET EARNINGS (LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net earnings (loss) $(16,634) 11,523 10,845
Adjustments to reconcile
net earnings (loss) to net
cash provided by operating activities:
Depreciation of utility plant 36,782 36,015 35,098
Amortization of debt
expense, discount and
premium, and other
deferred charges 5,495 4,939 5,667
Allowance for borrowed
funds used during construction (275) (303) (149)
Deferred income taxes (10,920) 5,515 1,347
Investment tax credit adjustments (1,374) (959) (444)
Reorganization costs 6,858 - -
Recognition of
regulatory disallowances 31,546 - -
Cash flows impacted by changes
in current assets and liabilities:
Deferred purchased
power and fuel costs (107) 2,584 (5,493)
Accrued interest (4,422) 7,246 2,256
Revenues subject to refund 1,382 (14,115) 15,961
Changes in other current
assets and liabilities (4,211) 2,044 4,901
Other - net (1,274) (4,493) (2,278)
NET CASH PROVIDED
BY OPERATING ACTIVITIES $ 42,846 49,996 67,711
See accompanying Notes to Consolidated Financial Statements.
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
1994 1993
(In Thousands)
ASSETS
UTILITY PLANT:
Electric plant (notes 2, 8) $1,192,277 1,203,636
Construction work in progress 3,816 5,282
Total 1,196,093 1,208,918
Less accumulated depreciation 228,820 202,923
Net utility plant 967,273 1,005,995
NONUTILITY PROPERTY, at cost 183 541
CURRENT ASSETS:
Cash and cash equivalents 8,614 2,078
Customer receivables 3,832 764
Inventories, at the lower
of average cost or market:
Fuel 1,157 1,422
Materials and supplies 7,527 7,793
Deferred purchased power and fuel costs 15,258 15,151
Accumulated deferred income taxes (note 7) 2,702 2,867
Other current assets 1,958 1,091
Total current assets 41,048 31,166
REGULATORY TAX ASSETS 17,304 16,915
DEFERRED CHARGES 34,674 39,118
$1,060,482 1,093,735
CAPITALIZATION AND LIABILITIES
CAPITALIZATION (See Consolidated
Statements of Capitalization):
Common stockholder's equity (notes 2, 4) $ 185,777 214,184
Redeemable cumulative
preferred stock (note 3) 8,680 9,560
Long-term debt, less current
maturities (notes 2, 4) 682,832 678,994
Total capitalization 877,289 902,738
CURRENT LIABILITIES:
Current maturities of long-term debt 2,670 1,070
Accounts payable 21,951 22,450
Accrued interest 11,693 16,115
Accrued taxes 16,898 18,006
Customers' deposits 3,973 4,464
Revenues subject to refund (note 8) 4,782 3,400
Other current liabilities 10,622 9,336
Total current liabilities 72,589 74,841
REGULATORY TAX LIABILITIES (note 8) 47,307 49,314
ACCUMULATED DEFERRED INCOME TAXES (note 7) 36,769 45,523
ACCUMULATED DEFERRED INVESTMENT
TAX CREDITS (note 7) 15,708 17,082
DEFERRED CREDITS (note 6) 10,820 4,237
COMMITMENTS AND CONTINGENCIES (notes 7, 8, 9)
$1,060,482 1,093,735
See accompanying Notes to Consolidated Financial Statements.
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF CAPITALIZATION
December 31, 1994 and 1993
1994 1993
(In Thousands)
COMMON STOCKHOLDER'S EQUITY (notes 2, 4):
Common stock, $10 par value per share.
Authorized shares: 12,000,000
Outstanding shares: 10,705 $ 107 107
Capital in excess of par value 175,111 175,094
Retained earnings 10,559 38,983
Total common stockholder's equity $185,777 214,184
REDEEMABLE CUMULATIVE PREFERRED STOCK (note 3):
Redeemable cumulative preferred stock, $100 par value.
Authorized shares: 1,000,000
Redemption price at
option of CompanyOutstanding shares
1994 1993 1994 1993
Series B, 4.650% $100.000 100.000 24,000 25,200 $2,400 2,520
Series C, 4.750 100.000 100.000 13,800 14,400 1,380 1,440
Series D, 11.000 101.040 101.570 2,000 3,200 200 320
Series E, 11.000 101.040 101.570 1,000 1,600 100 160
Series F, 11.000 101.040 101.570 2,000 3,200 200 320
Series G, 11.875 106.432 106.927 44,000 48,000 4,400 4,800
Total redeemable
cumulative preferred
stock 86,800 95,600 $8,680 9,560
LONG-TERM DEBT (notes 2, 4):
FIRST MORTGAGE BONDS:
Series L, 10.500% due 2000 $9,720 9,840
Series M, 8.700 due 2006 8,300 8,400
Series R, 10.000 due 2017 63,050 63,700
Series S, 9.625 due 2019 19,800 20,000
Series T, 11.250 due 1997 130,000 130,000
Series U, 9.250 due 2000 100,000 100,000
Total first mortgage bonds 330,870 331,940
Unamortized discount, net of premium (640) (676)
Total first mortgage bonds, net 330,230 331,264
SECURED DEBENTURES:
12.50% due 1999 130,000 130,000
Series A, 10.75% due 2003 140,000 140,000
Total secured debentures 270,000 270,000
SECURED NOTES PAYABLE 85,272 78,800
Total long-term debt 685,502 680,064
Less current maturities (2,670) (1,070)
Total long-term debt, less current maturities $682,832 678,994
TOTAL CAPITALIZATION $877,289 902,738
See accompanying Notes to Consolidated Financial Statements.
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of TNP Enterprises, Inc.)
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
AND REDEEMABLE CUMULATIVE PREFERRED STOCK
Three Years Ended December 31, 1994
Common Stockholder's Equity Redeemable
Capital in Cumulative
Common Stock Excess of Retained Preferred
Shares Amount Par Value Earnings Total Stock
(In Thousands)
YEAR ENDED DECEMBER 31, 1992:
Balance, January 1, 1992 10,705 $107 121,640 49,646 171,393 11,320
Net earnings - - - 10,845 10,845 -
Dividends on preferred stock - - - (968) (968) -
Dividends on common stock - - - (13,840) (13,840) -
Equity contribution from
parent company - - 38,405 - 38,405 -
Purchase and retirement of
preferred stock* - - 40 - 40 (880)
Balance, December 31, 1992 10,705 107 160,085 45,683 205,875 10,440
YEAR ENDED DECEMBER 31, 1993:
Net earnings - - - 11,523 11,523 -
Dividends on preferred stock - - - (879) (879) -
Dividends on common stock - - - (17,344) (17,344) -
Equity contribution from
parent company - - 15,000 - 15,000 -
Purchase and retirement of
preferred stock* - - 9 - 9 (880)
Balance, December 31, 1993 10,705 107 175,094 38,983 214,184 9,560
YEAR ENDED DECEMBER 31, 1994:
Net loss - - - (16,634) (16,634) -
Dividends on preferred stock - - - (790) (790) -
Dividends on common stock - - - (11,000) (11,000) -
Purchase and retirement of
preferred stock* - - 17 - 17 (880)
Balance, December 31, 1994 10,705 $107 175,111 10,559 185,777 8,680
* The following shares were retired each year:
Series Rate Shares
B 4.650% 1,200
C 4.750 600
D 11.000 1,200
E 11.000 600
F 11.000 1,200
G 11.875 4,000
See accompanying Notes to Consolidated Financial Statements.
(1) Summary of Significant Accounting Policies
General
The consolidated financial statements of TNP Enterprises, Inc.
("TNPE") and Subsidiaries include the accounts of TNPE and its
wholly owned subsidiaries, Texas-New Mexico Power Company
("TNMP"), Bayport Cogeneration, Inc. and TNP Operating Company.
The consolidated financial statements of Texas-New Mexico Power
Company and Subsidiaries include the accounts of TNMP and its
wholly owned subsidiaries, Texas Generating Company ("TGC") and
Texas Generating Company II ("TGC II").
TNMP is the principal operating subsidiary of TNPE. TNMP is a
public utility engaged in the generation, purchase, transmission,
distribution and sale of electricity within the states of Texas
and New Mexico. TNMP is subject to regulation by the Public
Utility Commission of Texas ("PUCT") and the New Mexico Public
Utility Commission ("NMPUC"). TNMP is subject in some of its
activities, including the issuance of securities, to the
jurisdiction of the Federal Energy Regulatory Commission
("FERC"), and its accounting records are maintained in accordance
with the FERC's Uniform System of Accounts.
All intercompany transactions and balances have been eliminated
in consolidation.
Utility Plant
Utility plant is stated at the historical cost of construction,
which includes labor, materials, an allowance for funds used
during construction and indirect charges for such items as
engineering, supervision and general administrative costs.
Property repairs and replacement of minor items are charged to
operating expenses; major replacements and improvements are
capitalized to utility plant.
The costs of depreciable units of plant retired or disposed of in
the normal course of business are eliminated from utility plant
accounts and such costs plus removal expenses less salvage are
charged to accumulated depreciation. When complete operating
units are disposed of, appropriate adjustments are made to
accumulated depreciation, and the resulting gains or losses, if
any, are recognized.
Depreciation is provided on a straight-line method based on the
estimated service lives of the properties as indicated by
periodic depreciation studies. A portion of depreciation of
transportation equipment used in construction is charged to
utility plant accounts in accordance with the equipment's use.
Depreciation as a percentage of average depreciable cost was
3.14%, 3.00% and 3.10% in 1994, 1993 and 1992, respectively.
Cash Equivalents
For purposes of the consolidated statements of cash flows, all
highly liquid debt instruments with maturities of three months or
less when purchased are considered to be cash equivalents.
Temporary Investments
Temporary investments are recorded at amortized cost, adjusted
for the amortization or accretion of premiums or discounts, as
management has the ability and intent to hold these securities
until maturity. These securities, which are debt obligations of
the U.S. Government, mature within one year.
Deferred Charges
Debt Expense, Discount and Premium
Expenses incurred in connection with the issuance of outstanding
long-term debt and discount and premium related to such debt are
amortized on a straight-line basis over the lives of the
respective issues.
Other
Included in deferred charges are other assets that are expected
to benefit future periods and certain costs that are deferred for
rate making purposes and amortized over periods allowed by
regulatory authorities.
(1) Summary of Significant Accounting Policies - continued
Operating Revenues
Revenues are recognized on the basis of meter readings which are
made on a monthly cycle. TNMP does not accrue revenues for
electric services provided but not billed at the end of an
accounting period.
TNMP sells customer receivables to a nonaffiliated company on a
nonrecourse basis.
Power Purchased for Resale and Fuel Costs
Power purchased for resale is recorded on the basis of billings
from suppliers; no accrual is made for power delivered to TNMP
between the dates of such billings and the end of an accounting
period.
Electric rates include estimates of power purchased for resale
and fuel costs incurred by TNMP in the purchase or generation of
electricity. Differences between amounts collected and allowable
costs are recorded as deferred purchased power and fuel costs in
accordance with ratemaking policies of regulatory authorities.
Allowance for Borrowed Funds Used During Construction
The allowance for borrowed funds used during construction
("AFUDC") is designed to allow TNMP to capitalize the net
composite interest costs during periods of construction and does
not represent current cash income. Established regulatory
practices permit TNMP to recover these costs in future periods by
determining rates to include a fair return on and a recovery of
these costs through their inclusion in rate base and cost of
service. The composite rates used for AFUDC were 8.76% in 1994,
7.53% in 1993 and 5.8% in 1992.
Income Taxes
On January 1, 1993, TNPE and TNMP implemented Statement of
Financial Accounting Standards ("SFAS") 109, "Accounting for
Income Taxes" on a prospective basis. SFAS 109 required a change
from the deferred method to the asset and liability method of
accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted tax
rates to differences between the financial statement amounts and
the tax bases of existing assets and liabilities.
SFAS 109 required TNMP to recognize deferred income taxes for:
- the reduction in depreciable tax bases due to investment tax
credits ("ITC"),
- ITC accounted for under the deferred method,
- prior flow-through rate making treatment of certain income tax
benefits and
- the effects of federal income tax rate changes.
Certain provisions of SFAS 109 provide that regulated enterprises
are permitted to recognize adjustments resulting from the
adoption of SFAS 109 as regulatory assets or liabilities if such
amounts are probable of being recovered from or returned to
customers through future rates. Accordingly, TNMP recorded
regulatory and deferred tax assets and liabilities as a result of
the adoption of SFAS 109.
The implementation of SFAS 109 in 1993 did not have a significant
effect on results of operations.
Prior to 1993, TNMP had provided income tax expense using the
deferred method required under Accounting Principles Board
Opinion ("APB") No. 11. Under this method, certain revenue and
expense items were reported in one period for financial reporting
purposes and a different period for income tax purposes. Deferred
income taxes were provided for these differences.
ITC utilized in the federal income tax return are deferred and
amortized to earnings ratably over the estimated service lives of
the related assets.
TNPE files a consolidated federal income tax return that includes
the consolidated operations of TNMP and its subsidiaries. The
amounts of income taxes recognized in TNMP's accompanying
consolidated financial statements were computed as if TNMP and
its subsidiaries filed a separate consolidated federal income tax
return. Accordingly, the amounts could differ from those
recognized as a member of TNPE's consolidated group.
(1) Summary of Significant Accounting Policies - continued
Fair Values of Financial Instruments
In the accompanying consolidated balance sheets as of December
31, 1994 and 1993, the fair values of cash equivalents and
temporary investments approximated the carrying amounts because
of the short maturities of those instruments.
The estimated fair values of long-term debt and preferred stock
were based on quoted market prices of the same or similar issues.
The estimated fair values of long-term debt and preferred stock
were as follows:
December 31, 1994 December 31, 1993
Carrying Amount Fair Values Carrying Amount Fair Values
(In Thousands)
Long-term debt $ 685,502 674,000 680,064 723,000
Preferred stock 8,680 5,900 9,560 7,600
Shareholder Rights Plan
TNPE has a Shareholder Rights Plan ("Rights Plan") that is
designed to protect TNPE's stockholders from coercive takeover
tactics and inadequate or unfair takeover bids. The Rights Plan,
adopted in 1988 and amended on November 13, 1990, by TNPE's Board
of Directors, provides for the distribution of one right for each
share of TNPE's common stock held of record as of the close of
business on November 4, 1988 and for each share of common stock
issued thereafter until November 4, 1998.
Each right entitles the stockholder to elect to exercise the
right in whole or in part to purchase, upon the occurrence of
certain events, one share of common stock at an initial price of
$45 per share or, under certain circumstances, shares of common
stock at half the then-current market price or, with an election
to exercise such rights without payment of cash, to receive the
number of shares of TNPE's common stock or other securities
having an aggregate value equal to the excess of (i) the value of
the common stock or other securities on the date of the exercise
of the rights over (ii) the cash payment that would have been
payable upon the exercise of the rights if an election for cash
payment had been made.
Until certain triggering events occur, the rights will trade
together with TNPE's common stock and separate rights
certificates will not be issued. Among the triggering events are
the acquisition by a person or group of persons of 10% or more of
TNPE's outstanding common stock or the commencement of a tender
or exchange offer which, upon consummation, would result in a
person or group of persons owning 15% or more of TNPE's
outstanding common stock. The rights expire November 4, 1998,
unless earlier redeemed or exchanged by TNPE, and have had no
effect on earnings (loss) per share.
Earnings (Loss) Per Share
Earnings (loss) per share of common stock is computed for each
year based upon the weighted average number of common shares
outstanding. Net earnings (loss) is adjusted for preferred
dividend requirements.
Common Stock
At December 31, 1994, 326,519 shares of TNPE's common stock were
reserved for issuance to TNMP's 401(k) Employees' Thrift Plan.
Additionally, 346,080 shares of TNPE's common stock were reserved
for subsequent issuance to TNPE's stockholders under a Dividend
Reinvestment and Stock Purchase Plan.
Basis of Presentation
Certain 1993 and 1992 amounts were reclassified to conform to the
1994 method of presentation.
During 1994, TNPE and TNMP changed their method of presentation
of the consolidated statements of cash flows from the indirect to
the direct method. Accordingly, the consolidated statements of
cash flows for 1993 and 1992 have been presented using the direct
method.
(2) Long-Term Debt
First Mortgage Bonds
First mortgage bonds ("Bonds") issued under TNMP's bond
indenture, as amended and supplemented (the "Bond Indenture") are
secured by substantially all utility plant owned directly by
TNMP. The Bond Indenture contains restrictions as to the payment
of cash dividends on the common stock of TNMP as discussed in
note 4. The Bond Indenture also provides that additional Bonds
may not be issued unless net earnings are at least twice the
annual interest charges on bonded indebtedness, as defined. Under
this test, based on December 31, 1994 financial statement
information, approximately $23 million of additional Bonds could
be issued, assuming an interest rate of 11.0% and satisfactory
market conditions.
Secured Notes Payable and Secured Debentures
Secured notes payable were outstanding with a group of fourteen
lenders (primarily banks) under the Unit 2 Credit Agreement (the
"Credit Agreement"). The total commitment under the Credit
Agreement is $147.75 million, and TNMP is permitted to prepay and
reborrow up to $141.75 million. The reborrowings under the Credit
Agreement are subject to compliance with an interest coverage
test and an equity ratio test mentioned below. The unused
commitment available to be borrowed under the Credit Agreement
was $62.5 million as of December 31, 1994. The total commitment
amount will be reduced approximately $37 million beginning each
January 1 in 1996, 1997 and 1998. A commitment fee of 1/4 of 1%
per annum is payable quarterly on the unused portion of the
reducing commitment.
Interest rates under the Credit Agreement are based upon LIBOR,
CD or prime rates, plus applicable margins. During 1994, the
interest rates on individual borrowings ranged from 6.88% to
10.38%. The margins included in the interest rates will increase
by 1/2 of 1% in 1995 and by 1/4 of 1% each year in 1996, 1997 and
1998. The effective costs of borrowings under the Credit
Agreement were 9.27% and 7.23% at December 31, 1994 and 1993,
respectively.
The Credit Agreement was originally entered into for the
construction and acquisition of Unit 2 of the TNP One generating
plant. Borrowings under the Credit Agreement are ratably secured
by a first lien on a 74% undivided interest, which is owned
directly by TGC II, in Unit 2.
The Series A, 10.75% secured debentures, issued by TNMP,
effectively are secured ratably with a first lien on a 59%
undivided interest, which is owned directly by TGC, in Unit 1 of
TNP One.
The 12.5% secured debentures, issued by TNMP, effectively are
secured ratably:
1. With the lenders under the Credit Agreement in
the first lien on the 74% undivided interest
in Unit 2 and
2. With the Series A, 10.75% secured debentures
in the first lien on the 59% undivided
interest in Unit 1.
The remaining interests in Unit 1 and Unit 2 are owned directly
by TNMP.
The lenders under the Credit Agreement and the holders of the
secured debentures are secured by second liens on substantially
all utility plant in Texas owned directly by TNMP.
The Credit Agreement and the secured debentures contain certain
covenants which, under specified conditions, restrict the payment
of cash dividends on the common stock of TNMP. The most
restrictive of such covenants are an interest coverage test and
an equity ratio test. TNMP has met the tests at each quarterly
date since each test became effective.
The Credit Agreement and the secured debentures also contain
covenants which generally prohibit the sale, lease, transfer or
other disposition of assets other than in the ordinary course of
business.
(2) Long-Term Debt - continued
Maturities
Based upon the December 31, 1994 balances, maturities and sinking
fund requirements for long-term debt for the five years following
1994 are as follows:
First Secured Secured
mortgage bonds debentures notes payable Total
(In Thousands)
1995 $ 1,070 - 1,600 2,670
1996 1,070 - 9,872 10,942
1997 131,070 - 36,900 167,970
1998 1,070 - 36,900 37,970
1999 1,070 130,000 - 131,070
(3) Redeemable Cumulative Preferred Stock
In the event of voluntary liquidation of TNMP, holders of the
preferred stock have a preference to the extent of amounts
payable on redemption, and in the event of involuntary
liquidation, to the extent of par plus accrued dividends.
On October 1 of each year, TNMP is required to offer to purchase
from the holders of shares in Series B and Series C, at a price
not exceeding $100 per share plus accrued dividends, a number of
shares equal to 2% of the maximum number of shares of each series
outstanding at any one time prior to August 15 of such year.
TNMP is required to redeem, at a price of $100 per share plus
accrued dividends, 1,200 shares each of Series D and F, and 600
shares of Series E on each March 15 through March 1, 1996. The
requirement to redeem such shares is cumulative and totals
$300,000 on an annual basis.
On each June 15 through June 15, 2008, TNMP is required to redeem
4,000 shares of Series G at a price of $100 per share plus
accrued dividends; the requirement to redeem such shares is
cumulative. The holders of Series G and/or TNMP separately have
the noncumulative option for redemption of an additional 4,000
shares on each June 15 at a price of $100 per share plus accrued
dividends.
The recognition of regulatory disallowances (discussed in note 8)
during 1994 will not impair the ability of TNMP to pay cash
dividends on its preferred stock.
(4) Retained Earnings
Common Stock Dividends - TNMP
The Bond Indenture contains restrictions pertaining to the
payment of cash dividends on TNMP's common stock, which is wholly
owned by TNPE. The restrictions do not permit TNMP to remit a
cash dividend unless supported by the availability of
unrestricted retained earnings.
Due to the recognition of certain regulatory disallowances
(discussed in note 8) during the second quarter of 1994, cash
dividends on TNMP's common stock were suspended for the third
quarter. However, sufficient earnings were generated during the
third quarter to restore TNMP's unrestricted retained earnings
and permitted TNMP to pay a cash dividend of $2.2 million to TNPE
during the fourth quarter of 1994. As of December 31, 1994, all
of TNMP's retained earnings were restricted and no common stock
dividends can be paid to TNPE until unrestricted retained
earnings are restored.
