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HOUSE BILL 13
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Dayan Hochman-Vigil
AN ACT
RELATING TO ELECTRIC PUBLIC UTILITIES; ESTABLISHING
DISTRIBUTION SYSTEM PLANNING REQUIREMENTS; REQUIRING
DISTRIBUTION SYSTEM PLANS AND ENERGIZATION REPORTS; REQUIRING
BENEFICIAL ELECTRIFICATION PLANS; PROVIDING FOR ELECTRIC PUBLIC
UTILITIES TO RECOVER COSTS FOR BENEFICIAL ELECTRIFICATION
PROGRAMS; REQUIRING ANNUAL REPORTS ON BENEFICIAL
ELECTRIFICATION; ESTABLISHING THE VIRTUAL POWER PLANT PROGRAM;
AUTHORIZING THE PUBLIC REGULATION COMMISSION TO ADOPT RULES TO
ESTABLISH TARIFFS AND PERFORMANCE TARGETS; ALLOWING FOR
COMPENSATION TO ELECTRIC PUBLIC UTILITY CUSTOMERS FOR
PARTICIPATION IN THE VIRTUAL POWER PLANT PROGRAM AND UTILITY
COST RECOVERY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new Section 62-8-12.1 NMSA 1978 is enacted
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to read:
"62-8-12.1. [NEW MATERIAL ] GRID PLANNING--DISTRIBUTION
SYSTEM PLANS--ENERGIZATION REPORTS--RULES.--
A. In accordance with furnishing adequate,
efficient and reasonable service, an electric public utility
shall:
(1) conduct sufficient advanced planning,
engineering and construction of distribution system hosting and
load capacity and preorder transformers and other needed
equipment so that customers can be energized and interconnected
without substantial delay; and
(2) upgrade the electric public utility's
electrical distribution systems as needed and in time to allow
for achievement of federal, state, regional and local air
quality and decarbonization standards, plans and regulations,
including vehicle emissions standards.
B. The commission shall finalize a rule no later
than December 1, 2025 that establishes a staggered filing
schedule as determined by the commission. The distribution
system plans shall be filed with the commission no earlier than
July 1, 2026 and no later than July 1, 2027. After filing the
initial distribution system plan, an electric public utility
shall file subsequent distribution system plans with the
commission every three years. A distribution system plan shall
include:
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(1) detailed mapping of distribution hosting
capacity and available load capacity and underlying data with
appropriate safeguards to protect confidentiality and critical
infrastructure;
(2) proposed reasonable average and maximum
target energization time periods that may vary depending on the
nature of the work required and recognize factors beyond the
electric public utility's control, along with a record of
recent energization time periods for various customer rate
classifications and voltage service levels;
(3) a proposed dollar per kilowatt
interconnection fee that new residential distributed generation
customers pay to protect the customers from incurring
unreasonable costs that result from the timing of the
customer's interconnection request and to help defray the costs
of interconnecting new distributed generation systems to the
distribution system;
(4) optional flexible interconnection or
energization tariffs;
(5) a ten-year planning horizon and
corresponding five-year budget; and
(6) a plan to use distributed energy resources
to avoid or minimize the need for traditional distribution
system upgrades where feasible.
C. An electric public utility shall make the
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information in Paragraph (1) of Subsection B of this section
available online and accessible to customers, stakeholders and
verified third parties and update the information at least
quarterly.
D. An electric public utility may apply to the
commission, at the same time as submitting a distribution
system plan, for approval of a tariff rider or a change in base
rates, or both, to recover the electric public utility's
distribution system plan costs.
E. In a distribution system plan and an application
for a general rate case, an electric public utility shall
report on the electric public utility's current qualified
staffing levels for each job classification needed to achieve
the policies and requirements of this section. The utility
shall:
(1) include a review of anticipated needs for
future utility, affiliate and contractor personnel; and
(2) provide a copy of the report to the
workforce solutions department.
F. The commission shall approve a distribution
system plan, including associated costs, that:
(1) is reasonably designed to maximize
benefits and minimize costs;
(2) is reasonably expected to allow the
electric public utility to achieve the energization time
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periods established by the commission pursuant to an electric
public utility's proposed energization time periods and the
requirements of Subsection A of this section; and
(3) is reasonably expected to allow the
electric public utility to recover the costs.
G. An electric public utility shall resubmit a
distribution system plan for commission approval as determined
by the commission.
H. An electric public utility shall provide an
energization report to the commission at least annually that
contains the following:
(1) the average, median and standard deviation
time periods between receiving an application for energizing an
electrical service and achieving energization;
(2) explanations for energization time periods
that exceed the most recent maximum target energization time
periods approved by the commission; and
(3) a strategy for meeting any missed targets
in the future.
I. The commission shall periodically update the
energization time periods and energization report requirements
to reflect changed circumstances and new information.
J. The commission may require an electric public
utility to take the remedial actions necessary to achieve
energization time periods.
