SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 8-K
                                 CURRENT REPORT


                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

  Date of Report (Date of earliest event reported)    September 15, 1998
                                                     -------------------
                                                      (August 24, 1998)
                                                     -------------------

                      PUBLIC SERVICE COMPANY OF NEW MEXICO
             (Exact Name of Registrant as Specified in its Charter)


                                   Commission
          New Mexico               File Number 1-6986         85-0019030
  ---------------------------                  ------        ------------
 (State or Other Jurisdiction                              (I.R.S. Employer
        of Incorporation)                                Identification Number)



Alvarado Square, Albuquerque, New Mexico                   87158
- ----------------------------------------                  -------
(Address of Principal Executive Offices)                 (Zip Code)


                                 (505) 241-2700
                     ---------------------------------------
              (Registrant's Telephone Number, Including Area Code)



                     ---------------------------------------
          (Former Name or Former Address if Changed, Since Last Report)






Item 5. Other Event

Retail Pilot Load Program

As previously reported, the City of Albuquerque ("COA") filed a petition in 1997
with the New Mexico  Public  Utility  Commission  ("NMPUC") to institute a small
scale  retail  pilot load  aggregation  program.  The NMPUC Staff  presented  an
alternative to the COA pilot proposal,  which proposed a larger pilot that would
include a broader mix of customer  classes.  The NMPUC Staff also  proposed that
the  NMPUC  order  a  separate  proceeding  to  identify  what  stranded  costs,
transition  costs and  administrative  costs would be incurred by the Company in
connection  with a pilot program and the proper  methodology for quantifying any
appropriate  recovery.  Hearings  were held in April 1998.  (See PART I, ITEM 2.
- -"MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS - OTHER ISSUES  FACING THE COMPANY - The City of  Albuquerque  Retail
Pilot Load  Aggregation  Program" in the  quarterly  report on Form 10-Q for the
quarter ended March 31, 1998.)

The Company has opposed the pilot  program on the grounds  that (i) the NMPUC is
exceeding its statutory authority in implementing such a plan and (ii) the pilot
as structured  will not offer any valid lessons in the workings of a competitive
electric  market.  The Company still  believes that a pilot program  designed as
part of the  framework  for overall  industry  restructuring  under  legislative
direction  will have the most value for an effective  transition  to full retail
access.

On August 24, 1998, the Company  received an NMPUC order,  requiring the Company
to start a retail pilot program for a one year period  commencing with the first
billing  cycle in December  1998.  The pilot  program  encompasses  16 MW of the
Company's  system  load  within  the  city  of  Albuquerque,  consisting  of 31%
residential,  43% commercial, 25% industrial and 1% public streets and highways.
The Company will be responsible for billing, metering and collection, as well as
load balancing and  settlement.  The Company will be allowed to seek recovery of
all reasonable implementation and administration costs associated with the pilot
program in its next  general rate case.  The Company  currently  estimates  that
revenue loss resulting from the pilot and the system installation/implementation
costs  will be  approximately  $5.3  million  and  $1.0  million,  respectively.
However, the amount of revenue loss is dependent on the actual rates implemented
for the pilot, an issue about which the order is unclear.

The order defers any decision on recovery of stranded  costs in connection  with
the pilot,  although the NMPUC did lay out certain  principles  which will guide
the NMPUC when this issue arises,  including  that the Company must  demonstrate
that it has mitigated any revenue loss from this pilot program through the sales
of power in the  off-system  markets  that would  have been used to serve  pilot
participants.

On September 9, 1998,  the Company filed a motion with the NMPUC for  rehearing.
In the filing,  the Company  requested  a delay in  implementation  of the pilot
program to allow  reasonable time for  installation of the necessary  systems to
accommodate  the pilot  program,  including time for supplier  notification  and
customer  education.  The Company also requested  that the NMPUC  reconsider its
determination that it has jurisdiction to order the pilot program.  In addition,
the Company  requested  that the NMPUC stay,  pending review of such an order by
the New  Mexico  Supreme  Court,  the  effect  of the  order and of any order on
rehearing that would require the Company to  participate in a pilot program.  If
the Company's  motion is not granted,  the Company  intends to appeal to the New
Mexico State Supreme Court.

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SIGNATURES
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Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                      Public Service Company of New Mexico
                                      ------------------------------------
                                                (Registrant)



Date:  September 15, 1998                   /s/ Donna M. Burnett
                                      ------------------------------------
                                           Donna M. Burnett
                                           Corporate Controller and
                                           Chief Accounting Officer








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