(4) Retained Earnings - continued
Common Stock Dividends - TNMP - continued
Information concerning TNMP's retained earnings and payment of
dividends is summarized below:
Dec. 31, Sept. 30,June 30,March 31,Dec. 31,
1994 1994 1994 1994 1993
(unaudited)
(In Thousands)
Total retained earnings $10,559 17,698 5,373 31,574 38,983
Less restricted level
required by Bond
Indenture before payment
of common stock dividends 13,696 13,517 13,517 13,117 12,817
Unrestricted retained
earnings $(3,137) 4,181 (8,144) 18,457 26,166
Dec. 15, June 15, March 15,
Date dividends paid 1994 1994 1994
Dividends paid on common
stock as permitted at
end of preceding quarter $2,200 - 4,400 4,400
Common Stock Dividends - TNPE
The dividend restriction at TNMP did not preclude TNPE from
paying quarterly cash dividends to its stockholders during 1994.
However, because of TNMP's restriction and other factors (the
relatively low common equity of TNPE's capital structure,
industry considerations, etc.), beginning with the third quarter
of 1994, the TNPE Board of Directors reduced the quarterly cash
dividend by 51% to $0.20 per share.
(5) Reorganization
During the fourth quarter of 1994, as part of its on-going
reorganization, TNMP reduced company-wide staffing levels by 140
positions, or 14% of the workforce, as a result of work
elimination reviews by employee teams. The goals of the teams
were to streamline operations and reduce future costs. The
staffing reductions were accomplished primarily through a
combination of early retirements and involuntary terminations.
The aggregate costs impacting TNMP's 1994 operations were as
follows (in thousands except loss per share):
Early retirements $6,379
Involuntary terminations 1,786
Other costs 617
Reorganization costs 8,782
Less related income taxes (3,059)
Reorganization costs, net
of income taxes $5,723
Loss per share of
TNPE common stock $ 0.53
(6) Employee Benefit Plans
Pension Plan
TNMP has a defined benefit pension plan covering substantially
all of its employees. The benefits are based on an employee's
years of service and compensation. In 1992, the defined benefit
retirement plan was amended to change, for all participants
retiring after December 31, 1992, the determination of average
monthly compensation used in calculating the amount of retirement
benefits from the average of the three highest consecutive
calendar years to the average of the completed calendar years of
compensation after 1992. TNMP's funding policy is to contribute
annually at least the minimum amount required by U.S. Government
funding standards, but not more than that which can be deducted
for federal income tax purposes.
The following tables set forth the plan's funded status and
amounts recognized in the consolidated balance sheets at December
31, 1994 and 1993.
1994 1993
(In Thousands)
Benefits earned
Actuarial present value of benefit obligations:
Vested benefit obligation $45,845 50,457
Nonvested benefit obligation 4,212 5,052
Accumulated benefit obligation $50,057 55,509
Reconciliation of funded status
Projected benefit obligation $60,000 60,618
Unrecognized net asset 131 171
Unrecognized prior service cost 2,746 2,990
Unrecognized net gain from past experience 10,533 9,554
73,410 73,333
Plan assets (principally marketable securities)
at estimated fair value 66,338 69,763
Accrued pension costs (included in deferred credits
in the consolidated balance sheets) $ 7,072 3,570
Net pension costs were comprised of the following components as
determined using the projected unit credit actuarial method:
[CAPTION]
1994 1993 1992
(In Thousands)
Service cost $1,763 1,472 2,148
Interest cost on projected
benefit obligation 4,179 4,191 4,504
Adjustment for actual return on
plan assets 260 (6,126) (5,071)
Effect of reorganization
costs, net 3,537 - -
Net amortization and deferral (6,238) 300 258
$3,501 (163) 1,839
Assumptions used in accounting for the pension plan as of
December 31, 1994 and 1993 were as follows:
1994 1993
Discount rates 8.50% 7.15%
Rates of increase in compensation levels 5.50% 4.15%
Expected long-term rate of return on assets 9.50% 9.50%
(6) Employee Benefit Plans - continued
Postretirement Benefits Plan
TNMP sponsors a health care plan that provides postretirement
medical and death benefits to retirees who satisfied minimum age
and service requirements during employment.
On January 1, 1993, TNMP adopted SFAS 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." SFAS 106
requires an employer to recognize the costs of postretirement
benefits on the accrual basis during the periods that employees
render service to earn these benefits. Prior to 1993, the costs
of these benefits were expensed on a "pay-as-you-go" basis.
In each of its regulatory jurisdictions, TNMP was permitted to
recover the additional costs resulting from the adoption of SFAS
106. TNMP was required to establish a trust fund dedicated to the
payment of these postretirement benefits.
The following table sets forth the plan's funded status and
amounts recognized in the consolidated balance sheets at December
31, 1994 and 1993.
1994 1993
(In Thousands)
Accumulated postretirement benefits obligation:
Retirees and dependents $15,936 15,828
Active employees 7,192 7,671
Total benefits earned 23,128 23,499
Plan assets (principally marketable securities)
at estimated fair value 4,026 1,297
Accumulated postretirement benefits
obligation in excess of plan assets 19,102 22,202
Unrecognized transition obligation (15,436) (17,750)
Unrecognized net loss from
past experience - (3,533)
Accrued postretirement benefits costs (included
in deferred credits in the
consolidated balance sheets) $ 3,666 919
As previously explained, TNMP had accounted for postretirement
benefits on the "pay-as-you-go" basis prior to 1993. Under this
method, postretirement benefits costs were approximately $760,000
in 1992. Net postretirement benefits costs, pursuant to SFAS 106,
for 1994 and 1993 were comprised of the following components.
1994 1993
(In Thousands)
Service cost $ 738 508
Interest cost on postretirement
benefits obligation 1,642 1,510
Reduction for actual return on
plan assets (59) -
Effect of reorganization costs, net 2,945 -
Net amortization and deferral 784 934
Net postretirement benefits costs $6,050 2,952
(6) Employee Benefit Plans - continued
Postretirement Benefits Plan - continued
The transition obligation is being amortized over a twenty-year
period which began in 1993. The assumed health care cost trend
rate used to measure the expected cost of benefits was 6% for
1994 and is assumed to trend downward slightly each year to a
level of 4.3% for 2003 and thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported.
For example, increasing the assumed health care cost trend rates
by one percentage point in each year would increase the
accumulated postretirement benefits obligation as of December 31,
1994 by $2.8 million and the aggregate of the service and
interest cost components of net postretirement benefits cost for
the year ended December 31, 1994 by $366,000.
Additional assumptions used in accounting for the postretirement
benefits plan as of December 31, 1994 and 1993 were as follows:
1994 1993
Discount rates 8.50% 7.15%
Expected rate of return on assets 6.00% 6.00%
Other Employee Benefits
TNMP has a voluntary 401(k) thrift plan designed to enhance the
existing retirement plans available to its employees. Employees
have the option of investing their contributions in fixed income
securities, mutual funds or TNPE's common stock. The plan
provides for TNMP's contributions to be used to purchase TNPE's
common stock which employees may later convert into investments
in one or more other investment options. TNMP's contributions to
the thrift plan were approximately $753,000 in 1994, none in 1993
and $1,592,000 in 1992. Thrift plan assets included 1,721,553
shares and 1,471,213 shares of TNPE's common stock as of December
31, 1994 and 1993, respectively.
TNMP has employment contracts with certain members of management
and other key personnel. The contracts provide for lump sum
compensation payments and other rights in the event of
termination of employment or other adverse treatment of such
persons following a "change in control" of TNPE or TNMP. Such
event is defined to include, among other things, substantial
changes in the corporate structure or ownership of either entity
or in the Board of Directors of either entity.
An excess benefit plan has been provided for certain key
personnel and retired employees. The excess benefit plan is
provided under an insurance policy arrangement for benefits which
generally would have been provided by the pension and thrift
plans except for U.S. Government ceiling limitations.
(7) Income Taxes
The components of income taxes were as follows:
TNPE TNMP
1994 1993 1992 1994 1993 1992
(In Thousands)
Taxes on net operating income:
Federal - current $(253) (356) 655 (253) (356) 655
State - current 55 94 339 55 94 339
Federal - deferred (13) 5,515 1,347 (13) 5,515 1,347
ITC adjustments (1,027) (959) (444) (1,027) (959) (444)
(1,238) 4,294 1,897 (1,238) 4,294 1,897
Taxes on other income (loss):
Federal - current 1,006 641 1,114 560 622 1,095
Federal - deferred (10,902) 19 2,060 (10,907) - -
ITC adjustments (409) 6 (2,035) (347) - -
(10,305) 666 1,139 (10,694) 622 1,095
Total income taxes $(11,543) 4,960 3,036 (11,932) 4,916 2,992
(7) Income Taxes - continued
The amounts for total income taxes differ from the amounts
computed by applying the appropriate statutory federal income tax
rate to earnings (loss) before income taxes for the following
reasons:
TNPE TNMP
1994 1993 1992 1994 1993 1992
(In Thousands)
Tax at statutory tax rate $(9,873) 5,601 4,633 (9,731) 5,557 4,589
Amortization of
accumulated deferred ITC (1,055) (1,048) (1,051) (1,055) (1,048) (1,051)
Amortization of
excess deferred taxes (183) (142) (1,153) (183) (142) (1,153)
State income taxes 55 94 339 55 94 339
ITC related to disallowances (347) - - (347) - -
Other - net (140) 455 268 (670) 455 268
Actual income taxes $(11,543) 4,960 3,036 (11,931) 4,916 2,992
The tax effects of temporary differences that gave rise to
significant portions of net current and net noncurrent deferred
income taxes based on SFAS 109 as of December 31, 1994 and 1993
are presented below.
TNPE TNMP
1994 1993 1994 1993
(In Thousands)
Current deferred income taxes:
Deferred tax assets:
Unbilled revenues $ 6,264 6,914 6,264 6,914
Revenues subject to refund 1,404 1,053 1,404 1,053
Other 222 51 222 51
7,890 8,018 7,890 8,018
Deferred tax liability:
Deferred purchased power and
fuel costs (5,188) (5,151) (5,188) (5,151)
Current deferred income
taxes, net $ 2,702 2,867 2,702 2,867
Noncurrent deferred income taxes:
Deferred tax assets:
Minimum tax credit
carryforwards $10,086 10,067 14,993 14,890
Federal regular tax net operating
loss carryforwards 17,662 10,005 23,104 15,679
ITC carryforwards 17,469 17,434 18,672 18,786
Regulatory related items 18,291 10,116 18,291 10,116
Accrued employee
benefit costs 3,355 1,384 3,355 1,384
Other 2,149 2,388 788 792
69,012 51,394 79,203 61,647
Deferred tax liabilities:
Utility plant, principally
due to depreciation
and basis differences (108,094) (101,839) (108,094) (101,839)
Deferred charges (5,344) (5,993) (5,344) (5,993)
Regulatory related items (2,534) - (2,534) -
Other - 729 - 662
(115,972) (107,103) (115,972) (107,170)
Noncurrent deferred
income taxes, net $(46,960) (55,709) (36,769) (45,523)
(7) Income Taxes - continued
The provisions for deferred income taxes based on APB 11 for 1992
resulted from the following timing differences:
TNPE TNMP
1992
(In Thousands)
Deferred income taxes on net operating income:
Tax depreciation in excess of
book depreciation $ 13,615 13,615
Deferred charges expenses for tax purposes 674 674
Deferred purchase power and fuel costs 1,765 1,765
Unbilled revenues for tax purposes 519 519
Accrual for revenues subject to refund (5,069) (5,069)
Minimum tax credit (2,608) (2,608)
Change in deferred taxes due to tax
net operating loss (6,256) (6,256)
Amortization of excess deferred taxes (1,153) (1,153)
Other (140) (140)
1,347 1,347
Deferred income taxes on other income:
Recognition of deferred income taxes 6,256 -
Minimum tax credit (4,196) -
2,060 -
Total $ 3,407 1,347
The following is a summary of the federal tax carryforwards as of
December 31, 1994:
TNPE TNMP
1994
(In Thousands)
Net Operating Loss
Amount $50,464 66,012
First Year of Expiration Period 2008 2006
Last Year of Expiration Period 2009 2009
Minimum Tax Credits
Amount $10,086 14,993
Expiration Period None None
Investment Tax Credit Amount $17,469 18,672
Expiration Period 2005 2005
Based on TNPE and TNMP's historical and projected pretax
earnings, management believes it is more likely than not that
both TNPE and TNMP will realize the benefit of the deferred tax
assets existing at December 31, 1994.
In 1991, TNPE received a private letter ruling from the Internal
Revenue Service confirming that Unit 1 of the TNP One generating
plant was property eligible for ITC. In connection with an audit
of TNPE's consolidated federal income tax returns for 1990 and
1991, the IRS revenue agent has informally advised TNPE that he
will recommend that the private letter ruling be revoked.
Management believes the claim for ITC is valid; however, if the
revenue agent's position is upheld, TNPE's claim for ITC may be
denied resulting in a negative effect on future cash flows to the
extent of ITC utilized on TNPE's consolidated tax returns and any
related interest and penalties. Of the $22 million of ITC at
issue, TNPE and its subsidiaries have utilized $5 million in the
consolidated returns through 1993; TNMP's portion is $3.7
million. However, through 1994, TNPE and TNMP have only
recognized $0.8 million of the ITC in results of operations.
(8) Regulatory Matters
Texas Rate Case Settlement
On October 6, 1994, the PUCT issued a final order approving a
unanimous settlement agreement among the parties in TNMP's 1994
retail rate application. The final order provides for an increase
in annualized revenues in Texas of $17.5 million, or 4.5%, which
TNMP implemented on October 2, 1994.
The final order and the settlement agreement resolved all
outstanding court appeals in connection with TNMP's two previous
rate cases and provided for TNMP to write off $35 million of the
PUCT's total disallowances of $61.4 million regarding TNP One.
TNMP recognized the write-off in the second quarter of 1994,
which resulted in an after-tax charge of approximately $20.5
million, or $1.91 per share of TNPE common stock, as detailed
below (in thousands except loss per share):
Regulatory disallowances $35,000
Less accumulated depreciation previously recognized (3,454)
Regulatory disallowances, net of
accumulated depreciation 31,546
Less related income taxes (11,041)
Regulatory disallowances, net of income taxes $20,505
Loss per share of TNPE common stock $ 1.91
The final order includes a moratorium restricting TNMP from
filing applications for rate increases in Texas for a five-year
period beginning March 31, 1994, subject to certain conditions.
Those conditions do not allow TNMP to file for any base rate
increase under any circumstances prior to March 31, 1997 but
would allow an application for increased rates to be filed after
that time if certain force majeure events (as defined in the
agreement) occur at any time during the five-year moratorium
period.
Revenues Subject to Refund
The recent final order discussed above does not impact the
uncertainties concerning the $1.6 million in additional
annualized revenues granted to TNMP, subject to refund, by the
PUCT in the previous Texas rate case, filed in 1991. At December
31, 1994, revenues subject to refund totaled $4.8 million under a
tax-related issue from this previous Texas rate case. These
revenues subject to refund were excluded from the results of
operations. Recognition of these revenues is conditioned upon
TNMP obtaining a private letter ruling from the IRS supporting
TNMP's position on certain related income tax consequences. The
private letter ruling will not affect revenues related to
electricity sales on and after October 2, 1994, when the new
rates in the most recent Texas rate case settlement were
implemented.
While there can be no assurances given, based upon a similar
revenue ruling received by an unrelated utility, TNMP expects to
receive a favorable ruling during 1995. An unfavorable ruling
would result in a refund to TNMP's Texas customers of the $4.8
million of deferred revenues and in the recognition of an
additional expense of $8.1 million to provide for a regulatory
liability for the pass-through to customers of income tax
benefits applicable to the disallowed plant.
Other Regulatory Matters
In a 1990 PUCT application, TNMP was granted deferred accounting
treatment (DAT) for certain operating and interest costs relating
to the construction of Unit 1 of TNP One. The unamortized
balances of these costs were $4,418,000 and $4,549,000 as of
December 31, 1994 and 1993, respectively. Certain cities have
filed an appeal in district court contesting the DAT. In the
opinion of management, the ultimate disposition of this matter is
not expected to have a material adverse effect on TNMP's and
TNPE's consolidated financial position or results of operations.
(9) Commitments and Contingencies
Sale of Texas Panhandle Properties
In connection with the Texas rate case settlement (note 8), TNMP
agreed to actively pursue the sale of its franchise rights and
utility plant located in the Texas Panhandle. During December
1994, TNMP executed an agreement to sell the Panhandle properties
to Southwestern Public Service Company for $29.2 million, subject
to certain conditions and regulatory approvals. The Panhandle
properties comprise a relatively small portion of TNMP's
business. At December 31, 1994, the book value of the Panhandle
properties was $14.3 million; annual revenues were $9.6 million
with corresponding annual sales of 103 gigawatt-hours to 7,300
customers. Assuming satisfaction of the conditions and regulatory
approvals, the transaction is expected to be completed in 1995;
however, certain issues relating to the release of liens on the
Panhandle properties by debt holders could possibly delay the
completion of this transaction until such liens are released.
Fuel Supply Agreement
Under a fuel supply agreement, Walnut Creek Mining Company
provides TNMP with a lignite fuel source for the 38-year life of
TNP One. Walnut Creek Mining Company is jointly owned by Phillips
Coal Company and Peter Kiewit Sons', Inc. TNMP successfully
negotiated a 20 percent reduction in the cost of lignite coal
effective January 1, 1995, as a result of an amendment to this
agreement. Initially, the reduction will be used to offset the
accumulated under-recovery of fuel costs. These costs of
approximately $15 million are included in deferred purchased
power and fuel costs at December 31, 1994 in the accompanying
consolidated balance sheets.
Wholesale Purchased Power Agreements
TNMP purchases a significant portion of its electric requirements
from various wholesale suppliers. These contracts are scheduled
to expire in various years through 2010.
In 1995, TNMP provided notice to Texas Utilities Electric Company
("TU") of its intent to cease purchasing full requirements power
and energy at the points of delivery currently served by TU,
effective no later than January 1, 1999. In 1994, TU supplied
approximately 29% of TNMP's Texas capacity and 22% of its Texas
energy requirements. Management expects that, as a result of the
development of competition within the wholesale power market,
TNMP will enter into new arrangements for such capacity and
energy on terms that are more favorable for its customers.
Legal Actions
TNMP is involved in various claims and other legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of these matters will not
have a material adverse effect on TNMP's and TNPE's consolidated
financial position or results of operations.
TNP ENTERPRISES, INC. AND SUBSIDIARIES
Selected Quarterly Consolidated Financial Data
The following selected quarterly consolidated financial data for
TNPE is unaudited, and, in the opinion of the TNPE's management,
is a fair summary of the results of operations for such periods:
March 31 June 30 Sept. 30 Dec.31
(In thousands - except per share amounts)
1994
Operating revenues $107,599 111,046 149,864 109,480
Net operating income 15,704 17,622 30,984 13,681
Net earnings (loss) (2,884) (21,654) 11,921 (4,824)
Earnings (loss)
applicable to common stock $(3,095) (21,855) 11,732 (5,013)
Weighted average number of common
shares outstanding 10,702 10,725 10,752 10,822
Earnings (loss) per
share of common stock $ (0.29) (2.04) 1.09 (0.47)
Dividends per share of common stock $0.4075 0.4075 0.2000 0.2000
1993
Operating revenues $103,150 107,530 150,067 113,495
Net operating income 14,454 15,722 29,576 18,488
Net earnings (loss) (1,866) (410) 13,579 302
Earnings (loss) applicable
to common stock $(2,099) (634) 13,368 91
Weighted average number of common
shares outstanding 10,604 10,626 10,653 10,680
Earnings (loss) per
share of common stock $ (0.20) (0.06) 1.25 0.01
Dividends per share of common stock $0.4075 0.4075 0.4075 0.4075
Generally, the variations between quarters reflect the seasonal
fluctuations of TNMP's business. In addition, the results above
are impacted by net of tax amounts pertaining to the $20.5
million of regulatory disallowances (second quarter of 1994) and
$5.7 million of reorganization costs (fourth quarter of 1994).
These one-time items are explained more fully in notes 8 and 5,
respectively, of Notes to Consolidated Financial Statements.
Also, the dividend reduction commencing with the third quarter of
1994 is explained at note 4 of Notes to Consolidated Financial
Statements. The annual variations between 1994 and 1993 are
addressed at Item 7, "Managements' Discussion and Analysis of
Financial Condition and Results of Operations."
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Identification of Directors and Directorships
The information required by this item is incorporated by
reference to "Election of Directors" and "Security Ownership of
Management" of the definitive Proxy Statement relating to the
annual meeting of holders of common stock of TNPE, pursuant to
Regulation 14A, filed with the SEC and mailed on or about March
28, 1995 to the holders of common stock of TNPE.
Identification of Executive Officers
The information set forth under "Executive Officers of the
Registrants" in Part I is incorporated here by reference.
