PNM RESOURCES, INC. 2009 OFFICER INCENTIVE PLAN

PNM RESOURCES, INC.

2009 OFFICER INCENTIVE PLAN

PNM Resources, Inc. (the “Company”) has adopted the PNM Resources, Inc. Second Amended and Restated Omnibus Performance Equity Plan (the “PEP”), which currently is subject to approval by the Company’s shareholders and becomes effective upon shareholder approval.  The Company also has adopted this 2009 Officer Incentive Plan (the “Plan”) for the purpose of providing annual cash-based incentive awards (each an “Award”) to eligible Officers (as defined below).  The Awards payable to Officers under the Plan are intended to qualify as Performance Cash Awards granted pursuant to Section 9.4 of the PEP and, in the case of Officers who are Covered Employees, as Performance-Based Performance Cash Awards granted pursuant to Section 12 of the PEP.

Capitalized terms used in the Plan and not otherwise defined herein shall have the meanings given to them under the terms of the PEP.

  ELIGIBILITY

All Officers of the Company and its Affiliates are eligible to participate in the Plan with the exception of the First Choice Power officers, who will participate in the First Choice Power, L.P. Incentive Plan, and the Optim Energy, LLC officers, who will participate in Optim Energy’s programs.  For purposes of the Plan, the term “Officer” means any employee of the Company or any Affiliate (other than First Choice Power or Optim Energy) who has the title of Chief Executive Officer, President, Executive Vice President, Senior Vice President or Vice President and who is in salary grade H18 or higher.

PLAN OBJECTIVES

The Plan is designed to motivate and reward Officers for benefiting our customers and shareholders by achieving and exceeding the Performance Goals (as defined below) established for such Officers.

  PERFORMANCE PERIOD

The period over which the Officer’s performance will be measured for purposes of determining whether Awards are payable under the Plan began on January 1, 2009 and ends on December 31, 2009 (the “Performance Period”).  The Board Governance and Human Resources Committee (the “Committee”) of the Company’s Board of Directors (the “Board”), in its sole discretion, reserves the right to adjust, amend or suspend the Plan during the Performance Period.

AWARD DETERMINATION

In order for Awards to be payable under the Plan, the performance goals described below (collectively, the “Performance Goals”) must be satisfied.

Exhibit 10.2

Business Area Earnings Per Share

PNM Resources, Inc. will be treated as one “Business Area” and its Utility subsidiaries (Public Service Company of New Mexico and Texas-New Mexico Power Company), collectively, will be treated as a separate “Business Area.”  A Business Area must achieve the applicable Earnings Per Share (“EPS”) levels set forth in the table below in order for Awards to be payable pursuant to the Plan to Officers within such Business Area.

If a Business Area does not achieve the Threshold EPS level set forth above, no Awards are payable under the Plan to Officers within that Business Area.  In addition, no Awards are payable to Officers of either Business Area if the PNM Resources EPS is less than $0.41. Subject to the preceding sentence, if a Business Area achieves the Threshold, Target or Maximum level of EPS, the aggregate potential Awards payable to the Officers of that Business Area at that level of performance (e.g., the aggregate Awards payable at Target for those Officers), as determined pursuant to the table set out below, will make up the initial potential “Award Pool” for that Business Area.

The Award Pool for a Business Area will be increased if the attained EPS level exceeds by at least $0.01 the minimum EPS number for the Target Award level and is less than the minimum EPS number for the Maximum Award level.  For example, if the PNM Resources EPS is at least $0.47 but is less than $0.59, the Award Pool for the PNM Resources Business Area will be increased.  For each $0.01 of additional EPS, the Award Pool will be increased by up to the Plan’s share of 25% of the incremental earnings (i.e., the additional EPS multiplied by the average number of common shares of PNM Resources, Inc, common stock used to calculate diluted EPS as reported in Company’s 10-K multiplied by 25%).  The Plan’s share of 25% of the incremental earnings will be determined by multiplying 25% of the incremental earnings by a fraction, the numerator of which is the Award Pool for that Business Area and the denominator of which is the sum of the Award Pool for both Business Areas under this Plan and the total award pool under Company’s incentive compensation plan for non-Officer employees.  The Committee, in the exercise of its discretion, may choose to increase the Award Pool by an amount less than the Business Area’s share of 25% of the incremental earnings.

For purposes of the Plan, a Business Area’s EPS will be the net earnings for that Business Area, excluding non-recurring items that do not factor into ongoing earnings, divided by the average number of common shares of PNM Resources, Inc, common stock used to calculate diluted EPS as reported in Company’s 10-K.   The Committee’s determination of the EPS of a particular Business Unit shall be binding and conclusive.

For purposes of the Plan, the Chief Executive Officer, the Executive Vice President, the Chief Operating Officer, the Senior Vice Presidents and the shared services Vice Presidents are

Exhibit 10.2

assigned to the PNM Resources Business Area.  The utility Vice Presidents are assigned to the Utility Business Area.

Each Business Area is broken down into separate “Business Units.”  The Business Units are identified on Attachment A.  The Award Pool for each Business Area will be broken into Business Unit Award Pools.  The Award Pool for each of the Business Units of a Business Area will be determined by multiplying the Business Area Award Pool by a fraction.  The numerator of the fraction