UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the period ended November 30, 1996

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____________________ to _______________________

Commission file number 1-3789

SOUTHWESTERN PUBLIC SERVICE COMPANY
(Exact name of registrant as specified in its charter)

New Mexico 75-0575400
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

Tyler at Sixth, Amarillo, Texas 79101
(Address of principal executive offices) (Zip Code)

Registrant's Telephone Number, including area code (806) 378-2121

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __

As of January 10, 1997, 40,917,908 shares of the Company's common stock were
outstanding.

SOUTHWESTERN PUBLIC SERVICE COMPANY
FORM 10-Q
For the Quarter Ended November 30, 1996

TABLE OF CONTENTS

Page

PART I. Financial Information

Condensed Consolidated Balance Sheets at November 30, 1996 and
August 31, 1996

Condensed Consolidated Statements of Earnings for the three and twelve
months ended November 30, 1996 and November 30, 1995

Condensed Consolidated Statements of Cash Flows for the three and
twelve months ended November 30, 1996 and November 30, 1995

Notes to Condensed Consolidated Financial Statements

Independent Accountants' Report

Management's Discussion and Analysis of Financial Condition
and Results of Operations

PART II. Other Information

Signatures

Exhibit 12. Statement of Computation of Ratio of Earnings

FORWARD LOOKING INFORMATION

Certain matters discussed in this 10-Q are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the Company "believes," "anticipates,"
"expects" or words of similar import. Similarly, statements that describe the
Company's future plans, objectives or goals are also forward-looking statements.
Such statements address future events and conditions concerning capital
expenditures, earnings, litigation, rate and other regulatory matters, the
pending Merger, liquidity and capital resources, and accounting matters. Actual
results in each case could differ materially from those currently anticipated in
such statements, by reason of factors such as electric utility restructuring,
including the ongoing state and federal activities; future economic conditions;
developments in the legislative, regulatory and competitive markets in which the
Company operates; and other circumstances affecting anticipated revenues and
costs.

PART I. FINANCIAL INFORMATION

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets

Assets

November 30, August 31,
1996 1996
(Unaudited)
(In Thousands)
Utility plant:
Utility plant in service ........................ $ 2,510,014 $ 2,484,025
Accumulated depreciation ........................ (926,055) (911,422)
Net plant in service ................... 1,583,959 1,572,603
Construction work in progress ................... 74,404 49,143
Net utility plant ...................... 1,658,363 1,621,746
Nonutility property and investments ...................... 71,401 71,855

Current assets:
Cash and temporary investments .................. 20,651 31,223
Accounts receivable, net ........................ 63,921 77,959
Undercollected fuel and purchased power cost, net 11,253 7,193
Accrual for unbilled revenues ................... 19,744 23,152
Materials and supplies, at average cost ......... 20,082 21,513
Prepayments and other current assets ............ 6,288 7,452
Total current assets ................... 141,939 168,492

Deferred debits .......................................... 147,018 135,724

Total assets ........................... $ 2,018,721 $ 1,997,817

Continued . . .

See accompanying notes to condensed consolidated financial statements.

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Balance Sheets

Capitalization and Liabilities

November 30, August 31,
1996 1996
(Unaudited)
(In Thousands)
Capitalization:
Common stock, $1 par value, authorized - 100,000,000 shares;
issued and outstanding - 40,917,908 shares ............ $ 40,918 $ 40,918
Premium on capital stock ....................................... 307,484 307,484
Retained earnings .............................................. 385,682 386,717
Total common shareholders' equity ................... 734,084 735,119
SPS Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust holding solely Subordinated Debentures of SPS 100,000 -
Long-term debt ................................................. 620,402 622,931
Total capitalization ................................ 1,454,486 1,358,050

