February 10, 2023

Local choice energy act passes Senate Conservation Committee

A bill that would allow a local government such as a county, municipality or tribe to sell electricity to customers while tapping into utility-owned infrastructure passed the Senate Conservation Committee on a 6-2 party-line vote with Republicans opposing the legislation .

Despite passing its first committee by a wide margin, the Local Choice Energy Act, SB 165, has a long way to go before it can become law.

State Sen. Joseph Cervantes, D-Las Cruces, said that the Local Choice Energy Act will likely need significant rewriting before it can pass the Senate Judiciary Committee, which is the next stop on the bill’s trajectory. Cervantes chairs that committee.

Should the bill become law, the local choice energy provider would secure the electricity—either through generation or purchase—that would then be sent to customers using utility infrastructure. 

The local choice energy provider would also be required to meet renewable portfolio standards that are essentially identical to those outlined in the Energy Transition Act for utilities. 

The bill would only apply to areas currently served by investor-owned utilities, though rural electric cooperatives could choose to opt-in. 

Bill sponsor Sen. Carrie Hamblen, D-Las Cruces, said that nearly three-quarters of New Mexicans receive electricity from what she described as monopoly utilities. She said local, non-profit entities could provide power to customers at a lower cost and, in some places that have local choice energy, that results in 20 percent lower rates.

“It gives communities choices and community control over how their electricity is sourced and priced,” Hamblen said.

She said currently local communities do not have “any control over their policies, their pricing, and no way to stop them from obstructing critical policies like our state landmark community solar program that we’re all very familiar with.”

Related: Community solar appeal: An expensive delay tactic or customer protection?

She said that the Local Choice Energy Act would increase adoption of renewable energy.

Ten states have enacted local choice energy laws and others, including Arizona and Colorado, are looking at following suit.

“I think the main message that I want to convey today is there’s nothing scary about the transition that this particular legislation would take us through,” former New Mexico Public Regulation Commissioner Stephen Fischmann said while acting as an expert witness on Thursday. “There’s nothing scary about community choice. There’s nothing that’s a big risk to ratepayers. In fact, primarily, it presents advantages.”

Fischmann further addressed arguments made by opponents like the Public Service Company of New Mexico (PNM) that local choice energy could reduce grid reliability. He pointed to questions about whether PNM would have enough electricity to meet demand last summer. Fischmann said the claim that it would reduce reliability relies on the assumption that local governments would source less reliable energy.

The proposal is controversial and a representative of the Public Service Company of New Mexico argued that it is a step toward deregulation.

PNM’s chief policy and legal advisor Laura Sanchez said that when referring to the investor-owned utilities as monopoly utilities the proponents forget an important word—regulated. She said the PRC would not have as much oversight over local choice energy providers as it does over investor-owned utilities.

Republicans Steve Neville of Farmington and Gregg Schmedes of Tijeras voted against the bill.