FIRST SUPPLEMENTAL INDENTURE

FIRST SUPPLEMENTAL INDENTURE , dated as of March 23, 2009, between TEXAS-NEW MEXICO POWER COMPANY , a corporation organized and existing under the laws of the State of Texas (hereinafter called the “Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. , a national banking association organized and existing under the laws of the United States (hereinafter called the “Trustee”), as Trustee under the Indenture hereinafter referred to.

WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Mortgage Indenture dated as of March 23, 2009 (the “Indenture”), providing for the issuance by the Company from time to time of its bonds, notes or other evidence of indebtedness to be issued in one or more series (in the Indenture and herein called the “Securities”) and to provide security for the payment of the principal of and premium, if any, and interest, if any, on the Securities and the performance and observance of the other obligations of the Company thereunder; and

WHEREAS , the Company, in the exercise of the power and authority conferred upon and reserved to it under the provisions of the Indenture and pursuant to appropriate resolutions of the Board of Directors, has duly determined to make, execute and deliver to the Trustee this First Supplemental Indenture to the Indenture as permitted by Sections 2.01, 3.01 and 14.01 of the Indenture in order to establish the form and terms of, and to provide for the creation and issuance of, a first series of Securities under the Indenture in an initial aggregate principal amount of $265,500,000; and

WHEREAS , all things necessary to make the Securities of the first series, when executed by the Company and authenticated and delivered by the Trustee or any Authenticating Agent and issued upon the terms and subject to the conditions hereinafter and in the Indenture set forth against payment therefor the valid, binding and legal obligations of the Company and to make this First Supplemental Indenture a valid, binding and legal agreement of the Company, have been done;

NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH that, in order to establish the terms of a series of Securities and for and in consideration of the premises and of the covenants contained in the Indenture and in this First Supplemental Indenture and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, it is mutually covenanted and agreed as follows:

Section 1.01 Certain Definitions . Each capitalized term that is used herein and is defined in the Indenture shall have the meaning specified in the Indenture unless such term is otherwise defined herein.

The following terms have the meanings given to them in this Article One and, for purposes of this First Supplemental Indenture, such meanings shall supersede and replace the meanings given them, if any, in the Indenture:

“Agent Members” has the meaning assigned to it in Section 2.04.

“Certificated First Mortgage Bond” means any First Mortgage Bond issued in fully-registered, certificated form (other than a Global First Mortgage Bond), which shall be substantially in the form of Exhibit A , with appropriate legends as specified in Exhibit A .

“Comparable Treasury Issue” means the U.S. Treasury security or securities selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the First Mortgage Bonds (as defined in Section 2.01) to be redeemed that would be used, at the time of selection and in accordance with customary market practice, in pricing new issues of corporate debt securities of a comparable maturity to the remaining term of such First Mortgage Bonds.

“Comparable Treasury Price” means, with respect to any Redemption Date:

“Distribution Compliance Period” means, in respect of any Regulation S Global First Mortgage Bond, the 40 consecutive days beginning on and including the later of (a) the day on which any First Mortgage Bonds represented thereby are offered to Persons other than distributors (as defined in Regulation S under the Securities Act) pursuant to Regulation S and (b) the issue date for such First Mortgage Bonds.

“DTC” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depositary institution hereinafter appointed by the Company that is a clearing agency registered under the Exchange Act.

“First Mortgage Bond Custodian” means the custodian with respect to any Global First Mortgage Bond appointed by DTC, or any successor Person thereto, and shall initially be the Trustee.

“Global First Mortgage Bond” means a Rule 144A Global First Mortgage Bond or a Regulation S Global First Mortgage Bond, as the context may require, issued in fully-registered certificated form to DTC (or its nominee), as depositary for the beneficial owners thereof, which shall be substantially in the form of Exhibit A , with appropriate legends as specified in Exhibit A .

“Independent Investment Banker” means one of the Reference Treasury Dealers selected by the Trustee after consultation with the Company.

 “Reference Treasury Dealer” means each of four primary U.S. Government securities dealers in New York City (each a “Primary Treasury Dealer”), consisting of (i) J.P. Morgan Securities Inc. and (ii) three other nationally recognized investment banking firms (or their affiliates) that are selected by the Company in connection with the particular redemption, and their respective successors, provided that if any of them ceases to be a Primary Treasury Dealer, the Company will substitute another nationally recognized investment banking firm (or its affiliate) that is a Primary Treasury Dealer.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding that Redemption Date.