Current liabilities:
Short-term debt ................................................ 53 69,624
Current maturities of long-term debt ........................... 15,231 15,176
Accounts payable ............................................... 17,493 15,979
Interest accrued ............................................... 17,082 10,962
Fuel and purchased power expense accrued ....................... 36,579 46,396
Taxes accrued .................................................. 29,384 32,486
Dividends payable on common stock .............................. 22,505 22,505
Other current liabilities ...................................... 40,229 43,441
Total current liabilities ........................... 178,556 256,569

Deferred credits:
Deferred income taxes .......................................... 367,619 365,911
Unamortized investment tax credits ............................. 5,740 5,803
Other .......................................................... 12,320 11,484
Total deferred credits .............................. 385,679 383,198

Total capitalization and liabilities ................ $2,018,721 $1,997,817

See accompanying notes to condensed consolidated financial statements.

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Earnings
(Unaudited)

Three Months Ended Twelve Months Ended
11-30-96 11-30-95 11-30-96 11-30-95
(In Thousands, Except Per Share Amounts)

Operating revenues ................................ $ 214,381 $ 200,957 $ 912,821 $ 847,823

Operating expenses:
Operation:
Fuel ............................ 100,466 89,450 428,039 375,476
Purchased power ................. 3,289 1,438 19,862 5,579
Other ........................... 27,228 26,935 109,926 107,911
Maintenance .............................. 8,525 7,234 33,825 28,382
Depreciation and amortization ............ 17,101 16,388 66,161 62,166
Taxes other than property and income taxes 5,580 5,277 21,412 19,590
Property taxes ........................... 5,801 5,678 23,594 23,843
Income taxes ............................. 11,680 13,165 57,863 64,338
Total operating expenses 179,670 165,565 760,682 687,285
Operating income .................................. 34,711 35,392 152,139 160,538

Other income, net:
Income taxes ............................. (611) (1,117) (5,443) (4,670)
Other, net ............................... 966 (119) 9,571 8,562
Total other income, net 355 (1,236) 4,128 3,892

Interest charges .................................. 12,724 10,988 51,322 42,953
Preferred stock dividends of subsidiary ........... 872 - 872 -
Net earnings ...................................... 21,470 23,168 104,073 121,477
Dividends on cumulative preferred stock ........... - 1,219 1,274 4,878
Earnings applicable to common stock ............... $ 21,470 $ 21,949 $ 102,799 $ 116,599
Earnings per common share* ........................ $ .52 $ .54 $ 2.51 $ 2.85
Weighted average shares outstanding ............... 40,918 40,918 40,918 40,918
Dividends declared per common share ............... $ .55 $ .55 $ 2.20 $ 2.20

( ) Denotes deduction.
*Based on weighted average shares outstanding.

See accompanying notes to condensed consolidated financial statements.

Certain 1995 amounts have been reclassified to conform to the 1996 presentation.

SOUTHWESTERN PUBLIC SERVICE COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)

Three Months Ended Twelve Months Ended
11-30-96 11-30-95 11-30-96 11-30-95
(In Thousands)
Operating Activities:
Cash received from customers .......................................... $ 227,526 $ 225,264 $ 888,378 $ 835,409
Cash paid to suppliers and employees .................................. (149,325) (128,683) (584,764) (503,790)
Interest paid ......................................................... (7,398) (4,154) (51,370) (41,986)
Income taxes paid ..................................................... (13,000) (19,205) (49,220) (58,283)
Taxes other than income taxes paid .................................... (10,330) (9,248) (46,682) (42,087)
Other operating cash receipts and payments, net ....................... (9,493) 441 (2,691) 11,007
Net cash provided by operating activities ....... 37,980 64,415 153,651 200,270
Investing Activities:
Construction expenditures ............................................. (54,456) (32,991) (133,451) (105,507)
Nonutility property and investments ................................... 454 (1,134) (180) (27,993)
Acquisitions .......................................................... - (29,200) - (29,200)
Net cash used in investing activities ........... (54,002) (63,325) (133,631) (162,700)
Financing Activities:
Issuance of long-term debt ............................................ 82,300 - 142,300 76,204
Issuance of SPS Obligated Mandatorily Redeemable
Preferred Securities ................................................ 100,000 - 100,000 -
Retirement of long-term debt .......................................... (84,774) (1,645) (87,574) (18,375)
Change in short-term debt ............................................. (69,571) - 53 -
Redemption of cumulative preferred stock .............................. - - (75,434) -
Dividends paid (common and preferred) ................................. (22,505) (23,724) (91,295) (94,898)
Net cash used in financing activities ........... 5,450 (25,369) (11,950) (37,069)
Net Increase (Decrease) in Cash and Temporary Investments ...................... (10,572) (24,279) 8,070 501
Cash and Temporary Investments at Beginning of Period .......................... 31,223 36,860 12,581 12,080
Cash and Temporary Investments at End of Period ................................ $ 20,651 $ 12,581 $ 20,651 $ 12,581

