April 17, 2002


To:  PNM Resources, Inc. Shareholders

Re:  May 14 Annual Meeting of Shareholders

Dear Shareholder:

On April 11, 2002, we mailed to you our annual report, notice of annual meeting,
proxy statement and proxy card relating to our annual shareholders meeting to be
held on May 14, 2002. In the proxy statement,  we indicated that we had selected
Arthur Andersen LLP as independent  auditors for 2002. We also informed you that
we have issued a request for proposals for auditing  services for 2002. This was
done to identify  alternative  auditors should the Board of Directors  determine
during the year that using  different  auditors would be in the best interest of
the Company and its shareholders.

Since the  completion  and  mailing  of the  proxy  statement,  there  have been
additional significant developments regarding Arthur Andersen.  Because of these
developments,  it is becoming more  probable that the Board will replace  Arthur
Andersen as  independent  auditors  during 2002.  That decision has not yet been
made nor has a decision been made as to who would replace  Arthur  Andersen,  if
they are  replaced.  These  decisions  are not likely to be made until after the
annual  meeting.  When these decisions have been made, we will make the required
filings with the Securities and Exchange Commission.

Due to  this  unique  situation,  we  are  removing  "Proposal  2:  Approval  of
Independent Public  Accountants" from the agenda for the annual meeting.  Unlike
our  usual  practice,  you  will  not be  asked  to  approve  the  selection  of
independent  public  accountants for 2002. Since the votes on this proposal will
not be counted, if you have not already submitted your proxy, you do not have to
vote on Proposal 2 when you do submit your proxy.

Representatives  of Arthur  Andersen  are  expected  to be present at the annual
meeting and will have the  opportunity  to make a  statement  if they so desire.
They also will be available to respond to appropriate questions.

On  behalf of your  Board of  Directors,  management  and  employees,  we deeply
appreciate your continued support.

Sincerely,



Jeffry E. Sterba                            Robert G. Armstrong
Chairman, President & CEO                   Audit and Ethics Committee Chair