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 14, 2010
	(January 11, 2010)

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:

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

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

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

o 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

Agreement for Disposition of Escrowed Funds to Facilitate an Agreement in Principle to Settle, Subject to Approval by the Federal Energy Regulatory Commission (“FERC”), Certain California Energy Crisis Legal Proceedings.

On January 11, 2010, PNM Resources, Inc.’s (“PNMR”) wholly owned subsidiary, Public Service Company of New Mexico (“PNM”), entered into an “Agreement for the Disposition of Escrowed Funds” (the “Agreement”) in order to facilitate the agreement in principle to settle all remaining claims against PNM arising out of certain of its transactions in the California energy markets during the California energy crisis of 2000 and 2001.

The terms of the Agreement are summarized briefly below.  The summary is not intended to be complete and is qualified in its entirety by reference to the Agreement filed as an exhibit to this report.

Parties to the Agreement

In addition to PNM, the parties to the Agreement are Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, the Public Utilities Commission of the State of California (“CPUC”), Edmund G. Brown Jr., Attorney General of the State of California, and the California Department of Water Resources (collectively the “Parties”).  The Parties, other than PNM, are referred to as the “California Parties”.

Except for joint ownership interests of PNM with Southern California Edison Company in the Four Corners Power Plant and the Palo Verde Nuclear Generating Station and related switchyards, neither PNMR nor PNM nor any of their affiliates have any material relationship (other than in respect of the Agreement) with any of the California Parties.

Material Terms of the Agreement

The Parties have reached an agreement in principle to settle all claims asserted by the California Parties against PNM arising out of certain of its transactions in the California energy markets during 2000 and 2001 (the “settlement”). The terms of such agreement in principle provide, among other things, for PNM to pay to the California Parties an amount of $45,000,000.00, consisting of the assignment of PNM receivables plus interest as of December 31, 2009 held by the California Independent System Operator (“ISO”) and the California Power Exchange (“PX”) in the amount of $13,089,625.20, plus a cash payment of $31,910,374.80 (the “Cash Payment”) and for the California Parties to release PNM from claims arising from the California energy crisis of 2000 and 2001.  To reflect the terms of the agreement in principle, PNM recorded an addition to its legal reserves of $5.8 million as of December 31, 2009.  During the nine months ended September 30, 2009, such reserves were increased by $26.2 million.  These pre-tax amounts, which were recorded as reductions of operating revenues, aggregate $32.0 million ($19.3 million after income taxes).  PNMR considers these increases in legal reserves to be non-recurring in nature and excludes them from the computation of on-going earnings.

Pursuant to the Agreement, within 5 business days after the date of the Agreement, PNM will pay the Cash Payment into an escrow account which has been established by the California Parties.  The Cash Payment and all interest accrued on such funds shall either 1) be distributed to the California Parties and other entities that purchased electricity through the ISO and PX during the relevant time period as settlement funds in accordance with the terms and conditions of the final and definitive settlement agreement (the “Definitive Agreement”) expected to be entered into among the Parties or 2) be distributed to PNM upon a termination event under the Agreement, including: a) the  termination of efforts to prepare and execute the Definitive Agreement based upon the failure of either PNM or the California Parties to have used best efforts to complete and file with FERC the Definitive Agreement on or before January 29, 2010; or b) the California Parties terminating the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before April 30, 2010; or c) PNM terminating the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before September 30, 2010; or d)  the failure of the Parties to execute the Definitive Agreement no later than April 15, 2010 and the termination by either PNM or the California Parties of further settlement efforts thereafter.

2

Although the execution of the Definitive Agreement will be subject to approval by the CPUC and the settlement itself will be subject to FERC approval, the effectiveness of the Agreement is not subject to such approvals.

For more information about the claims asserted by the California Parties against PNM arising out of its transactions in the California energy markets during 2000 and 2001, please see PNM’s and PNMR’s Annual Reports on Form 10-K for the year ended December 31, 2008 and Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2009.

Item 9.01                   Financial Statements and Exhibits.