Reconciliation of Net Earnings to Net Cash Provided
by Operating Activities:
Net earnings ................................................. $ 21,470 $ 23,168 $ 104,073 $ 121,477
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation ........................................ 17,101 16,388 66,161 62,166
Deferred income taxes and investment tax credits .... 3,445 3,074 16,543 10,122
Allowance for equity funds used during construction . (175) (60) (174) (245)
Cash flows impacted by changes in:
Accounts receivable ................................. 14,038 18,394 (9,053) (1,121)
Accrual for unbilled revenues ....................... 3,408 7,339 1,543 (9,821)
Materials and supplies .............................. 1,431 1,112 453 (924)
Accounts payable .................................... 1,514 4,723 583 6,029
Fuel and purchased power expense accrued ............ (9,817) (10,587) 7,002 921
Taxes accrued ....................................... (3,102) (6,289) (4,084) 2,022
Undercollected fuel and purchased power cost, net ... (4,060) (1,165) (16,057) (536)
Other, net .......................................... (7,273) 8,318 (13,339) 10,180
Net cash provided by operating activities ...... $ 37,980 $ 64,415 $ 153,651 $ 200,270

See accompanying notes to condensed consolidated financial statements.

SOUTHWESTERN PUBLIC SERVICE COMPANY
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1) Interim periods. The results of operations for the interim periods are not
necessarily an indication of the expected results for the fiscal year due to the
seasonal nature of Southwestern Public Service Company's (the Company) business.
The unaudited condensed consolidated financial statements included herein were
prepared from the books of the Company in accordance with generally accepted
accounting principles and reflect all adjustments (none of which are other than
normal recurring adjustments) which are, in the opinion of management, necessary
to provide a fair statement of the results of operations and financial position
for the interim periods. Such financial statements generally conform to the
presentation reflected in the Company's Annual Report to Stockholders. The
current interim period reported herein is included in the fiscal year subject to
independent audit at the end of the year.

(2) Income taxes. The components of income tax expense (benefit) are as follows:

Three Months Ended Twelve Months Ended
11-30-96 11-30-95 11-30-96 11-30-95
(In Thousands)
Taxes on operating income:
Federal-current ........... $ 7,997 $ 9,518 $ 38,138 $ 51,188
Federal-deferred .......... 3,668 3,287 17,678 11,468
Investment tax credits .... (62) (62) (250) (250)
State-current ............. 77 422 2,297 1,932
11,680 13,165 57,863 64,338
Taxes on other income:
Federal-current ........... 765 1,262 6,279 5,735
Federal-deferred .......... (161) (151) (884) (1,096)
State-current ............. 7 6 48 31
611 1,117 5,443 4,670
Total income taxes ..... $ 12,291 $ 14,282 $ 63,306 $ 69,008

(3) Merger with Public Service Company of Colorado (PSCo). The Company and
Denver-based PSCo entered into a definitive merger agreement (the Merger) on
August 22, 1995, to form a registered public utility holding company named New
Century Energies, Inc., which will be the parent company for the Company and
PSCo. The transaction is subject to various conditions, including receipt of the
approval of or the taking of other action by the Securities and Exchange
Commission, the Federal Trade Commission, the Department of Justice, the Nuclear
Regulatory Commission, the Federal Energy Regulatory Commission (FERC), and the
state public utility commissions in Texas, Colorado, New Mexico, Wyoming, and
Kansas. (See GENERAL. Merger Agreement in the Company's 1996 Annual Report on
Form 10-K.)

