HB 309

                                1  HOUSE BILL 309
                                2     57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Nathan P. Small
                                5
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                                10  AN ACT
                                11   RELATING TO TAXATION; AMENDING A SPECIAL METHOD OF VALUATION TO
                                12   INCLUDE PROPERTY USED FOR STORAGE OF ELECTRIC POWER OR ENERGY.
                                13
                                14   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                15        SECTION 1.    Section 7-36-29 NMSA 1978 (being Laws 1975,
                                16   Chapter 165, Section 10, as amended) is amended to read:
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                                17        "7-36-29.    SPECIAL METHOD OF VALUATION--PROPERTY USED FOR
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                                18   THE GENERATION, TRANSMISSION, [OR] DISTRIBUTION OR STORAGE OF
                                19   ELECTRIC POWER OR ENERGY.--
                                20  A.   All property used for the generation,
                                21   transmission, [or] distribution or storage of electric power or
                                22   energy subject to valuation for property taxation purposes
                                23   shall be valued in accordance with the provisions of this
                                24   section.
                                25  B.   As used in this section:
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                                1  (1)   "depreciation" means straight line
                                2    depreciation over the useful life of the item of property;
                                3  (2)   "electric plant" means all property
                                4    situated in this state used or useful for the generation,
                                5    transmission, [or] distribution or storage of electric power or
                                6    energy, but does not include land, land rights, general
                                7    buildings and improvements, construction work in progress,
                                8    materials and supplies and licensed vehicles;
                                9  (3)   "construction work in progress" means the
                                10   total of the balances of work orders for an electric plant in
                                11   process of construction on the last day of the preceding
                                12   calendar year exclusive of land, land rights and licensed
                                13   vehicles;
                                14  (4)   "general buildings and improvements" means
                                15   buildings of the nature of offices, residential housing,
                                16   warehouses, shops and associated improvements in general use by
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                                17   the taxpayer and not directly associated with generation,
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                                18   transmission, [or] distribution or storage of electric power or
                                19   energy;
                                20  (5)   "materials and supplies" means the cost,
                                21   including sales, use and excise taxes, and transportation costs
                                22   to point of delivery in this state, less purchases and trade
                                23   discounts, of all unapplied material and supplies on hand in
                                24   this state as of December 31 of the preceding calendar year;
                                25   [and]
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                                1  (6)   "storage" means energy storage technology
                                2    that converts, stores and returns electricity to alleviate
                                3    disparities between electricity supply and demand, to
                                4    facilitate the dispatching of electricity or to increase
                                5    economic return on the sale of electricity; and
                                6  [(6)] (7)   "tangible property cost" means the
                                7    actual cost of acquisition or construction of property,
                                8    including additions, retirements, adjustments and transfers,
                                9    but without deduction of related accumulated provision for
                                10   depreciation, amortization or other purposes; "tangible
                                11   property cost" excludes the cost of property contributed to, or
                                12   acquired with funds contributed to, a utility by or on behalf
                                13   of a ratepayer or potential ratepayer for the expansion,
                                14   improvement or replacement of property used for the
                                15   transmission or distribution of electric power of the utility.
                                16  C.   An electric plant shall be valued as follows:
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                                17  (1)   the department shall determine the
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                                18   tangible property cost of the electric plant;
                                19  (2)   such tangible property cost shall then be
                                20   reduced by the related accumulated provision for depreciation
                                21   and any other justifiable factors, including functional and
                                22   economic obsolescence, such as the limitation on the use of the
                                23   property based on the available reserves committed to the
                                24   property; and
                                25  (3)   notwithstanding the foregoing
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                                1    determination of value for property taxation purposes, the
                                2    value for property taxation purposes of an electric plant shall
                                3    not be less than twenty percent of the tangible property cost
                                4    of the electric plant.
                                5  D.   The value of construction work in progress shall
                                6    be fifty percent of the amount expended and entered upon the
                                7    accounting records of the taxpayer as of December 31 of the
                                8    preceding calendar year as construction work in progress.
                                9  E.   The value of materials and supplies shall be the
                                10   tangible property cost for such property as of December 31 of
                                11   the preceding calendar year.
                                12  F.   Each item of property having a taxable situs in
                                13   the state and valued under this section shall have its net
                                14   taxable value allocated to the governmental units in which the
                                15   property is located.
                                16  G.   The department shall adopt regulations [under
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                                17   Section 72-31-88 NMSA 1953] to implement the provisions of this
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                                18   section."
                                19  SECTION 2.   APPLICABILITY.--The provisions of this act
                                20   apply to property tax years beginning on or after January 1,
                                21   2027.
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