Item 11. EXECUTIVE COMPENSATION.*
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.*
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.*
*The information required by Items 11, 12, and 13 is incorporated
by reference to "Compensation of Directors and Executive
Officers," "Security Ownership of Management" and "Certain
Transactions" in the definitive Proxy Statement relating to the
annual meeting of holders of common stock of TNPE, pursuant to
Regulation 14A, filed with the SEC and mailed on or about March
28, 1995 to the holders of common stock of TNPE.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Items Filed as Part of This Report
Financial Statements Page
Independent Auditors' Reports 29
TNPE
Consolidated Statements of Operations, Three
Years Ended December 31, 1994 31
Consolidated Statements of Cash Flows, Three
Years Ended December 31, 1994 32
Consolidated Balance Sheets, December 31, 1994 and 1993 34
Consolidated Statements of Capitalization,
December 31, 1994 and 1993 35
Consolidated Statements of Common Stockholders' Equity
and Redeemable Cumulative Preferred Stock, Three
Years Ended December 31, 1994 37
TNMP
Consolidated Statements of Operations, Three
Years Ended December 31, 1994 39
Consolidated Statements of Cash Flows, Three
Years Ended December 31, 1994 40
Consolidated Balance Sheets, December 31, 1994 and 1993 42
Consolidated Statements of Capitalization,
December 31, 1994 and 1993 43
Consolidated Statements of Common Stockholder's Equity
and Redeemable Cumulative Preferred Stock, Three
Years Ended December 31, 1994 45
Notes to Consolidated Financial Statements 47
Selected Quarterly Consolidated Financial Data - TNPE 60
All financial statement schedules are omitted, as the
required information is not applicable or the information is
presented in the consolidated financial statements or related
notes.
Exhibits
See Exhibit Index, Pages 64-77
(b) Reports on Form 8-K
None during the last quarter covered by this report.
(c) The Exhibit Index on pages 64-77 is incorporated here by
reference.
(d) All financial statement schedules are omitted, as the
required information is not applicable or the information is
presented in the consolidated financial statements or related
notes.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) TNP ENTERPRISES, INC.
By \s\ M. S. Cheema
Manjit S. Cheema
Date: March 24, 1995 Vice President & Chief Financial
Officer
(Registrant) TEXAS-NEW MEXICO POWER COMPANY
By \s\ M. S. Cheema
Manjit S. Cheema
Date: March 24, 1995 Vice President & Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the Registrants and in the capacities and on the dates indicated.
Title Date
By \s\ R.D. Woofter Chairman 3-24-95
R. D. Woofter
By \s\ Kevern R. Joyce President & Chief Executive Officer 3-24-95
Kevern R. Joyce
By \s\ M. S. Cheema Vice President & Chief Financial 3-24-95
Manjit S. Cheema Officer of TNPE and Vice President &
Chief Financial Officer and Treasurer of TNMP
By \s\ Monte W. Smith Treasurer (Principal Accounting 3-24-95
Monte W. Smith Officer) of TNPE and Controller (Principal
Accounting Officer) of TNMP
By \s\ R. Denny Alexander Director 3-24-95
R. Denny Alexander
By \s\ Cass O. Edwards,II Director 3-24-95
C. O. Edwards, II
By \s\ John A. Fanning Director 3-24-95
John A. Fanning
By \s\ Sidney M. Gutierrez Director 3-24-95
Sidney M. Gutierrez
By \s\ Harris L. Kempner, Jr. Director 3-24-95
Harris L. Kempner, Jr.
By \s\ Dwight R. Spurlock Director 3-24-95
Dwight R. Spurlock
TNP ENTERPRISES, INC. AND SUBSIDIARIES
TEXAS-NEW MEXICO POWER COMPANY AND SUBSIDIARIES
EXHIBIT INDEX
These are exhibits applicable to the reports of both TNPE and
TNMP unless otherwise noted.
Exhibits filed herewith are denoted by "*." The other exhibits
have heretofore been filed with the Commission and are
incorporated herein by reference.
Exhibit
No. Description
TNPE incorporated documents 3(a) through 3(g), and 4(u) by
reference to exhibits with the same exhibit number designation in
that filing noted in the parenthesis.
3(a) - Articles of Incorporation and
Amendments through March 6, 1984 (Exhibit 3(a), File
No. 2-89800).
3(b) - Amendment to Articles of Incorporation
filed September 25, 1984 (Exhibit 3(b) to Form 10-K
for the year ended December 31, 1984, File No. 1-
8847).
3(c) - Amendment to Articles of Incorporation
filed August 29, 1985 (Exhibit 3(a) to Form 10-K for
the year ended December 31, 1985, File No. 1-8847).
3(d) - Amendment to Articles of Incorporation
filed June 2, 1986 (Exhibit 3(a) to Form 10-K for the
year ended December 31, 1986, File No. 1-8847).
3(e) - Amendment to Articles of Incorporation
filed May 10, 1988 (Exhibit 3(e) to Form 10-K for the
year ended December 31, 1988, File No. 1-8847).
3(f) - Amendment to Articles of Incorporation
filed May 10, 1988 (Exhibit 3(f) to Form 10-K for the
year ended December 31, 1988, File No. 1-8847).
3(g) - Amendment to Articles of Incorporation
filed December 27, 1988 (Exhibit 3(g) to Form 10-K for
the year ended December 31, 1988, File No. 1-8847).
*3(h) - Bylaws of TNPE, as amended November 15,
1994.
4(u) - Rights Agreement and Form of Right
Certificate, as amended, effective November 13, 1990
(Exhibit 2.1 to Form 8-A, File No. 1-8847).
*23 - Independent Auditors' Consent - KPMG
Peat Marwick LLP.
*27 - Financial Data Schedule for TNPE.
TNMP incorporated documents 3(a) through 3(gg) by reference to
exhibits with the same exhibit number designation in that filing
noted in the parenthesis.
3(a) - Restated Articles of Incorporation of
TNMP (Exhibit 4(a), File No. 2-86282).
3(b) - Amendment to Restated Articles of
Incorporation dated October 26, 1983 (Exhibit 3(b) to
Form 10-K for the year ended December 31, 1984, File
No. 1-2660-2).
3(c) - Amendment to Restated Articles of
Incorporation dated April 8, 1984 (Exhibit 3(c) to
Form 10-K for the year ended December 31, 1984, File
No. 1-2660-2).
3(d) - Amendment to Restated Articles of
Incorporation dated October 2, 1984 (Exhibit 3(d) to
Form 10-K for the year ended December 31, 1984, File
No. 1-2660-2).
3(e) - Articles of Merger dated October 3,
1984 (Exhibit 3(e) to Form 10-K for the year ended
December 31, 1984, File No. 1-2660-2).
3(f) - Amendment to Restated Articles of
Incorporation dated May 22, 1985 (Exhibit 3(a) to Form
10-K for the year ended December 31, 1985, File No. 2-
97230).
3(g) - Amendment to Restated Articles of
Incorporation dated August 20, 1985 (Exhibit 3(b) to
Form 10-K for the year ended December 31, 1985, File
No. 2-97230).
3(h) - Amendment to Restated Articles of
Incorporation dated October 7, 1985 (Exhibit 3(c) to
Form 10-K for the year ended December 31, 1985, File
No. 2-97230).
3(i) - Amendment to Restated Articles of
Incorporation dated June 12, 1986 (Exhibit 3(a) to
Form 10-K for the year ended December 31, 1986, File
No. 2-97230).
3(j) - Amendment to Restated Articles of
Incorporation dated October 17, 1986 (Exhibit 3(b) to
Form 10-K for the year ended December 31, 1986, File
No. 2-97230).
3(k) - Amendment to Restated Articles of
Incorporation dated July 14, 1987 (Exhibit 3(k) to
Form 10-K for the year ended December 31, 1987, File
No. 2-97230).
3(l) - Amendment to Restated Articles of
Incorporation dated October 23, 1987 (Exhibit 3(l) to
Form 10-K for the year ended December 31, 1987, File
No. 2-97230).
3(m) - Amendment to Restated Articles of
Incorporation dated May 4, 1988 (Exhibit 3(m) to Form
10-K for the year ended December 31, 1988, File No. 2-
97230).
3(n) - Amendment to Restated Articles of
Incorporation dated May 5, 1988 (Exhibit 3(n) to Form
10-K for the year ended December 31, 1988, File No. 2-
97230).
3(o) - Amendment to Restated Articles of
Incorporation dated May 5, 1988 (Exhibit 3(o) to Form
10-K for the year ended December 31, 1988, File No. 2-
97230).
3(p) - Amendment to Restated Articles of
Incorporation dated December 5, 1988 (Exhibit 3(p) to
Form 10-K for the year ended December 31, 1988, File
No. 2-97230).
3(q) - Amendment to Restated Articles of
Incorporation dated April 11, 1989 (Exhibit 3(q) to
Form 10-K for the year ended December 31, 1989, File
No. 2-97230).
3(r) - Amendment to Restated Articles of
Incorporation dated July 27, 1989 (Exhibit 3(r) to
Form 10-K for the year ended December 31, 1989, File
No. 2-97230).
3(s) - Amendment to Restated Articles of
Incorporation dated October 23, 1989 (Exhibit 3(s) to
Form 10-K for the year ended December 31, 1989, File
No. 2-97230).
3(t) - Amendment to Restated Articles of
Incorporation dated May 16, 1990 (Exhibit 3(t) to Form
10-K for the year ended December 31, 1990, File No. 2-
97230).
3(u) - Amendment to Restated Articles of
Incorporation dated June 26, 1990 (Exhibit 3(u) to
Form 10-K for the year ended December 31, 1990, File
No. 2-97230).
3(v) - Amendment to Restated Articles of
Incorporation dated November 27, 1990 (Exhibit 3(v) to
Form 10-K for the year ended December 31, 1990, File
No. 2-97230).
3(w) - Amendment to Restated Articles of
Incorporation dated May 1, 1991 (Exhibit 3(w) to Form
10-K for the year ended December 31, 1991, File No.
2-97230).
3(x) - Amendment to Restated Articles of
Incorporation dated July 18, 1991 (Exhibit 3(x) to
Form 10-K for the year ended December 31, 1991, File
No. 2-97230).
3(y) - Amendment to Restated Articles of
Incorporation dated October 18, 1991 (Exhibit 3(y) to
Form 10-K for the year ended December 31, 1991, File
No. 2-97230).
3(z) - Amendment to Restated Articles of
Incorporation dated April 30, 1992 (Exhibit 3(z) to
Form 10-K for the year ended December 31, 1992, File
No. 2-97230).
3(aa) - Amendment to Restated Articles of
Incorporation dated June 19, 1992 (Exhibit 3(aa) to
Form 10-K for the year ended December 31, 1992, File
No. 2-97230).
3(bb) - Amendment to Restated Articles of
Incorporation dated November 3, 1992 (Exhibit 3(bb) to
Form 10-K for the year ended December 31, 1992, File
No. 2-97230).
3(cc) - Amendment to Restated Articles of
Incorporation dated April 7, 1993 (Exhibit 3(cc) to
Form 10-K for the year ended December 31, 1993, File
No. 2-97230).
3(dd) - Amendment to Restated Articles of
Incorporation dated July 22, 1993 (Exhibit 3(dd) to
Form 10-K for the year ended December 31, 1993, File
No. 2-97230).
3(ee) - Amendment to Restated Articles of
Incorporation dated October 21, 1993 (Exhibit 3(ee) to
Form 10-K for the year ended December 31, 1993, File
No. 2-97230).
3(ff) - Amendment to Restated Articles of
Incorporation dated April 13, 1994 (Exhibit 3(ff) to
Form 10-Q for the quarter ended June 30, 1994, File
No. 2-97230).
3(gg) - Amendment to Restated Articles of
Incorporation dated June 27, 1994 (Exhibit 3(gg) to
Form 10-Q for the quarter ended June 30, 1994, File
No. 2-97230).
*3(hh) - Bylaws of TNMP, as amended November 15,
1994.
*27 - Financial Data Schedule for TNMP.
TNPE and TNMP incorporated documents 4(a) through 4(t) by
reference to same exhibit number as filing noted in parenthesis.
4(a) - Indenture of Mortgage and Deed of Trust
dated as of November 1, 1944 (Exhibit 2(d), File No. 2-
61323).
4(b) - Seventh Supplemental Indenture dated as
of May 1, 1963 (Exhibit 2(k), File No. 2-61323).
4(c) - Eighth Supplemental Indenture dated as
of July 1, 1963 (Exhibit 2(1), File No. 2-61323).
4(d) - Ninth Supplemental Indenture dated as
of August 1, 1965 (Exhibit 2(m), File No. 2-61323).
4(e) - Tenth Supplemental Indenture dated as
of May 1, 1966 (Exhibit 2(n), File No. 2-61323).
4(f) - Eleventh Supplemental Indenture dated
as of October 1, 1969 (Exhibit 2(o), File No. 2-
61323).
4(g) - Twelfth Supplemental Indenture dated as
of May 1, 1971 (Exhibit 2(p), File No. 2-61323).
4(h) - Thirteenth Supplemental Indenture dated
as of July 1, 1974 (Exhibit 2(q), File No. 2-61323).
4(i) - Fourteenth Supplemental Indenture dated
as of March 1, 1975 (Exhibit 2(r), File No. 2-61323).
4(j) - Fifteenth Supplemental Indenture dated
as of September 1, 1976 (Exhibit 2(e), File No. 2-
57034).
4(k) - Sixteenth Supplemental Indenture dated
as of November 1, 1981 (Exhibit 4(x), File No. 2-
74332).
4(l) - Seventeenth Supplemental Indenture
dated as of December 1, 1982 (Exhibit 4(cc), File No.
2-80407).
4(m) - Eighteenth Supplemental Indenture dated
as of September 1, 1983 (Exhibit (a) to Form 10-Q of
TNMP for the quarter ended September 30, 1983, File
No. 1-4756).
4(n) - Nineteenth Supplemental Indenture dated
as of May 1, 1985 (Exhibit 4(v), File No. 2-97230).
4(o) - Twentieth Supplemental Indenture dated
as of July 1, 1987 (Exhibit 4(o) to Form 10-K of TNMP
for the year ended December 31, 1987, File No. 2-
97230).
4(p) - Twenty-First Supplemental Indenture
dated as of July 1, 1989 (Exhibit 4(p) to Form 10-Q of
TNMP for the quarter ended June 30, 1989, File No. 2-
97230).
4(q) - Twenty-Second Supplemental Indenture
dated as of January 15, 1992 (Exhibit 4(q) to Form 10-
K of TNMP for the year ended December 31, 1991, File
No. 2-97230).
4(r) - Twenty-Third Supplemental Indenture
dated as of September 15, 1993 (Exhibit 4(r) to Form
10-K of TNMP for the year ended December 31, 1993,
File No. 2-97230).
4(s) - Indenture and Security Agreement for
Secured Debentures dated as of January 15, 1992
(Exhibit 4(r) to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
4(t) - Indenture and Security Agreement for
Secured Debentures dated as of September 15, 1993
(Exhibit 4(t) to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
Material Contracts Relating to TNP One
10(a) - Fuel Supply Agreement, dated November
18, 1987, between Phillips Coal Company and TNMP
(Exhibit 10(j) to Form 10-K of TNMP for the year ended
December 31, 1987, File No. 2-97230).
*10(a)1 - Amendment No. 1, dated as of April 1, 1988,
to the Fuel Supply Agreement dated November 18, 1987,
between Phillips Coal Company and TNMP.
*10(a)2 - Amendment No. 2, dated as of November 29,
1994, between Walnut Creek Mining Company and TNMP, to
the Fuel Supply Agreement dated November 18, 1987,
between Phillips Coal Company and TNMP, effective as
of January 1, 1995.
10(b) - Unit 1 First Amended and Restated
Project Loan and Credit Agreement, dated as of January
8, 1992 (the "Unit 1 Credit Agreement"), among TNMP,
Texas Generating Company ("TGC"), the banks named
therein as Banks (the "Unit 1 Banks") and The Chase
Manhattan Bank (National Association), as Agent for
the Unit 1 Banks (the "Unit 1 Agent"), amending and
restating the Project Loan and Credit Agreement among
such parties dated as of December 1, 1987 (Exhibit
10(c) to Form 10-K of TNMP for the year ended December
31, 1991, File No. 2-97230).
10(b)1 - Participation Agreement, dated as of
January 8, 1992, among the banks named therein as
Banks, the parties named therein as Participants and
the Unit 1 Agent (Exhibit 10(c)1 to Form 10-K of TNMP
for the year ended December 31, 1991, File No.
2-97230).
10(b)2 - Amendment No. 1, dated as of September
21, 1993, to the Unit 1 Credit Agreement (Exhibit
10(b)2 to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(c) - Assignment and Security Agreement,
dated as of January 8, 1992, among TGC and the Unit 1
Agent, for the benefit of the Secured Parties, as
defined in the Unit 1 Credit Agreement, amending and
restating the Assignment and Security Agreement among
such parties dated as of December 1, 1987 (Exhibit
10(d) to Form 10-K of TNMP for the year ended December
31, 1991, File No. 2-97230).
10(d) - Assignment and Security Agreement,
dated December 1, 1987, executed by TNMP in favor of
the Unit 1 Agent for the benefit of the Secured
Parties, as defined therein (Exhibit 10(u) to Form 10-
K of TNMP for the year ended December 31, 1987, File
No. 2-97230).
10(e) - Amended and Restated Subordination
Agreement, dated as of October 1, 1988, among TNMP,
Continental Illinois National Bank and Trust Company
of Chicago and the Unit 1 Agent, amending and
restating the Subordination Agreement among such
parties dated as of December 1, 1987 (Exhibit 10(uu)
to Form 10-K of TNMP for the year ended December 31,
1988, File No. 2-97230).
10(f) - Mortgage and Deed of Trust (With
Security Agreement and UCC Financing Statement for
Fixture Filing), dated to be effective as of December
1, 1987, and executed by Project Funding Corporation
("PFC"), as Mortgagor, to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(ee) to Form 10-K of TNMP
for the year ended December 31, 1987, File No. 2-
97230).
10(f)1 - Supplemental Mortgage and Deed of Trust
(With Security Agreement and UCC Financing Statement
for Fixture Filing), executed by TGC, as Mortgagor, on
January 27, 1992, to be effective as of December 1,
1987, to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein
(Exhibit 10(g)4 to Form 10-K of TNMP for the year
ended December 31, 1991, File No. 2-97230).
10(f)2 - First TGC Modification and Extension
Agreement, dated as of January 24, 1992, among the
Unit 1 Banks, the Unit 1 Agent, TNMP and TGC (Exhibit
10(g)1 to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
10(f)3 - Second TGC Modification and Extension
Agreement, dated as of January 27, 1992, among the
Unit 1 Banks, the Unit 1 Agent, TNMP and TGC (Exhibit
10(g)2 to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
10(f)4 - Third TGC Modification and Extension
Agreement, dated as of January 27, 1992, among the
Unit 1 Banks, the Unit 1 Agent, TNMP and TGC (Exhibit
10(g)3 to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
10(f)5 - Fourth TGC Modification and Extension
Agreement, dated as of September 29, 1993, among the
Unit 1 Banks, the Unit 1 Agent, TNMP and TGC (Exhibit
10(f)5 to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(f)6 - Fifth TGC Modification and Extension
Agreement, dated as of September 29, 1993, among the
Unit 1 Banks, the Unit 1 Agent, TNMP and TGC (Exhibit
10(f)6 to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(g) - Indemnity Agreement, made as of the 1st
day of December, 1987, by Westinghouse, CE and Zachry,
as Indemnitors, for the benefit of the Secured
Parties, as defined therein (Exhibit 10(ff) to Form 10-
K of TNMP for the year ended December 31, 1987, File
No. 2-97230).
10(h) - Second Lien Mortgage and Deed of Trust
(With Security Agreement) executed by TNMP, as
Mortgagor, to Donald H. Snell, as Mortgage Trustee,
for the benefit of the Secured Parties, as defined
therein (Exhibit 10(jj) to Form 10-K of TNMP for the
year ended December 31, 1987, File No. 2-97230).
10(h)1 - Correction Second Lien Mortgage and
Deed of Trust (with Security Agreement), dated as of
December 1, 1987, executed by TNMP, as Mortgagor, to
Donald H. Snell, as Mortgage Trustee, for the benefit
of the Secured Parties, as defined therein (Exhibit
10(vv) to Form 10-K of TNMP for the year ended
December 31, 1988, File No. 2-97230).
10(h)2 - Second Lien Mortgage and Deed of Trust
(with Security Agreement) Modification, Extension and
Amendment Agreement, dated as of January 8, 1992,
executed by TNMP to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(i)2 to Form 10-K of TNMP
for the year ended December 31, 1991, File No. 2-
97230).
10(h)3 - TNP Second Lien Mortgage Modification
No. 2, dated as of September 21, 1993, executed by
TNMP to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein
(Exhibit 10(h)3 to Form 10-K of TNMP for the year
ended December 31, 1993, File No. 2-97230).
10(i) - Agreement for Conveyance and Partial
Release of Liens, made as of the 1st day of December,
1987, by PFC and the Unit 1 Agent for the benefit of
TNMP (Exhibit 10(kk) to Form 10-K of TNMP for the year
ended December 31, 1987, File No. 2-97230).
10(j) - Inducement and Consent Agreement, dated
as of June 15, 1988, between Phillips Coal Company,
Kiewit Texas Mining Company, TNMP, Phillips Petroleum
Company and Peter Kiewit Son's, Inc. (Exhibit 10(nn)
to Form 10-K of TNMP for the year ended December 31,
1988, File No. 2-97230).
10(k) - Assumption Agreement, dated as of
October 1, 1988, executed by TGC, in favor of the
Issuing Bank, as defined therein, the Unit 1 Banks,
the Unit 1 Agent and the Depositary, as defined
therein (Exhibit 10(ww) to Form 10-K of TNMP for the
year ended December 31, 1988, File No. 2-97230).
10(l) - Guaranty, dated as of October 1, 1988,
executed by TNMP and given in respect of the TGC
obligations under the Unit 1 Credit Agreement (Exhibit
10(xx) to Form 10-K of TNMP for the year ended
December 31, 1988, File No. 2-97230).
