HB 254

                                1  HOUSE BILL 254
                                2     57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Kristina Ortez
                                5
                                6
                                7
                                8
                                9
                                10  AN ACT
                                11   RELATING TO PUBLIC UTILITIES; PERMITTING THE INCORPORATION OF
                                12   THE VALUE OF AVOIDED GREENHOUSE GAS EMISSIONS IN THE PUBLIC
                                13   REGULATION COMMISSION'S UTILITY COST TEST.
                                14
                                15   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                16        SECTION 1.    Section 62-17-4 NMSA 1978 (being Laws 2005,
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                                17   Chapter 341, Section 4, as amended) is amended to read:
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                                18        "62-17-4.    DEFINITIONS.--As used in the Efficient Use of
                                19   Energy Act:
                                20  A.   "achievable" means those energy efficiency or
                                21   load management resources available to the utility using its
                                22   best efforts;
                                23  B.   "advanced conductor" means a conductor that has
                                24   a direct current electrical resistance at least ten percent
                                25   lower than existing conductors of a similar diameter while
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                                1    simultaneously increasing the energy carrying capacity by at
                                2    least seventy-five percent;
                                3  C.   "advanced grid technology" means hardware or
                                4    software technology that increases the efficiency, capacity or
                                5    reliability of existing or new electric transmission and
                                6    distribution systems, facilities and equipment and includes
                                7    advanced conductors, thermal ratings, [grid enhancing] grid-
                                8    enhancing technology and technology determined by the
                                9    commission or the federal energy regulation commission to
                                10   increase the efficiency, capacity or reliability of an existing
                                11   or new transmission facility;
                                12  D.   "advanced power flow controllers" means hardware
                                13   or software technology used to push or pull electric power in a
                                14   manner that balances overloaded lines and underused corridors
                                15   within a distribution or transmission system;
                                16  E.   "commission" means the public regulation
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                                17   commission;
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                                18  F.   "cost-effective" means that the energy
                                19   efficiency or load management program meets the utility cost
                                20   test;
                                21  G.   "customer" means a utility customer at a single,
                                22   contiguous field, location or facility, regardless of the
                                23   number of meters at that field, location or facility;
                                24  H.   "distribution cooperative utility" means a
                                25   utility with distribution facilities organized as a rural
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                                1    electric cooperative pursuant to Laws 1937, Chapter 100 or the
                                2    Rural Electric Cooperative Act or similarly organized in other
                                3    states;
                                4  I.   "dynamic line ratings" means hardware or
                                5    software technology used to appropriately update the calculated
                                6    thermal limits of existing distribution or transmission lines
                                7    based on real-time and forecasted weather conditions;
                                8  J.   "energy efficiency" means measures, including
                                9    energy conservation measures, or programs that target consumer
                                10   behavior, equipment or devices to result in a decrease in
                                11   consumption of electricity and natural gas without reducing the
                                12   amount or quality of energy services;
                                13  K.   "[grid enhancing] grid-enhancing technology"
                                14   means hardware or software technology that reduces congestion
                                15   or enhances the flexibility of electric transmission and
                                16   distribution systems by increasing the capacity of a line or
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                                17   rerouting electricity from overloaded to uncongested lines
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                                18   while maintaining industry safety standards and includes
                                19   dynamic line ratings, advanced power flow controllers and
                                20   topology optimization;
                                21  L.   "large customer" means a customer with
                                22   electricity consumption greater than seven thousand megawatt-
                                23   hours per year or natural gas use greater than three hundred
                                24   sixty thousand decatherms per year;
                                25  M.   "load management" means measures or programs
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                                1    that target equipment or devices to result in decreased peak
                                2    electricity demand or shift demand from peak to off-peak
                                3    periods;
                                4  N.   "program costs" means the prudent and reasonable
                                5    costs of developing and implementing energy efficiency and load
                                6    management programs; [but] "program costs" does not include
                                7    charges for incentives or the removal of regulatory
                                8    disincentives;
                                9  O.   "public utility" means a public utility that is
                                10   not also a distribution cooperative utility;
                                11  P.   "topology optimization" means hardware or
                                12   software technology that identifies reconfigurations of the
                                13   distribution or transmission grid and can enable the routing of
                                14   power flows around congested or overloaded distribution or
                                15   transmission elements; and
                                16  Q.   "utility cost test" means a standard that is met
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                                17   if the monetary costs that are borne by the public utility and
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                                18   that are incurred to develop, acquire and operate energy
                                19   efficiency or load management resources on a life-cycle basis
                                20   are less than the avoided monetary costs associated with
                                21   developing, acquiring and operating the associated supply-side
                                22   resources, which for investor-owned electric utilities may
                                23   incorporate the value of avoided greenhouse gas emissions."
                                24        SECTION 2.    Section 62-17-5 NMSA 1978 (being Laws 2005,
                                25   Chapter 341, Section 5, as amended) is amended to read:
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                                1  "62-17-5.    COMMISSION APPROVAL--ENERGY EFFICIENCY AND LOAD
                                2    MANAGEMENT PROGRAMS--DISINCENTIVES.--
                                3  A.   Pursuant to the findings and purpose of the
                                4    Efficient Use of Energy Act, the commission shall consider
                                5    public utility acquisition of cost-effective energy efficiency
                                6    and load management resources to be in the public interest.