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K. An electric public utility's contract for new
construction required to meet the provisions of this section
shall contain provisions stating that:
(1) the minimum wages and fringe benefits to
be paid to various classifications of laborers and mechanics
shall be based upon the wages and benefits determined by the
director of the labor relations division of the workforce
solutions department pursuant to the Public Works Minimum Wage
Act; and
(2) the electric public utility and any
contractor or subcontractor to the contract shall follow the
provisions of the Public Works Minimum Wage Act and any rules
adopted pursuant to that act.
L. As used in this section:
(1) "beneficial electrification" means
converting the energy source of a customer's end use from a
non-electric fuel source to a high-efficiency electric source
or avoiding the use of non-electric fuel sources in new
construction or industrial applications;
(2) "distributed energy resource" means
distributed generation, energy storage systems, electric
vehicles, microgrids, fuel cells and demand-side management
measures, including energy efficiency, demand response and
demand flexibility that are deployed at the distribution grid
level on either the customer or utility side of the meter;
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(3) "electric public utility" means an
electric public utility certified by the commission to provide
retail electric service in New Mexico pursuant to the Public
Utility Act that is not also a distribution cooperative
utility;
(4) "energization" or "energize" means
connecting new customers to the electric distribution system,
establishing adequate load capacity to provide service for a
new customer or upgrading electrical capacity to provide
service to an existing customer. "Energization" or "energize"
does not mean activities relating to interconnecting
electricity supply resources;
(5) "energization time period" means the
elapsed time beginning when the electric public utility
receives a substantially complete energization project
application and when the electric service is installed and
energized;
(6) "flexible interconnection or energization
tariff" means a way to energize a new load or interconnect a
distributed energy resource to an electric public utility's
distribution system that is governed by a set of rules and
requirements and includes an agreement for curtailing the
import or export of electricity from and to the distribution
system at certain times or operation conditions by use of
certified power control systems or other load management
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technologies;
(7) "hosting capacity" means the amount of
generation that can be interconnected to the electric public
utility's distribution system at a given time and at a given
location under existing electrical grid conditions and
operations without adversely impacting safety, power quality,
reliability or other operational criteria and without requiring
electric infrastructure upgrades; and
(8) "load capacity" means the amount of load
that can be added to the distribution system at a given time
and at a given location under existing grid conditions and
operations without adversely impacting safety, power quality,
reliability or other operational criteria and without requiring
electric infrastructure upgrades subject to transmission system
constraints."
SECTION 2. Section 62-17-4 NMSA 1978 (being Laws 2005,
Chapter 341, Section 4, as amended) is amended to read:
"62-17-4. DEFINITIONS.--As used in the Efficient Use of
Energy Act:
A. "achievable" means those energy efficiency or
load management resources available to the utility using its
best efforts;
B. "beneficial electrification" means converting
the energy source of a customer's end use from a non-electric
fuel source to a high-efficiency electric source or avoiding
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the use of non-electric fuel sources in new construction or
industrial applications;
C. "beneficial electrification plan" means an
electric public utility's plan to increase beneficial
electrification in the residential, commercial, industrial or
agricultural sectors for purposes other than transportation;
[B.] D. "commission" means the public regulation
commission;
[C.] E. "cost-effective" means that the energy
efficiency or load management program meets the utility cost
test;
[D.] F. "customer" means a utility customer at a
single, contiguous field, location or facility, regardless of
the number of meters at that field, location or facility;
[E.] G. "distribution cooperative utility" means a
utility with distribution facilities organized as a rural
electric cooperative pursuant to Laws 1937, Chapter 100 or the
Rural Electric Cooperative Act or similarly organized in other
states;
H. "electric public utility" means an electric
public utility certified by the commission to provide retail
electric service in New Mexico pursuant to the Public Utility
Act that is not also a distribution cooperative utility;
[F.] I. "energy efficiency" means measures,
including energy conservation measures, or programs that target
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consumer behavior, equipment or devices to result in a decrease
in consumption of electricity and natural gas without reducing
the amount or quality of energy services;
[G.] J. "large customer" means a customer with
electricity consumption greater than seven thousand megawatt-
hours per year or natural gas use greater than three hundred
sixty thousand decatherms per year;
K. "low-income customer" means a residential
customer of an electric public utility with an annual household
income at or below eighty percent of area median income, as
published by the United States department of housing and urban
development, or who is enrolled in a low-income program
facilitated by the state or a low-income energy program led by
the qualifying utility or as determined by the commission;
[H.] L. "load management" means measures or
programs that target equipment or devices to result in
decreased peak electricity demand or shift demand from peak to
off-peak periods;
[I.] M. "program costs" means the prudent and
reasonable costs of developing and implementing energy
efficiency and load management programs, but "program costs"
does not include charges for incentives or the removal of
regulatory disincentives;
[J.] N. "public utility" means a public utility
that is not also a distribution cooperative utility; and
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[K.] O. "utility cost test" means a standard that
is met if the monetary costs that are borne by the public
utility and that are incurred to develop, acquire and operate
energy efficiency or load management resources on a life-cycle
basis are less than the avoided monetary costs associated with
developing, acquiring and operating the associated supply-side
resources."