“Regulation S Global First Mortgage Bonds” has the meaning assigned to it in Section 2.05.

“Restrictive Legend” has the meaning assigned to it in Section 2.05.

“Rule 144A Global First Mortgage Bonds” has the meaning assigned to it in Section 2.05.

“Temporary Regulation S Global First Mortgage Bond” has the meaning assigned to it in Section 2.05.

“Treasury Rate” means, with respect to any Redemption Date, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated on the third Business Day preceding the applicable Redemption Date, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that Redemption Date.

Section 2.01    Title of the First Mortgage Bonds . This First Supplemental Indenture hereby creates a series of Securities designated as the “9.50% First Mortgage Bonds, due 2019, Series 2009A” (the “First Mortgage Bonds”) and such Securities shall be executed, authenticated and delivered in accordance with the provisions of, and, except as hereinafter provided, shall in all respects be subject to all of the terms, conditions and covenants of the Indenture as supplemented by this First Supplemental Indenture. For purposes of the Indenture, the First Mortgage Bonds shall constitute a single series of Securities and may be issued in an unlimited principal aggregate amount (subject to the limitations set forth in Article IV of the Indenture), although the initial issuance of the First Mortgage Bonds shall be in the principal amount of $265,500,000.

Section 2.02    Form and Terms of the First Mortgage Bonds . The form and terms of the First Mortgage Bonds pursuant to the authority granted by this First Supplemental Indenture in accordance with Sections 2.01 and 3.01 of the Indenture are set forth herein.  The First Mortgage Bonds shall be issued in registered form without coupons in the denominations of $2,000 and integral multiples of $1,000 in excess thereof, appropriately numbered.

The First Mortgage Bonds shall mature on April 1, 2019 and shall bear interest at the rate of 9.50% per annum, payable semi-annually on the first (1st) day of April and the first (1st) day of October in each year commencing October 1, 2009 (each such April 1 and October 1 hereinafter called an “Interest Payment Date”).

If any Interest Payment Date falls on a day that is not a Business Day, the Interest Payment Date will be the next succeeding Business Day (and without any interest or payment in respect of any such delay). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. The First Mortgage Bonds shall be payable as to principal and interest in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts, and shall be payable (as well the interest on the principal thereof) as provided for in the Indenture. The Company shall pay interest on overdue principal at the rate per annum borne by the First Mortgage Bonds, and it shall pay interest on overdue installments of interest at the rate per annum borne by the First Mortgage Bonds to the extent lawful.

The interest so payable on any Interest Payment Date shall be paid to the Persons in whose names the First Mortgage Bonds are registered at the close of business on the regular record date for such Interest Payment Date, which shall be the fifteenth (15th) day of the month

next preceding such Interest Payment Date (hereinafter called a “Regular Record Date”); except that if the Company shall default in the payment of any interest due on such Interest Payment Date, the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a date (herein called a “Special Record Date”) to determine the Holders of record who will receive such Defaulted Interest (which shall be fixed in accordance with Section 3.07 of the Indenture), which Special Record Date shall not be more than fifteen (15) days or less than ten (10) days prior to the date proposed by the Company for payment of such Defaulted Interest.

Section 2.03     Optional Redemption .  The Company, at its option, may redeem at any time all, or from time to time, any part of the First Mortgage Bonds, on not less than 30 days nor more than 60 days notice as provided in the Indenture (except that, notwithstanding the provisions of Section 5.04 of the Indenture, any notice of redemption for the First Mortgage Bonds given pursuant to said Section need not set forth the Redemption Price but only the manner of calculation thereof) at a Redemption Price equal to the greater of the following amounts:

plus, in either of the above cases, accrued and unpaid interest on the principal amount being redeemed to the applicable Redemption Date.