10(m) - First Amended and Restated Facility
Purchase Agreement, dated as of January 8, 1992, among
TNMP, as the Purchaser, and TGC, as the Seller,
amending and restating the Facility Purchase Agreement
among such parties dated as of October 1, 1988
(Exhibit 10(n) to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
10(n) - Operating Agreement, dated as of
October 1, 1988, among TNMP and TGC (Exhibit 10(zz) to
Form 10-K of TNMP for the year ended December 31,
1988, File No. 2-97230).
10(o) - Unit 2 First Amended and Restated
Project Loan and Credit Agreement, dated as of January
8, 1992 (the "Unit 2 Credit Agreement"), among TNMP,
Texas Generating Company II ("TGC II"), the banks
named therein as Banks (the "Unit 2 Banks") and The
Chase Manhattan Bank (National Association), as Agent
for the Unit 2 Banks (the "Unit 2 Agent"), amending
and restating the Project Loan and Credit Agreement
among such parties dated as of October 1, 1988
(Exhibit 10(q) to Form 10-K of TNMP for the year ended
December 31, 1991, File No. 2-97230).
10(o)1 - Amendment No. 1, dated as of September
21, 1993, to the Unit 2 Credit Agreement (Exhibit
10(o)1 to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(p) - Assignment and Security Agreement,
dated as of January 8, 1992, among TGC II and the Unit
2 Agent, for the benefit of the Secured Parties, as
defined in the Unit 2 Credit Agreement, amending and
restating the Assignment and Security Agreement among
such parties dated as of October 1, 1988 (Exhibit
10(r) to Form 10-K of TNMP for the year ended December
31, 1991, File No. 2-97230).
10(q) - Assignment and Security Agreement,
dated as of October 1, 1988, executed by TNMP in favor
of the Unit 2 Agent for the benefit of the Secured
Parties, as defined therein (Exhibit 10(jjj) to Form
10-K of TNMP for the year ended December 31, 1988,
File No. 2-97230).
10(r) - Subordination Agreement, dated as of
October 1, 1988, among TNMP, Continental Illinois
National Bank and Trust Company of Chicago and the
Unit 2 Agent (Exhibit 10(mmm) to Form 10-K of TNMP for
the year ended December 31, 1988, File No. 2-97230).
10(s) - Mortgage and Deed of Trust (With
Security Agreement and UCC Financing Statement for
Fixture Filing), dated to be effective as of October
1, 1988, and executed by Texas PFC, Inc., as
Mortgagor, to Donald H. Snell, as Mortgage Trustee,
for the benefit of the Secured Parties, as defined
therein (Exhibit 10(uuu) to Form 10-K of TNMP for the
year ended December 31, 1988, File No. 2-97230).
10(s)1 - First TGC II Modification and Extension
Agreement, dated as of January 24, 1992, among the
Unit 2 Banks, the Unit 2 Agent, TNMP and TGC II
(Exhibit 10(u)1 to Form 10-K of TNMP for the year
ended December 31, 1991, File No. 2-97230).
10(s)2 - Second TGC II Modification and
Extension Agreement, dated as of January 27, 1992,
among the Unit 2 Banks, the Unit 2 Agent, TNMP and TGC
II (Exhibit 10(u)2 to Form 10-K of TNMP for the year
ended December 31, 1991, File No. 2-97230).
10(s)3 - Third TGC II Modification and Extension
Agreement, dated as of January 27, 1992, among the
Unit 2 Banks, the Unit 2 Agent, TNMP and TGC II
(Exhibit 10(u)3 to Form 10-K of TNMP for the year
ended December 31, 1991, File No. 2-97230).
10(s)4 - Fourth TGC II Modification and
Extension Agreement, dated as of September 29, 1993,
among the Unit 2 Banks, the Unit 2 Agent, TNMP and TGC
II (Exhibit 10(s)4 to Form 10-K of TNMP for the year
ended December 31, 1993, File No. 2-97230).
10(s)5 - Fifth TGC II Modification and Extension
Agreement, dated as of June 15, 1994, among the Unit 2
Banks, the Unit 2 Agent, TNMP and TGC II (Exhibit
10(s)5 to Form 10-Q of TNMP for the quarter ended June
30, 1994, File No. 2-97230).
10(t) - Release and Waiver of Liens and
Indemnity Agreement, made effective as of the 1st day
of October, 1988, by a consortium composed of
Westinghouse, CE, and Zachry (Exhibit 10(vvv) to Form
10-K of TNMP for the year ended December 31, 1988,
File No. 2-97230).
10(u) - Second Lien Mortgage and Deed of Trust
(With Security Agreement), dated as of October 1,
1988, and executed by TNMP, as Mortgagor, to Donald H.
Snell, as Mortgage Trustee, for the benefit of the
Secured Parties, as defined therein (Exhibit 10(www)
to Form 10-K of TNMP for the year ended December 31,
1988, File No. 2-97230).
10(u)1 - Second Lien Mortgage and Deed of Trust
(with Security Agreement) Modification, Extension and
Amendment Agreement, dated as of January 8, 1992,
executed by TNMP to Donald H. Snell, as Mortgage
Trustee, for the benefit of the Secured Parties, as
defined therein (Exhibit 10(w)1 to Form 10-K of TNMP
for the year ended December 31, 1991, File No. 2-
97230).
10(u)2 - TNP Second Lien Mortgage Modification
No. 2, dated as of September 21, 1993, executed by
TNMP to Donald H. Snell, as Mortgage Trustee, for the
benefit of the Secured Parties, as defined therein
(Exhibit 10(u)2 to Form 10-K of TNMP for the year
ended December 31, 1993, File No. 2-97230).
10(v) - Intercreditor and Nondisturbance
Agreement, dated as of October 1, 1988, among PFC,
Texas PFC, Inc., TNMP, the Project Creditors, as
defined therein, and the Collateral Agent, as defined
therein (Exhibit 10(xxx) to Form 10-K of TNMP for the
year ended December 31, 1988, File No. 2-97230).
10(v)1 - Amendment #1, dated as of January 8,
1992, to the Intercreditor and Nondisturbance
Agreement, dated as of October 1, 1988, among TGC, TGC
II, TNMP, the Unit 1 Banks, the Unit 2 Banks and The
Chase Manhattan Bank (National Association) in its
capacity as collateral agent for the Unit 1 Banks and
the Unit 2 Banks (Exhibit 10(x)1 to Form 10-K of TNMP
for the year ended December 31, 1991, File No. 2-
97230).
10(v)2 - Amendment No. 2, dated as of September
21, 1993, to the Intercreditor and Nondisturbance
Agreement, among TGC, TGC II, TNMP, the Unit 1 Banks,
the Unit 2 Banks and The Chase Manhattan Bank
(National Association) in its capacity as collateral
agent for the Unit 1 Banks and the Unit 2 Banks
(Exhibit 10(v)2 to Form 10-K of TNMP for the year
ended December 31, 1993, File No. 2-97230).
10(w) - Grant of Reciprocal Easements and
Declaration of Covenants Running with the Land, dated
as of the 1st day of October, 1988 between PFC and
Texas PFC, Inc. (Exhibit 10(yyy) to Form 10-K of TNMP
for the year ended December 31, 1988, File No. 2-
97230).
10(x) - Non-Partition Agreement, dated as of
May 30, 1990, among TNMP, TGC and The Chase Manhattan
Bank (National Association), as Agent for the Banks
which are parties to the Unit 1 Credit Agreement
(Exhibit 10(ss) to Form 10-K of TNMP for the year
ended December 31, 1990, File No. 2-97230).
10(y) - Assumption Agreement, dated July 26,
1991, to be effective as of May 31, 1991, by TGC II in
favor of the Issuing Bank, the Unit 2 Banks, the Unit
2 Agent and the Depositary, as defined therein
(Exhibit 10(kkk) to Amendment No. 1 to File No. 33-
41903).
10(z) - Guaranty, dated July 26, 1991, to be
effective as of May 31, 1991, by TNMP and given in
respect of the TGC II obligations under the Unit 2
Credit Agreement (Exhibit 10(lll) to Amendment No. 1
to File No. 33-41903).
10(aa) - First Amended and Restated Facility
Purchase Agreement, dated as of January 8, 1992, among
TNMP, as the Purchaser, and TGC II, as the Seller,
amending and restating the Facility Purchase Agreement
among such parties dated July 26, 1991, to be
effective as of May 31, 1991 (Exhibit 10(dd) to Form
10-K of TNMP for the year ended December 31, 1991,
File No. 2-97230).
10(aa)1 - Amendment No. 1 to the Unit 2 First
Amended and Restated Facility Purchase Agreement,
dated as of September 21, 1993, among TNMP, as the
Purchaser, and TGC II, as the Seller (Exhibit 10(aa)1
to Form 10-K of TNMP for the year ended December 31,
1993, File No. 2-97230).
10(bb) - Operating Agreement, dated July 26,
1991, to be effective as of May 31, 1991, between TNMP
and TGC II (Exhibit 10(nnn) to Amendment No. 1 to File
No. 33-41903).
10(cc) - Non-Partition Agreement, executed July
26, 1991, to be effective as of May 31, 1991, among
TNMP, TGC II and The Chase Manhattan Bank (National
Association) (Exhibit 10(ppp) to Amendment No. 1 to
File No. 33-41903).
Power Supply Contracts
10(dd) - Contract dated May 12, 1976 between
TNMP and Houston Lighting & Power Company (Exhibit
5(a), File No. 2-69353).
10(dd)1 - Amendment, dated January 4, 1989, to
the Contract dated May 12, 1976 between TNMP and
Houston Lighting & Power Company (Exhibit 10(cccc) to
Form 10-K of TNMP for the year ended December 31,
1988, File No. 2-97230).
10(ee) - Contract dated May 1, 1986 between TNMP
and Texas Electric Utilities Company, amended
September 29, 1986, October 24, 1986 and February 21,
1987 (Exhibit 10(c) of Form 8 applicable to Form 10-K
of TNMP for the year ended December 31, 1986, File No.
2-97230).
10(ff) - Amended and Restated Agreement for
Electric Service dated May 14, 1990 between TNMP and
Texas Utilities Electric Company (Exhibit 10(vv) to
Form 10-K of TNMP for the year ended December 31,
1990, File No. 2-97230).
10(ff)1 - Amendment, dated April 19, 1993, to
Amended and Restated Agreement for Electric Service,
dated May 14, 1990, As Amended between TNMP and Texas
Utilities Electric Company (Exhibit 10(ii)1 to Form S-
2 Registration Statement, filed on July 19, 1993, File
No. 33-66232).
10(gg) - Contract dated June 11, 1984 between
TNMP and Southwestern Public Service Company (Exhibit
10(d) of Form 8 applicable to Form 10-K of TNMP for
the year ended December 31, 1986, File No. 2-97230).
10(hh) - Contract dated April 27, 1977 between
TNMP and West Texas Utilities Company amended April
14, 1982, April 19, 1983, May 18, 1984 and October 21,
1985 (Exhibit 10(e) of Form 8 applicable to Form 10-K
of TNMP for the year ended December 31, 1986, File No.
2-97230).
10(ii) - Contract dated April 29, 1987 between
TNMP and El Paso Electric Company (Exhibit 10(f) of
Form 8 applicable to Form 10-K of TNMP for the year
ended December 31, 1986, File No. 2-97230).
10(jj) - Contract dated February 28, 1974,
amended May 13, 1974, November 26, 1975, August 26,
1976 and October 7, 1980 between TNMP and Public
Service Company of New Mexico (Exhibit 10(g) of Form 8
applicable to Form 10-K of TNMP for the year ended
December 31, 1986, File No. 2-97230).
10(jj)1 - Amendment, dated February 22, 1982, to
the Contract dated February 28, 1974, amended May 13,
1974, November 26, 1975, August 26, 1976, and October
7, 1980 between TNMP and Public Service Company of New
Mexico (Exhibit 10(iiii) to Form 10-K of TNMP for the
year ended December 31, 1988, File No. 2-97230).
10(jj)2 - Amendment, dated February 8, 1988, to
the Contract dated February 28, 1974, amended May 13,
1974, November 26, 1975, August 26, 1976, and October
7, 1980 between TNMP and Public Service Company of New
Mexico (Exhibit 10(jjjj) to Form 10-K of TNMP for the
year ended December 31, 1988, File No. 2-97230).
10(jj)3 - Amended and Restated Contract for
Electric Service, dated April 29, 1988, between TNMP
and Public Service Company of New Mexico (Exhibit
10(zz)3 to Amendment No. 1 to File No. 33-41903).
10(kk) - Contract dated December 8, 1981 between
TNMP and Southwestern Public Service Company amended
December 12, 1984, December 2, 1985 and December 19,
1986 (Exhibit 10(h) of Form 8 applicable to Form 10-K
of TNMP for the year ended December 31, 1986, File No.
2-97230).
10(kk)1 - Amendment, dated December 12, 1988, to
the Contract dated December 8, 1981 between TNMP and
Southwestern Public Service Company amended December
12, 1984, December 2, 1985 and December 19, 1986
(Exhibit 10(llll) to Form 10-K of TNMP for the year
ended December 31, 1988, File No. 2-97230).
10(kk)2 - Amendment, dated December 12, 1990, to
the Contract dated December 8, 1981 between TNMP and
Southwestern Public Service Company (Exhibit 19(t) to
Form 10-K of TNMP for the year ended December 31,
1990, File No. 2-97230).
10(ll) - Contract dated August 31, 1983, between
TNMP and Capitol Cogeneration Company, Ltd. (including
letter agreement dated August 14, 1986) (Exhibit 10(i)
of Form 8 applicable to Form 10-K of TNMP for the year
ended December 31, 1986, File No. 2-97230).
10(ll)1 - Agreement Substituting a Party, dated
May 3, 1988, among Capitol Cogeneration Company, Ltd.,
Clear Lake Cogeneration Limited Partnership and TNMP
(Exhibit 10(nnnn) to Form 10-K of TNMP for the year
ended December 31, 1988, File No. 2-97230).
10(ll)2 - Letter Agreements, dated May 30, 1990
and August 28, 1991, between Clear Lake Cogeneration
Limited Partnership and TNMP (Exhibit 10(oo)2 to Form
10-K of TNMP for the year ended December 31, 1992,
File No. 2-97230).
10(ll)3 - Notice of Extension Letter, dated
August 31, 1992, between Clear Lake Cogeneration
Limited Partnership and TNMP (Exhibit 10(oo)3 to Form
10-K of TNMP for the year ended December 31, 1992,
File No. 2-97230).
10(ll)4 - Scheduling Agreement, dated September
15, 1992, between Clear Lake Cogeneration Limited
Partnership and TNMP (Exhibit 10(oo)4 to Form 10-K of
TNMP for the year ended December 31, 1992, File No. 2-
97230).
10(mm) - Interconnection Agreement between TNMP
and Plains Electric Generation and Transmission
Cooperative, Inc. dated July 19, 1984 (Exhibit 10(j)
of Form 8 applicable to Form 10-K of TNMP for the year
ended December 31, 1986, File No. 2-97230).
10(nn) - Interchange Agreement between TNMP and
El Paso Electric Company dated April 29, 1987 (Exhibit
10(l) of Form 8 applicable to Form 10-K of TNMP for
the year ended December 31, 1986, File No. 2-97230).
*10(nn)1 - Amendment No. 1, dated November 21,
1994, to the Interchange Agreement between TNMP and El
Paso Electric Company dated April 29, 1987.
10(oo) - DC Terminal Participation Agreement
between TNMP and El Paso Electric Company dated
December 8, 1981 amended April 29, 1987 (Exhibit 10(m)
of Form 8 applicable to Form 10-K of TNMP for the year
ended December 31, 1986, File No. 2-97230).
*10(pp) - 1996 Firm Capacity & Energy Sale
Agreement between TNMP and TEP dated December 20,
1994, effective as of January 1, 1996.
Employment Contracts
10(qq) - Texas-New Mexico Power Company
Executive Agreement for Severance Compensation Upon
Change in Control, executed November 11, 1993, between
Sector Vice President and Chief Financial Officer and
TNMP (Pursuant to Instruction 2 of Reg. 229.601(a),
accompanying this document is a schedule: (i)
identifying documents substantially identical to the
document which have been omitted from the Exhibits;
and (ii) setting forth the material details in which
such omitted documents differ from the document)
(Exhibit 10(pp) to Form 10-K of TNMP for the year
ended December 31, 1993, File No. 2-97230).
10(rr) - Texas-New Mexico Power Company Key
Employee Agreement for Severance Compensation Upon
Change in Control, executed November 11, 1993, between
Assistant Treasurer and TNMP (Pursuant to Instruction
2 of Reg. 229.601(a), accompanying this document is a
schedule: (i) identifying documents substantially
identical to the document which have been omitted from
the Exhibits; and (ii) setting forth the material
details in which such omitted documents differ from
the document) (Exhibit 10(qq) to Form 10-K of TNMP for
the year ended December 31, 1993, File No. 2-97230).
10(ss) - Agreement between James M. Tarpley and
TNPE and TNMP, pursuant to resignation as of November
9, 1993, to be effective January 1, 1994 (Exhibit
10(rr) to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(tt) - Agreement between Dwight R. Spurlock
and TNPE and TNMP, effective November 9, 1993 (Exhibit
10(ss) to Form 10-K of TNMP for the year ended
December 31, 1993, File No. 2-97230).
10(uu) - Agreement between Kevern Joyce and TNPE
and TNMP, executed March 25, 1994 (Exhibit 10(tt) to
Form 10-Q of TNMP for the quarter ended March 31,
1994, File No. 2-97230).
*21 - Subsidiaries of the Registrants.
EX-21
2
SUBSIDIARIES OF THE REGISTRANTS Exhibit 21
Name State of
Incorporation
TNPE
Texas-New Mexico Power Company Texas
Bayport Cogeneration, Inc. Texas
TNP Operating Company Texas
Each subsidiary of TNPE conducts business in its own name.
TNMP
Texas Generating Company Texas
Texas Generating Company II Texas
EX-23
3
TNP ENTERPRISES, INC. AND SUBSIDIARIES Exhibit 23
Independent Auditors' Consent
The Board of Directors
TNP Enterprises, Inc.:
We consent to incorporation by reference in the Registration Statement
(No. 2-93266) on Form S-3 and in the Registration Statement (No. 2-
93265) on Form S-8 of TNP Enterprises, Inc. of our report dated
January 27, 1995, relating to the consolidated balance sheets and
statements of capitalization of TNP Enterprises, Inc. and subsidiaries
as of December 31, 1994 and 1993, and the related consolidated
statements of operations, common stockholders' equity and redeemable
cumulative preferred stock, and cash flows for each of the years in
the three-year period ended December 31, 1994, which report appears in
the December 31, 1994, annual report on Form 10-K of TNP Enterprises,
Inc.
Our report includes an explanatory paragraph that states that
uncertainties exist with respect to the regulatory treatment of the
income tax benefits of the regulatory disallowances recognized in
1994, as discussed in note 8 to the consolidated financial statements.
The ultimate outcome of this matter cannot presently be determined.
Accordingly, no provision for any loss that may ultimately be required
upon resolution of this matter has been made in the accompanying
consolidated financial statements.
As discussed in note 1 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993 to
adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards ("SFAS") No. 109,
Accounting for Income Taxes. As discussed in note 6, the Company also
adopted the provisions of the Financial Accounting Standards Board's
SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions in 1993.
KPMG Peat Marwick LLP
Fort Worth, Texas
March 24, 1995
EX-3
4
TEXAS-NEW MEXICO POWER COMPANY
B Y L A W S
______________________
ARTICLE I
OFFICES
1. The registered office of the Corporation shall be at
4100 International Plaza, Tower II, Fort Worth, Texas 76109, and
the registered agent of the Corporation at such address shall be
the Secretary of the Corporation.
2. The Corporation may also have offices at such other
places, within or without the State of Texas, as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Place
l. All meetings shall be held in the offices of the
Corporation at 4100 International Plaza, Tower II, Fort Worth,
Texas 76109, or at such other place as may be fixed from time to
time by the Board of Directors.
Annual Meeting
2. An annual meeting of the shareholders, commencing with
the year 1985, shall be held on the fourth Friday in April
each year at a time to be set by the Board of Directors, if not a
legal holiday and, if a legal holiday, then on the next business
day following (other than a Saturday), at which they shall elect,
by a plurality vote, a Board of Directors and transact such other
business as may properly be brought before the meeting; provided,
however, that such date for any annual meeting may be altered as
deemed appropriate by the Board of Directors.
Shareholders List
3. At least ten days before each meeting of shareholders, a
complete list of shareholders entitled to vote at said meeting,
arranged in alphabetical order, with the residence of each and
the number of voting shares held by each, shall be prepared by
the officer or agent having charge of the stock transfer books.
Such list, for a period of ten days prior to such meeting, shall
be kept on file at the registered office of such Corporation and
shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall be produced and
kept open at the time and place of meeting during the whole time
thereof, and shall be subject to the inspection of any
shareholder who may be present.
Quorum
4. The attendance of the holders of a majority of shares
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of the shareholders for the transaction of business,
except as otherwise provided by Statute, the Restated Articles of
Incorporation, or these Bylaws. In the absence of such a quorum
at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person or represented by proxy, shall
have power to recess the meeting from time to time, without
notice other than announcement at the meeting, until a quorum
shall be constituted. When such recessed meeting is reconvened
and a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally
called.
Special Meetings
5. Special meetings of the shareholders for any purpose or
purposes, unless otherwise prescribed by Statute, the Restated
Articles of Incorporation, or these Bylaws, may be called by the
Chairman of the Board, the President, or a majority of the
members of the Board of Directors or by the holders of not less
than one-fifth of all the shares entitled to vote at such
meeting. Business transacted at all special meetings shall be
confined to items stated in the call.
