8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  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)	January 17, 2008
	(January 12, 2008)

Commission	Name of Registrants, State of Incorporation,	I.R.S. Employer
File Number	Address and Telephone Number	Identification No.
001-32462	PNM Resources, Inc.	85-0468296
	(A New Mexico Corporation)
	Alvarado Square
	Albuquerque, New Mexico  87158
	(505) 241-2700
001-06986	Public Service Company of New Mexico	85-0019030
	(A New Mexico Corporation)
	Alvarado Square
	Albuquerque, New Mexico  87158
	(505) 241-2700
______________________________
(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)  

 Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 1.01                    Entry into a Material Definitive Agreement.

On January 12, 2008, Public Service Company of New Mexico (“PNM”), a wholly owned public utility subsidiary of PNM Resources, Inc. (“PNMR”), entered into an Asset Purchase Agreement (the “Gas Assets Agreement”) with Continental Energy Systems LLC (“Continental”) and New Mexico Gas Company, Inc., (“NMGC”) a subsidiary of Continental, for the sale of PNM’s natural gas operations to NMGC for $620 million in cash, subject to adjustment.

In a separate transaction that is conditioned upon the closing of the transactions contemplated by the Gas Assets Agreement, on January 12, 2008, PNMR and PNM Merger Sub LLC, a newly formed subsidiary of PNMR, entered into an Agreement and Plan of Merger (the “Texas Merger Agreement”) with Continental and Cap Rock Holding Corporation (“CRHC”), which is a subsidiary of Continental.  Under the terms of the Texas Merger Agreement, PNMR will acquire 100% ownership of CRHC and its subsidiaries, including Cap Rock Energy, which operate an electric distribution and transmission business serving approximately 36,000 customers in 28 counties in north, west and central Texasfor $202.5 million in cash, subject to adjustment for the changes in certain components of working capital , and subject to the condition that the outstanding indebtedness of CRHC and its subsidiaries is eliminated at or prior to closing.

PNMR expects to use the net proceeds of these transactions to retire debt, fund future electric capital expenditures and for other corporate purposes.

The Gas Assets Agreement and the Texas Merger Agreement each contain a number of customary representations and warranties and indemnification provisions as well as closing conditions, including regulatory and third party approvals.  The parties may terminate each of the agreements under certain circumstances and may be obligated to pay a termination fee in connection therewith.  The sale of the natural gas operations is subject to, among other conditions, receiving approval from the New Mexico Public Regulation Commission, the Federal Energy Regulatory Commission and anti-trust review under the Hart-Scott-Rodino Act.  PNMR’s acquisition of the Texas electric operations also requires anti-trust review as well as approval by the Federal Energy Regulatory Commission and the Public Utility Commission of Texas. Pending all approvals, the transactions are expected to close by year-end 2008.

There are no material relationships between the PNMR and Continental parties other than in respect of the transactions described herein.

Item 8.01                    Other Events.

PNMR issued a press release announcing the above-described transactions on January 14, 2008.  The press release is furnished herewith as Exhibit 99.1.

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Item 9.01                    Financial Statements and Exhibits.

(c) Exhibits:

Exhibit Number                                 Description

99.1   Press Release dated January 14, 2008.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements made in this report and other documents that PNMR and PNM file with the Securities and Exchange Commission (“SEC”) that relate to future events or PNMR’s and PNM’s expectations, projections, estimates, intentions, goals, targets and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995.  Readers are cautioned that all forward-looking statements are based upon current expectations and estimates and PNMR and PNM assume no obligation to update this information.

Because actual results may differ materially from those expressed or implied by these forward-looking statements, PNMR and PNM caution readers not to place undue reliance on these statements.  PNMR’s and PNM’s business, financial condition, cash flow and operating results are influenced by many factors, which are often beyond their control, that can cause actual results to differ from those expressed or implied by the forward-looking statements.  These factors include the risk that the joint venture EnergyCo LLC (“EnergyCo”) is unable to identify and implement profitable acquisitions, including development of the Cedar Bayou Generating Station, or that PNMR and ECJV Holdings, L.L.C. will not agree to make additional capital contributions to EnergyCo, the potential unavailability of cash from PNMR’s subsidiaries or EnergyCo due to regulatory, statutory or contractual restrictions, the outcome of any appeals of the Public Utility Commission of Texas order in the stranded cost true-up proceeding, the ability of First Choice Power to attract and retain customers, changes in Electric Reliability Council of Texas protocols, changes in the cost of power acquired by First Choice Power, collections experience, insurance coverage available for claims made in litigation, fluctuations in interest rates, conditions affecting PNMR’s and PNM’s ability to access the financial markets, including actions by the ratings agencies affecting the PNMR’s and PNM’s credit ratings, or EnergyCo’s access to additional debt financing following the utilization of its existing credit facility, weather, water supply, changes in fuel costs, availability of fuel supplies, the effectiveness of risk management and commodity risk transactions, seasonality and other changes in supply and demand in the market for electric power, variability of wholesale power prices and natural gas prices, volatility and liquidity in the wholesale power markets and the natural gas markets, changes in the competitive environment in the electric and natural gas industries, the performance of generating units, including the Palo Verde Nuclear Generating Station, the San Juan Generating Station, the Four Corners Plant, and EnergyCo generating units, and transmission systems, the ability to secure long-term power sales, the risk that PNMR and its subsidiaries and EnergyCo may have to commit to substantial capital investments and additional operating costs to comply with new environmental control requirements including possible future requirements to address concerns about global climate change, the risks associated with completion of generation, including pollution control equipment at the San Juan Generating Station, and the EnergyCo Cedar Bayou Generating Station, transmission, distribution and other projects, including construction delays and unanticipated cost overruns, state and federal regulatory and legislative decisions and actions, the outcome of legal proceedings, changes in applicable accounting principles and the performance of state, regional and national economies, and the risk that the closings of the pending sale of the PNM natural gas utility and pending purchase of certain Continental Energy Systems subsidiaries may not occur due to regulatory or other reasons.  For a detailed discussion of the important factors that affect PNMR and PNM and that could cause actual results to differ from those expressed or implied by their forward-looking statements, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in PNMR’s and PNM’s current and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and PNMR’s and PNM’s current and future Current Reports on Form 8-K, filed with the SEC.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