(d) Exhibits:

Exhibit
Number	Description
10.1	Agreement for the Disposition of Escrowed Funds, dated January 11, 2010

3

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 14, 2010	/s/ Thomas G. Sategna
	Thomas G. Sategna
	Vice President and Corporate Controller
	(Officer duly authorized to sign this report)

4

EX-10.1

Exhibit 10.1

Execution Copy

AGREEMENT FOR DISPOSITION OF ESCROWED FUNDS

This Agreement for the Disposition of Escrowed Funds (“Agreement”) is entered into on January 11, 2010, between Public Service Company of New Mexico (“PNM”), on the one hand, and on the other hand, Pacific Gas and Electric Company, Southern California Edison Company, San Diego Gas & Electric Company, the Public Utilities Commission of the State of California (“CPUC”), Edmund G. Brown Jr., Attorney General of the State of California, and the California Department of Water Resources, acting solely under the authority of power created by California Assembly Bill 1 from the First Extraordinary Session of 2001-2002, codified in Sections 8000 through 80270 of the California Water Code, and not under its powers and responsibilities with respect to the State Water Resources Development System (collectively, the “California Parties”).  PNM and the California Parties are collectively referred to herein as the “Parties” and individually as a “Party.”

Whereas, the Parties have reached an agreement in principle to settle claims asserted by the California Parties against PNM arising out of transactions in California energy markets during 2000 and 2001 (the “settlement”), the terms of which provide, among other things, for PNM to pay $45,000,000 to the California Parties through the combination of a cash payment and an assignment of receivables, and for the California Parties to release PNM from claims arising from the California energy crisis of 2000-2001, all of which will be detailed in a definitive settlement agreement (“Definitive Agreement”) to be prepared and executed by the Parties; and,

Whereas, the Parties have agreed that PNM shall pay the cash portion of the settlement consideration into an escrow account, to be established by the California Parties, prior to execution of the Definitive Agreement and prior to approval of the Definitive Agreement by the Federal Energy Regulatory Commission (“FERC”) and the CPUC, which approval will be a prerequisite to the settlement’s effectiveness; and,

Whereas, the Parties desire to enter this Agreement to govern the disposition of funds to be held in escrow pending execution of the Definitive Agreement and receipt of the required regulatory approvals.

Now, therefore the Parties agree as follows:

1.Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in the Master Escrow Agreement II, dated May 27, 2008, between the California Parties and JP Morgan Chase Bank, a copy of which has been provided to PNM.

2.No later than five (5) Business Days after execution of this Agreement, the California Parties shall establish an Escrow Account (“Settling Supplier Refund Escrow (PNM)”) pursuant to the terms of the Master Escrow Agreement II (except insofar as the terms

Execution Copy

of such agreement contemplate that a definitive settlement agreement between the settling parties is already in place) by issuing instructions to the Escrow Agent that comply with the terms of the Master Escrow Agreement II and the provisions of paragraph 6 of this Agreement.

3.No later than five (5) Business Days after the later of (i) the date on which the Parties have fully executed this Agreement, or (ii) the date on which the Parties determine the amount of PNM’s receivables held in the accounts of the California Power Exchange and the California Independent System Operator as of close of business Pacific Standard Time on December 31, 2009 (the “PNM Receivables Amount”), PNM shall deposit an amount equal to forty-five million dollars ($45,000,000) less the PNM Receivables Amount into the Settling Supplier Refund Escrow (PNM).  PNM shall transfer such amount in immediately available funds to the Settling Supplier Refund Escrow (PNM) by wire transfer to the following wire address:

JP Morgan Chase Bank

ABA No 021000021

Account No. 507971817

Southwest Escrow Incoming Wire Account

FFC: Account No. 865362412; Settling Supplier Refund Escrow (PNM)

Attn. Paul Gilliam

4.All cash amounts deposited by PNM into the Settling Supplier Refund Escrow (PNM) , and all interest accrued on such funds, shall be either (i) distributed to Settling Participants in accordance with the terms and conditions of the Definitive Agreement, or (ii) distributed to PNM pursuant to paragraph 5 of this Agreement.

5.All cash deposits by PNM,  including accrued interest on such deposits, held in the Settling Supplier Refund Escrow (PNM) shall be distributed directly to PNM upon the occurrence of any of the following events (each, a “Termination Event”):

a.   The Parties’ efforts to prepare and execute the Definitive Agreement have been terminated based on the failure of either the California Parties or PNM to have used best efforts to complete and file with FERC the Definitive Agreement on or before January 29, 2010; or

b.   The California Parties have terminated the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before April 30, 2010; or

c.   PNM has terminated the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before September 30, 2010; or

d.   Without regard to whether either Party has exercised best efforts to prepare and execute a Definitive Agreement, the Parties’ efforts have failed to result in execution of a Definitive Agreement no later than April

2

Execution Copy

15, 2010 and either PNM or the California Parties has thereafter elected to terminate further settlement efforts based on that failure.

