TERMS AGREEMENT

Exhibit 1.1

EL PASO ELECTRIC COMPANY
(the “Company”)

Debt Securities

TERMS AGREEMENT

May 11, 2005

To: Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010

Ladies and Gentlemen:

      The Company agrees to sell to Credit Suisse First Boston LLC (the “ Underwriter ”), and the Underwriter agrees to purchase from the Company, on and subject to the terms and conditions of the Underwriting Agreement attached hereto (the “ Underwriting Agreement ”), the following debt securities (“ Offered Securities ”) on the terms set forth below. For purposes of the Underwriting Agreement, the term “ Prospectus ” shall mean the Prospectus Supplement dated May 11, 2005 relating to the Offered Securities to the Prospectus dated May 5, 2005, as first filed with the Securities and Exchange Commission pursuant to and in accordance with Rule 424(b) under the Securities Act of 1933, including all material incorporated or deemed to be incorporated by reference therein at the date hereof. The terms of the Offered Securities will be described more fully in the Securities Resolution, adopted by the Pricing Committee of the Company’s board of directors effective as of the Closing Date referred to below, pursuant to authority delegated to such individuals by the Company’s board of directors (the “ Securities Resolution ”), and the Indenture dated as of May 1, 2005 between the Company and JPMorgan Chase Bank, National Association.

      Title: 6% Senior Notes due May 15, 2035.

      Principal Amount: $400,000,000.

      Interest: 6% per annum, from the Closing Date, payable semi-annually on May 15 and November 15 of each year, commencing November 15, 2005, to holders of record on the preceding May 1 or November 1, as the case may be.

      Maturity: May 15, 2035.

      Redemption: The Offered Securities will be redeemable at the Company’s option on the terms described in the Securities Resolution.

      Additional Condition to Closing : On or prior to the Closing Date, the Underwriter shall have received from the Company evidence reasonably satisfactory to the Underwriter that the Offered Securities have received ratings of at least Baa3 from Moody’s Investors Service, Inc. and at least BBB from Standard & Poor’s Ratings Services.

      Sinking Fund: None.

      Listing: None.

      Purchase Price: 98.297% of the principal amount of the Offered Securities.

      Public Offering Price: 99.422% of the principal amount of the Offered Securities.

      Underwriting Discount : The Public Offering Price less the Purchase Price.

      Closing Date: 10:00 a.m., New York City time, on May 17, 2005 at the offices of Davis Polk & Wardwell, 1600 El Camino Real, Menlo Park, CA, 94025, in Federal (same day) funds.

      Settlement : Book-Entry Only via The Depository Trust Company pursuant to Section 3 of the Underwriting Agreement.

      Blackout pursuant to Section 4(h) of the Underwriting Agreement : Until the Closing Date.

      The provisions of the Underwriting Agreement are incorporated herein by reference.

      The Offered Securities will be made available for checking and packaging at the office of Davis Polk & Wardwell, 1600 El Camino Real, Menlo Park, CA, 94025 at least 24 hours prior to the Closing Date.

      For purposes of Section 2(b) and Section 6 of the Underwriting Agreement, the only information furnished to the Company by the Underwriter for use in the Prospectus consists of (i) the concession and reallowance figures appearing in the third paragraph under the caption “Underwriting” in the Prospectus, (ii) the information regarding the Underwriter’s intention to make a market in the Offered Securities, contained in the fifth paragraph under the caption “Underwriting” in the Prospectus and (iii) the information regarding stabilization and related transactions that the Underwriter may undertake contained in the eighth paragraph under the caption “Underwriting” in the Prospectus.

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      If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the Underwriter in accordance with its terms.

UNDERWRITING AGREEMENT

EL PASO ELECTRIC COMPANY

Debt Securities
First Mortgage Bonds
Preferred–Common–Stock
Warrants
Purchase Contracts
Units