	PNM RESOURCES, INC.
	PUBLIC SERVICE COMPANY OF NEW MEXICO
	(Registrants)
Date:  January 17, 2008	/s/ Thomas G. Sategna
	Thomas G. Sategna
	Vice President and Corporate Controller
	(Officer duly authorized to sign this report)

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EX-99.1

EXHIBIT 99.1

PNM Resources and Continental Energy Systems Announce

 Agreements for Utility Asset Sale and Acquisition

PNM utility to sell natural gas operations

 PNM Resources to acquire electric operations in Texas

(ALBUQUERQUE, N.M.)– PNM Resources’ (NYSE: PNM) New Mexico utility, PNM, has reached a definitive agreement to sell its natural gas operations to a subsidiary of Continental Energy Systems for $620 million. In a separate transaction that is conditioned upon the sale of the natural gas operations, PNM Resources will acquire Continental’s regulated Texas electric delivery business for $202.5 million.

PNM Resources expects to use the net proceeds of these transactions to retire debt, fund future electric capital expenditures and for other corporate purposes. The transactions are expected to be slightly accretive to PNM Resources’ ongoing earnings per diluted share in the first full year following both closings. The natural gas operations sale is expected to generate an after-tax book gain of approximately $100 million, based on its book value on Sept. 30, 2007.

Jeff Sterba, PNM Resources chairman, president and CEO, said the planned sale of the gas utility is one of several company initiatives designed to concentrate its investment focus and strengthen the financial position of the company during an era of rising costs, growing power demand and significant capital investment needs. Other initiatives include previously announced cost reduction efforts and the ongoing PNM electric rate case that is to be resolved in early May 2008.

"We have worked hard to provide great service to our PNM gas customers since we acquired the gas business in 1985," Sterba said.  "But we have decided to focus future energy and efforts on our electric operations, particularly given the large capital investment required to meet the needs of our electric customers. We are pleased to have found a natural gas delivery company committed to high-value and reliable service to customers that will buy the New Mexico gas operations and employ virtually all of our employees who provide this service currently.”

PNM Resources will acquire Continental’s Cap Rock Holding Corporation and its subsidiary Cap Rock Energy, an electric distribution and transmission company serving approximately 36,000 customers in 28 counties in north, west and central Texas.

“The purchase of the Texas electric assets is consistent with our strategy of focusing on a core electric business in regulated and unregulated markets,” Sterba said. “We have a proven track record of acquiring electric operations that have provided substantial value to our shareholders. Moving forward, the sale of the gas operations and purchase of the electric operations allow PNM Resources to direct our efforts to one industry.”

Continental Energy Systems, through its wholly owned subsidiaries, provides natural gas distribution services to approximately 410,000 customers in Alaska and Michigan and electric distribution services to approximately 36,000 customers in Texas. Following the closing of the proposed gas sale transaction, Continental will provide regulated natural gas distribution services to almost 1 million customers throughout New Mexico, Alaska and Michigan.

The sale of the gas operations is subject to certain conditions including receiving approval from the N.M. Public Regulation Commission and anti-trust review under the Hart-Scott-Rodino Act. PNM Resources’ acquisition of Continental Energy’s Texas electric operations also requires anti-trust review and approvals by the Federal Energy Regulatory Commission and the Public Utility Commission of Texas. Pending all approvals, the transactions are expected to close by year-end.

OTHER CORPORATE NEWS

PNM Resources has entered into final negotiations to sell certain utility wholesale power and gas contracts. A sale of the merchant portfolio would be the first step toward separating the merchant business from the PNM utility, which is required to occur by Jan. 1, 2010, under an existing New Mexico regulatory order.