Within five (5) Business Days of the date of a Termination Event, the California Parties shall notify the Escrow Agent of the occurrence of a Termination Event and instruct the Escrow Agent immediately to disburse to PNM all funds deposited by it in the Settling Supplier Refund Escrow (PNM) to PNM, plus all interest that has accrued on such funds in the Settling Supplier Refund Escrow (PNM).

6.The instructions to the Escrow Agent for establishing the Settling Supplier Refund Escrow (PNM) shall (a) identify the circumstances that constitute a Termination Event, (b) instruct the Escrow Agent immediately to distribute all funds in the Settling Supplier Refund Escrow (PNM) directly to PNM upon notice by the California Parties of the occurrence of a Termination Event, (c) include wiring instructions for the transfer of funds to PNM, and (d) be in the form of instructions set forth as Attachment A to this Agreement.

7.Nothing in this Agreement shall be interpreted to make PNM a Party to, an Authorized Third Party to, or a third party beneficiary of, the Master Escrow Agreement II.  All costs of and responsibility for the Settling Supplier Refund Escrow (PNM) shall be borne by the California Parties.  In the event that funds are disbursed to pursuant to Paragraph 5 of this Agreement, PNM shall be responsible for taxes accruing on such funds while held in escrow.  In all other events, the California Parties shall be responsible for taxes accruing on funds held in the Settling Supplier Refund Escrow (PNM).

8.     PNM and the California Parties hereby designate this Agreement as a “Settlement Agreement” solely for purposes of Section 1.1.8 of the Master Escrow Agreement II.

9.This Agreement and the rights and duties of the Parties shall be governed by and construed, enforced, and performed in accordance with the laws of the State of California, without giving effect to principles of conflicts of laws that would require the application of laws of another jurisdiction.

10.    This Agreement shall terminate on the Execution Date, as such term is defined in the Definitive Agreement, at which time the Definitive Agreement will supersede this Agreement with respect to the subject matter of this Agreement.   To this purpose, the Definitive Agreement shall contain provisions governing the disposition of the funds in the Settling Supplier Refund Escrow (PNM).

11.    This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all such counterparts together shall constitute one and the same document.  All signatures of the Parties to this Agreement may be transmitted by facsimile and such facsimile will, for all purposes, be deemed to be the original signature of such party whose signature it reproduces, and will be binding upon such Party.

3

Execution Copy

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date set forth in the beginning of this Agreement.

Public Service Company of New Mexico By:                /s/ Pat Vincent-Collawn                                               Name:           Pat Vincent-Collawn                                                  Title:             President & CEO                                                           Date:             January 11, 2010	Southern California Edison Company By:             /s/ Russell C. Swartz                                                        Name:           Russell C. Swartz                                                              Title:             Associate General Counsel  Date:             January 6, 2010
Pacific Gas and Electric Company By:             /s/ Mark D. Patrizio                                                          Name:            Mark. D. Patrizio                                                             Title:             Attorney - Director                                                         Date:             January 11, 2010	San Diego Gas & Electric Company By:             /s/ Lee Schavrien                                                           Name:            Lee Schavrien                                                                 Title:              SVP Regulatory & Finance Date:              January 7, 2010
People of the State of California, ex rel. Edmund G. Brown Jr., Attorney General By:               /s/ Martin Goyete                                                             Name:          Martin Goyete                                                                  Title:            S.D.A.G.                                                                            Date:            January 8, 2010	California Department of Water Resources, acting solely under the authority and powers created by Assembly Bill 1 of the First Extraordinary Session of 2001-2002, codified in Sections 80000 through 80270 of the California Water Code By:             /s/ Russell C. Mills                                                         Name:           Russell C. Mills                                                               Title:             CFO                                                                                  Date:             January 8, 2010
California Public Utilities Commission By:              /s/ Elizabeth M. McQuillan Name:         Elizabeth M. McQuillan                                                 Title:           Staff Attorney                                                                 Date:           January 8, 2010

4

ATTACHMENT A

TO

AGREEMENT FOR DISPOSITION OF ESCROWED FUNDS

FORM OF INSTRUCTIONS FOR ESTABLISHING PNM ESCROW

SIDLEY AUSTIN LLP 701 FIFTH AVENUE SUITE 4200 SEATTLE, WA 98104 (415) 772 7400 FAX	BEIJING BRUSSELS CHICAGO DALLAS FRANKFURT GENEVA HONG KONG LONDON	LOS ANGELES NEW YORK SAN FRANCISCO SHANGHAI SINGAPORE SYDNEY TOKYO WASHINGTON, D.C.
(206) 262 7682 email: etodderud@sidley.com	FOUNDED 1866