UNDERWRITING AGREEMENT

      1. Introductory . El Paso Electric Company, a Texas corporation (“ Company ”), proposes to issue and sell from time to certain of its unsecured debt securities, first mortgage bonds, preferred stock, no par value, common stock, no par value (“ Common Stock ”), warrants, purchase contracts, and units registered under the Registration Statement referred to in Section 2(a) (“ Registered Securities ”). The Registered Securities constituting unsecured debt securities will be issued under an indenture to be entered into by the Company and JPMorgan Chase Bank, N.A., as Trustee in the form attached to the Registration Statement (the “ Indenture ”), in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices and other terms pursuant to the Indenture. The Registered Securities constituting first mortgage bonds will be issued under the General Mortgage and Deed of Trust, dated as of February 1, 1996, as amended and supplemented, between the Company and U.S. Bank National Association as successor to State Street Bank and Trust Company, as Trustee (the “ Mortgage ”), in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices and other terms pursuant to the Mortgage. The Registered Securities constituting preferred stock may be issued in one or more series, which series may vary as to dividend rates, redemption provisions, selling prices and other terms, and which series will be issued under a statement of resolution establishing such series, subject to the Company’s Articles of Incorporation. The Registered Securities constituting warrants, purchase contracts or units will have such terms as are set forth in the Prospectus referred to in Section 2(a) and will be issued under such agreements and documents as will be set forth in a Terms Agreement referred to in Section 3. Particular series or offerings of Registered Securities will be sold pursuant to a Terms Agreement referred to in Section 3, for resale in accordance with the terms of offering determined at the time of sale.

      The Registered Securities involved in any such offering are hereinafter referred to as the “ Offered Securities ”. The firm or firms which agree to purchase the Offered Securities are hereinafter referred to as the “ Underwriters ” of such securities, and the representative or representatives of the Underwriters, if any, specified in a Terms Agreement referred to in Section 3 are hereinafter referred to as the “ Representatives ”; provided, however , that if the Terms

Agreement does not specify any representative of the Underwriters, the term “ Representatives ”, as used in this Agreement, shall mean the Underwriters.

      2. Representations and Warranties of the Company. The Company, as of the date of each Terms Agreement referred to in Section 3, represents and warrants to, and agrees with, each Underwriter that:

      (a) A registration statement (No. 333-123646), including a prospectus, relating to the Registered Securities has been filed with the Securities and Exchange Commission (the “ Commission ”) and has become effective. Such registration statement, as amended at the time of any Terms Agreement referred to in Section 3, including all material incorporated or deemed to be incorporated by reference at such time, is hereinafter referred to as the “ Registration Statement ”, and the prospectus included in such Registration Statement (the “ Basic Prospectus ”), as supplemented as contemplated by Section 3 to reflect the terms of the Offered Securities and the terms of the offering of the Offered Securities, as first filed with the Commission pursuant to and in accordance with Rule 424(b) (“ Rule 424(b) ”) under the Securities Act of 1933 (the “ Act ”), including all material incorporated or deemed to be incorporated by reference therein at the time of any Terms Agreement, is hereinafter referred to as the “ Prospectus ”. The terms “supplement,” “amendment” and “amend” as used herein shall include all documents deemed to be incorporated by reference in the Prospectus that are filed subsequent to the date of the Terms Agreement relating to the applicable Offered Securities by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”).

      (b) The Registration Statement, on the Effective Date, conformed, and on the date of each Terms Agreement will conform, in all material respects to the requirements of the Act, the Trust Indenture Act of 1939 (“ Trust Indenture Act ”) and the rules and regulations of the Commission (“ Rules and Regulations ”) and did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. Any Preliminary Prospectus, when delivered to the Underwriters for their use in marketing the Offered Securities, conformed, and the Prospectus, on the date of each Terms Agreement, and on the Closing Date referred to in Section 3, will conform, in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and did not and will not, as applicable, include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the foregoing does not apply to statements in or omissions from any of such documents based upon written information furnished to the Company by any Underwriter through the Representatives, if any, specifically for use therein. For purposes of

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this Agreement, “ Effective Date ” shall mean the later of (i) the date or time that the Registration Statement or any post-effective amendment thereto was declared effective by the Commission under the Act and (ii) the date that the Company’s most recent Annual Report on Form 10-K was filed with the Commission under the Exchange Act, and “ Preliminary Prospectus ” shall mean any supplement to the Basic Prospectus, as amended or supplemented as of the date thereof, used in connection with the offering and sale of the Offered Securities (other than making confirmations of sales of the Offered Securities) and filed with the Commission pursuant to Rule 424(b), and all material incorporated or deemed to be incorporated by reference therein.

      (c) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Texas, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification except where the failure to be so qualified would not have a material adverse effect on the condition (financial or other), business, properties or results of operations of the Company (“ Material Adverse Effect ”). The Company has no subsidiaries that (i) have assets of more than $1,000,000 and (ii) have conducted any new business activity during the prior six months.