If less than all of the First Mortgage Bonds are to be redeemed, the Trustee shall select by lot, on a pro-rata basis or in such other manner as it shall deem appropriate and fair, the particular First Mortgage Bonds or portions thereof to be redeemed.  Notice of redemption shall be given by mail not less than 30 nor more than 60 days prior to the Redemption Date to the Holders of First Mortgage Bonds to be redeemed (which, as long as the First Mortgage Bonds are held in the book-entry only system, will be The Depository Trust Company (or its nominee) or a successor Depositary); provided, however, that the failure to duly give such notice by mail, or any defect therein, shall not affect the validity of any proceedings for the redemption of First Mortgage Bonds as to which there shall have been no such failure or defect. Such notice may state that such redemption shall be conditional upon receipt by the Paying Agent or Agents for such First Mortgage Bonds, on or prior to the Redemption Date, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such First Mortgage Bonds and that if such money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such First Mortgage Bonds.  On and after the

Redemption Date (unless the Company shall default in the payment of the First Mortgage Bonds or portions thereof to be redeemed at the applicable Redemption Price, together with interest accrued thereon to such date), interest on the First Mortgage Bonds or the portions thereof so called for redemption shall cease to accrue.

The Independent Investment Banker shall give to the Company and the Trustee written notice of the Redemption Price applicable to the First Mortgage Bonds promptly after its calculation thereof.

The Trustee shall be under no duty to inquire into, may conclusively presume the correctness of, shall be fully protected in relying upon the Independent Investment Banker’s calculation of any Redemption Price, and shall have no responsibility for such calculation.

(a)           Each Global First Mortgage Bond initially shall: (i) be registered in the name of DTC or the nominee of DTC, (ii) be delivered to the First Mortgage Bond Custodian, and (iii) bear the appropriate legend, as set forth in Exhibit  A .  Any Global First Mortgage Bond may be represented by more than one certificate.  The aggregate principal amount of each Global First Mortgage Bond may from time to time be increased or decreased by adjustments made on the records of the First Mortgage Bond Custodian, as provided in this First Supplemental Indenture.

(b)          Members of, or participants in, DTC (“Agent Members”) shall have no rights under this First Supplemental Indenture with respect to any Global First Mortgage Bond held on their behalf by DTC or by the First Mortgage Bond Custodian under such Global First Mortgage Bond, and DTC may be treated by the Company, the Trustee, the Paying Agent and the Security Registrar and any of their agents as the absolute owner of such Global First Mortgage Bond for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee, the Paying Agent or the Security Registrar or any of their agents from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its Agent Members, the operation of customary practices of DTC governing the exercise of the rights of an owner of a beneficial interest in any Global First Mortgage Bond.  The registered Holder of a Global First Mortgage Bond may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action that a Holder is entitled to take under this First Supplemental Indenture, the Indenture or the First Mortgage Bonds.

(c)           Except as provided below, owners of beneficial interests in Global First Mortgage Bonds will not be entitled to receive Certificated First Mortgage Bonds.  Certificated First Mortgage Bonds shall be issued to all owners of beneficial interests in a Global First Mortgage Bond in exchange for such interests if:

(i)     DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global First Mortgage Bond and a successor depositary is not appointed by the Company within 90 days of such notice or DTC ceases to be a clearing agency registered under the Exchange Act at a time when DTC is required to be so registered in order to act as depositary,

(ii)    the Company executes and delivers to the Trustee and Security Registrar an Officers’ Certificate stating that such Global First Mortgage Bond shall be so exchangeable, or

(iii)   an Event of Default has occurred and is continuing and the Security Registrar has received a written request from DTC to issue a Certificated First Mortgage Bond.

(d)           In connection with the exchange of an entire Global First Mortgage Bond for Certificated First Mortgage Bonds pursuant to this paragraph (d), such Global First Mortgage Bond shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and upon Company Order the Trustee shall authenticate and deliver, to each beneficial owner identified by DTC in exchange for its beneficial interest in such Global First Mortgage Bond, an equal aggregate principal amount of Certificated First Mortgage Bonds of authorized denominations.

(e)           In connection with the exchange of a portion of a Certificated First Mortgage Bond for a beneficial interest in a Global First Mortgage Bond, the Trustee shall cancel such Certificated First Mortgage Bond, and the Company shall execute, and the Trustee shall authenticate and deliver to the exchanging Holder, a new Certificated First Mortgage Bond representing the principal amount not so exchanged.

Section 2.05     Restrictions on Transfer .  The First Mortgage Bonds and any related documents may be amended or supplemented from time to time by the Company without the consent of any Holder to modify the restrictions on and procedures for resales and other transfers of the First Mortgage Bonds to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally. Holders of the First Mortgage Bonds are deemed by the acceptance of such First Mortgage Bonds to have agreed to any such amendment or supplement.