Voting Rights
6.(a) When a quorum is present at any meeting, the
affirmative vote of the holders of a majority of the shares
having voting power, present in person or represented by proxy,
shall decide any question brought before such meeting, unless the
question is one upon which, by express provisions of the
Statutes, the Restated Articles of Incorporation, or these
Bylaws, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
The shareholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
(b) Each outstanding share, regardless of class, shall be
entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting
rights of the shares of any class or classes are limited or
denied by the Restated Articles of Incorporation. At any meeting
of shareholders, every shareholder having the right to vote shall
be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder, or by his
duly authorized attorney in fact, and bearing a date of not more
than eleven months prior to said meeting, unless said instrument
provides for a longer period. Such proxy shall be filed with the
Secretary of the Corporation prior to or at the time of the
meeting. The Board of Directors may fix in advance a record date
for the purpose of determining shareholders entitled to notice of
or to vote at a meeting of shareholders, such record date to be
not less than ten nor more than fifty days prior to such meeting;
or the Board of Directors may close the stock transfer books for
such purpose for a period of not less than ten nor more than
fifty days prior to such meeting. In the absence of any action
by the Board of Directors, the date upon which the notice of the
meeting is mailed shall be the record date.
(c) No shareholder shall have the right to cumulate his
votes in the election of Directors.
Notice of Meeting
7. Written or printed notice, stating the place, day and
hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder of record
entitled to vote at the meeting.
Unanimous Consent
8. Any action required to be taken at a meeting of
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all shareholders entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and
effect as the unanimous vote of the shareholders.
ARTICLE III
DIRECTORS
Authority
1. The business and affairs of the Corporation shall be
managed by its Board of Directors, who may exercise all such
powers of the Corporation and do all such lawful acts and things
as are not directed or required by Statute, the Restated Articles
of Incorporation, or these Bylaws to be exercised or done by the
shareholders.
Number, Election and Term of Office
2.(a) The Board of Directors shall be made up of nine (9)
members. Except as hereinafter provided, Directors shall be
elected at the annual meeting of the shareholders, and each
Director elected shall serve until the next succeeding annual
meeting and until his successor shall be elected and shall
qualify. Directors need not be residents of the State of Texas
nor shareholders of the Corporation.
(b) The position of Advisory Director may be created from
time to time by the Board of Directors. Any Advisory Director
shall be entitled to notice of meetings and expected to attend
such meetings. Any Advisory Director may render advice to the
Board, but may not vote on any issue. Any Advisory Director
shall be entitled to the same compensation and benefits as a duly
elected Director.
(c) The number of Directors may be increased or decreased
from time to time by an amendment to these Bylaws, but shall
never be less than three (3).
Retirement
3. No person shall be eligible for election or reelection
to the Board of Directors on or after the date of the Annual
Meeting of Shareholders next following the date on which such
person attains the age of seventy (70) years; provided, however,
that the Board may waive the foregoing provision, but only if the
Board finds each year that the retention of a Director on the
Board after his seventieth birthday will be beneficial to the
Corporation, but no such waiver may be made in the case of a
Director who has attained or will attain the age of seventy-six
(76) years on or prior to the date of the Annual Meeting of
Shareholders.
Removal
4. Any Director may be removed for or without cause at any
special meeting of the shareholders by the affirmative vote of a
majority in number of the shares or class of shares, as the case
may be, which elected the Director being removed, if notice of
the intention to act upon such matter shall have been given in
the notice calling such meeting. Upon the removal of a Director,
the shareholders, by affirmative vote of the majority of the
outstanding shares, shall have the power at the same special
meeting to elect a new Director to serve until the next annual
shareholders meeting, if notice of the intention to act upon such
matter shall have been given in the notice calling such meeting.
If the shareholders fail to elect a person to fill the unexpired
term of the Director so removed, such unexpired term shall be
considered a vacancy on the Board to be filled by the remaining
Directors in the manner next provided.
Vacancies
5. If any vacancy occurs in the Board of Directors caused
by death, resignation, retirement, disqualification, removal from
office of any Director, or otherwise, a majority of the Directors
then in office, though less than a quorum, may choose a
successor, or a successor may be chosen at a special meeting of
shareholders called for that purpose, and each Director so
chosen shall be elected until the next annual meeting of the
shareholders and until his successor shall have been elected and
shall qualify. Any Directorship to be filled by reason of an
increase in the number of Directors shall be by election at an
annual meeting of shareholders or at a special meeting of
shareholders called for that purpose.
Organize the Board
6. The first meeting of each newly elected Board shall be
held without further notice immediately following the annual
meeting of shareholders, and at the same place, unless by
unanimous consent of the Directors then elected and serving, such
time or place shall be changed. The Board shall elect one
Director to serve as Chairman and to preside at all meetings of
the shareholders and of the Board of Directors.
Regular Meeting Dates
7. Regular meetings of the Board will be held quarterly
without notice on a day certain at such time and place as shall
be determined by the Board during the periods specified below:
First Quarter - From January 16 through
February 15, both days inclusive;
Second Quarter - From April 16 through
May 15, both days inclusive;
Third Quarter - From July 16 through
August 15, both days inclusive; and
Fourth Quarter - From October 16 through
November 15, both days inclusive.
Special Meetings
8. Special meetings of the Board of Directors may be called
by the Chairman of the Board of Directors or the President on
three days' notice to each Director, either personally or by
telephone, mail or telegram stating the purpose of such meeting.
Notice given by telephone shall be confirmed in writing. Special
meetings shall be called by the Chairman of the Board, the
President or Secretary in like manner and on like notice on the
written request of two Directors. The notice of and request for
a special meeting shall state the time and place and purpose or
purposes of such meeting. Business transacted at all special
meetings shall be confined to purposes stated in the call.
Action may be taken by the Board of Directors without a meeting,
if the action is evidenced by a written unanimous consent of the
Directors.
Waiver of Notice
9. Attendance of a Director at any meeting shall constitute
a waiver of notice of such meeting, except where a Director
attends for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or
convened. Except as may be otherwise expressly provided by
Statute, or the Restated Articles of Incorporation, or these
Bylaws, neither the business to be transacted at nor the purpose
of any special meeting need be specified in a notice or waiver of
notice.
Quorum
10. At all meetings of the Board of Directors the presence
of a majority of the Directors shall be necessary and sufficient
to constitute a quorum for the transaction of business, and the
act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of
Directors, except as may be otherwise specially provided by
Statute, the Restated Articles of Incorporation, or these
Bylaws. If a quorum shall not be present at any meeting of
Directors, the Directors present thereat may adjourn the meeting
from time to time without notice other than announcement at the
meeting, until a quorum shall be present.
Executive Committee and Other Committees
Creation
11. By resolution passed by a majority of the full Board,
the Board of Directors may designate an Executive Committee. The
Chairman of the Board shall have authority to create such other
Committees as he finds necessary.
Executive Committee
12. The Executive Committee, if established, shall be
comprised of three or more Directors of the Corporation, one of
whom shall be the President of the Corporation and the majority
of whom shall be outside Directors. To the extent provided by
resolution, the Executive Committee shall have the authority of
the Board of Directors to manage the business and affairs of the
Corporation, except where action of the full Board may be
required by Statute, or the Restated Articles of Incorporation.
Other Committees
13. Other Committees which are created by the Chairman of
the Board shall have all the authority of the Board which may be
granted to the Committee by a resolution of the full Board.
Minutes
14. The Executive Committee and any other Committees which
may be created shall keep minutes of any proceedings and report
such to the Board. Copies of the approved Committees' minutes
shall be circulated to the full Board.
Compensation
15. Directors and Advisory Directors of the Corporation may
by resolution of the Board be allowed a fixed sum and expenses of
attendance for attendance at each regular or special meeting of
the Board or of any meeting by members of an authorized
Committee, if any, and may also receive such other compensation
for their services as Directors, or for serving the Corporation
in any other capacity, as the Board of Directors from time to
time may determine. Any Director who is also an employee of the
Corporation shall not be compensated for services as a Director.
Dividends
16. Subject always to the provisions of law and the
Restated Articles of Incorporation, the Board of Directors shall
have full power to determine whether any and, if so, what part of
the funds legally available for the payment of dividends shall be
declared in dividends and paid to the shareholders of the
Corporation. Dividends may be declared at any regular or special
meeting of the Board and may be made payable in cash, in property
or in shares of capital stock. The Board of Directors may fix a
sum which may be set aside or reserved over and above the paid-in
capital of the Corporation for working capital or as a reserve
for any proper purpose and from time to time may increase,
diminish and vary such fund in the Board's absolute judgment and
discretion.
Annual Report
17. The Board of Directors shall present at each annual
meeting and, when called for by a vote of the shareholders at any
special meeting of the shareholders, a full and clear statement
of the business and condition of the Corporation.
ARTICLE IV
NOTICES
Notice of Meetings
1. Whenever, under provisions of Statutes, the Restated
Articles of Incorporation, or these Bylaws, notice is required to
be given to any Director or shareholder and no provision is made
as to how such notice shall be given, personal notice shall not
be required, and such notice may be given in writing, by postage
prepaid mail addressed to such Director or shareholder at such
address as appears on the books of the Corporation. Any notice
required or permitted to be given by mail shall be deemed to be
given at the time when such notice is deposited in the United
States Mail as aforesaid.
Waiver
2. Whenever any notice is required to be given to any
shareholder or Director of the Corporation under provisions of
Statutes, the Restated Articles of Incorporation, or these
Bylaws, a waiver thereof in writing, signed before or after the
time stated in such notice by the person or persons entitled to
such notice, shall be deemed equivalent to the giving of such
notice.
ARTICLE V
OFFICERS
Positions
1. The officers of the Corporation shall be chosen by the
Directors and shall include a President, Vice President, and such
additional Vice Presidents as the Board may from time to time
determine, a Controller, a Secretary and a Treasurer and such
number of Assistant Controllers, Assistant Secretaries, Assistant
Treasurers, and Assistant Vice Presidents as the Board of
Directors may from time to time determine. Any two or more
offices may be held by the same person except the offices of
President and Secretary shall not be held by the same person.
Election
2.(a) The Board of Directors, at its first meeting after
each annual meeting of shareholders, shall elect the officers of
the Corporation, as above provided.
(b) The Board may appoint such other officers and agents
as it shall deem necessary, who shall hold their offices for such
terms, exercise such powers and perform such duties as shall be
determined from time to time by the Board.
Term
3. The officers of the Corporation shall hold office until
their successors are chosen and qualify in their stead. An
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the
full Board of Directors. If the office of any officer becomes
vacant for any reason, the vacancy shall be filled by affirmative
vote of a majority of the full Board of Directors.
Salaries and Contracts with Officers
4. The salaries of all officers who report directly to the
President of the Corporation shall be fixed by the Board of
Directors. The salaries of agents and employees shall be
determined and fixed by the President. The Board of Directors of
the Corporation may enter into agreements with officers on such
terms as are deemed necessary for present or future performance
of service to and for the Corporation by officers at such amounts
of compensation, salary or remuneration as may be required to
obtain such services or as to which such officers may agree, and
for lease to the Corporation by the officers of any vehicles,
equipment, furnishings or other articles of property owned or
held by officers as may be useful or necessary to the
organization and functioning of the Corporation. No officer
shall be ineligible to receive such salary by reason of the fact
that he is also a Director of the Corporation.
Duties
Chairman of the Board
5. The Chairman of the Board shall preside at all meetings
of shareholders and Directors, and may be designated as the Chief
Executive Officer of the Corporation, but unless so designated
shall not otherwise be considered an officer of the Corporation.
Chief Executive Officer
6. The Chief Executive Officer shall have responsibility
for the general direction of the business and affairs of the
Corporation, subject to the control of the Board of Directors.
He shall have authority to sign, execute and acknowledge in the
name and on behalf of the Corporation all contracts and other
documents and instruments, including bonds and mortgages, except
as otherwise provided by law, and shall have authority to appoint
and discharge agents and employees. He shall have such
additional powers and duties as the Board of Directors may from
time to time assign to him. In the absence or disability of the
President, he shall perform such duties and exercise such powers
of the President as he shall deem necessary unless such functions
are assumed by the Chairman of the Board or otherwise delegated
by the Board of Directors or the Executive Committee. He shall
be an ex officio member of all Board Committees.
President
7.(a) The President shall, in the absence of the Chairman
of the Board, perform all of the functions and duties herein
above assigned to the Chairman of the Board. If the President is
designated as the Chief Executive Officer, he shall perform all
the functions of that office as set out in Paragraph 6 above; but
in all events, the President shall be the Chief Operating Officer
of the Corporation and shall be responsible for the active day-to-
day management of the business of the Corporation and shall
perform such other functions and duties as may from time to time
be designated by the Board of Directors.
(b) The President may execute bonds, mortgages and other
contracts or instruments requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Vice Presidents
8. The Board of Directors may elect an Executive Vice
President who shall perform the duties of the President during
his absence or disability and shall perform such other duties as
the Board of Directors may prescribe. The Board of Directors may
elect other Vice Presidents who shall in the order of their
seniority in office and in the absence or disability of the
President and the Executive Vice President, perform the duties
and exercise the powers of the President and shall perform such
other duties as the Board of Directors may prescribe.
The Assistant Vice Presidents, if any, in order of their
seniority in office shall, in the absence or disability of their
respective Vice President, perform the duties and exercise the
powers of such Vice President, and shall perform such other
duties and have such other powers as the Board of Directors or
President may from time to time prescribe.
Secretary
9. The Secretary shall attend all sessions of the Board of
Directors and all meetings of the shareholders and record all
votes and the minutes of all proceedings of the meetings of the
Corporation and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given,
notice of all meetings of the shareholders and special meetings
of the Board of Directors, and shall perform such other duties as
may be prescribed by the Board of Directors or President, under
whose supervision he shall function. He shall keep in safe
custody the seal of the Corporation and, when authorized by the
Board, shall affix the same to any instrument requiring it and,
when so affixed, it shall be attested by his signature.
The Assistant Secretaries, if any, in order of their
seniority in office shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the
Secretary, and shall perform such other duties and have such
other powers as the Board of Directors or President may from time
to time prescribe.
Chief Financial Officer
10. The Chief Financial Officer, if one is appointed, shall
be a Vice President and shall be in charge of the financial
affairs of the Corporation under the direction and the
supervision of the President. He shall supervise the activities
of the Controller and the Treasurer.
Treasurer
11. The Treasurer shall act under the supervision of the
Chief Financial Officer, or if there is no Chief Financial
Officer, the Treasurer shall act under the President's
supervision. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. He
shall disburse the funds of the Corporation as may be ordered by
the Chief Financial Officer, taking proper vouchers for such
disbursements, and shall render to the Chief Financial Officer,
or to the President, if there is no Chief Financial Officer, an
account of all his transactions as Treasurer.
The Assistant Treasurers, if any, in order of their
seniority in office shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the
Treasurer, and shall perform such other duties and have such
other powers as the Board of Directors or President may from time
to time prescribe.
Controller
12. The Controller shall act under the supervision of the
Chief Financial Officer, or if there is no Chief Financial
Officer, the Controller shall act under the President's
supervision. The Controller, if one is appointed, shall be the
chief accounting officer of the Corporation. He shall, when
proper, approve all bills for purchases, payrolls, and similar
instruments providing for disbursement of money by the
Corporation for payment by the Chief Financial Officer. He shall
be in charge of and maintain books of account and accounting
records of the Corporation and shall render to the Chief
Financial Officer, or to the President, if there is no Chief
Financial Officer, an account of all his transactions as
Controller and of the financial condition of the corporation. In
addition, he shall perform such other acts as are usually
performed by the Controller of a corporation or assigned to him
by the President.
The Assistant Controllers, if any, in order of their
seniority in office shall, in the absence or disability of the
Controller, perform the duties and exercise the powers of the
Controller, and shall perform such other duties and have such
other powers as the Board of Directors or President may from time
to time prescribe.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Form
1. The interest of each shareholder of the Corporation
shall be evidenced by certificates for shares of stock certifying
the number of shares represented thereby. Such certificates
shall be consecutively numbered and entered on the books of the
Corporation as they are issued and shall be in such form not
inconsistent with the Restated Articles of Incorporation as the
Board of Directors may from time to time prescribe. Each
certificate shall state on the face thereof the holder's name,
the number and class of shares, and the par value of such shares
or a statement that such shares are without par value. Each
certificate shall be signed by the President or a Vice President
and the Secretary or an Assistant Secretary and may be sealed
with the seal of the Corporation or a facsimile thereof. The
signatures of such officers may be facsimiles if the certificate
is countersigned by a transfer agent or is registered by a
registrar other than the Corporation itself or its employee.
Lost Certificates
2. The Board of Directors may direct that a new certificate
representing shares be issued in place of any certificate
theretofore issued by the Corporation and alleged to have been
lost or destroyed, upon the making of an affidavit of loss or
destruction by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate, the
Board of Directors, in its discretion and as a condition
precedent to the issuance thereof, may require the owner of such
lost or destroyed certificate or his legal representative to give
the Corporation a bond or indemnity not exceeding an amount which
is double the value of the stock.
Transfer Agent and Registrar
3. The Board of Directors may appoint one or more transfer
agents or transfer clerks and one or more registrars and may
require all certificates for shares to bear the signature or
signatures of any of them.
Registered Owner
4. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by law, the
Restated Articles of Incorporation, or these Bylaws.
Transfer of Shares
5. Shares of stock shall be transferable on the books of
the Corporation only by endorsement by the holder thereof in
person or by his duly authorized attorney. Upon surrender to the
Corporation or the Corporation's transfer agent of a certificate
representing shares which has been duly endorsed or accompanied
by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation or the
Corporation's transfer agent to issue a new certificate to the
person entitled thereto, cancel the old certificate and record
the transaction upon its books.
Closing of Transfer Books
6. The Board of Directors may provide that the stock
transfer books shall be closed for a stated period not to exceed
fifty days for the purpose of determining shareholders entitled
to receive notice of or to vote at any meeting of shareholders or
any adjournment thereof or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to
receive notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding
such meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a record date for any such
determination of shareholders, such date to be not more than
fifty days and, in case of a meeting of shareholders, not less
than ten days prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If
the stock transfer books are not closed and no record date is
fixed for the determination of shareholders or shareholders
entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment of such meeting.
ARTICLE VII
GENERAL PROVISIONS
Checks
1. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time
to time designate.
Fiscal Year
2. The fiscal year of the Corporation shall begin the first
day of January in each year.
Corporation Seal
3. The Corporation seal shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Texas."
Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise imprinted.
Voting Securities Held by the Corporation
4. Unless otherwise ordered by the Board of Directors, the
President shall have full power and authority on behalf of the
Corporation to attend and to act and to vote at any meeting of
security holders of other Corporations in which the Corporation
may hold securities. At such meeting the President shall possess
and may exercise any and all rights and powers incident to the
ownership of such securities which the Corporation might have
possessed and exercised if it had been present. The Board of
Directors may from time to time confer like powers upon any other
person or persons.
Indemnification
5. The Corporation shall indemnify any Director, officer,
employee, or former Director, officer or employee of the
Corporation, or any person who has served at the Corporation's
request as a Director, officer or employee of another Corporation
in which the Corporation owns shares of stock or of which it is a
creditor against expenses actually and necessarily incurred by
him and any amount paid in satisfaction of judgments in
connection with any action, suit or proceeding, whether civil or
criminal, in which he is made a party because of his service to
the Corporation in one of the above capacities subject to the
following provisions.
6. Before a person requesting indemnity shall be entitled
to indemnity, it shall have been determined in the manner
provided in paragraph 7 that he:
a. conducted himself in good faith,
b. reasonably believed:
1) his conduct in his official
capacity was in the Corporation's best
interest, or
2) where his conduct was not in his
official capacity, that his conduct was not
opposed to the Corporation's best interest;
and where a criminal proceeding is involved,
he had no reasonable cause to believe his
conduct was unlawful.
7. For a person to be eligible for indemnification, a
determination of such eligibility shall be made by one of the
following means:
a. a majority vote of a quorum of Directors who are
not named parties in the proceeding at the time of the
vote,
b. where such a quorum cannot be obtained by a
majority vote of a committee of the Board consisting of
Directors who are not parties in the proceeding at the
time of the vote,
c. by special legal counsel selected in the manner as
required by Statute, or
d. by a vote of the shareholders which excludes those
shares held by Directors who are parties to the
proceeding.
8. Reasonable expenses incurred by a person eligible for
indemnification may be reimbursed in advance of final disposition
of the proceeding if:
a. the Corporation receives a written affirmation by
the Director of his good faith belief that he has met
the standard of conduct necessary for indemnification,
b. the Director provides a written obligation to
repay all amounts paid or reimbursed if it is
ultimately determined that he is not eligible for
indemnification, and
c. a determination of the facts known at the time of
the request for the advance reimbursement would not
preclude indemnification.
9. Where eligibility has been determined, a person may be
indemnified against judgments, penalties, fines, settlements, and
reasonable expenses actually incurred, provided that if the
proceeding is brought by or on behalf of the Corporation, the
indemnification is limited to reasonable expenses actually
incurred.
10. A person is not eligible for indemnification if:
a. the person is found liable on the basis of
personal benefit being improperly received by him
regardless of whether or not the benefit resulted from
action taken in the person's official capacity,
b. the person is found liable to the Corporation.
11. Such rights of indemnification and reimbursement shall
not be deemed exclusive of any other rights to which such
Director, officer, or employee may be entitled by law or under
any bylaw, vote of shareholders, agreement or otherwise. The
Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a Director, officer,
employee or agent of any other Corporation against any liability
asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability
under the provisions of this section.