      (d) If the Offered Securities are debt securities/first mortgage bonds: The Indenture/Mortgage has been duly authorized and has been duly qualified under the Trust Indenture Act; the Offered Securities have been duly authorized; and when the Offered Securities are delivered and paid for pursuant to the Terms Agreement on the Closing Date (as defined below in Section 3) or pursuant to Delayed Delivery Contracts (as hereinafter defined), the Indenture/Mortgage will have been duly executed and delivered, such Offered Securities will have been duly executed, authenticated, issued and delivered and will conform to the description thereof contained in the Prospectus and the Indenture/Mortgage and such Offered Securities will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and, in the case of first mortgage bonds, will be entitled to the security afforded by the Mortgage.

      (e) If the Offered Securities are preferred stock: The Offered Securities have been duly authorized and, when the Offered Securities have been delivered and paid for in accordance with the Terms Agreement on the Closing Date or pursuant to the Delayed Delivery Contracts, such Offered Securities will have been validly issued, fully paid and

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nonassessable and will conform to the description thereof contained in the Prospectus; and the shareholders of the Company have no preemptive rights with respect to the Offered Securities.

      (f) If the Offered Securities are Common Stock: The Offered Securities and all other outstanding shares of capital stock of the Company have been duly authorized; all outstanding shares of capital stock of the Company are, and, when the Offered Securities have been delivered and paid for in accordance with the Terms Agreement on the Closing Date, such Offered Securities will have been, validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus; and the shareholders of the Company have no preemptive rights with respect to the Common Stock.

      (g) If the Offered Securities are warrants, purchase contracts or units: The Offered Securities have been duly authorized and, when they Offered Securities have been delivered and paid for in accordance with the Terms Agreement on the Closing Date or pursuant to the Delayed Delivery Contracts, such Offered Securities will have been validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus.

      (h) If the Offered Securities are convertible, exchangeable or exercisable securities, including warrants and purchase contracts:

      (i) when the Offered Securities are delivered and paid for pursuant to the Terms Agreement on the Closing Date, such Offered Securities will be convertible or exchangeable into or exercisable for debt or equity securities of the Company in accordance with their terms (if the Offered Securities are preferred stock, warrants or purchase contracts) or the Indenture/Mortgage (if the Offered Securities are debt securities/first mortgage bonds);

      (ii) if the Offered Securities are convertible or exchangeable into or exercisable for Common Stock, the shares of Common Stock initially issuable upon conversion, exchange or exercise of such Offered Securities have been duly authorized and reserved for issuance upon such conversion and, when issued upon such conversion, will be validly issued, fully paid and nonassessable; the outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and conform to the description thereof contained in the Prospectus; and the shareholders of the Company have no preemptive rights with respect to the Common Stock; and

      (iii) if the Offered Securities are convertible or exchangeable into or exercisable for debt securities/first mortgage

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bonds, the Indenture/Mortgage has been duly authorized and has been duly qualified under the Trust Indenture Act; the debt securities/first mortgage bonds underlying the Offered Securities have been duly authorized; and when the debt securities/first mortgage bonds underlying the Offered Securities are delivered upon conversion, exchange or exercise of the Offered Securities, the Indenture/Mortgage will have been duly executed and delivered, such debt securities/first mortgage bonds will have been duly executed, authenticated, issued and delivered, will conform to the description thereof contained in the Prospectus and the Indenture/Mortgage and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles and, in the case of first mortgage bonds, will be entitled to the security afforded by the Mortgage.

      (i) If the Offered Securities are Common Stock or are convertible into Common Stock: Except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment.

      (j) If the Offered Securities are Common Stock or are convertible into Common Stock: There are no contracts, agreements or understandings between the Company and any person granting, by reason of the execution of this Agreement, such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act.

      (k) If the Offered Securities constitute Common Stock or are convertible into Common Stock: The outstanding shares of Common Stock are listed on The New York Stock Exchange (the “ Stock Exchange ”) and the Offered Securities (if they are Common Stock) or the Common Stock into which the Offered Securities are convertible (if they are convertible) has been approved for listing on the Stock Exchange, subject to notice of issuance. If the Offered Securities are debt securities/first mortgage bonds or preferred stock, they have been approved for listing on a stock exchange as indicated in the Terms Agreement, subject to notice of issuance.