Global First Mortgage Bonds offered and sold to Qualified Institutional Buyers (as such term is defined under Rule 144A) in the United States of America in reliance on Rule 144A (the “Rule 144A Global First Mortgage Bonds”) shall be issued in the form of permanent global First Mortgage Bonds substantially in the form attached hereto as Exhibit A containing the second legend set forth thereon (the “Restrictive Legend”) and the other legends required thereby and numbered from 1 upward with the prefix “RA”, deposited with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as herein provided. The aggregate principal amount of the Rule 144A Global First Mortgage Bonds may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

Global First Mortgage Bonds offered and sold outside the United States of America will be issued initially in the form of a single temporary Global First Mortgage Bond (the “Temporary Regulation S Global First Mortgage Bond”) and shall bear the Temporary Regulation S Global First Mortgage Bond Legend in the form set forth in Exhibit A .  At any time following the Distribution Compliance Period, upon receipt by the Trustee and the Company of a duly executed certificate in the form of Exhibit A to the form of First Mortgage Bond, one or

more Global First Mortgage Bonds will be issued (together with the Temporary Regulation S Global First Mortgage Bonds, the “Regulation S Global First Mortgage Bonds”).  The Regulation S Global First Mortgage Bonds shall be numbered from 1 upward with the prefix “RS”. The Regulation S Global First Mortgage Bond will be deposited upon issuance with the Trustee, as custodian for DTC, duly executed by the Company and authenticated by the Trustee as herein provided. The aggregate principal amount of the Regulation S Global First Mortgage Bonds may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under the Indenture, this First Supplemental Indenture or under applicable law with respect to any transfer of any beneficial interest in any Global First Mortgage Bond (including any transfers between or among Agent Members or beneficial owners in any Global First Mortgage Bond) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the Indenture or this First Supplemental Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

If the proposed transfer is a transfer of a beneficial interest in one Global First Mortgage Bond to a beneficial interest in another Global First Mortgage Bond, the Security Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global First Mortgage Bond to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Security Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global First Mortgage Bond from which such interest is being transferred.

A Global First Mortgage Bond may not be transferred as a whole except by the depository to a nominee of the depository or by a nominee of the depository to the depository or another nominee of the depository or by the depository or any such nominee to a successor depository or a nominee of such successor depository.

Beneficial interests in any restricted Global First Mortgage Bond may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same restricted Global First Mortgage Bond in accordance with the transfer restrictions set forth in the Restrictive Legend; provided, however , that prior to the expiration of the restricted period under the Securities Act, transfers of beneficial interests in the Regulation S   Global First Mortgage Bond may not be made to a U.S. Person (as defined in Regulation S) or for the account or benefit of a U.S. Person (other than an Initial Purchaser).

Any Holder of a First Mortgage Bond requesting the transfer or exchange of a Rule 144A Global First Mortgage Bond (or an interest therein) for a Regulation S Global First Mortgage Bond (or an interest therein) must deliver or cause to be delivered to the Trustee a duly completed Regulation S Certificate, in the form attached as Exhibit A to the form of First Mortgage Bond; provided that if the requested transfer or exchange is made by the Holder of a First Mortgage Bond that does not bear a Restrictive Legend, then no certification is required.

Any Holder of a First Mortgage Bond requesting the transfer or exchange of a Regulation S Global First Mortgage Bond (or an interest therein) for a Rule 144A Global First Mortgage Bond (or an interest therein) must deliver or cause to be delivered to the Trustee a duly completed Rule 144A Certificate, in the form attached as Exhibit B to the form of First Mortgage Bond; provided that if the requested transfer or exchange is made by the Holder of a First Mortgage Bond that does not bear a Restrictive Legend, then no certification is required.

The Company shall issue a First Mortgage Bond that is not a Global First Mortgage Bond and that does not bear the Restrictive Legend in replacement of a First Mortgage Bond (that is not a Global First Mortgage Bond) bearing the Restrictive Legend at the request of any Holder following such request if (i) the Holder shall have obtained an opinion of counsel reasonably acceptable to the Company in form and substance reasonably satisfactory to the Company to t