January 21, 2020

Clean energy top of mind in 2020 legislative session

New Mexico State Capitol (CC BY-ND 2.0) by Mr.TinDC

As the legislative session gets underway in Santa Fe this week, Gov. Michelle Lujan Grisham selected a handful of bills aimed at expanding the state’s clean energy economy to be considered during the short session this year.

Here’s a preview of the clean energy bills that made it on to the governor’s call this session.

Reinstating the solar tax credit

Sen. Majority Whip Mimi Stewart, D-Albuquerque, prefiled SB 29, the Solar Market Development Income Tax. It’s the fifth time legislators will consider the bill, which would reinstate a solar tax credit that expired in 2016. Fellow Democrat Rep. Matthew McQueen, who represents parts of Bernalillo and Santa Fe county, is the House sponsor of the bill.

The legislation would create an income tax credit worth 10 percent of the cost of installation for solar thermal or solar photovoltaic systems for residential, business or agriculture applications. Solar thermal systems use solar energy for heating or cooling, and for water heaters. Solar photovoltaic systems, better known as PV solar systems, use solar energy for electricity generation, and is often referred to as rooftop solar.

The bill caps tax credits at $6,000 per person, and $10 million total per calendar year. The legislation would require individuals or businesses to apply for the tax credit in the tax year during which the system was purchased, and it specifies that only certified solar thermal or photovoltaic systems qualify. It also directs the state Energy, Minerals and Natural Resources Department (EMNRD) to develop rules for certifying solar systems for tax credit eligibility.

The bill is designed to increase the installed base of solar energy systems across the state, and is supported by clean energy advocates. The New Mexico Solar Energy Association president Athena Christodoulou said the association supports all legislation that promotes clean energy, and voiced support for the bill. But Christodoulou said there was room for improvement in the legislation.

“The economics for solar electric systems pencil out for many homeowners even without the 10 percent tax credit, but this bill will make it even more enticing, and make it work for those with smaller homes or bills,” Christodoulou said in an email. “Solar thermal, however, reduces greenhouse gas emissions from our buildings better than PV because it reduces our natural gas use.”

Christodoulous said she’d like to see the solar thermal tax credit bumped up to 20 percent, because those systems tend to cost more and don’t offer homeowners quite as much of a return on their investment — even though these systems help reduce greenhouse gas emissions.

“Bumping solar thermal up to 20 percent tax credit while keeping the $6,000 limit for each system would get our plumbers and HVAC companies involved and develop that market,” Christodoulou said.

The bill passed both the House and the Senate in 2016, the year in which the original tax credit was set to expire. Then Gov. Susana Martinez pocket-vetoed the bill, meaning she didn’t sign the bill into law before the deadline.

Gov. Michelle Lujan Grisham voiced her support for the tax credit during the last legislative session, but the bill died in the House.

Electric Vehicle Tax Credit

Republican Sen. Pat Woods, R-Broadview, is sponsoring SB 2, the Electric Vehicle Tax Credit, for this legislative session.

The bill would create a $2,500 tax income tax credit for consumers who purchase or lease an electric vehicle. The credit would double to $5,000 for low-income consumers making below $50,000 a year, Woods told NM Political Report. Tax credits are capped at $10 million per fiscal year.

The legislation will also propose a $300 tax credit for the installation of at-home charging infrastructure, capped at $1 million per fiscal year.

“This bill is getting a fledgling industry going,” Woods said. “I know there are some electric cars out there already, but I think it will help put it in the price range for more people.”

Woods, who sits on the board of the Farmers Electric Cooperative servicing Curry, DeBaca, Guadalupe, Harding, Quay, Roosevelt and San Miguel counties, told NM Political Report electric utilities are supportive of electric vehicles and EV charging infrastructure.

SB 2 would also impose an additional registration fee for owners of electric or plug-in hybrid cars. The fee would range from $20 to $50 dollars annually, depending on the type of vehicle. That money would then be put into the the motor vehicle suspense fund, which goes towards state road maintenance.

The additional registration fee for electric and hybrid vehicles mirrors SB 20, prefiled by Sen. Bill Tallman, R-Albuquerque, though Tallman’s proposed registration fees range from $50-$100 per year.

Expanding the electric vehicle market in the state is in line with the governor’s goals to reduce the state’s transportation emissions, which accounts for 25 percent of the state’s greenhouse gas emissions. Lujan Grisham joined New Mexico to the Regional Electric Vehicle Plan for the West, a coalition of Western states that have pledged to expand electric vehicle charging infrastructure along the major transportation corridors in each state to help promote the electric vehicle market. And she announced in September 2019 her intentions to implement more stringent clean car standards as federal car emission standards were rolled back.