The Merger, with a targeted completion date in the spring of 1997, is
conditioned on qualifying as a tax-free reorganization and being accounted for
as a pooling of interests.

(4) Issuance of securities. The Company redeemed in September 1996, the
$25,000,000 6-1/2% pollution control revenue bonds (PCRBs) due 2004 and the
$32,300,000 6-5/8% PCRBs due 2009 and replaced these series in September 1996,
with $57,300,000 5-3/4% PCRBs due 2016.

In October 1996, the Company called its $25,000,000 principal amount of
13-1/2% PCRBs and issued $25,000,000 of new variable rate PCRBs. In connection
with the new issuance of variable rate PCRBs, the Company has an interest rate
swap agreement, which, in effect, fixes the interest rate on a $25,000,000
notional amount at 6.435%. Amounts paid or received under this agreement are
accrued as interest rates change and are recognized over the life of the
agreement as an adjustment to interest expense. The Company is exposed to
interest rate risk in the event of nonperformance by the counterparty; however,
the Company does not anticipate such nonperformance.

In October 1996, Southwestern Public Service Capital I, a wholly owned
trust, issued in a public offering $100,000,000 of its 7.85% Trust Preferred
Securities, Series A. The sole asset of the trust is $103,000,000 principal
amount of the Company's 7.85% Deferrable Interest Subordinated Debentures,
Series A due September 1, 2036. The funds from this financing were used to
reduce short-term debt.

(5) Rate and regulatory matters. The Company may effect changes in its rates
only as approved by the regulatory authorities governing its jurisdictions.
Amounts ultimately realized will differ from amounts approved because
kilowatt-hour sales and other factors will vary from those used in rate
proceedings.

A Public Utility Commission of Texas (PUCT) substantive rule requires
periodic examination of the Company's fuel and purchased power costs, the
efficiency of the use of such fuel and purchased power, fuel acquisition and
management policies and purchase power commitments. On May 1, 1995, the Company
filed with the PUCT a petition for a fuel reconciliation for the months of
January 1992 through December 1994. A hearing was held in September 1995, and in
January 1996 an order was issued which required the Company to make a $3.9
million fuel refund consisting of $2.1 million of overrecovered fuel costs and
$1.8 million of disallowed fuel costs for the period. This refund was made in
April 1996. Additionally, the order required the Company to flow through to
customers 100% of margins from non-firm off-system opportunity sales as of
January 1995. Prior PUCT rulings had allowed the Company to retain 25% of these
margins. The 100% flow through is required by PUCT rules, absent rule waiver.
The Company filed a motion for rehearing on January 25, 1996. The PUCT issued an
order on March 14 denying rehearing on the fuel disallowance (which was adjusted
to $1.9 million), and ordered the flow through of 100% of the margin effective
with the first billing cycle after the date of the order. On May 24, 1996, the
Company filed an appeal in the Travis County District Court on the PUCT's
decision with respect to the $1.9 million of disallowed fuel costs in which the
hearing of merits was held on November 1, 1996. The District Court upheld the
PUCT's decision on the disallowed fuel costs. It is anticipated that the
District Court decision will be appealed to the Texas Court of Appeals. The
ultimate outcome of this matter will not significantly affect consolidated
financial results. Currently the Company has approximately $11 million in
underrecovered fuel costs and has filed with the PUCT for a change in the fuel
factors. Settlement was made with the PUCT and intervening parties, and the fuel
factors were interimly approved and are now in effect.