CONFERENCE CALL AND WEB CAST:  9 AM (EASTERN) JAN. 15, 2008

PNM Resources (NYSE: PNM) will host a conference call to discuss today’s announcements on Tuesday, Jan. 15, 2008, at 9 a.m. Eastern.

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Investors, analysts and other participants can listen to the live conference call by dialing (877) 627-6582 (toll free) or (719) 325-4879 (toll) five to 10 minutes prior to the event and referencing “the PNM Resources conference call.” A telephone replay will be available through midnight Jan. 22 by dialing (888) 203-1112 (toll free) or (719) 457-0820 and using confirmation code 1668446.

A live Web cast of the conference call will be available at www.PNMResources.com. Listeners are encouraged to visit the Web site at least 30 minutes before the event to register, download and install any necessary audio software. A recording of the Web cast will be available for 30 days and a transcript of the call will be posted as soon as possible.

ADVISORS

JP Morgan acted as sole financial advisor to PNM Resources. Troutman Sanders LLP is serving as PNM Resources’ legal counsel on the transactions. Cravath, Swaine and Moore LLP is acting as legal advisor for Continental Energy Systems.

About PNM Resources

PNM Resources (NYSE: PNM) is an energy holding company based in Albuquerque, N.M., with 2006 consolidated operating revenues of $2.5 billion. Through its utility and energy subsidiaries, PNM Resources serves electricity to approximately 835,000 homes and businesses in New Mexico and Texas and natural gas to nearly 490,000 customers in New Mexico. Its utility subsidiaries are PNM and Texas-New Mexico Power. Other subsidiaries include First Choice Power, a deregulated competitive retail electric provider in Texas, and Avistar, an unregulated energy technology company. With generation resources of more than 2,650 megawatts, PNM Resources and its subsidiaries market power throughout the Southwest, Texas and the West. In addition, the joint venture in which the company has a 50-percent ownership owns approximately 920 megawatts of generation. For more information, visit www.PNMResources.com.

About Continental Energy Systems

Continental Energy Systems is a utility holding company. Through its subsidiaries, the company serves approximately 410,000 natural gas customers in Alaska and Michigan and transmits and distributes electricity to residential and commercial customers in 28 counties in Texas.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Statements made in this news release that relate to future events or the Company’s expectations, projections, estimates, intentions, goals, targets and strategies are made pursuant to the Private Securities Litigation Reform Act of 1995.  You are cautioned that all forward-looking statements are based upon current expectations and estimates and the Company assumes no obligation to update this information. Because actual results may differ materially from those expressed or implied by these forward-looking statements, the Company cautions you not to place undue reliance on these statements.  The Company’s business, financial condition, cash flow and operating results are influenced by many factors, which are often beyond its control, that can cause actual results to differ from those expressed or implied by the forward-looking statements.  These factors include the risk that the joint venture EnergyCo LLC (“EnergyCo”) is unable to identify and implement profitable acquisitions, including development of the Cedar Bayou Generating Station, or that the Company and ECJV Holdings, L.L.C. will not agree to make additional capital contributions to EnergyCo, the potential unavailability of cash from the Company’s subsidiaries or EnergyCo due to regulatory, statutory or contractual restrictions, the outcome of any appeals of the Public Utility Commission of Texas  order in the stranded cost true-up proceeding, the ability of First Choice Power to attract and retain customers, changes in Electric Reliability Council of Texas protocols, changes in the cost of power acquired by First Choice Power, collections experience, insurance coverage available for claims made in litigation, fluctuations in interest rates, conditions affecting the Company’s ability to access the financial markets, including actions by the ratings agencies affecting the Company’s credit ratings, or EnergyCo’s access to additional debt financing following the utilization of its existing credit facility, weather, water supply, changes in fuel costs, availability of fuel supplies, the effectiveness of risk management and commodity risk transactions, seasonality and other changes in supply and demand in the market for electric power, variability of wholesale power prices and natural gas prices, volatility and liquidity in the wholesale power markets and the natural gas markets, changes in the competitive environment in the electric and natural gas industries, the performance of generating units, including the Palo Verde Nuclear Generating Station, the San Juan Generating Station, the Four Corners Plant, and EnergyCo generating units, and transmission systems, the ability to secure long-term power sales, the risk that the Company and its subsidiaries and EnergyCo may have to commit to substantial capital investments and additional operating costs to comply with new environmental control requirements including possible future requirements to address concerns about global climate change, the risks associated with completion of generation, including pollution

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control equipment at the San Juan Generating Station, and the EnergyCo Cedar Bayou Generating Station, transmission, distribution and other projects, including construction delays and unanticipated cost overruns, state and federal regulatory and legislative decisions and actions, the outcome of legal proceedings, changes in applicable accounting principles and the performance of state, regional and national economies, and the risk that the closings of the pending sale of the PNM natural gas utility and pending purchase of certain Continental Energy Systems subsidiaries may not occur due to regulatory or other reasons.  For a detailed discussion of the important factors that affect the Company and that could cause actual results to differ from those expressed or implied by the Company’s forward-looking statements, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s current and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and the Company’s current and future Current Reports on Form 8-K, filed with the SEC.

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