FIRST AMENDMENT TO THE
                      PENSION SERVICE ADJUSTMENT AGREEMENT
                             FOR BENJAMIN F. MONTOYA



         THIS FIRST  AMENDMENT TO THE PENSION  SERVICE  ADJUSTMENT  AGREEMENT is
approved as of the ______ day of  _____________,  1998,  by and  between  Public
Service Company of New Mexico, a New Mexico corporation  ("PNM") and BENJAMIN F.
MONTOYA ("Montoya").

         WHEREAS,  PNM and Montoya  entered  into a Pension  Service  Adjustment
Agreement ("Agreement") on November 15, 1993; and

         WHEREAS,  on April 22, 1997, PNM amended the Public Service  Company of
New Mexico Employees'  Retirement Plan (the "Plan"),  effective January 1, 1997,
limiting the additional  accrual of credited  service and freezing  salaries for
purposes of pension calculations under the Plan; and

         WHEREAS,  Montoya  acknowledges the amendment to the Plan and agrees to
incorporate the terms of the amendment, effective July 1, 1998; and

         WHEREAS,  paragraph  9 permits  the  Agreement  to be amended by mutual
consent; and

         WHEREAS,  Montoya  and PNM desire to amend the  Agreement  as set forth
below to incorporate the limitations pursuant to the amendment to the Plan.

         NOW,  THEREFORE,  PNM and Montoya do hereby amend the Agreement by this
First Amendment as follows:


         1. Paragraph 2(b),  Calculation of Additional  Retirement Benefits,  is
hereby amended to read as follows:

            (b)  based upon the Retirement Plan in effect on January 1, 1998.

         2. Except as  hereinabove  amended,  PNM and Montoya hereby readopt and
redeclare each and every provision of the Agreement.

         3. This First Amendment shall be reflected on Exhibit "A" of the Public
Service Company of New Mexico OBRA `93 Retirement Plan.



         IN  WITNESS  WHEREOF,  the  parties  hereto,  personally  or  by  their
authorized  representatives,  have signed this First  Amendment to the Agreement
effective as of the date specified herein.

                                            PUBLIC SERVICE COMPANY OF NEW
                                            MEXICO

Date: _________________                     By: ______________________________
                                                     John T. Ackerman,
                                                         Chairman


Date: _________________                     __________________________________
                                                     Benjamin F. Montoya