On December 19, 1989, the FERC issued its final order regarding the
1985 rate case. The Company appealed certain portions of the order that related
to recognition in rates of the reduction of the federal income tax rate from 46%
to 34%. The United States Court of Appeals for the District of Columbia Circuit
remanded the case, directing the FERC to reconsider the Company's claim of an
offsetting cost and limiting the FERC's actions. The FERC issued its Order on
Remand in July 1992, required filings were made and a hearing was completed in
February 1994. In October 1994, the administrative law judge issued a favorable
initial decision that, if approved by the FERC, would result in a substantial
recovery by the Company. Negotiated settlements with the Company's partial
requirements customers and TNP were approved by the FERC in July 1993 and
September 1993, respectively, and the Company received approximately $2,800,000,
including interest. In a settlement with the Company's New Mexico cooperative
customers the Company received approximately $7,000,000, including interest. The
FERC approved this settlement in July 1995. Resolutions of these matters with
the remaining wholesale customers, Golden Spread member cooperatives and
Lyntegar Electric Cooperative, have not been reached. The Company cannot
reasonably estimate the remaining amount recoverable from these proceedings;
however, a favorable resolution could materially improve consolidated earnings
in the year in which it is resolved.

(6) Other events. As discussed in the Company's 1996 Annual Report on Form 10-K
under BUSINESS. Nonutility Businesses, Quixx Corporation, a wholly owned
subsidiary of the Company, holds a 49% limited partnership interest in BCH
Energy Limited Partnership which owns a waste-to-energy cogeneration facility
located near Fayetteville, North Carolina. Limited commercial operation of the
BCH project began in June 1996; however, the facility has not achieved the
expected performance level. Quixx is currently negotiating with the project debt
and equity holders concerning the restructuring of the project to achieve the
required improvements on economically viable terms. Should it not be possible to
economically complete the necessary improvements, Quixx may be required to write
off a portion or all of its investment of approximately $15,000,000 in this
project. The resolution of this matter could adversely affect consolidated
earnings for the year.

The banks providing the debt financing to the project have withheld
funds for the BCH project and for the construction of the companion Carolina
project discussed in such Form 10-K and construction of the Carolina project has
been suspended. Quixx is also in negotiations concerning the viability of the
Carolina project and the restoration of the funding for its construction.

The Company was named as a defendant in a case entitled Thunder Basin Coal
Co. v. Southwestern Public Service Co., No. 93-CV-304B (D. Wyo.). (See ITEM 3.
LEGAL PROCEEDINGS in the Company's 1996 Annual Report on Form 10-K.) On November
1, 1994, the jury returned a verdict in favor of Thunder Basin and awarded them
damages of approximately $18,800,000. The Company appealed the judgement to
the Tenth Circuit Court of Appeals and on January 7, 1997, that Court found in
favor of Thunder Basin and upheld the $18,800,000 judgement. The Company is
considering a motion for rehearing.

Management believes that the payment would be recoverable from
ratepayers, although any such recovery would be subject to regulatory review.
Therefore, management believes that the ultimate resolution will not have a
material adverse effect on the Company's consolidated financial statements.

(7) General. See note (1) of Notes to Consolidated Financial Statements in the
Company's 1996 Annual Report on Form 10-K for a summary of the Company's
significant accounting policies.

Independent Accountant's Report

Southwestern Public Service Company:

We have reviewed the accompanying condensed consolidated balance sheet of
Southwestern Public Service Company and subsidiaries as of November 30, 1996,
and the related condensed consolidated statements of earnings and cash flows for
the three-month and twelve-month periods ended November 30, 1996 and 1995. These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet and statement of capitalization of
Southwestern Public Service Company and subsidiaries as of August 31, 1996, and
the related consolidated statements of earnings, common shareholders' equity,
and cash flows for the year then ended (not presented herein); and in our report
dated October 10, 1996, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying condensed consolidated balance sheet as of August 31, 1996, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.

