FIRST AMENDMENT TO THE
                      PUBLIC SERVICE COMPANY OF NEW MEXICO
                                SECTION 415 PLAN



         THIS  FIRST  AMENDMENT  TO THE  PUBLIC  SERVICE  COMPANY  OF NEW MEXICO
SECTION 415 PLAN is effective the 7th day of December 1998 by the Public Service
Company of New Mexico, a New Mexico corporation ("PNM" or the "Company").

         WHEREAS,  the Company  established  the Public  Service  Company of New
Mexico Section 415 Plan (the "Plan") effective January 1, 1994;

         WHEREAS, under Section 6.03, the Company reserved the right at any time
to amend the Plan;

         WHEREAS,  on December 7, 1998,  the  Compensation  and Human  Resources
Committee of the PNM Board of Directors  approved certain benefits upon a Change
in Control (as defined in the First  Restated  and Amended  Executive  Retention
Plan) and authorized certain amendments to affected plans,  including this Plan;
and

         WHEREAS,  the  Company  desires to amend this Plan to  incorporate  the
approved  Change in Control  benefits to provide full and sufficient  funding of
the Public Service Company of New Mexico and Paragon  Resources,  Inc.  Deferred
Compensation Trust Agreement (the "Rabbi Trust") for any obligations or benefits
accrued as of the date of the occurrence of a Change in Control.

         NOW THEREFORE, the Company hereby amends the Plan as follows:

         ITEM 1. Article V, Source of Benefit Payments,  shall be amended to add
a new Section 5.02, as follows:

         5.02  Change in Control.  Upon a Change in  Control,  as defined in the
         First Restated and Amended Executive  Retention Plan effective December
         7, 1998,  and  incorporated  herein by  reference,  the  Company  shall
         sufficiently  fund the Public Service Company of New Mexico and Paragon
         Resources,  Inc.  Deferred  Compensation  Trust  Agreement  (the "Rabbi
         Trust") to provide in full for any benefits  accrued under this Plan as
         of the date of the occurrence of the Change in Control.

         ITEM 2. Except as herein above amended, the Company hereby readopts and
redeclares each and every other provision of the Plan.


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         IN WITNESS  WHEREOF,  Public Service  Company of New Mexico caused this
First  Amendment to the Public Service Company of New Mexico Section 415 Plan to
be executed by its authorized  officers  effective as of the date and year first
above written.


                                    PUBLIC SERVICE COMPANY OF NEW MEXICO


Date:_________________              By_________________________________________
                                               BENJAMIN F. MONTOYA
                                       President and Chief Executive Officer













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