                                7  B.   The commission shall direct public utilities to
                                8    evaluate and implement cost-effective programs that reduce
                                9    energy demand and consumption.
                                10  C.   Before the commission approves an energy
                                11   efficiency and load management program for a public utility, it
                                12   shall find that the portfolio of programs is cost-effective and
                                13   designed to provide every affected customer class with the
                                14   opportunity to participate and benefit economically.     The
                                15   commission shall determine the cost-effectiveness of energy
                                16   efficiency and load management measures using the utility cost
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                                17   test, which for investor-owned electric utilities may
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                                18   incorporate the value of avoided greenhouse gas emissions.     In
                                19   determining life-cycle costs and benefits of energy efficiency
                                20   programs, the commission shall not adjust for taxes when
                                21   selecting a discount rate.    In determining life-cycle costs and
                                22   benefits for energy efficiency and load management programs
                                23   directed to low-income customers, the commission shall either
                                24   quantify or assign a reasonable value to:
                                25  (1)   reductions in working capital;
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                                1  (2)   reduced collection costs;
                                2  (3)   lower bad-debt expense;
                                3  (4)   improved customer service effectiveness;
                                4    and
                                5  (5)   other appropriate factors as utility
                                6    system economic benefits.
                                7  D.   The commission shall act expeditiously on public
                                8    utility requests for approval of energy efficiency or load
                                9    management programs.
                                10  E.   Public utilities shall obtain commission
                                11   approval of energy efficiency and load management programs
                                12   before they are implemented.    Public utilities proposing new
                                13   energy efficiency and load management programs shall, before
                                14   seeking commission approval, solicit nonbinding recommendations
                                15   on the design, implementation and use of third-party energy
                                16   service contractors through competitive bidding on the programs
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                                17   from commission staff, the attorney general, the energy,
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                                18   minerals and natural resources department and other interested
                                19   parties.    The commission may for good cause require public
                                20   utilities to solicit competitive bids for energy efficiency and
                                21   load management resources.
                                22  F.   The commission shall:
                                23  (1)   upon petition or its own motion, identify
                                24   and remove regulatory disincentives or barriers for public
                                25   utility expenditures on energy efficiency and load management
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                                1    measures in a manner that balances the public interest,
                                2    consumers' interests and investors' interests;
                                3  (2)   upon petition by a public utility, remove
                                4    regulatory disincentives through the adoption of a rate
                                5    adjustment mechanism that ensures that the revenue per customer
                                6    approved by the commission in a general rate case proceeding is
                                7    recovered by the public utility without regard to the quantity
                                8    of electricity or natural gas actually sold by the public
                                9    utility subsequent to the date the rate took effect.
                                10   Regulatory disincentives removed through a rate adjustment
                                11   mechanism shall be separately calculated for the rate class or
                                12   classes to which the mechanism applies and collected or
                                13   refunded by the utility through a separately identified tariff
                                14   rider that shall not be used to collect commission-approved
                                15   energy efficiency and load management program costs and
                                16   incentives;
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                                17  (3)   provide public utilities an opportunity to
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                                18   earn a profit on cost-effective energy efficiency and load
                                19   management resource development that, with satisfactory program
                                20   performance, is financially more attractive to the utility than
                                21   supply-side utility resources; and
                                22  (4)   not reduce a utility's return on equity
                                23   based on approval of a disincentive removal mechanism or profit
                                24   incentives pursuant to the Efficient Use of Energy Act.
                                25  G.   Public utilities providing electricity and
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                                1    natural gas service to New Mexico customers shall, subject to
                                2    commission approval, acquire the cost-effective and achievable
                                3    energy efficiency and load management resources available in
                                4    their service territories.    This requirement, however, for
                                5    public utilities providing electricity service, shall not be
                                6    less than savings of five percent of 2020 total retail
                                7    kilowatt-hour sales to New Mexico customer classes that have
                                8    the opportunity to participate in calendar year 2025 as a
                                9    result of energy efficiency and load management programs
                                10   implemented in years 2021 through 2025.    No later than June 30,
                                11   2025, the commission shall adopt, through rulemaking, energy
                                12   savings targets for electric utilities for years 2026 through
                                13   2030 based on cost-effective and achievable energy savings and
                                14   provide utility incentives based on savings achieved.
                                15  H.   A public utility that determines it cannot
                                16   achieve the minimum requirements established in Subsection G of
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                                17   this section shall report to the commission on why it cannot
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                                18   meet those requirements and shall propose alternative
                                19   requirements based on acquiring cost-effective and achievable
                                20   energy efficiency and load management resources.    If the
                                21   commission determines, after hearing, that the minimum
                                22   requirements of Subsection G of this section exceed the
                                23   achievable amount of energy efficiency and load management
                                24   available to the public utility or that the program costs of
                                25   energy efficiency and load management to achieve the minimum
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                                1    requirements of Subsection G of this section exceed the program
                                2    costs funding established in Subsection A of Section 62-17-6
                                3    NMSA 1978, the commission shall establish lower minimum energy
                                4    savings requirements for the utility based on the maximum
                                5    amount of energy efficiency and load management that it
                                6    determines can be achieved."
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