Deloitte & Touche LLP

January 10, 1997
Dallas, Texas

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Operating Revenues and Kilowatt-Hour Sales

Substantially all of the Company's operating revenues result from the
sale of electric energy. The principal factors determining revenues are the
amount and price per unit of energy sold. The following table describes the
principal components of changes in revenues.

Increase (Decrease) From
Corresponding Prior Period
Three Months Twelve Months
Ended Ended
11-30-96 11-30-96
(Dollars In Thousands)
Estimated effect on revenues of variations in:
Kilowatt-hour (kwh) sales* .................... $ (711) $ 37,408
Rates .......................................... 3,490 (9,441)
Fuel and purchased power cost recovery ......... 8,325 31,747
Subtotal ............................ 11,104 59,714
Non-firm kwh sales ............................. 2,320 5,284
Total revenue increase ............... $ 13,424 $ 64,998
Increase in kwh sales* (in millions) .................. 52 805
Increase (decrease) in non-firm kwh sales (in millions) 132 (45)

* Comprised of retail and wholesale excluding economy and interruptible (non-firm) wholesale kwh sales.

Variations in Kwh Sales. The revenue increases for the twelve-month
period was due primarily to increased Kwh sales to all retail (ultimate)
customers and to rural electric cooperatives (RECs) due primarily to a hotter
than normal late spring and early summer. These conditions increased air
conditioning load for the twelve-month period. Contributing to the increase were
kwh sales resulting from the acquisition of electric properties in the Texas
Panhandle from Texas-New Mexico Power Company (TNP). The decrease for the
quarter is primarily due to a significant decline in firm sales to firm
municipal customers including the Texas cities of Lubbock, Brownfield, Tulia and
Floydada. These customers purchased available non-firm power from the Company
and others. Although kwh sales increased modestly in the quarter, the migration
of these customer purchases to the lower priced non-firm power caused a decline
in revenues that was not offset by the increased level of sales.

Variations in Rates. Increased revenues for the three-month period are
due primarily to increased demand charges per kwh received from certain
wholesale customers. The decreases for the twelve-month period are primarily the
result of last year's settlement of the 1985 Federal Energy Regulatory
Commission (FERC) rate case with the Company's New Mexico wholesale REC
customers. This settlement contributed increased revenues of approximately $4.0
million (and interest of $3.0 million that is included in other income).
Interruptible rates available to certain classes of retail customers were
approved and implemented in Texas and New Mexico in 1996 which acted to lower
related revenues for both periods. The Company sought approval to put into
effect these new rates in compliance with settlement agreements in the 1993 and
1994 rate cases in Texas and New Mexico, respectively, and to respond to
generation resource capacity needs.

Variations in Fuel and Purchased Power Cost Recovery. Revenue increases for
the three- and twelve-month periods are due to increased gas and coal costs.

Variations in Non-Firm Kwh Sales. The amount of revenues arising from
non-firm sales is dependent, in large part, upon the amount and cost of power
available to the Company for sale, the demand for power, the availability of
competing hydroelectric power from the Northwest and generation from major
plants in the West. The increases for the three- and twelve-month periods are
due primarily to increased fuel charges included in the non-firm kwh sales.
Additionally, interruptible sales to Public Service Company of New Mexico
increased for both periods because of an increased demand for power.

Operating Expenses and Non-Operating Items

Operating Expenses. Fuel and purchased power expense comprised 57.7%
and 58.9% of total operating expenses for the three and twelve months ended
November 30, 1996, respectively. When compared to the corresponding periods last
year, these expenses increased $12.9 million, or 14.2%, and $66.8 million, or
17.5%, for the three- and twelve-month periods respectively. Increased fuel
costs, primarily gas costs, caused increases in both periods. Fuel expense
(excluding purchased power expense), per net kwh generated, increased from 1.83
to 2.01 cents and from 1.78 to 2.02 cents for the respective three- and
twelve-month periods due to higher natural gas and coal costs.