ARTICLE VIII
AMENDMENTS
These Bylaws may be altered, amended or repealed by the
affirmative vote of a majority of the full Board of Directors at
any regular meeting of the Board or at any special meeting of the
Board if notice of the proposed alteration, amendment or repeal
be contained in the notice of such special meeting; provided,
however, that no change of the time or place for the election of
Directors shall be made within sixty days next before the day on
which such election is to be held, and that in case of any change
of such time or place, notice thereof shall be given to each
shareholder in person or by letter mailed to his last known
postoffice address at least twenty days before the election is
held.
BYLAWS
OF
TEXAS-NEW MEXICO POWER COMPANY
(REVISED NOVEMBER 15, 1994)
EX-3
5
TNP ENTERPRISES, INC.
B Y L A W S
______________________
ARTICLE I
OFFICES
1. The registered office of the Corporation shall be at
4100 International Plaza, Tower II, Fort Worth, Texas 76109, and
the registered agent of the Corporation at such address shall be
the Secretary of the Corporation.
2. The Corporation may also have offices at such other
places, within or without the State of Texas, as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Place
l. All meetings shall be held in the offices of the
Corporation at 4100 International Plaza, Tower II, Fort Worth,
Texas 76109, or at such other place as may be fixed from time to
time by the Board of Directors.
Annual Meeting
2. An annual meeting of the shareholders, commencing with
the year l985, shall be held on the fourth Friday in April each
year at a time to be set by the Board of Directors, if not a
legal holiday and, if a legal holiday, then on the next business
day following (other than a Saturday), at which they shall elect,
by a plurality vote, a Board of Directors and transact such other
business as may properly be brought before the meeting; provided,
however, that such date for any annual meeting may be altered as
deemed appropriate by the Board of Directors.
Shareholders List
3. At least ten days before each meeting of shareholders,
a complete list of shareholders entitled to vote at said meeting,
arranged in alphabetical order, with the residence of each and
the number of voting shares held by each, shall be prepared by
the officer or agent having charge of the stock transfer books.
Such list, for a period of ten days prior to such meeting, shall
be kept on file at the registered office of such Corporation and
shall be subject to inspection by any shareholder at any time
during usual business hours. Such list shall be produced and
kept open at the time and place of meeting during the whole time
thereof, and shall be subject to the inspection of any
shareholder who may be present.
Quorum
4. The attendance of the holders of a majority of shares
issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of the shareholders for the transaction of business,
except as otherwise provided by Statute, the Articles of
Incorporation, or these Bylaws. In the absence of such a quorum
at any meeting of the shareholders, the shareholders entitled to
vote thereat, present in person or represented by proxy, shall
have power to recess the meeting from time to time, without
notice other than announcement at the meeting, until a quorum
shall be constituted. When such recessed meeting is reconvened
and a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally
called.
Special Meetings
5. Special meetings of the shareholders for any purpose
or purposes, unless otherwise prescribed by Statute, the Articles
of Incorporation, or these Bylaws, may be called by the Chairman
of the Board, the President, or a majority of the members of the
Board of Directors or by the holders of not less than one-fifth
of all the shares entitled to vote at such meeting. Business
transacted at all special meetings shall be confined to items
stated in the call.
Voting Rights
6.(a) When a quorum is present at any meeting, the
affirmative vote of the holders of a majority of the shares
having voting power, present in person or represented by proxy,
shall decide any question brought before such meeting, unless the
question is one upon which, by express provisions of the
Statutes, the Articles of Incorporation, or these Bylaws, a
different vote is required, in which case such express provision
shall govern and control the decision of such question. The
shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
(b) Each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting
rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation. At any meeting of
shareholders, every shareholder having the right to vote shall be
entitled to vote in person or by proxy appointed by an instrument
in writing subscribed by such shareholder, or by the duly
authorized attorney in fact of the shareholder, and bearing a
date of not more than eleven months prior to said meeting, unless
said instrument provides for a longer period. Such proxy shall
be filed with the Secretary of the Corporation prior to or at the
time of the meeting. The Board of Directors may fix in advance a
record date for the purpose of determining shareholders entitled
to notice of or to vote at a meeting of shareholders, such record
date to be not less than ten nor more than fifty days prior to
such meeting; or the Board of Directors may close the stock
transfer books for such purpose for a period of not less than ten
nor more than fifty days prior to such meeting. In the absence
of any action by the Board of Directors, the date upon which the
notice of the meeting is mailed shall be the record date.
(c) No shareholder shall have the right to cumulate
votes in the election of Directors.
Notice of Meeting
7. Written or printed notice, stating the place, day and
hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or
person calling the meeting, to each shareholder of record
entitled to vote at the meeting.
Unanimous Consent
8. Any action required to be taken at a meeting of
shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by
all shareholders entitled to vote with respect to the subject
matter thereof. Such consent shall have the same force and
effect as the unanimous vote of the shareholders.
Requirements for Shareholder Proposals
9.(a) At an annual or special meeting of the
shareholders, only such business shall be conducted as shall have
been brought before the meeting (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of the Board of
Directors, or (iii) by any shareholder of the Corporation who is
a shareholder of record at the time of giving of the notice
provided for in this Bylaw, who is entitled to vote at such
meeting and who complies with the notice procedures set forth in
this Bylaw.
(b) For business properly to be brought before either
an annual or special meeting by a shareholder pursuant to clause
(iii) of paragraph (a) of this Bylaw, the shareholder must have
given timely notice thereof in writing to the Secretary of the
Corporation. To be timely for an annual meeting, a shareholder's
notice must be delivered to or mailed and received at the
principal executive offices of the Corporation prior to the close
of business not less than 30 days nor more than 60 days prior to
the first anniversary of the date of the notice of the preceding
year's annual meeting; provided, however, that in the event that
the date of the meeting is changed by more than 20 days from the
anniversary date of the preceding year's annual meeting, notice
by the shareholder to be timely must be received no later than
the close of business on the 10th day following the earlier of
the day on which notice of the date of the meeting was mailed or
public disclosure was made. To be timely for a special meeting,
a shareholder's notice must be delivered to or mailed and
received at the principal executive offices of the Corporation:
in the case of a proposal by a shareholder calling or joining
other shareholders in calling a special meeting or by any other
shareholder pursuant to any understanding or arrangement with any
shareholder or shareholders calling the special meeting, at the
time the shareholder serves notice of the call but not less than
40 days prior to the date of the meeting and in all other cases,
not later than the close of business 10 days after the notice of
the special meeting is first delivered in accordance with these
Bylaws and the Texas Business Corporation Act.
(c) A shareholder's notice to the Secretary shall set
forth as to each matter the shareholder proposes to bring before
the meeting (i) the exact wording of the shareholder's proposal
that is requested to be brought before the meeting and the
reasons for conducting such business at the meeting, (ii) a brief
description of the shareholder's reasons for or arguments in
support of the proposal, (iii) the name and address, as they
appear on the Corporation's books, of the shareholder proposing
such business, and the name and address of the beneficial owner,
if any, on whose behalf the proposal is made, (iv) the class and
number of shares of the Corporation which are owned beneficially
and of record by such shareholder of record and by the beneficial
owner, if any, on whose behalf the proposal is made and as to all
such shares the date or dates of acquisition thereof, and (v) any
material interest of such shareholder of record and the
beneficial owner, if any, on whose behalf the proposal is made in
such business.
(d) Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at a meeting except in
accordance with the procedures set forth in these Bylaws. The
Chairman of the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought
before the meeting in accordance with the procedures prescribed
by these Bylaws. Any such business not properly brought before
the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Bylaw, a shareholder shall also
comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder with respect to the matters set forth in this Bylaw.
Nomination Procedures
10.(a) Only persons who are nominated in accordance with
the procedures set forth in these Bylaws shall be eligible to
serve as Directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of
shareholders (i) by or at the direction of the Board of Directors
or (ii) by any shareholder of the Corporation who is a
shareholder of record at the time of giving of notice provided
for in this Bylaw, who shall be entitled to vote for the election
of Directors at the meeting and who complies with the notice
procedures set forth in this Bylaw.
(b) Nominations by shareholders shall be made pursuant
to timely notice in writing to the Secretary of the Corporation.
To be timely, a shareholder's notice shall be delivered to or
mailed and received at the principal executive offices of the
Corporation (i) in the case of an annual meeting, not less than
30 days nor more than 60 days prior to the first anniversary of
the date of the notice of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is changed by more than 20 days from such anniversary
date of the preceding year's annual meeting, notice by the
shareholder to be timely must be so received not later than the
close of business on the 10th day following the earlier of the
day on which notice of the date of the meeting was mailed or
public disclosure was made, and (ii) in the case of a special
meeting at which Directors are to be elected, [a] if the
nomination is made by a shareholder calling or joining other
shareholders in calling the special meeting or by any other
shareholder pursuant to any understanding or arrangements with
any shareholder making or joining in the call, at the time notice
of the call is first given but not, in any event, less than 40
days prior to the date of the meeting and [b] in all other cases,
not later that the close of business 10 days after the notice of
the special meeting is first delivered to shareholders in
accordance with these Bylaws and the Texas Business Corporation
Act.
(c) Such shareholder's notice shall set forth (i) as
to each person whom the shareholder proposes to nominate for
election or reelection as a Director all information relating to
such person that is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended from time to time (including
such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected);
(ii) as to the shareholder giving the notice [a] the name and
address, as they appear on the Corporation's books, of such
shareholder and [b] the class and number of shares of the
Corporation which are beneficially owned by such shareholder and
also which are owned of record by such shareholder and as to all
such shares the date or dates of acquisition thereof; and (iii)
as to the beneficial owner, if any, on whose behalf the
nomination is made, [a] the name and address of such person and
[b] the class and number of shares of the Corporation which are
beneficially owned by such person and as to all such shares the
date or dates of acquisition thereof. At the request of the
Board of Directors, any person nominated by the Board of
Directors for election as a Director shall furnish, in writing,
to the Secretary of the Corporation that information required to
be set forth in a shareholder's notice of nomination which
pertains to the nominee.
(d) No person shall be eligible to serve as a Director
of the Corporation unless nominated in accordance with the
procedures set forth in this Bylaw. The Chairman of the meeting
shall, if the facts warrant, determine and declare to the meeting
that a nomination was not made in accordance with the procedures
prescribed by these Bylaws. The defective nomination shall be
disregarded. Notwithstanding the foregoing provisions of this
Bylaw, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder with
respect to the matters set forth in this Bylaw.
ARTICLE III
DIRECTORS
Authority
1. The business and affairs of the Corporation shall be
managed by its Board of Directors, who may exercise all such
powers of the Corporation and do all such lawful acts and things
as are not directed or required by Statute, the Articles of
Incorporation, or these Bylaws to be exercised or done by the
shareholders.
Number, Election and Terms of Office
2.(a) The Board of Directors shall be made up of nine (9)
members. Each Director elected shall serve until the end of that
Director's term of office and until a successor shall be elected
and shall qualify. Directors need not be residents of the State
of Texas nor shareholders of the Corporation.
(b) The Directors shall be divided into three classes,
each class to be as nearly equal in number as is possible; the
term of office of the Directors of each class shall be until the
third annual shareholders' meeting after their election; provided
that the classes shall have staggered terms and the Directors of
each class initially shall be elected at the annual meeting next
following the adoption of this Bylaw, to the following terms:
Directors in class 1: terms expire at the first
annual shareholders' meeting following elections;
Directors in class 2: terms expire at the second
annual shareholders' meeting following elections;
Directors in class 3: terms expire at the third
annual shareholders' meeting following elections.
(c) The position of Advisory Director may be created
from time to time by the Board of Directors. Any Advisory
Director shall be entitled to notice of meetings and expected to
attend such meetings. Any Advisory Director may render advice to
the Board, but may not vote on any issue. Any Advisory Director
shall be entitled to the same compensation and benefits as a duly
elected Director.
(d) The number of Directors may be increased or
decreased from time to time by amendment to these Bylaws, but
shall never be less than three (3).
Retirement
3. No person shall be eligible for election or reelection
to the Board of Directors on or after the date of the Annual
Meeting of Shareholders next following the date on which such
person attains the age of seventy (70) years; provided, however,
that the Board may waive the foregoing provision, but only if the
Board finds at the time of the Director's nomination for the next
term of office that the retention of a Director on the Board
after that Director's seventieth birthday will be beneficial to
the Corporation, but no such waiver may be made in the case of a
Director who has attained or will attain the age of seventy-six
(76) years on or prior to the date of the Annual Meeting of
Shareholders at which the Director will stand for election for
the next term of office.
Removal
4. Any Director may be removed either for or without
cause at any meeting of the shareholders by the affirmative vote
of the holders of not less than eighty percent (80%) of the
shares or the class of shares, as the case may be, entitled to
vote for the election of the Director proposed to be removed, if
notice of the intention to act upon such matter shall have been
given in accordance with the Bylaws of the Corporation. Upon the
removal of a Director, the shareholders, by affirmative vote of
the holders of eighty percent (80%) of the shares or class of
shares, as the case may be, entitled to vote for the election of
the removed Director, may elect a new Director to serve until the
next annual shareholders' meeting. If the shareholders fail to
elect a person to fill the unexpired term of the removed
Director, such unexpired term shall be considered a vacancy on
the Board to be filled by the remaining Directors in the manner
provided in these Bylaws.
Vacancies
5. If any vacancy occurs in the Board of Directors caused
by death, resignation, retirement, disqualification, removal from
office of any Director, or otherwise, a majority of the Directors
then in office, though less than a quorum, may choose a
successor, or a successor may be chosen at a special meeting of
shareholders called for that purpose, and each Director so
chosen shall be elected until the next annual meeting of the
shareholders and until a successor shall have been elected and
shall qualify. Any Directorship to be filled by reason of an
increase in the number of Directors shall be filled initially by
a vote of a majority of the Directors then in office, though less
than a quorum. Any such new Director shall serve until the
annual meeting next following that Director's election in
accordance with this Bylaw.
Organize the Board
6. The first meeting of each newly elected Board shall be
held without further notice immediately following the annual
meeting of shareholders, and at the same place, unless by
unanimous consent of the Directors then elected and serving, such
time or place shall be changed. The Board shall elect one
Director to serve as Chairman and to preside at all meetings of
the shareholders and of the Board of Directors.
Regular Meeting Dates
7. Regular meetings of the Board will be held quarterly
without notice on a day certain at such time and place as shall
be determined by the Board during the periods specified below:
First Quarter - From January 16 through
February 15, both days inclusive;
Second Quarter - From April 16 through
May 15, both days inclusive;
Third Quarter - From July 16 through
August 15, both days inclusive; and
Fourth Quarter - From October 16 through
November 15, both days inclusive.
Special Meetings
8. Special meetings of the Board of Directors may be
called by the Chairman of the Board of Directors or the President
on three days' notice to each Director, either personally or by
telephone, mail or telegram stating the purpose of such
meeting. Notice given by telephone shall be confirmed in
writing. Special meetings shall be called by the Chairman of the
Board, the President or Secretary in like manner and on like
notice on the written request of two Directors. The notice of
and request for a special meeting shall state the time and place
and purpose or purposes of such meetings. Business transacted at
all special meetings shall be confined to purposes stated in the
call. Action may be taken by the Board of Directors without a
meeting, if the action is evidenced by a written unanimous
consent of the Directors.
Waiver of Notice
9. Attendance of a Director at any meeting shall
constitute a waiver of notice of such meeting, except where a
Director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened. Except as may be otherwise expressly
provided by Statute, or the Articles of Incorporation, or these
Bylaws, neither the business to be transacted at nor the purpose
of any special meeting need be specified in a notice or waiver of
notice.
Quorum
10. At all meetings of the Board of Directors, the
presence of a majority of the Directors shall be necessary and
sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the Directors present at
any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specially provided
by Statute, the Articles of Incorporation, or these Bylaws. If a
quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to
time without notice other than announcement at the meeting, until
a quorum shall be present.
Executive Committee and Other Committees
Creation
11. By resolution passed by a majority of the full Board,
the Board of Directors may designate an Executive Committee. The
Chairman of the Board shall have authority to create such other
Committees as he finds necessary.
Executive Committee
12. The Executive Committee, if established, shall be
comprised of three or more Directors of the Corporation, one of
whom shall be the President of the Corporation and the majority
of whom shall be outside Directors. To the extent provided by
resolution, the Executive Committee shall have the authority of
the Board of Directors to manage the business and affairs of the
Corporation, except where action of the full Board may be
required by Statute, or the Articles of Incorporation.
Other Committees
13. Other Committees which are created by the Chairman
of the Board shall have all the authority of the Board which may
be granted to the Committee by a resolution of the full Board.
Minutes
14. The Executive Committee and any other Committees
which may be created shall keep minutes of any proceedings and
report such to the Board. Copies of the approved Committees'
minutes shall be circulated to the full Board.
Compensation of Directors
15. Directors and Advisory Directors of the Corporation
may by resolution of the Board be allowed a fixed sum and
expenses of attendance for attendance at each regular or special
meeting of the Board or of any meeting by members of an
authorized committee, if any, and may also receive such other
compensation for their services as Directors, or for serving the
Corporation in any other capacity, as the Board of Directors from
time to time may determine. Any Director who is also an employee
of the Corporation shall not be compensated for services as a
Director.
Dividends
16. Subject always to the provisions of law and the
Articles of Incorporation, the Board of Directors shall have full
power to determine whether any and, if so, what part of the funds
legally available for the payment of dividends shall be declared
in dividends and paid to the shareholders of the Corporation.
Dividends may be declared at any regular or special meeting of
the Board and may be made payable in cash, in property or in
shares of capital stock. The Board of Directors may fix a sum
which may be set aside or reserved over and above the paid-in
capital of the Corporation for working capital or as a reserve
for any proper purpose and from time to time may increase,
diminish and vary such fund in the Board's absolute judgment and
discretion.
Annual Report
17. The Board of Directors shall present at each annual
meeting and, when called for by a vote of the shareholders at any
special meeting of the shareholders, a full and clear statement
of the business and condition of the Corporation.
ARTICLE IV
NOTICES
Notice of Meetings
1. Whenever, under provisions of Statutes, the Articles
of Incorporation, or these Bylaws, notice is required to be given
to any Director or shareholder and no provision is made as to how
such notice shall be given, personal notice shall not be
required, and such notice may be given in writing, by postage
prepaid mail addressed to such Director or shareholder at such
address as appears on the books of the Corporation. Any notice
required or permitted to be given by mail shall be deemed to be
given at the time when such notice is deposited in the United
States Mail as aforesaid.
Waiver
2. Whenever any notice is required to be given to any
shareholder or Director of the Corporation under provisions of
Statutes, the Articles of Incorporation, or these Bylaws, a
waiver thereof in writing, signed before or after the time stated
in such notice by the person or persons entitled to such notice,
shall be deemed equivalent to the giving of such notice.
ARTICLE V
OFFICERS
Positions
1. The officers of the Corporation shall be chosen by the
Directors and shall be a President, a Vice President, and such
additional Vice Presidents as the Board may from time to time
determine, a Secretary and a Treasurer and such number of
Assistant Secretaries and Assistant Treasurers as the Board of
Directors may from time to time determine. Any two or more
offices may be held by the same person except the offices of
President and Secretary shall not be held by the same person.
Election
2. (a) The Board of Directors, at its first meeting after
each annual meeting of shareholders, shall elect the officers of
the Corporation, as above provided.
(b) The Board may appoint such other officers and
agents as it shall deem necessary, who shall hold their offices
for such terms, exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Term
3. The officers of the Corporation shall hold office
until their successors are chosen and qualify in their stead. An
officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the
full Board of Directors. If the office of any officer becomes
vacant for any reason, the vacancy shall be filled by affirmative
vote of a majority of the full Board of Directors.
Salaries and Contracts with Officers
4. The salaries of all officers who report directly to
the President of the Corporation shall be fixed by the Board of
Directors. The salaries of agents and employees shall be
determined and fixed by the President. The Board of Directors of
the Corporation may enter into agreements with officers on such
terms as are deemed necessary for present or future performance
of service to and for the Corporation by officers at such amounts
of compensation, salary or remuneration as may be required to
obtain such services or as to which such officers may agree, and
for lease to the Corporation by the officers of any vehicles,
equipment, furnishings or other articles of property owned or
held by officers as may be useful or necessary to the
organization and functioning of the Corporation. No officer
shall be ineligible to receive such salary by reason of the fact
that the officer is also a Director of the Corporation.
Duties
Chairman of the Board
5. The Chairman of the Board shall preside at all
meetings of shareholders and Directors, and may be designated as
the Chief Executive Officer of the Corporation, but unless so
designated shall not otherwise be considered an officer of the
Corporation.
Chief Executive Officer
6. The Chief Executive Officer (the "CEO") shall have
responsibility for the general direction of the business and
affairs of the Corporation, subject to the control of the Board
of Directors. The CEO shall have authority to sign, execute and
acknowledge in the name and on behalf of the Corporation all
contracts and other documents and instruments, including bonds
and mortgages except as otherwise provided by law, and shall have
authority to appoint and discharge agents and employees. The CEO
shall have such additional powers and duties as the Board of
Directors may from time to time assign to the CEO. In the
absence or disability of the President, the CEO shall perform
such duties and exercise such powers of the President as the CEO
shall deem necessary unless such functions are assumed by the
Chairman of the Board or otherwise delegated by the Board of
Directors or the Executive Committee. The CEO shall be an ex
officio member of all Board Committees.
President
7. (a) The President shall, in the absence of the
Chairman of the Board, perform all of the functions and duties
herein above assigned to the Chairman of the Board. If the
President is designated as the Chief Executive Officer, the
President shall perform all the functions of that office as set
out in Paragraph 6 above.