The state is also moving its 2,000 strong vehicle fleet to electric and hybrid vehicles. Last year’s budget bill allocated $1 million for purchasing electric vehicles, while the state General Services Department has allocated some of its $2.5 million budget for purchasing hybrid vehicles.

PRC Reform

Las Cruces Democratic Rep. Nathan Small will be introducing legislation to reform the Public Regulation Commission (PRC), the political body that regulates the state’s utilities, including investor-owned PNM. While Small hasn’t filed the legislation yet, the bill is expected to make structural changes to the PRC, possibly including establishing additional qualification requirements for commissioners.

“Our good government efforts are focused on modernizing the structure of the PRC and ensuring that we are ready for the future,” Small told NM Political Report. “This reform proposal will result in a highly professionalized and efficient organization, with the technical expertise to benefit public safety, the environment, and economic development.”

The PRC fell out of favor with Lujan Grisham after commissioners challenged the idea that the Energy Transition Act (ETA) should apply to PNM’s plan to close down the coal-fired San Juan Generating Station, spurring Lujan Grisham and others to ask the Supreme Court to force the commission to apply the ETA to the case. The Supreme Court announced last week it will hear the case beginning Jan. 29.

“It’s clear that reform is urgently needed to help restore sound decision-making to the Public Regulation Commission,” Lujan Grisham said in August 2019. “If our goal is to protect ratepayers, create economic opportunities for New Mexicans and take advantage of our state’s renewable energy potential, we have too much at stake to sit on the sidelines.”

During last year’s session, both the House and the Senate passed a resolution proposing a constitutional amendment that would see the PRC transition from a five-member elected body to a three-member body, with commissioners appointed by the governor and approved by the Senate. New Mexico residents will vote on the proposal on the November ballot.

IRB authority for transmission lines

Sens. Steve Neville, R-Aztec, and Jacob Candelaria, D-Albuquerque, have introduced SB 6, a bill that would enable counties to issue industrial revenue bonds (IRBs) for funding transmission line projects across the state. Expanding transmission lines for electricity throughout the state will help bring more renewable energy generation to market in New Mexico, and help the state reach the ETA’s goal of zero carbon emission power generation by 2050.

New Mexico will need to capitalize on its wind and solar assets for clean energy power generation, but more electricity transmission infrastructure will be needed to bring that power to residents across the state.

SB 6 would amend the Industrial Revenue Bond Act to expand projects that are eligible for funding using bonds to include transmission lines. The bill would also require the developer of new transmission lines to pay to the state 5 percent of the total amount of in-lieu tax payments made to the county or local government for the project. Fees collected on transmission line projects will then be deposited into the state’s general fund.

The legislation comes after a group of energy stakeholders, and Lujan Grisham, criticized the PRC’s handling of a transmission line case with PNM last year. PNM attempted to charge ratepayers more money to help pay for a new $85 million, 345 kV transmission line the utility is building to serve a data center for Facebook.

PRC Hearing Examiner Carolyn Glick determined that PNM could not raise customer rates for the project, because the transmission line would only benefit two customers: Facebook and PNM wholesale transmission customer Avangrid Renewables. Consequently, the PRC decided Facebook would need to cover half of the cost of the transmission line.

PNM, the Coalition for Clean Affordable Energy and New Mexico Industrial Energy Consumers asked for the PRC to reopen the case. PNM argued the transmission is a “network upgrade” that would benefit all customers, not just Facebook and Avangrid. But the PRC unanimously voted to not reopen the case, based on a technicality.

A spokesperson for Lujan Grisham told the Associated Press at the time the decision could have “a real chilling effect” on new businesses coming to the state.

Community Energy Efficiency Block Grants

Albuquerque Democrat Sen. Gerald Ortiz y Pino will introduce a bill to create an Energy Efficiency Block Grant Program. The program would administer grants to low-incoming residents to support upgrades to residences aimed at improving energy efficiency in homes and reducing utility bills. The program would be managed by the Energy Minerals and Natural Resources Department (EMNRD).

The legislation will ask for $2.5 million appropriation to support the block grant program.

The details of the legislation are still unknown, but the state has adopted a number of energy conservation and efficiency programs in the past. EMNRD has managed a Sustainable Building Tax Credit since 2007, designed to encourage the design and construction of energy efficient, sustainable buildings for commercial and residential use. The last update to that law was in 2015, during which the legislature reduced the amount of the tax credit, capped eligibility for the program at 2,000 square feet for residences, and added water conservation requirements.

It’s unclear what type of parameters and requirements the new legislation will include.