Total operating expenses, excluding fuel and purchased power, increased
$1.2 million, or 1.7%, for the three-month period, and increased $6.6 million,
or 2.1%, for the twelve-month period. The increase in the three-month period was
due primarily to steam production maintenance expenses. Additionally, a decline
in taxable income lowered taxes in the current period. The increase in the
twelve-month period was due primarily to increased steam production maintenance
expense and expenses associated with the acquisition of the TNP electric
properties. Maintenance expenses were higher due to the normal recurring
eighteen-month repair cycle and additional cooling tower maintenance costs.

Other Income. Other income increased for the three-month period due
primarily to reduced taxes and merger and business integration expenses as well
as slightly increased subsidiary earnings. Other income during the twelve-month
period was favorably impacted by the approximate $7.7 million after-tax gain on
the sale of certain water rights by Quixx Corporation. The gain was offset by
increased merger and business integration expenses of approximately $5.4
million. The Company reclassified these expenses from operating expenses to
other income to conform with a FERC order. Other income was favorably impacted
in the prior twelve-month period by the approximate $3.0 million of interest
arising from the rate case settlement with New Mexico wholesale customers.

Earnings

Current earnings applicable to common stock declined for both periods
in part because of increased interest expense due to increased long-term and
short-term debt. These higher levels of debt were caused by the retirement of
preferred stock, the 1995 acquisition of electric properties from TNP and
increased construction expenditures. Twelve-month earnings were positively
affected by the sale of a portion of underground water rights held by Quixx that
added 19 cents per share. However, these earnings were adversely affected by
merger-related and business integration expenses. Additionally, earnings for the
prior twelve-month period had been boosted by the rate settlement with wholesale
customers in New Mexico that added 11 cents per share, and by a change in the
estimate of delivered-but-not-billed kwh sales that added 13 cents per share.
These estimated kwh sales relate to energy used by customers but not billed
until the subsequent month. Operating income was flat in the three-month period
and decreased in the twelve-month period primarily because of the greater
maintenance expenses and the expenses associated with the TNP acquisition.

Assuming normal weather conditions, 1997 operating income is expected
to remain relatively flat, but net earnings for 1997 will be negatively impacted
by increased merger-related and business integration expenses. Any write-off
associated with the BCH project discussed in Note (6) would further adversely
affect such earnings. A resolution of the 1985 FERC rate case with Texas
wholesale REC customers, by settlement or otherwise, would favorably affect
income and earnings in the year received.

LIQUIDITY AND CAPITAL RESOURCES

The Company's demand for capital is normally related to the
construction of utility plant and equipment. Cash construction expenditures
excluding AFUDC for the three and twelve months ended November 30, 1996, were
$54.5 million and $133.5 million, respectively. Also in fiscal 1996, the Company
received regulatory approval to make investments in Quixx of up to $15 million
each year beginning in fiscal 1996 and continuing for five years. Quixx's
investment in independent power projects is dependent upon suitable investment
opportunities and the availability of capital. The Company cannot accurately
forecast the portion of internally generated funds to be used for capital
expenditures, but expects that it will be approximately 40% in fiscal 1997. To
the extent the capital required in 1997 is not supplied by internally generated
funds, the Company expects to obtain such capital from short-term borrowing or
from the sale of long-term debt, preferred stock and/or common stock. The
Company's estimates of capital needs, in particular those related to
construction and the generation of internal funds are subject to review and
revision, and may vary substantially from the foregoing especially in a more
competitive environment. Due to the merger, Standard & Poor's is reviewing the
Company's rated debt for possible downgrade.

In August 1994 the Company entered in a forward interest rate swap
agreement in anticipation of redeeming its $25 million principal amount of
13-1/2% Pollution Control Revenue Bonds (PCRBs) with a new issuance of variable
rate PCRBs. Such bonds were redeemed October 1, 1996, and replaced with a
variable rate bond issue that has been swapped for a fixed rate of 6.435% due
July 1, 2016. Additionally, the Company redeemed on September 26, 1996, the $25
million 6-1/2% PCRBs due 2004 and the $32.3 million 6-5/8% PCRBs and replaced
these series on September 18, 1996, with $57.3 million 5-3/4% PCRBs due
September 1, 2016.