(b) The President may execute bonds, mortgages and
other contracts or instruments requiring a seal, under the seal
of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Vice Presidents
8. The Board of Directors may elect an Executive Vice
President who shall perform the duties of the President during
the President's absence or disability and shall perform such
other duties as the Board of Directors may prescribe. The Board
of Directors may elect other Vice Presidents who shall in the
order of their seniority in office and in the absence or
disability of the President and the Executive Vice President,
perform the duties and exercise the powers of the President and
shall perform such other duties as the Board of Directors may
prescribe.
Secretary
9. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all
votes and the minutes of all proceedings of the meetings of the
Corporation and of the Board of Directors in a book to be kept
for that purpose and shall perform like duties for the standing
committees when required. The Secretary shall give, or cause to
be given, notice of all meetings of the shareholders and special
meetings of the Board of Directors, and shall perform such other
duties as may be prescribed by the Board of Directors or
President, under whose supervision the Secretary shall function.
The Secretary shall keep in safe custody the seal of the
Corporation and when authorized by the Board, shall affix the
same to any instrument requiring it and, when so affixed, it
shall be attested by the Secretary's signature.
The Assistant Secretaries, if any, in order of their
seniority in office, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the
Secretary, and shall perform such other duties and have such
other powers as the Board of Directors or President may from time
to time prescribe.
Chief Financial Officer
10. The Chief Financial Officer, if one is appointed,
shall be a Vice President and shall be in charge of the financial
affairs of the Corporation under the direction and the
supervision of the President. He shall supervise the activities
of the Controller and the Treasurer.
Treasurer
11. The Treasurer shall act under the supervision of the
Chief Financial Officer. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and
other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of
the Corporation as may be ordered by the Chief Financial Officer,
taking proper vouchers for such disbursements, and shall render
to the Chief Financial Officer, an account of all the Treasurer's
transactions and of the financial condition of the Corporation.
The Assistant Treasurers, if any, in order of their
seniority in office shall, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the
Treasurer, and shall perform such other duties as the President
may from time to time prescribe.
Controller
12. The Controller shall act under the supervision of the
Chief Financial Officer. The Controller, if one is appointed,
shall be the chief accounting officer of the Corporation. The
Controller shall, when proper, approve all bills for purchases,
payrolls, and similar instruments providing for disbursement of
money by the Corporation for payment by the Chief Financial
Officer. The Controller shall be in charge of and maintain books
of account and accounting records of the Corporation and shall
render to the Chief Financial Officer, an account of all the
Controller's transactions. In addition, the Controller shall
perform such other acts as are usually performed by the
Controller of a Corporation or assigned to the Controller by the
President.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Form
1. The interest of each shareholder of the Corporation
shall be evidenced by certificates for shares of stock certifying
the numbers of shares represented thereby. Such certificates
shall be consecutively numbered and entered on the books of the
Corporation as they are issued and shall be in such form not
inconsistent with the Articles of Incorporation as the Board of
Directors may from time to time prescribe. Each certificate
shall state on the face thereof the holder's name, the number and
class of shares, and the par value of such shares or a statement
that such shares are without par value. Each certificate shall
be signed by the President or a Vice President and the Secretary
or an Assistant Secretary and may be sealed with the seal of the
Corporation or a facsimile thereof. The signatures of such
officers may be facsimiles if the certificate is countersigned by
a transfer agent or is registered by a registrar other than the
Corporation or its employee.
Lost Certificates
2. The Board of Directors may direct that a new
certificate representing shares be issued in place of any
certificate theretofore issued by the Corporation and alleged to
have been lost or destroyed, upon the making of an affidavit of
loss or destruction by the person claiming the certificate to be
lost or destroyed. When authorizing such issue of a new
certificate, the Board of Directors, in its discretion and as a
condition precedent to the issuance thereof, may require the
owner of such lost or destroyed certificate or the owner's legal
representative to give the Corporation a bond or indemnity not
exceeding an amount which is double the value of the stock.
Transfer Agent and Registrar
3. The Board of Directors may appoint one or more transfer
agents or transfer clerks and one or more registrars and may
require all certificates for shares to bear the signature or
signatures of any of them.
Registered Owner
4. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact
thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person, whether or not it shall have express or
other notice thereof, save as expressly provided by law, the
Articles of Incorporation, or these Bylaws.
Transfer of Shares
5. Shares of stock shall be transferable on the books of
the Corporation only by endorsement by the holder thereof in
person or by the holder's duly authorized attorney. Upon
surrender to the Corporation or the Corporation's transfer agent
of a certificate representing shares which has been duly endorsed
or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or
the Corporation's transfer agent to issue a new certificate to
the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Closing of Transfer Books
6. The Board of Directors may provide that the stock
transfer books shall be closed for a stated period not to exceed
fifty days for the purpose of determining shareholders entitled
to receive notice of or to vote at any meeting of shareholders or
any adjournment thereof or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to
receive notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding
such meeting. In lieu of closing the stock transfer books, the
Board of Directors may fix in advance a record date for any such
determination of shareholders, such date to be not more than
fifty days and, in case of a meeting of shareholders, not less
than ten days prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If
the stock transfer books are not closed and no record date is
fixed for the determination of shareholders or shareholders
entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment of such meeting.
ARTICLE VII
GENERAL PROVISIONS
Checks
1. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time
to time designate.
Fiscal Year
2. The fiscal year of the Corporation shall begin the
first day of January each year.
Corporation Seal
3. The Corporation seal shall have inscribed thereon the
name of the Corporation and the words "Corporate Seal, Texas".
Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise imprinted.
Voting Securities Held by the Corporation
4. Unless otherwise ordered by the Board of Directors,
the President shall have full power and authority on behalf of
the Corporation to attend and to act and to vote at any meeting
of security holders of other Corporations in which the
Corporation may hold securities. At such meeting the President
shall possess and may exercise any and all rights and powers
incident to the ownership of such securities which the
Corporation might have possessed and exercised if it had been
present. The Board of Directors may from time to time confer
like powers upon any other person or persons.
Indemnification
5. The Corporation shall indemnify any Director, officer,
employee, or former Director, officer or employee of the
Corporation, or any person who has served at the Corporation's
request as a Director, officer or employee of another Corporation
in which the Corporation owns shares of stock or of which it is a
creditor against expenses actually and necessarily incurred by
that person and any amount paid in satisfaction of judgments in
connection with any action, suit or proceeding, whether civil or
criminal, in which that person is made a party because of service
to the Corporation in one of the above capacities subject to the
following provisions.
6. Before a person requesting indemnity shall be entitled
to indemnity, it shall have been determined in the manner
provided in paragraph 7 that that person:
a. performed any activity in good faith,
b. reasonably believed:
1) the conduct was in an official capacity and in the
Corporation's best interest, or
2) where the conduct was not in an official capacity,
the conduct was not opposed to the Corporation's best interest;
and where a criminal proceeding is involved, no reasonable cause
exists to believe the conduct was unlawful.
7. For a person to be eligible for indemnification, a
determination of such eligibility shall be made by one of the
following means:
a. a majority vote of a quorum of Directors who are not
named parties in the proceeding at the time of the vote,
b. where such a quorum cannot be obtained by a majority
vote of a committee of the Board consisting of Directors who are
not parties in the proceeding at the time of the vote,
c. by special legal counsel selected in the manner as
required by Statute, or
d. by a vote of the shareholders which excludes those
shares held by Directors who are parties to the proceeding.
8. Reasonable expenses incurred by a person eligible for
indemnification may be reimbursed in advance of final disposition
of the proceeding if:
a. the Corporation receives a written affirmation by the
Director of a good faith belief that the Director has met the
standard of conduct necessary for indemnification,
b. the Director provides a written obligation to repay
all amounts paid or reimbursed if it is ultimately determined
that the Director is not eligible for indemnification, and
c. a determination of the facts known at the time of the
request for the advance reimbursement would not preclude
indemnification.
9. Where eligibility has been determined, a person may be
indemnified against judgments, penalties, fines, settlements, and
reasonable expenses actually incurred, provided that if the
proceeding is brought by or on behalf of the Corporation, the
indemnification is limited to reasonable expenses actually
incurred.
10. A person is not eligible for indemnification if:
a. the person is found liable on the basis of personal
benefit being improperly received by that person regardless of
whether or not the benefit resulted from action taken in the
person's official capacity,
b. the person is found liable to the Corporation.
11. Such rights of indemnification and reimbursement shall
not be deemed exclusive of any other rights to which such
Director, officer, or employee may be entitled by law or under
any bylaw, vote of shareholders, agreement or otherwise. The
Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a Director, officer,
employee or agent of any other Corporation against any liability
asserted against that person and incurred by that person in any
such capacity or arising out of that person's status as such,
whether or not the Corporation would have the power to indemnify
that person against such liability under the provisions of this
section.
ARTICLE VIII
AMENDMENTS
These Bylaws may be altered, amended, or repealed by the
affirmative vote of the shareholders holding eighty percent (80%)
of the shares of each class of shares outstanding or by the
affirmative vote of a majority of the full Board at any regular
meeting of the Board or at any special meeting of the Board if
notice of the proposed alteration, amendment, or repeal be
contained in the notice of such special meeting.
ARTICLE IX
RESTRICTION OF TRANSFER OF RIGHTS
The Rights Agreement, as amended, between the Corporation
and Team Bank, successor to Texas American Bank/Fort Worth, N.A.,
dated as of November 13, 1990, as may be further amended from
time to time, and the Resolution of the Board of Directors of the
Corporation of even date herewith create certain Rights (as
defined in the Rights Agreement). The transferability of the
Rights is restricted in that the Rights, whether represented by
or attached to the certificates representing Common Shares of the
Company or, after the Distribution Date (as defined in the Rights
Agreement), as evidenced by separate certificates, are null and
void and unenforceable in the hands of an Acquiring Person, any
Affiliate or Associate thereof and their successors and assigns.
BYLAWS
OF
TNP ENTERPRISES, INC.
(REVISED NOVEMBER 15, 1994)
EX-10
6
Amendment No. 1
FUEL SUPPLY AGREEMENT
Amendment No. 1, dated as of April 1, 1988, to the Fuel Supply
Agreement, executed and effective as of November 18, 1987 (the
"Fuel Agreement"), between Phillips Coal Company, a Nevada
corporation ("Phillips"), and Texas-New Mexico Power Company, a
Texas corporation ("TNP").
WHEREAS, the parties hereto have previously entered into the
Fuel Agreement, pursuant to the terms and conditions of which
Phillips has agreed to sell and deliver Lignite to TNP and TNP has
agreed to purchase and receive Lignite from Phillips; and
WHEREAS, the parties hereto desire to amend the Fuel
Agreement as hereinafter provided.
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. All terms not defined herein shall have
the meanings ascribed to them in the Fuel Agreement.
2. Amendments. Exhibit B to the Fuel Agreement is hereby
amended by deleting the Depiction of Point of Delivery appearing
therein and substituting therefor the Depiction of Point of
Delivery as of April 1, 1988, attached hereto.
3. Fuel Agreement. Except as expressly amended hereby, the
Fuel Agreement shall continue in full force and effect in
accordance with the terms and provisions thereof.
4. Governing Law. This Amendment No. 1 shall be governed
by and construed in accordance with the laws of the State of
Texas.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be executed by their duly authorized officers
as of the date first above written.
PHILLIPS COAL COMPANY
By: \s\ C.B. Friley
Title: President
TEXAS-NEW MEXICO POWER COMPANY
By: \s\ James M. Tarpley
Title: President and Chief
Operating Officer
Agreed and entered into for purposes of
Section 11.03:
PHILLIPS PETROLEUM COMPANY
By: K. F. Smalley
Title: Sr. Vice President
2
CHART
DESCRIPTION:
Point of Delivery shown as a circular area approximately 400 feet in diameter
and approximately 200 feet southeast of coordinates N3,139,958.54,
E3,139,958.54 when utilizing the Texas Plane Coordinate System.
EX-10
7
AMENDMENT NO. 2 TO FUEL SUPPLY AGREEMENT
This Amendment to Fuel Supply Agreement (the "Amendment") is made and entered
into as of the 29th day of November, 1994, by and between Texas-New Mexico
Power Company ("TNP") and Walnut Creek Mining Company ("Walnut Creek") and
amends the Fuel Supply Agreement dated as of November 18, 1987, as amended (the
"Agreement") entered into by and between TNP and Phillips Coal Company.
Capitalized terms not defined herein shall be given the same meaning ascribed
to such terms in the Agreement. This Amendment is made with respect to the
following facts:
(a) Effective May 10, 1988, the Agreement was assigned by Phillips Coal
Company to Walnut Creek.
(b) The Parties desire to amend the Agreement as set forth in this Amendment.
In consideration of the recitals set forth above which are hereby made a part
of this Amendment, the Parties agree as follows:
1. Section 4.01(A) of the Agreement shall be deleted in its entirety and
replaced by the following:
Except as otherwise specifically provided in this Section 4.01(A) and subject
to the provisions of Article 12 of this Agreement, during the Term hereof, TNP
shall purchase and Walnut Creek shall deliver all of the solid fuel
requirements for each of the Units (such solid fuel requirements to be
Lignite); provided, however, that at a minimum, TNP shall purchase and Walnut
Creek shall deliver for each Year during the Term hereof the Annual Lignite
Quantity as set forth in Exhibit C; and, provided further, that to the extent
of the then remaining Allowed Shortfall as determined in accordance with
Section 4.04 of this Agreement, TNP must take delivery of not less than 90
percent of the Annual Lignite Quantity in any Year. Notwithstanding the
preceding sentence, in any Year during the Term hereof, TNP may purchase from
sources other than Walnut Creek no more than 540,000 Dths of an alternate fuel
(equivalent to 40,000 tons of Lignite) to be used solely by TNP for testing
purposes and a quantity of natural gas to be used in start-ups with respect to
the Units. TNP may elect to prepay at any time any or all amounts it determines
may in the future be due Walnut Creek as a result of TNP's failure to receive
the Adjusted Lignite Quantity in a Year.
2. Section 4.01(C) of the Agreement shall be deleted in its entirety.
3. The second and third sentences of Section 4.02 of the
Agreement shall be deleted in their entirety.
4. Section 4.04 of the Agreement shall be deleted in its
entirety and replaced by the following:
Allowed Shortfall shall not exceed 15,934,731 Dths. To the
extent that there remains Allowed Shortfall, TNP may f ail to
take delivery in any Year of an amount of Lignite equal to no
more than 10 percent of the Annual Lignite Quantity for such
Year. In such event, TNP must choose either (i) to allocate such
amount not taken as a deduction from the then remaining balance
of Allowed Shortfall, or (ii) to pay for such amounts as Make-up
pursuant to Section 4.05.
5. The last two sentences of the second paragraph of Section
4.05 of the Agreement shall be deleted in their entirety.
6. Section 4.06 of the Agreement shall be deleted in its
entirety.
7. Add the following to Section 6.01(c) of the Agreement:
Notwithstanding anything to the contrary in this Agreement,
effective January 1, 1995, the Base Price of Lignite shall be
$1.295 per Dth for all Lignite purchased and delivered.
8. The fifth, sixth, and seventh sentences of the first
paragraph of Section 6.02 of the Agreement shall be deleted in
their entirety and replaced by the following:
Price redetermination proceedings and the implementation of a new
price for Lignite may occur no more often than one time every
five years. Walnut Creek may request the next price
redetermination which shall be effective no earlier than January
1, 2000, by delivering such request in writing to TNP no later
than September 1, 1999. Such new price shall continue in effect
for a period of five years. If Walnut Creek fails to request
such price redetermination, then TNP may request a price
redetermination which shall be effective no earlier than January
1, 2001, by delivering such request in writing to Walnut Creek no
later than September 1, 2000. Such new price shall continue in
effect for a period of five years. Thereafter, either Party may
request in writing a market price redetermination no later than
September 1 of the Year preceding January 1 of the Year when a
new price may become effective; provided, however, that such a
new price for Lignite may occur no more often than one time every
five years. If neither Party requests a reopener, the then
existing Adjusted Base Price shall continue in force.
9. A new Section 8.06 shall be added to the Agreement as
follows:
2
Section 8.06. Audit of TNP by Walnut Creek. TNP shall maintain
accurate, complete, and timely books and records of all purchases
of fuel for the Units in order that the provisions of this
Agreement can adequately be administered. Once each year, Walnut
Creek or its employees, agents, or representatives, shall have
the right to enter upon the premises of TNP at reasonable times
and to conduct an audit of such purchases at the sole expense of
Walnut Creek. Walnut Creek shall furnish to TNP a copy of the
audit report upon its completion. In the event TNP disagrees
with the audit report, the Parties shall cooperate in an attempt
to resolve any differences regarding the audit report. If any
differences regarding the audit report are not resolved within 30
days following delivery of the audit report to TNP, then the
controversy shall be submitted for resolution in accordance with
Section 8.05.
10. Walnut Creek shall update the Manning Table for the Two
Unit Plan as set forth in Exhibit E in order to arrive at an
average hourly rate to be effective as of January 1, 1995, as
soon as practicable upon the availability of the necessary
information to make such determination.
11. Exhibit F to the Agreement shall be deleted in its entirety
and replaced by the attached Amended Exhibit F.
12. Except as set forth in this Amendment, all other provisions
of the Agreement shall remain unchanged and in full force and
effect. However, to the extent that there is any inconsistency
between the Agreement and this Amendment, this Amendment shall
control.
13. This Amendment shall be effective as of January 1, 1995.
IN WITNESS WHEREOF, the Parties have caused their authorized
representatives to execute this Amendment as of the day and year
first above written.
TEXAS-NEW MEXICO POWER COMPANY
By: Randy Ownby
Title: Assistant Vice President
Resource Acquisition & Management
WALNUT CREEK MINING COMPANY
By: Bruce Grewcock
Title: Member, Management Committee
3
AMENDED
EXHIBIT F
TO
FUEL SUPPLY AGREEMENT
Adjustments to Base Price
Section F.01. Components. The Base Price for Lignite as set out in
Section 6.01 is made up of the following components:
Base Price of Components per Dth
(January 1, 1995)
Two Unit
Section Plan
Price Components
F.04 Capital $0.295
F.05 Labor 0.296
F.09 General and Administrative 0.042
F.06 Supplies 0.289
F.07 Power Costs 0.032
F.08 Taxes and Regulatory 0.042
Requirements
F.09 Other Items 0.221
F.09.1 1996 Price Component $0.025
F.09.2 1998 Price Component $0.025
Sub-Total: 1.217
(Pre-Royalty Base Price)
F.10 Royalties (6% of Total 0.078
Base Price)
Total Base Price: $1.295
*Effective January 1, 1996
**Effective January 1, 1998
The components of the various Base Prices set forth above ("Price
Components") shall be referred to in this Agreement as the "Capital
Component", the "Labor Component", the "General and Administrative
Component", the "Supplies Component", the "Power Costs Component", the
"Taxes and Regulatory Requirements Component", the "Other Items
Component", which includes the 1996 and 1998 Price Components referred
to in Section F.09.1 and F.09.2, and the "Royalties Component",
respectively. The Components are expressed in terms of dollars per Dth.
EXHIBIT F - Page 1
Section F.02 Adjustments - General. Except for adjustments
relating to the Price Components described in Sections F.05,
F.07, F.08 and F.10 (which adjustments will be made as changes
occur), adjustments to the Price components shall be made on the
Adjustment Dates with the first adjustment being made on April 1,
1995 (April 1, 1996 for Section F.09.1; April 1, 1998 for Section
F.09.2). TNP shall bear only that portion of the changes in costs
and expenses (which give rise to adjustments in the Base Prices)
applicable to the Lignite. On each Adjustment Date, each Price
Component of the then applicable Base Price shall be adjusted in
- accordance with Sections F.04, F.06 and F.09 and the sum of the
Price Components, as adjusted, will be the Adjusted Base Price to
be charged per Dth for Lignite until the next Adjustment Date,
subject, however, to the other adjustments provided for in this
Agreement. In the event of the unavailability of any index
described in this Amended Exhibit F, adjustments to the Base
Prices shall be computed using any available conversion tables of
the U.S. Department of Labor and otherwise by mutual agreement of
the Parties.
Section F.03. Formulae. With the exception of F.09.1 and F.09.2,
the denominators of all fractions which are set forth in this
Amended Exhibit F, and which are based on the CPI or PPI, are
based on the CPI or the PPI (as the case may be) for December
1994. The denominators for the fractions set forth in Section
F.09.1 and F.09.2 are based on the CPI for December, 1995 and
December, 1997, respectively.
Section F. 04. Capital component Adjustment. The Capital
Component, which has been established to reflect Walnut Creek's
ownership of all equipment and facilities necessary to develop
and operate the Mine throughout the Term, shall be adjusted on
each Adjustment Date according to the following formula wherein C
is expressed in dollars per Dth:
C = (X) (0.295)
--------------
(Y)
WHERE:
X = the PPI for Construction Machinery and Equipment (Commodity
Code 112) for the second month preceding the Adjustment Date
and
Y = The PPI for Construction Machinery and Equipment (Commodity
Code 112) for the month of December 1994.
Section F.05. Labor Component Adjustment. The Labor Component,
which includes all hourly labor, salary labor and payroll burdens
(including benefits and payroll taxes) at the Mine, shall be
adjusted to allow for changes in Walnut Creek's base weighted
average hourly wage rate. The weighted average hourly wage rate
(on a non-union basis) attributable to the Lignite as of
EXHIBIT F - Page 2
January 1, 1995 for the Two Unit Plan is reflected in the Manning
Table to be updated by Walnut Creek and attached as Exhibit E.
(To be prepared as soon as practicable upon the availability of
the necessary information.)
