2002 Legislative Session
There were exciting things afoot at the Legislature this year, especially when you consider that the New Mexico Public Regulatory Commission is also pursuing renewable energy related measures.
In summary, the bills that passed 1) gave good tax incentives, including gross receipts, production, and capital cost incentives for large scale renewable energy project, 2) Allowed the use of industrial revenue bonds for new electricity generation projects, 3) Allow more flexibility in the use of alternative fuels by the state, and 4) Created a committee to study the impacts of new power plants.
All in all, given the history of such legislation in New Mexico, we think this was a pretty good year. We didn't see everything we hoped for make it through, but what did make it is significant.
Thanks to everyone who took the time to call their legislators and helped to get some of these bills through!
Quick summary of the bills and their final status:
- HB 233 (Lujan), SB 187 (Beffort), SB 264 (McSorley): Corporate Production and Investment Tax Incentives for utility scale renewables. Status: Passed both houses and was signed into law by the Governor!
- SJM 26 (McSorley): Memorial directing that a legislative interim committee be tasked to consider ways to foster the use of alternative energy: Status: Passed Senate - Did not make it to the floor in the Senate; stuck in House Energy & Natural Resources
- SB18 (Feldman): Alternative Fuels: Encourage more flexibility in use of alternative fuels by the state. Status: Passed both houses and was signed into law by the Governor!
- SJM18 (Rawson): Improving energy efficiency requirements in building codes. Status: Did not pass either house: held up in Senate Public Affairs, apparently after being sent back following amendments.
- HB 143 (Gubbels): SB 46 (Lyons): HB 373 (Lujan): Allowing counties to use industrial revenue bonds to finance new generation facilities. Status: HB 143, which lumped together HB 143, 373, and 377. Passed both houses and was signed into law by the Governor!
- HB 377 (Lujan): SB 376 (Lyons): Wind generation equipment gross receipts exclusion. See HB 143 above.
- HB 378 (Stewart): Prevent the Public Utility Act from being repealed, i.e. allowing the PRC to continue regulating electricity generation in New Mexico. Note, however, that this bill still allows the schedule repeal in July 2003 of several other acts related to telecommunications to go forward. CCAE's support of this bill does not imply support for repeal of these other acts. Status: Remained stuck in House Rules and Order of Business Committee.
- SB 381 (Nava): Allowing Schools to include geothermal heating and cooling in capital outlay costs. Status: Made Senate Calendar, apparently did not get voted on.
- SB 326 (Adair): Would appropriate $150,000 to the Energy, Minerals and Natural Resources Department to study the use of wood biomass for power generation. Status: Never made it out of Senate Finance Committee
- SB 410 (McSorley):Sustainable Energy for Homes without Basic Services. Status: Never made it out of Senate Finance Committee
- HJM 98 (Tripp), SJM 96 (Sanchez): Creation of Interim Committee to Study the Impacts of Power Plants. Status: HJM 98 Passed both Houses
Bill Descriptions, Discussion, and Links to Bill Texts:
Production and investment Tax Credit Bills large scale renewables:
Final Status: SB 187 passed both houses
Committee History: SB-187 have passed Senate Conservation Committee, Senate Finance, House Business and Industry, House Taxation and Revenue, and is now on the House Calendar. HB 233 has passed Business and Industry and House Taxation and Revenue successfully, and is now listed as in House Appropriations and Finance. HB 233 passed Business and Industry, House Taxation and Revenue, appears to have been withdrawn from House Appropriations and Finance and is hopefully also headed for a floor vote. SB 264 passed Senate Conservation Committee and is now officially listed as being in Senate Finance.
Discussion:
1) These would create a 1cent/kwh production tax credit, for corporate tax filings only, for which a qualifying facility can be eligible for ten consecutive years from the initiation of production, for the first 400,000 megawatt hours in each year.
2) Applicable to generation from solar light, solar heat, or wind (the bill by McSorley allows any renewable energy source designated by the state, which could include, for example, biomass fueled generation).
3) The installation must be a least 20 megawatts in size.
4) The total amount (that is, the sum total in the State, not a particular installation) is limited to 800,000 megawatt hours per year. Eligibility is assigned on a first come, first serve basis.
5) Excess credits (credits exceeding the actually tax liability of a facility) may be carried over for up to five years.
6) $100,000 is appropriated to oversee certification.
Analysis: What about the 400,000 and 800,000 megawatt hour limitations? Are these problematic? The 400,000 megawatt limit is probably not a problem: A one megawatt turbines with a capacity factor of 30% (that is, the wind blows 30% of the time), would produce about 2628 megawatt hours. Dividing this into 400,000 we find that this tax credit would cover the yearly production of a 152 megawatt farm (152 turbines). This would be large farm.
On the other hand, the 800,000 limit on the total eligible amount essentially limits the total to a little over 300 megawatts. It is therefore conceivable that one company could tie up all the credits.
Another problematic feature may be the 20 megawatt minimum. Although this is good from the standpoint of encouraging large projects, it seems unfair to Coops and other smaller type organizations that may only have the money to develop smaller projects, and there are also many wind and solar sites out there that are intrinsically limited to smaller amounts (limited land area). Moreover, solar is expensive, and developing a 20 megawatt solar plant is likely to be prohibitive. (Note: CCAE has made unsuccessful attempts both before and during the session to lower this limit) .
Finally, the proposed credits are perhaps a little weak - the federal government is considering a 1.8 cent/kwh production tax credit, up from the previous 1.5 cent/kwh credit that was in effect until this year.