In October 1996, Southwestern Public Service Capital I, a wholly owned
trust, issued in a public offering $100 million of 7.85% Trust Preferred
Securities, Series A. The sole asset of the trust is $103 million principal
amount of the Company's 7.85% Deferrable Interest Subordinated Debentures,
Series A due September 1, 2036. The securities are shown as SPS Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust holding solely
Subordinated Debentures of SPS on the Consolidated Balance Sheet. The funds from
this financing were used to reduce short-term debt.

The Company also has effective a shelf registration under which $220
million of debt securities and/or preferred stock are available for issuance.

OTHER MATTERS

Electric utilities have historically operated in a highly regulated
environment in which they have an obligation to provide electric service to
their customers in return for an exclusive franchise within their service
territory with an opportunity to earn a regulated rate of return. This
regulatory environment is changing. The generation sector has experienced
competition from nonutility power producers and the FERC is requiring utilities,
including the Company, to provide wholesale transmission service to others and
may order electric utilities to enlarge their transmission systems to facilitate
transmission services without impairing reliability. On July 9, 1996, the
Company filed its open access transmission tariff in compliance with FERC Order
No. 888. (See GENERAL. Competition in the Company's 1996 Annual Report on Form
10-K.) State regulatory authorities are in the process of changing utility
regulations in response to federal and state statutory changes and evolving
markets. All of the Company's jurisdictions continue to evaluate utility
regulations with respect to competition, and legislative proposals to effect
retail wheeling are expected to be introduced in 1997. The Company is unable to
predict what financial impact or effect the adoption of these proposals would
have on its operations. In part in response to these changing conditions the
Company has entered into a definitive merger agreement with Public Service
Company of Colorado (the Merger). Consummation of the Merger is subject to
customary conditions including receiving regulatory authority approvals. The two
utilities are working toward a completion date in spring 1997. The foregoing
discussions of the Company's "Results of Operations" and "Liquidity and Capital
Resources" do not take into account any changes that could arise as a result of
the Merger.

PART II. OTHER INFORMATION

Item 5. Other Information.

The Company's ratio of earnings to fixed charges for the twelve months
ended November 30, 1996, was 4.00. The ratio of earnings to fixed charges and
preferred dividend requirements combined was 3.86 for such period.

See Note (6) of Notes to Condensed Consolidated Financial Statements
for a discussion of Quixx's BCH project and a lawsuit between the Company and
Thunder Basin Coal Company.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits:

4(a) Indenture dated as of October 21, 1996, between the
Company and Wilmington Trust Company

(b) Supplemental Indenture dated as of October 21, 1996,
between the Company and Wilmington Trust Company

(d) Amended and Restated Trust Agreement dated as of
October 21, 1996, among the Company, David M. Wilks,
as initial depositor, Wilmington Trust Company and
the administrative trustees named therein

(e) Agreement as to Expenses and Liabilities dated as of
October 21, 1996, between the Company and Southwestern
Public Service Capital I (included as Exhibit F in
Exhibit 4(d))

Instruments defining the rights of holders of other
long-term debt not required to be filed as exhibits
will be furnished to the Commission upon request.

12 Statement showing computations of ratio of earnings for
the twelve months ended November 30, 1996

15 Letter of Deloitte & Touche LLP regarding unaudited
condensed consolidated interim financial information

(b) Reports on Form 8-K:

Item reported - Item 5. Other Events
Financial Statements filed - None
Date of report filed - October 11, 1996, reporting 1996
fiscal year earnings

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

SOUTHWESTERN PUBLIC SERVICE COMPANY

/s/ Doyle R. Bunch II
By
Doyle R. Bunch II
Executive Vice-President
Accounting and Corporate Development

DATE: January 10, 1997