The Parties recognize that the purpose of the Manning Tables are
to periodically recalculate weighted average hourly wage rates,
and that they do not necessarily reflect the number of people at
the Mine at any given time. The number of people in the Manning
Tables shall not be changed nor shall new categories be added
unless the labor force at the Mine is represented under a
collective bargaining agreement, or unless legislation enacted
after January 1, 1987 requires such change. In this event,
Walnut Creek will advise TNP of such changes and persons will be
added or removed at the appropriate rate to enable determination
of a new weighted hourly base wage rate. In addition to the
hourly wage rate adjustments and revisions, whenever a new labor
or laborrelated cost not reflected in the Manning Table is
incurred on a per Dth basis, Walnut Creek shall add that cost to
the price of Lignite and recover that cost and any adjustments to
that cost separately as a direct pass-through.
Should revisions to the Manning Tables be required because of,
without limitation, changes in job classifications, work
practices and overtime requirements under a collective bargaining
agreement, these revisions shall not go into effect until two (2)
years after the date on which the collective bargaining agreement
was executed.
The adjusted Labor Component which will become a part of the
Adjusted Base Price to be computed on each Adjustment Date will
be equal to L (expressed in dollars per Dth) in the following
formula:
L = (0.296) (X)
-------------
(Y)
WHERE:
X = the weighted average hourly- wage rate for- labor attributed
to the Lignite as of the Adjustment Date, as determined based
upon the applicable Manning Table attached as Amended Exhibit E;
and
Y = the applicable weighted average hourly base wage rate set
forth on Amended Exhibit E attributable to the Lignite as of
January 1, 1995.
Section F.06. Supplies Component Adjustment. The applicable Base
Price shall be adjusted to allow for changes in the cost of
supplies purchased by Walnut Creek and used in the production of
the Lignite. The adjusted Supplies Component, which will become
a part of the Adjusted Base Price to be computed on each
Adjustment Date, will be equal to S (expressed in dollars per
Dth) in the following formula:
EXHIBIT F - Page 3
TWO UNIT PLAN
FORMULA
S = (0.289) (.111)(A) + (.055)(B) + (.066)(C) +
---------- ----------- -----------
(Y) (Y) (Y)
(.581)(D) + (.187)(E)
---------- -----------
(Y) (Y)
WHERE:
A = the PPI for Number 2 Diesel Fuel (Commodity Code 057303)
for the second month preceding the Adjustment Date;
B = the PPI for Finished Lubricants (Commodity Code 0576) for
the second month preceding the Adjustment Date;
C = the PPI for Rubber and Rubber Products (Commodity Code 071)
for the second month preceding the Adjustment Date;
D = the PPI for Parts and other Equipment (Commodity Code 1126)
for the second month preceding the Adjustment Date; and
E = the PPI for Industrial Commodities (Commodity Code 03 THRU
15) for the second month preceding the Adjustment Date.
Y = Applicable PPI index for A, B, C, D or E for the month of
December, 1994.
Section F.07. Power Costs Component Adjustment. The applicable
Base Prices shall be adjusted to allow for changes in the costs
to Walnut Creek of electric power attributable to the production
of the Lignite. The Power Costs Component will be determined
monthly and will be equal to the actual cost of electric power
for the Mine during the preceding month divided by the number of
Dths of Lignite billed during the current month.
Section F. O8. Taxes and Regulatory Requirements Component
Adjustment. The applicable Base Prices shall be adjusted to
compensate for changesin the amounts of the following, as and
when said changes occur: (a) State of Texas Severance Taxes, (b)
Federal Surf ace Mine Reclamation Fees, (c) Texas Resource Excise
Taxes, (d) Texas Conservation Taxes, (e) the reasonable and
necessary costs of complying with applicable Regulatory
Requirements, (f) ad valorem taxes and (g) sales taxes.
The phrase "Regulatory Requirements" as used in this Exhibit
shall mean (i) taxes, whether or not in existence on the
Execution Date (other than state or federal income taxes, or
those taxes set
EXHIBIT F - Page 4
out above, but including the Texas Gross Receipts Tax, if Walnut
Creek is required to pay this tax) , (ii) fees (other than fees
which can be adjusted pursuant to other sections of this Exhibit
F or fees, the cause of the imposition or change in which are
related to inefficient operations on the part of Walnut Creek)
and (iii) costs, including those occasioned by compliance with
laws passed subsequent to January 1, 1987 or compliance with
interpretations of laws in force on Execution Date, but only if
the interpretations are issued by a court, governmental agency,
or regulatory body, and are different from the interpretations of
the relevant laws as they existed on January 1, 1987 [other than
costs which (a) may be adjusted pursuant to other sections of
this Exhibit F, (b) are brought about by the inefficient
operations of Walnut Creek, (c) are attributable to Walnut
Creek's negligence or intentional misconduct, or (d) are the
result of criminal fines or penalties imposed on Walnut Creek by
any government or governmental agency and relating to the mining,
production, severance, preparation, or sale of Lignite]. The
Base Price includes all Regulatory Requirements as of January 1,
1987. The Base Price will be adjusted as Regulatory Requirements
become effective to reflect the effect of actual changes in
Regulatory Requirements subsequent to January 1, 1987.
Section F.09. General and Administrative Component and Other
Items Component Adjustment. The Base Price shall be adjusted to
allow for changes in the costs of Walnut Creek's allocated
general and administrative services relating to the Lignite, and
other items. The Parties agree that the General and
Administrative Component and the Other Items Component of the
Base Price include charges made from corporate offices of
Phillips and Kiewit Texas Mining Company for overall management
services, including legal, engineering, marketing, accounting,
data processing and general overhead costs.
The adjusted General and Administrative Component and other Items
Component which will become a part of the Adjusted Base Price to
be computed on each Adjustment Date will be equal to P (expressed
in dollars per Dth) in the following formula:
EXHIBIT F - Page 5
P = (0.263) (X)
-------------
(Y)
WHERE:
X = the CPI for All Items - Urban Consumers for the second
month preceding the applicable Adjustment Date, and
Y = The CPI for all Items - Urban Consumers for the month of
December 1994.
Section F.09.1. 1996 Price Component. Effective January 1, 1996,
a new Price Component (the 1996 Price Component) in the amount of
$0.025 per Dth will be included in determining the Base Price for
lignite. The 1996 Price Component will be adjusted on each
subsequent Adjustment Date according to the following formula
where P is the adjusted Price Component expressed in dollars per
Dth.
P = 0.025 (X)
------------
(Y)
WHERE:
X = the Consumer Price Index for All Items - Urban Consumers for
the second month preceding the applicable Adjustment Date and
Y = the Consumer Price Index for All Items - Urban Consumers for
the month of December 1995.
Section F.09.2. 1998 Price Component. Effective January 1, 1998,
a new Price Component (the 1998 Price Component) in the amount of
$0.025 per Dth will be included in determining the Base Price for
lignite. The 1998 Price Component will be adjusted on each
subsequent Adjustment Date according to the following formula
where P is the adjusted Price Component expressed in dollars per
Dth.
P = 0.025 (X)
-----------
(Y)
WHERE:
X = the Consumer Price Index for All Items - Urban Consumers for
the second month preceding the applicable Adjustment Date and
Y = the Consumer Price Index for All Items - Urban Consumers for
the month of December 1997.
Section F.10. Royalties Component. The Lignite will be mined by
Walnut Creek under leases, sub-leases and agreements
(collectively "Leases"). A list of the Leases currently in
effect
EXHIBIT F - Page 6
has been delivered to TNP by Phillips. The Parties acknowledge
that the Leases now in effect require Walnut Creek to pay a
royalty on lignite equal to an average of 6% of the Total Base
Price of the lignite F.O.B. the Point of Delivery. The Base
Price shall be adjusted so that the Royalty Component shall be 6%
of the Adjusted Base Price.
EXHIBIT F - Page 7
EX-10
8
AMENDMENT NO. I
TO THE
INTERCHANGE AGREEMENT
BETWEEN
EL PASO ELECTRIC COMPANY
AND
TEXAS-NEW MEXICO POWER COMPANY
This Amendment No. I to the Interchange Agreement dated April
29, 1987 is entered into between El Paso Electric Company ("EPE")
and Texas-New Mexico Power Company ("TNP"); herein individually
the "Party" and collectively the "Parties".
Now, therefore, in consideration of the premises and mutual
covenants herein set forth, the Parties agree to the following:
The Interchange Agreement is hereby amended by deleting
Section 3 of Service Schedule C, Wheeling Service, in its
entirety.
Except as modified by this Amendment No. 1, the Interchange
Agreement shall remain in full force and effect.
This Amendment No. I shall become effective on the date it is
signed by the Parties, and the terms and conditions that affect
system operations will be implemented on the first day of the
month following the filing of this Amendment No. I with the
Federal Energy Regulatory Commission (FERC), such filing to be
made concurrently with the FERC filing of Amendment No. 5 to the
SWNMT Participation Agreement. This Amendment No. I shall
continue in effect concurrently with the Interchange Agreement;
provided, however, that if Amendment No. 5 to the SWNMT
Participation Agreement terminates pursuant to Section 1.2 of its
terms, this Amendment No. I shall also terminate and thereafter be
of no further force or effect.
The signatories hereto represent that they have been
appropriately authorized to enter into this Amendment No. 1 on
behalf of the Party for whom they sign. This Amendment No. 1 is
hereby executed as of the 21st day of November, 1994.
EL PASO ELECTRIC COMPANY
By: \s\ JOHN C. HORN
Its: Vice President
TEXAS-NEW MEXICO POWER COMPANY
By: \s\ RANDY OWNBY
Its: Assistant Vice President
2
EX-10
9
1996 FIRM CAPACITY & ENERGY SALE
AGREEMENT BETWEEN
TUCSON ELECTRIC POWER COMPANY
AND
TEXAS-NEW MEXICO POWER COMPANY
TUCSON-TNP
1996 FIRM CAPACITY & ENERGY SALE AGREEMENT
1. PARTIES
The Parties to this Agreement are TUCSON ELECTRIC POWER COMPANY,
an Arizona corporation ("Tucson"); and TEXAS-NEW MEXICO POWER
COMPANY, a Texas corporation ("TNP"), hereinafter collectively
referred to as "Parties" and individually referred to as "Party".
2. RECITALS This Agreement is made with reference to the
following facts, among others:
2.1 The Parties are engaged in the generation, transmission
and distribution of electric power and energy in one or
more of the States of Arizona, New Mexico, and Texas.
2.2 Electrical system interconnections exist which will
allow scheduled interchanges of power and energy to take
place between the Parties' respective systems.
2.3 Tucson desires to sell from its system and TNP desires to
purchase, in accordance with the terms and conditions set
forth herein, 30 megawatts of Firm Capacity and Firm
Energy, with no minimum energy requirement
NOW THEREFORE, The Parties agree as follows:
3. DEFINITIONS
The following terms when initially capitalized in this Agreement,
whether singular or plural, shall have the meaning as hereinafter
specified:
3.1 "Agreement" means this Agreement between Tucson and TNP.
3.2 "FERC" means the Federal Energy Regulatory
Commission, or its
-1-
successor.
3.3 "Firm Capacity" means system capacity as set forth in
Section 5.1 that is made available to TNP from Tucson's
system resources to facilitate deliveries of Firm Energy,
subject to curtailment only as provided in Section 5.3.
3.4 "Firm Energy" means the energy associated with Firm
Capacity, as set forth in Section 5.2.
3.5 "Point of Delivery" for all transactions hereunder shall
mean the 345 kV bus at Greenlee Substation.
4. EFFECTIVE DATE AND TERM
4.1 Subject to Sections 4.2 and 4.4, the period during which
sales win be made under this Agreement shall be January 1,
1996 through December 31, 1996, inclusive of both dates.
4.2 On or before January 31, 1995 Tucson will tender this
Agreement to the FERC for filing in compliance with
applicable regulation, and will request an effective date
of January 1, 1996. If, after filing this Agreement, FERC
or any other appropriate regulatory authority Orders any
material changes or modifications of this Agreement which
are unacceptable to either Party, the Party objecting to
such change or modification shall notify the other Party
of such objection, and to the extent the objection is not
remedied, this Agreement shall become void as of the
effective date of such order, and all obligations except
the obligation to pay for capacity and energy received,
prior to such effective date, shall terminate thereafter.
4.3 Neither Party hereto shall unilaterally make application
to FERC for a change in rates or in any other provision of
this Agreement pursuant to the provisions of either
Section 205 or 206 of the Federal Power Act.
5. CAPACITY AVAILABILITY AND ENERGY DELIVERY
5.1 Commencing January 1, 1996 and continuing each month
through the term of this Agreement, Tucson shall make
available at the Point of Delivery, and TNP shall
purchase, 30 megawatts of Firm Capacity. This Firm
Capacity shall be provided from Tucson's system
resources.
5.2 Commencing January 1, 1996 and continuing each month
through the term of this Agreement, Tucson shall deliver
and TNP shall accept and pay for Firm Energy as
scheduled by TNP, with no minimum energy requirement
5.3 Tucson may curtail energy deliveries under this Agreement
(i) for forced generation or transmission outages or (ii)
if the integrity or reliability of the transmission or
generation system is jeopardized. With respect to
priority of interruption or curtailment of service, TNP
will be curtailed on a pro rata basis with customers of
similar levels of firmness, and only SRP, NTUA and
Tucson's retail customers will have priority over TNP and
such other firm customers. Tucson may, as soon as
necessary, interrupt or reduce energy deliveries hereunder
to the extent needed to reduce or eliminate such jeopardy.
However, if practicable Tucson shall give TNP advance
notice before interrupting or reducing deliveries and
shall use reasonable efforts to supply scheduled energy,
including purchasing available energy from other
utilities.
6. SCHEDULING
Tucson shall be obligated to deliver Firm Capacity and Firm Energy
to TNP according to the following procedures:
6.1 Projected Monthly Schedules - By October 15, 1995,
TNP shall submit to Tucson in writing a monthly on-peak
and off-peak breakdown of the projected amount of Firm
Energy associated with Firm Capacity to be delivered
during 1996. Such projections shall represent a good
faith estimate by TNP of its anticipated deliveries and
shall not be binding on either Party.
6.2 Daily Schedules by TNP - TNP shall preschedule
deliveries of all Firm Energy and Firm Capacity no later
than 10-00 a.m. Mountain-. Standard Time on the last
normal business day observed by both Parties prior to the
day(s) of delivery, or as otherwise mutually agreed by
the Parties' dispatchers or schedulers. TNP may schedule
changes to this preschedule on a real-time basis with a
minimum 30 minutes notice, or as otherwise mutually
agreed. Tucson shall deliver such Firm Capacity and Firm
Energy in accordance with these daily schedules.
6.3 System Logs - All deliveries hereunder shall be deemed to
be made during the hours and in the amounts as accounted
for in Tucson's and TNP's dispatchers' system logs;
provided, that if scheduled deliveries are interrupted as
contemplated in Section 5.3 or due to uncontrollable
forces (as defined in Section 10), such schedules shall be
adjusted to reflect such interruption and any scheduled
delivery so interrupted may be rescheduled by TNP at a
later date by mutual agreement
7. LOSSES
Tucson shall be responsible for losses to the Point of Delivery.
TNP shall be responsible for losses associated with this Agreement
beyond the Point of Delivery.
8. CHARGES
8.1 Tucson shall bill TNP monthly on or before the tenth
(10th) day of the month following each month service is
rendered, in accordance with the provisions of Exhibit
A attached hereto. Bills shall be sent by facsimile to:
Texas-New Mexico Power Company
Attention: Mr. Charles T. Summers
Fax # (505) 538-3768 ext 227
Bills shall be deemed to be received on the day sent by
facsimile. The original invoice shall be sent via United
States mail to:
Texas-New Mexico Power Company
Attention: Mr. Randy Ownby
P. 0. Box 2943
4100 International Plaza
Fort Worth, Texas 76113
TNP shall pay Tucson by the tenth (10th) day after receipt of
the bill. Payment shall be made by wire transfer to:
Bank One
Tucson, Arizona
ABA #122-100-024
Credit Account #2002-8131
Tucson Electric Power Company
Amounts not paid by the due date shall be payable with
interest accrued on each calendar day from the due date to
the date of payment The interest shall be at a rate of two
percentage points above the then-effective prime commercial
lending rate per annum announced by the Chase Manhattan Bank
(NA), or its successor, at its principal office in New York
City.
8.2 In the event any portion of any bill is disputed,
the entire amount including disputed amount shall be
paid when due. The protest shall be timely if made at
the time of payment or within 60 days after the alleged
irregularity in billing is discovered, or should have
been discovered. If the disputed portion of the payment
is found to be incorrect, Tucson shall refund to TNP any
amount due, including interest accrued on each calendar
day from the date of payment by TNP to the date the
refund check is mailed by Tucson. The interest shall be
as provided in Section 8.1 herein.
9. AUTHORIZED REPRESENTATIVES
9.1 Each Party shall designate a person as its Authorized
Representative. Such Authorized Representative shall be
authorized to act on behalf of the Party designating
such Representative in carrying out the provisions of
this Agreement Each Party shall notify the other Party
within fifteen (15) calendar days after execution of @s
Agreement of the designation of its Authorized
Representative and shall promptly notify the other Party
of any subsequent changes in such designation.
9.2 The Authorized Representatives will meet as required to
provide coordination with respect to matters which
affect the implementation of this Agreement
9.3 Authorized Representatives shall have no authority to
modify any of the provisions of this Agreement
10. UNCONTROLLABLE FORCES
Neither Party shall be considered to be in default in the
performance of any of its obligations hereunder when failure of
performance shall be due to uncontrollable forces, other than
the obligation to make payment of any amounts due for Firm
Capacity made available and any Firm Energy delivered prior to
the occurrence of an uncontrollable force. The term
"uncontrollable forces" shall mean any event beyond the control
of the Party unable to perform such obligation including, but
not limited to, failure of or threat of failure of electric
facilities; flood, earthquake, storm, fire, lightning and other
natural catastrophes; epidemic, war, riot, civil disturbance or
disobedience; labor dispute, labor or material shortage;
sabotage; government priorities and restraint by court order or
public authority; and action or nonaction by, or failure to
obtain the necessary authorizations or approvals from any
governmental agency or authority, which by exercise of due
diligence such Party could not reasonably have been expected to
avoid and which, by exercise of due diligence, it shall be
unable to overcome. Nothing contained herein shall be construed
as to require either Party to settle any strike or labor dispute
in which it may be involved.
11. ASSIGNMENT OF AGREEMENT
This Agreement may be assigned by a Party without the prior
written consent of the other Party to (i) a wholly-owned
subsidiary or other affiliate in which the assigning Party has at
least a majority ownership interest or (ii) a successor by merger
or consolidation. In all other cases Agreement may not be
assigned without the prior written consent of the other Party.
12. NO DEDICATION OF FACILITIES
Any undertaking by one Party to the other under any provision of
this Agreement shall not constitute the dedication of ownership or
title 'm the system or any portion thereof of either Party to the
public or to the other Party, and it is understood and agreed that
any such undertaking by either Party shall cease upon the
termination of this Agreement
13. NOTICES
Any notice, demand or request provided for in this Agreement, or
served, given or made in connection with it, shall be in writing
and shall be deemed properly served, given or made if delivered in
person or sent by United States mail, postage prepaid, to the
persons specified below:
Texas-New Mexico Power Company c/o Assistant Vice
President - Resource Acquisition & Management P. 0.
Box 2943
Fort Worth, Texas 76113
Tucson Electric Power Company c/o Secretary
P. 0. Box 711
Tucson, Arizona 85702
-7-
A Party may at any time by written notice change the
designation or the address of the person so specified.
14. GOVERNING LAW
This Agreement shall be governed by and construed under the laws
of the State of Arizona or the federal laws of the United States,
as applicable.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the 20th day of December, 1994.
TEXAS-NEW MEXICO POWER COMPANY
By: Randy Ownby
Title: Assistant Vice President - Resource
Acquisition
TUCSON ELECTRIC POWER COMPANY
By: Steven J. Glaser
Title: Vice President
-8-
EXHIBIT A RATE SCHEDULE TUCSON-TNP
1996 FIRM CAPACITY & ENERGY SALE AGREEMENT
DEMAND CHARGES:
Rate
Year $/KW-Mo.
1996 3.50
ENERGY CHARGES:
Prescheduled
Month Year $/MWh
On-Peak Off-Peak
January 1996 $28.00 $20.00
February 1996 $28.00 $20.00
March 1996 $27.00 $20.00
April 1996 $27.00 $20.00
May 1996 $26.00 $20.00
June 1996 $29.00 $21.00
July 1996 $31.00 $23.00
August 1996 $31.00 $23.00
September 1996 $29.00 $21.00
October 1996 $26.00 $20.00
November 1996 $29.00 $20.00
December 1996 $29.00 $20.00
On-Peak hours are hours ending 0700-2200 MST, Monday through
Sunday. AR other hours are Off-Peak.
EX-27
10
UT
0000741612
TNP ENTERPRISES, INC.
1000
YEAR
DEC-31-1994
DEC-31-1994
PER-BOOK
967273
1308
53180
50031
00
1071792
134117
00
50752
184869
4900
3780
682832
00
00
00
2670
00
00
00
192741
1071792
477989
(1238)
401236
399998
77991
(20184)
57807
75248
(17441)
(790)
(18231)
13046
71568
44301
(1.7)
(1.7)
EX-27
11
UT
0000022767
TEXAS-NEW MEXICO POWER COMPANY
1000
YEAR
DEC-31-1994
DEC-31-1994
PER-BOOK
967273
183
41048
51978
00
1060482
107
175111
10559
185777
4900
3780
682832
00
00
00
2670
00
00
00
180523
1060482
477989
(1238)
401236
399998
77991
(19377)
58614
75248
(16634)
(790)
(17424)
(11000)
71568
42846
00
00