SB 235

                                1  SENATE BILL 235
                                2     57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Jeff Steinborn and Antoinette Sedillo Lopez
                                5  and Joanne J. Ferrary and Patricia Roybal Caballero
                                6
                                7
                                8
                                9
                                10  AN ACT
                                11   RELATING TO UTILITIES; ENACTING THE MICROGRID OVERSIGHT ACT;
                                12   REQUIRING THE PUBLIC REGULATION COMMISSION TO PROMULGATE A RULE
                                13   CREATING A RENEWABLE PORTFOLIO STANDARD FOR MICROGRIDS;
                                14   REQUIRING ANNUAL REPORTING FROM MICROGRIDS; PROHIBITING PUBLIC
                                15   UTILITY RATE INCREASES TO COVER THE COSTS ASSOCIATED WITH
                                16   MICROGRID INFRASTRUCTURE DEVELOPMENT.
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                                18   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                19        SECTION 1.     [NEW MATERIAL] SHORT TITLE.--This act may be
                                20   cited as the "Microgrid Oversight Act".
                                21        SECTION 2.     [NEW MATERIAL] DEFINITIONS.--As used in the
                                22   Microgrid Oversight Act:
                                23  A.   "commission" means the public regulation
                                24   commission;
                                25  B.   "electric public utility" means an electric
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                                1    public utility regulated by the commission, pursuant to the
                                2    Public Utility Act, that is not also a cooperative nonprofit
                                3    membership corporation organized pursuant to the Rural Electric
                                4    Cooperative Act;
                                5  C.   "microgrid" means a permanent or temporary
                                6    electric system that:
                                7  (1)   includes a self-source generation
                                8    resource;
                                9  (2)   is capable of generating not less than
                                10   twenty megawatts; and
                                11  (3)   is capable of operating independently or
                                12   connected to the grid;
                                13  D.   "self-source generation resource" means a
                                14   permanent or temporary electricity-generating resource that is
                                15   dedicated to primarily serving the persons connected either
                                16   directly or indirectly through business affiliates to a
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                                17   microgrid; and
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                                18  E.   "zero carbon resource" means an electricity-
                                19   generating resource that emits no carbon dioxide into the
                                20   atmosphere.
                                21        SECTION 3.     [NEW MATERIAL] OVERSIGHT AUTHORITY--POWERS AND
                                22   DUTIES OF COMMISSION.--
                                23  A.   On or before July 1, 2027, the commission shall
                                24   begin promulgating a rule to create a microgrid renewable
                                25   portfolio standard that an owner or operator of a microgrid
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                                1    shall comply with that requires a microgrid to achieve
                                2    incremental benchmarks for electricity generation from
                                3    renewable and zero carbon resources, culminating in one hundred
                                4    percent electricity generation from zero carbon resources by
                                5    2045.
                                6  B.   The commission may:
                                7  (1)   require and collect fees that are used to
                                8    cover the cost of the commission's oversight of compliance with
                                9    the rule promulgated pursuant to Subsection A of this section;
                                10   and
                                11  (2)   prohibit the operation of a microgrid that
                                12   fails to meet the requirements of the rule promulgated pursuant
                                13   to Subsection A of this section.
                                14  C.   Beginning January 1, 2029 and January 1 every
                                15   year thereafter, an owner or operator of a microgrid shall
                                16   issue a report to the commission that includes:
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                                17  (1)   total annual energy generation measured in
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                                18   megawatt-hours;
                                19  (2)   total annual energy generation of
                                20   renewable energy measured in megawatt-hours, organized by
                                21   technology type;
                                22  (3)   the status of compliance with the
                                23   microgrid renewable portfolio standard;
                                24  (4)   total water use, including water used for
                                25   power generation and cooling of facilities directly served by
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                                1    the microgrid; and
                                2  (5)   other information the commission may
                                3    require to verify compliance.
                                4  SECTION 4.     Section 62-17-12 NMSA 1978 (being Laws 2025,
                                5    Chapter 93, Section 6) is recompiled in the Microgrid Oversight
                                6    Act and is amended to read:
                                7  "SELF-SOURCED POWER GENERATION.--
                                8  A.   Persons located within the state may receive
                                9    electricity service using a [qualified] microgrid that may also
                                10   deliver electricity to equipment, lines and facilities operated
                                11   by an electric public utility; provided that the person and the
                                12   electric public utility enter into an electric service
                                13   agreement.
                                14  B.   [This section authorizes] An electric public
                                15   utility, subject to approval by the [public regulation]
                                16   commission, [to] may acquire self-source generation resources
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                                17   or energy and dedicate those resources or energy to retail
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                                18   services, wholesale services or self-generation services, or
                                19   any combination of those services [and rates established for
                                20   those services shall take into account the public interest and
                                21   need, reliability and affordability].     The [public regulation]
                                22   commission shall not approve an acquisition pursuant to this
                                23   section from a facility that does not qualify as a self-source
                                24   generation resource or if the acquisition would increase rates
                                25   to cover the costs associated with microgrid infrastructure
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                                1    development.
                                2  [C.    Energy generated and sold from a self-source
                                3    generation resource that is owned in whole or in part by a
                                4    qualified microgrid shall not be considered retail sales or
                                5    energy as contemplated under Sections 62-15-34, 62-16-4 and
                                6    62-18-10 NMSA 1978 until 2035, whether serving the qualified
                                7    microgrid or purchased in whole or in part by the electric
                                8    public utility to provide service.      By 2045, all of the energy
                                9    that a qualified microgrid generates and sells shall be from
                                10   net-zero carbon resources.     An operator of a qualified
                                11   microgrid shall file reports as required by the public
                                12   regulation commission, certifying the qualified microgrid's
                                13   progress toward and compliance with the net-zero carbon
                                14   resource standard.]
                                15  C.    The owner or operator of a microgrid may
                                16   purchase energy from an electric public utility; provided that
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                                17   the purchase does not increase rates to cover the costs
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                                18   associated with microgrid infrastructure development.
                                19  D.    A person [who] that only provides [self-source
                                20   generation sales] or sells electricity from a self-source
                                21   generation resource to that person's employees or tenants, when
                                22   the service or commodity is not resold to or used by others,
                                23   shall not be considered an electric public utility.
                                24  [E.    As used in this section:
                                25  (1)   "electric public utility" means an
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                                1    electric public utility certified by the public regulation
                                2    commission to provide retail electric service in New Mexico
                                3    pursuant to the Public Utility Act that is not also a
                                4    distribution cooperative utility;
                                5  (2)   "net-zero carbon resource" means an
                                6    electricity generation resource that emits no carbon dioxide
                                7    into the atmosphere, or that reduces methane emitted into the
                                8    atmosphere in an amount equal to no less than one-tenth of the
                                9    tons of carbon dioxide emitted into the atmosphere, as a result
                                10   of electricity production;
                                11  (3)   "qualified microgrid" means a permanent or
                                12   temporary electrical system that:
                                13  (a)   incorporates a microgrid controller;
                                14  (b)   includes a self-source generation
                                15   resource that is capable of generating not less than twenty
                                16   megawatts; and
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                                17  (c)   is capable of operating
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                                18   independently and disconnected from the grid;
                                19  (4)   "self-source generation resource" means a
                                20   permanent or temporary electricity generating resource that is
                                21   dedicated to primarily serving the persons connected either
                                22   directly or indirectly through business affiliates to the
                                23   construction and installation of a qualified microgrid; and
                                24  (5)   "self-source generation sales" means sales
                                25   of electricity to persons or utilities generated from a self-
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                                1    source generation resource.]"
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