Committee to Study Alternative Energy
- SJM 26 (McSorley)
Final Status: Passed Senate - Did not make it to the floor in the Senate; stuck in House Energy & Natural Resources
Committee History: Passed Senate Rules Committee, Senate Conservation, now in House Energy & Natural Resources
Discussion: A bill requesting the New Mexico Legislative council to direct the appropriate legislative interim committee to study means to foster use of alternative energy resources. The New Mexico Solar Energy Association has been advocating a memorial to create a such committee, which may have led to this memorial. Such a committee would be a welcome addition to the legislatures activities.
Alternative Fuels:
- SB18 (Feldman)
Final Status: Passed both Houses
Status: Passed through Senate Conservation, Corporations & Transportation, Finance, House Government and Urban Affairs, House Appropriations and Finance, and Passed the House 61-0!
Discussion: A bill to encourage more flexibility in use of alternative fuels by the state: Few conversions have occurred so far in part due to lack of incentives. This bill provides another way to encourage their use.
Energy Efficiency in Building Codes:
- SJM18 (Rawson) - Building Energy Codes
Final Status: Did not pass either house: held up in Senate Public Affairs, apparently after being sent back following amendments
Discussion: This is a memorial to encourage the construction industry to examine and strengthening energy efficiency codes. The Construction Industries Division is already considering strengthening the codes, and specifically, blending the international code with the state code. This memorial is considered a way to reinforce these proceedings. Details about mechanical and plumbing aspects are being discussed at present. Considerations are also focusing on whether to follow the 1992 "green book" (the one that some green builders want) and the 2000 "yellow book" (which is not substantially different, although info taking into passive solar is missing, and it has stronger perimeter and light fixture insulation requirements, so some builders may oppose for reasons of cost)
Committee History: Has passed Senate Rules, Public Affairs, expected to be heard in Senate Conservation soon. Senator Rawson amended the memorial before it passed the first committee to include the fact that the 1992 Energy Policy Act required states to adopt the ASHRAE 90.1 energy code for commercial buildings. He also added a section which means that the current 1992 code is acceptable.
Electrician Certification:
- HB 136 (Godbey): Electric Certificates of Competence
Final Status: Passed House, made it on Senate Calendar but apparently didn't get voted on.
Discussion: A bill that seems to be strengthening requirements for journeyman electricians. We have not evaluated the motivations and impact of this bill yet: This bill is not listed yet on the quick summary above.
Gross Receipts Tax Exemptions for New Generation Facilities:
Final Status: HB 143, which lumped together HB 143, 373, and 377, passed both Houses
Committee History:SB-46 passed Senate Conservation, now on House Calendar, and HB-143 passed Business and Industry successfully. HB 373 passed House Business and Industry. HB 143 passed House Taxation and Revenue. HB 143, 373, and 377 where lumped into "House Taxation & Revenue Substitute for HB 143, 373, and 377": http://www.legis.state.nm.us/Sessions/02%20Regular/bills/house/HB0377TRS.html, and are on the Senate Calendar.
Discussion: These appear to mostly deal with extending the number of counties which can issue industrial revenue bonds to finance new generation facilities, and we believe that some or all are specifically motivated to support wind power development.
Gross Receipts Tax Exclusions for Wind Equipment:
- HB 377 (Lujan) Wind Generation Equipment Exclusion - Specifically, amended the definition of "construction materials" to make wind turbine nacelles, rotor, and related equipment installed on a tower exempt from gross receipts tax.
- SB 376 (Lyons) Wind Generation Equipment Exclusion (initially the same as HB 377)
Final Status: HB 143, which lumped together HB 143, 373, and 377, passed both Houses
Committee History: SB-376 going to Senate Conservation Committee soon. HB 377 passed House Taxation and Revenue and House Business and Industry. HB 143, 373, and 377 where lumped into "House Taxation & Revenue Substitute for HB 143, 373, and 377": http://www.legis.state.nm.us/Sessions/02%20Regular/bills/house/HB0377TRS.html and are on the Senate Calendar.
Preventing Repeal of the Public Utilities Act (Keeping the PRC in business):
- HB 378 (Stewart)
Final Status: Remained stuck in House Rules and Order of Business Committee.
Committee History: In House Rules and Order of Business Committee
Discussion: This bill prevents the Public Utility Act from being repealed, which is scheduled to take place on July 1, 2003. If repealed, the New Mexico Public Regulatory Commission would no longer regulate electricity generation in New Mexico, and this would not be a good thing for clean energy development in New Mexico. Note, however, that this bill still allows the schedule repeal on July 1, 2003 of several other acts related to telecommunications to go forward. CCAE's support of this bill does not imply support for repeal of these other acts. Hopefully, a separate bill in either this or next years session will address these concerns, which do not fall under CCAE's purview.
Geothermal Heat and Cooling for schools:
- SB 381 (Nava)
Final Status: Made Senate Calendar, apparently did not get voted on.
Discussion: Allowing Schools to include geothermal heating and cooling in capital outlay costs:
Committee History: Passed Senate Conservation, Senate Education, now on Senate Calendar.
Wood Biomass for Power Generation
- SB 326 (Adair)
Final Status: Never made it out of Senate Finance Committee
Discussion: Would appropriate $150,000 to the Energy, Minerals and Natural Resources Department to study the use of wood biomass for power generation.
Committee History: Passed Senate Conservation, now in Senate Finance
Sustainable Energy for Homes without Basic Services
- SB 410 (McSorley)
Final Status: Never made it out of Senate Finance Committee
Discussion: Would appropriate $150,000 to the Energy, Minerals and Natural Resources Department in fiscal year 2003 to contract for services with a statewide energy and utility advocacy organization to assist in the provision of sustainable energy to low-income communities and families in locations currently not connected to regular energy and utility services.
Committee History: Passed Senate Public Affairs Committee, now in Senate Finance.
Creation of Interim Committee to Study the Impacts of Power Plants
Final Status: HJM 98 Passed both Houses
