Management Short-Term Incentive
Plan

TNP Enterprises, Inc.

March 1995




Plan Purposes
 *     Provide a meaningful and competitive incentive opportunity geared to
       the achievement of specified corporate financial, operational, and
       individual strategic goals.

 *     Vary performance criteria/goals and incentive award amounts 
       to reflect differences in operational and individual participant
       challenges and accomplishments.

Concept
  A short-term incentive plan for key management employees where 
  the award opportunity and performance goals are set at the beginning
  of each year. Actual payments are based on the achievement of 
  corporate financial, operational, and individual strategic goals 
  measured over a one-year period. Awards will only be paid if a 
  predetermined threshold level of overall corporate performance is 
  met. Payment will be made in cash as soon as practical after year end.  

Plan Administration
  The Personnel, Organization, and Nominating Committee (or any other
  successor committee [the "Committee"]) will have responsibility for
  administration of the program in accordance with the provisions of 
  the plan, as set forth in these administrative plan specifications.

Plan Year
  The plan year for the Management Short-Term Incentive Plan 
  will coincide with the Company's fiscal year which ends on December 31.

Participation
  Participation will be limited to those key individuals whose 
  actions can have a substantial impact on TNP's success. This 
  group will initially consist of the officer group, directors, 
  assistant officers, and key management employees designated by the 
  Chief Executive Officer and approved by the Committee.

Incentive
Opportunities
  At the beginning of each plan year, a minimum, target, and maximum
  award opportunity will be established for each participant grouping.
  The "target" award will be earned for achievement of expected 
  performance. "Minimum" and "maximum" performance award levels then
  will be developed in relation to the performance target award levels. 




  Actual participant award opportunities can vary from 0 to 150 percent
  of the target award opportunity in relation to actual corporate financial,
  operational, and individual performance.


Performance
Apportionment
  Performance will be assessed at three levels--corporate financial,
  operational, and individual. The Chief Executive Officer will 
  recommend, and the Committee will approve, the split of incentive 
  opportunity. The apportionments will vary by participant level. 
  The results of one performance area will not affect the amount
  of the award opportunity from other performance areas, except that
  no payouts will occur if the Company does not meet its overall 
  corporate threshold performance target. A participant's total 
  incentive award will be equal to the sum of the amounts earned from
  each portion of the incentive opportunity.



Corporate Financial
Performance
  Corporate financial performance will be measured based on 
  earnings per share (EPS). At the beginning of each plan year, a 
  "target" EPS goal will be established for the Company. 
  "Minimum" and "maximum" performance levels, for incentive award
  determination purposes, will be set up in relation to this 
  performance target.  No award is paid for performance below 
  minimum. Straight-line interpolation would be used for results 
  between minimum and the maximum.

  The Chief Executive Officer will suggest, and the Committee will
  determine, the treatment of "extraordinary" gains or losses and their
  impact on EPS in the plan. Where possible, this determination will be
  made prior to establishing the annual target for EPS.

Corporate
Operational
Performance

  Corporate operational goals for employees will be based equally upon
  overall safety, O&M costs, and system reliability. Targets for each of 
  these goals will be established. Minimum and maximum performance levels
  also will be determined. Tables will then be established to define 
  award opportunities based on various levels of achievement. 

Individual
Performance

  The purpose of individual performance is to recognize and to reward 
  those contributions that may not be adequately reflected by financial 
  or operational measures. Individual performance will be measured for
  participants at the officer level only.



  At the beginning of the plan year, preset goals and objectives will be 
  set which should be:

         *     Supportive of corporate and operational objectives;
         *     Controllable by the participant; and
         *     Varied in scope and complexity. 

  Goals will be set forth by the Chief Executive Officer. Following 
  year end, the Chief Executive Officer, with the approval of the 
  Committee, shall determine the extent to which individual goals have 
  been accomplished. The Committee shall make this determination for the
  Chief Executive Officer.


Overall 
Corporate
Threshold
  At the beginning of each plan year, an overall threshold level of 
  corporate financial performance will be established. Performance 
  below the threshold level will result in no award payouts, 
  regardless of actual corporate financial, operational, or 
  individual performance achievements.




Form and 
Timing of Payment

  Awards will be paid in cash as soon as practical following 
  approval of award amounts by the Committee.  

Termination of
Employment Due to
Retirement, Death, 
or Disability

  If a participant's employment is terminated due to retirement, 
  death, or disability during a plan year, the award earned shall 
  be prorated based on the number of months of participation within the
  plan year. The prorated award will be based upon performance 
  determined at year end and will be paid fully in cash at the same 
  time all other awards are paid from the plan.

Termination for 
Any Other Reason

  Termination of employment for reasons other than retirement, death, 
  or disability before the end of a plan year will result in forfeiture
  of any associated cash or stock award opportunity for the current 
  plan year. However, the Chief Executive Officer, with the approval of
  the Committee, may waive such forfeiture provision.

  Termination after the plan year end, but prior to award payout, will
  not result in award forfeiture, except in the event of termination 
  for "cause." 

Tax Treatment

  Payments are taxable to the participant in the year of receipt. The 
  Company receives a tax deduction at the same time and in the same 
  amount as the participant recognizes taxable income.

Withholding taxes

  The Company will have the right to deduct any Federal, state, or 
  local taxes required by law to be withheld. 

Beneficiary
Designation

  A participant may name a beneficiary or beneficiaries to whom any 
  benefit under this plan is to be paid in the event of death.

Effect on Employee
Benefit Plans

  Payments from this plan shall not be included in calculating the 
  amount of employee benefits to be paid under the terms of any of the
  Company's qualified employee benefit plans.

Participant Rights

  Participation in this plan shall not interfere with the Company's 
  right to terminate any participant's employment at any time. Rights
  or interests of any participants in this plan are nontransferable.



Plan Amendments

  The Committee may, in its sole discretion, modify, amend, suspend, or
  terminate, in whole or in part, any or all of the provisions of the 
  plan. However, no modification, amendment, suspension, or termination
  may adversely affect a payment or distribution to which a participant
  is entitled.

New Hires,
Promotions,
Demotions

  The Chief Executive Officer, with the approval of the Committee, 
  will have the discretion to determine participation and award levels
  for new hires, promotions, or demotions.