January 6, 2010

VIA FACSIMILE (713) 216-6927

Mr. Greg Campbell

Mr. Paul Gilliam

JP Morgan Chase Bank

712 Main Street, 5th Floor

TX2 SO37

Houston, TX 77002

Dear Greg and Paul:

Pursuant to Section 4.1 of the Master Escrow Agreement II, dated May 27, 2008, by and among the California Parties (as defined therein), and JP Morgan Chase Bank, the California Parties hereby instruct the Escrow Agent to establish the Escrow Accounts identified below.   Below the account names, we have identified the Party or Parties authorized to issue instructions for the disbursement of funds from that account, as required by Section 4.1 of the Escrow Agreement.   Please note that, pursuant to Section 7.2.2 of the Escrow Agreement, disbursement instructions with respect to a particular Escrow Account must be signed by all of the Parties that are authorized to instruct the Escrow Agent to make disbursements from such account.  “PNM” refers to the Public Service Company of New Mexico.

Settling Supplier Refund Escrow (PNM)  (Acct. No. 865362412)

The Parties authorized to instruct the Escrow Agent to make disbursements from the Settling Supplier Refund Escrow (PNM) shall be PG&E, SCE, SDG&E, California Attorney General, CPUC and CERS.

Sidley Austin LLP is a limited liability partnership practicing in affiliation with other Sidley Austin partnerships

PNM Escrow Account Authorization

January 6, 2010

Page 2

Pursuant to Section 6.1 of the Master Escrow Agreement II, the California Parties instruct the Escrow Agent to invest all funds deposited and held in the  Settling Supplier Refund Escrow (PNM) and to reinvest all interest earned thereon, in the JP Morgan US Government Money Market Fund, Agency Class, Fund No. 1603.

The Escrow Agent shall immediately liquidate all funds held in the Settling Supplier Refund Escrow (PNM) and disburse all such funds to PNM, at the wire address set forth below, upon instructions to the Escrow Agent by the California Parties that any of the following has occurred:

a.   The Parties’ efforts to prepare and execute the Definitive Agreement have been terminated based on the failure of either the California Parties or PNM to have used best efforts to complete and file with FERC the Definitive Agreement on or before January 29, 2010; or

b.   The California Parties have terminated the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before April 30, 2010; or

c.   PNM has terminated the Definitive Agreement based on the failure of FERC to approve the Definitive Agreement on or before September 30, 2010; or

d.   Without regard to whether either Party has exercised best efforts to prepare and execute a Definitive Agreement, the Parties’ efforts have failed to result in execution of a Definitive Agreement no later than April 15, 2010 and either PNM or the California Parties has thereafter elected to terminate further settlement efforts based on that failure.

Upon receipt and, if necessary, confirmation of instructions from the California Parties that such event has occurred, the Escrow Agent shall disburse all funds in the Settling Supplier Refund Escrow (PNM) to the following wire address:

Account Number: 651-100-3698

Account Name: PNM Misc Depository

Bank: Wells Fargo Bank

Location: Albuquerque, New Mexico

ABA Number: 121000248

Description: Return of funds deposited for settlement of California refund claims

PNM Escrow Account Authorization

January 6, 2010

Page 3

PNM will provide the Escrow Agent with a Tax Identification Number within five (5) Business Days of the date of this letter.   In the event that funds are disbursed from the Settling Suppler Refund Escrow (PNM) to PNM, PNM shall be responsible for taxes accruing on such funds while held in escrow.  In all other events, the California Parties shall be responsible for taxes accruing on funds held in the Settling Supplier Refund Escrow (PNM).

An Authorized Representative of each of  the California Parties will execute these instructions on behalf of his or her respective company or agency and send the executed letter to you.  Please contact me if you have any questions about this accounts.

Very truly yours,

 Eric Todderud

Pacific Gas and Electric Company

By:           _____________________________

Name:      _____________________________

Southern California Edison Company

By:           ______________________________

Name:      ______________________________

San Diego Gas & Electric Company

By:           ______________________________

Name:      ______________________________

PNM Escrow Account Authorization

January 6, 2010

Page 4

California Public Utilities Commission

By:           ______________________________

Name:      ______________________________

People of the State of California ex rel.

Edmund G. Brown Jr., Attorney

General

By:           _____________________________

Name:      _____________________________

California Department of Water Resources, acting solely under the authority of power created by California Assembly Bill 1 from the First Extraordinary Session of 2001-2002, codified in Sections 8000 through 80270 of the California Water Code, and not under its powers and responsibilities with respect to the State Water Resources Development System.

By:           _____________________________

Name:      _____________________________