Exhibit 99.1

January 7, 2002


Mr. Richard D. Terrill
Executive Vice President and General Counsel
Western Resources, Inc.
P. O. Box 889
Topeka, Kansas 66601

Re:     Agreement and Plan of Restructuring and Merger Among Western  Resources,
        Inc. ("WRI"), Public Service Company of New Mexico ("PHVOLT Enterprises,
        Inc., HVK, Inc. and HVNM, Inc. ("Agreement")

Dear Rick:

This is to notify WRI that the Board of  Directors  of PNM  Resources,  Inc. has
taken action to terminate  the  Agreement  effective as of January 7, 2002.  The
Agreement is, therefore, terminated effective as of such date.

The reasons for  termination of the Agreement  include,  but are not limited to,
the following:

o       Regulatory  rulings in Kansas have rendered an essential  element of the
        transaction  - the  Split-Off  -  impossible.  Reversal  of  the  Kansas
        Corporation Commission ("KCC") orders on appeal is unlikely. Even if the
        orders are reversed on appeal, the KCC would still be able to disapprove
        the  transaction  as presently  designed,  or condition  its approval on
        elimination or redesign of the Split-Off.

o       WRI breached  representations  and  warranties to the effect that no KCC
        approval was required for the Split-Off.

o       The Rate Orders issued by the KCC would have a material  adverse  effect
        on the operations of the combined enterprise. Reversal of the KCC orders
        on appeal is unlikely.

o       Even if the KCC  Orders  were to be  reversed  on  appeal,  it  would be
        impossible to obtain necessary  regulatory approvals in either Kansas or
        New Mexico by December 31, 2002, the last date for  consummation  of the
        transaction contained in the Agreement.




January 7, 2002                           -2-


o       Even if the merger  applications  could be placed before the KCC and New
        Mexico Public Regulation Commission ("NMPRC") in a timely fashion, it is
        unlikely  that the KCC would  approve the merger in the form required by
        the Agreement due to the necessary condition of the Split-Off, which the
        KCC clearly  opposes.  Any WRI debt  reduction  plan that called for the
        diversion  of PNM  revenue  to Kansas  operations  would  likely  not be
        approved by the NMPRC.

o       In breach of the Agreement, WRI has, without notice to or the consent of
        PNM,  instituted new severance plans. These plans are outside the normal
        and usual  course of business,  not  excepted in the Company  Disclosure
        Letter and have  resulted in the  termination  of key  employees who may
        have  been  vital  to the  operation  and  management  of  the  combined
        enterprise.

o       WRI, in breach of the Agreement,  failed to renegotiate the Agreement in
        good  faith  following  the  issuance  of the KCC's  Split-Off  and Rate
        Orders.

o       WRI  failed  to  adequately  prosecute  the Rate  Case in  breach of the
        Agreement.

o       WRI  breached  the  Agreement  by  unilaterally  submitting  a new  debt
        reduction  proposal  to the KCC in  November  2001 - a proposal  that is
        outside the terms of the  Agreement - without  advance  notice to or the
        consent of PNM.

o       In breach of the  Agreement,  WRI failed to provide  PNM with  financial
        information  vital to  determining  the impact of the Split-Off and Rate
        Orders,  and  to  enable  formulation  of a  credible  and  economically
        feasible debt reduction plan.

o       WRI,  in breach of the  Agreement,  unreasonably  refused  to consent to
        PNM's proposed stock repurchase plan.


Sincerely,

/s/ Patrick T. Ortiz

Patrick T. Ortiz
Senior Vice President,
General Counsel & Secretary

cc:  William Lamb
     Timothy Toy
     David Lindley
     Charles Gilman