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      (l) Each of the Federal Energy Regulatory Commission (“ FERC ”) and the New Mexico Public Regulation Commission (“ NMPRC ”) has issued its final order authorizing the issuance and sale of the Offered Securities by the Company; such orders are in full force and effect, are not subject to rehearing or appeal and are sufficient to authorize the transactions contemplated by the Terms Agreement (including the provisions of this Agreement) it being understood that the order dated April 22, 2005, from the FERC, authorizing the issuance of the Securities (effective for a two-year period beginning on the date of the order), is subject to requests for rehearing for the 30-day period commencing on the date of such order; and no other consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by the Terms Agreement (including the provisions of this Agreement) in connection with the issuance and sale of the Offered Securities by the Company, except such as have been obtained and made under the Act and, if the Offered Securities are debt securities/first mortgage bonds, the Trust Indenture Act and such as may be required under state securities laws.

      (m) The execution, delivery and performance of the Indenture/Mortgage (if the Offered Securities are debt securities/first mortgage bonds), the Terms Agreement (including the provisions of this Agreement) and any Delayed Delivery Contracts and the issuance and sale of the Offered Securities and, if the Offered Securities are other than Common Stock, compliance with the terms and provisions thereof, will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (A) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its properties, (B) any agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties of the Company is subject, or (C) the articles of incorporation or by-laws of the Company, except insofar as any such breach or violation or default pursuant to any agreements or instrument described under clause (B) above would not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, and the Company has full power and authority to authorize, issue and sell the Offered Securities as contemplated by the Terms Agreement (including the provisions of this Agreement).

      (n) If the Offered Securities are first mortgage bonds: The mortgage lien created by the Company pursuant to the terms of the Mortgage on the Closing Date will create a valid security interest in the Mortgaged Property (as defined therein) securing payment of the first mortgage bonds and the payment and performance of all of the Company’s other obligations under the Mortgage. On the Closing Date, (i) except as permitted by the Mortgage, such security interest will

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constitute a first, prior and exclusive lien with respect to the Mortgaged Property and (ii) no filings, registrations, recordings, deliveries or other actions on the part of the Company will be required in order to perfect the security interest in such Mortgaged Property created under the Mortgage, other than (A) filings, recordings, deliveries or other actions which, on or before the Closing Date, will have been made by or on behalf of the Company and (B) recordation of the Mortgage in the jurisdictions in which the Mortgaged Property subject thereto is located.

      (o) The Terms Agreement (including the provisions of this Agreement) and any Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company.

      (p) Except as disclosed in the Prospectus, the Company has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects except liens for taxes not yet due and payable that would not materially affect the value thereof or materially interfere with the use made or to be made thereof by it; and except as disclosed in the Prospectus, the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by it.

      (q) The Company possesses adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it and has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company, would individually or in the aggregate have a Material Adverse Effect.

      (r) There is (i) no significant unfair labor practice complaint pending against the Company or, to the best knowledge of the Company, threatened against it before the National Labor Relations Board or any state or local labor relations board, and no significant grievance or more significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company, or, to the best knowledge of the Company, threatened against it and (ii) no significant strike, labor dispute, slowdown or stoppage pending against the Company or, to the best knowledge of the Company, threatened against it except for such actions specified in clause (i) or (ii) above, which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

      (s) Except as otherwise set forth in the Prospectus, the Company has not violated any safety or similar law applicable to its business, nor any federal, state or local law relating to discrimination in

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the hiring, promotion or pay of employees nor any applicable federal or state wages and hours laws, nor any provisions of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), or the rules and regulations promulgated thereunder, which in each case would result in a Material Adverse Effect. Except as otherwise set forth in the Prospectus, the Company is in compliance with all applicable existing federal, state, local and foreign laws and regulations relating to protection of human health or the environment or imposing liability or standards of conduct concerning any Hazardous Material (“ Environmental Laws ”), except for such instances of noncompliance which, either singly or in the aggregate, would not have a Material Adverse Effect. The term “ Hazardous Material ” means (i) any “hazardous substance” as defined by the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, (ii) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material, waste or substance regulated under or within the meaning of any other Environmental Law.

      (t) In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, individually or in the aggregate, have a Material Adverse Effect.

      (u) Except as disclosed in the Prospectus, there are no pending actions, suits or proceedings against or affecting the Company or any of its respective properties that, if determined adversely to the Company, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Indenture/Mortgage (if the Offered Securities are debt securities/first mortgage bonds), the Terms Agreement (including the provisions of this Agreement) or any Delayed Delivery Contracts, or which are otherwise material in the context of the sale of the Offered Securities; and, to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated.

      (v) KPMG LLP (the “ Accountants ”), who have audited certain