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PNM Resources acquires Texas coal plant

19 April 2006 — PNM Resources completed its acquisition of the Twin Oaks Power facility April 18 — the latest addition to the company’s merchant generation fleet.

PNM Resources purchased Twin Oaks Power from Sempra Generation, a subsidiary of Sempra Energy, for $480 million in cash and arranged for bridge financing to close the transaction. Permanent financing will come through a mix of long-term debt and equity. The amount of equity issued will be sufficient to maintain the current investment-grade ratings of PNM Resources and its New Mexico utility, PNM. The company expects the issuance to be completed later this year.

Twin Oaks Power is considered to be one of the cleanest coal-fired power plants in Texas. The plant uses fluidized bed combustion technology and limestone injection to reduce nitrogen oxide and sulfur dioxide emissions.
The entire 305-MW output of Twin Oaks, which is located 150 miles south of Dallas, is sold under an existing contract through September 2007. When that contract expires, it will be replaced with another existing contract for 75 percent of the plant’s capacity through 2010.

Earlier this month, the Luna Energy Facility in southern New Mexico went online and added 190 MW — the company’s share of the 570-MW plant — to PNM Resources’ merchant generation capacity. Luna is a combined cycle facility and PNM Resources’ most efficient natural gas plant. The additions of Twin Oaks and Luna bring PNM Resources’ total generation resources to 2,840 MW.