SECTION 3. A new section of the Efficient Use of Energy
Act is enacted to read:
"[NEW MATERIAL] BENEFICIAL ELECTRIFICATION PLANS--
PROGRAMS--APPLICATIONS--RULES--REPORTING--COST RECOVERY.--
A. On or before January 30, 2026, the commission
shall direct electric public utilities to file beneficial
electrification plans that support voluntary customer adoption
of measures for beneficial electrification and adopt rules to
establish beneficial electrification targets for 2032 that
maximize greenhouse gas emissions reductions while maintaining
fair and reasonable rates and system reliability. The
commission shall consider the customer base within each
electric public utility that may adopt heat pumps when
determining reasonable targets. The commission shall establish
a schedule by which beneficial electrification targets will be
set for each subsequent six-year period. Beneficial
electrification targets shall be consistent with any greenhouse
gas emissions reductions adopted by the state by rule or law.
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B. At least every three years or as directed by the
commission, an electric public utility shall file an
application with the commission for a beneficial
electrification plan in conjunction with other plans filed with
the commission pursuant to rules adopted pursuant to Section
62-17-5 NMSA 1978. Beneficial electrification programs shall
be offered to residential and commercial customers and may also
be available to industrial and agricultural customers. An
electric public utility shall incorporate a public stakeholder
process to inform the program design of a beneficial
electrification plan.
C. When considering beneficial electrification plan
applications for approval, the commission shall evaluate
whether the plan:
(1) demonstrates that the proposed beneficial
electrification programs maximize electric public utility and
customer benefits at the lowest reasonable cost while
maintaining fair and reasonable rates;
(2) provides every affected customer class
with the opportunity to participate and benefit;
(3) complements applicable local, county,
state and federal incentives or tax credits for similar
measures;
(4) is reasonably expected to achieve the
beneficial electrification targets and projected greenhouse gas
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emissions reductions;
(5) includes beneficial electrification
programs targeted to low-income households with at least twenty
percent of the electric public utility's total beneficial
electrification program funding designated for programs that
serve low-income households;
(6) includes projected reductions in
greenhouse gas emissions and avoided costs of greenhouse gas
emissions, using the cost of methane and carbon dioxide
emissions from the most recent assessment of global social cost
of methane and carbon dioxide by the federal government;
provided that the cost shall not be less than those adopted as
of December 31, 2024, and using a discount rate from the
assessment of global social cost of two and one-half percent or
less;
(7) includes programs or rates reasonably
expected to improve the electric public utility's electrical
system efficiency, the integration of variable resources,
operational flexibility and system utilization during off-peak
hours, such as load management programs or dynamic rate
designs, or other programs and policies, with appropriate
documentation;
(8) includes budgets, projected number of
installations and projected fuel savings including to natural
gas, propane and other fuels; and
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(9) incorporates nonbinding recommendations
from stakeholders on the potential design and implementation of
beneficial electrification programs prior to filing the plan.
D. The commission may adopt rules to provide
additional application criteria to ensure prompt
determinations.
E. The commission shall take final action within
one hundred eighty days of the submission of a beneficial
electrification plan and any relating rate recovery mechanism
included with the plan.
F. An electric public utility shall recover its
prudent and reasonable costs for beneficial electrification
programs conducted pursuant to a commission-approved beneficial
electrification plan. An electric public utility may recover
costs through a commission-approved tariff rider or in base
rates, or both. Program costs may be deferred for future
recovery through the creation of a regulatory asset.
G. Funding levels for beneficial electrification
program costs shall be no less than one-half percent of
customer electric bills or electric public utility retail
revenues from customers eligible for beneficial electrification
programs, as determined by the commission. The utility may
propose, and the commission may approve, higher levels of
funding. For the purposes of determining the funding levels in
this subsection, only the base rate portion of customer bills
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or utility retail revenues shall be considered. Fuel costs,
riders and other charges shall not be included.
H. Unless otherwise ordered by the commission, an
electric public utility shall provide language on customer
bills or through other established customer communications
explaining beneficial electrification program benefits.
I. An electric public utility shall submit to the
commission an annual report that provides information relating
to the actions taken by the electric public utility to comply
with this section. The report shall include:
(1) documentation of program expenditures;
(2) customer participation levels, including
the proportion of low-income households served;
(3) estimated fuel savings;
(4) improvements made to the electric public
utility's electrical system efficiency and greenhouse gas
emission reductions resulting from programs; and
(5) any other information the commission may
require."
SECTION 4. A new section of the Public Utility Act is
enacted to read:
"[NEW MATERIAL] VIRTUAL POWER PLANT PROGRAM--RULES--
EXCEPTIONS.--
A. No later than February 1, 2026, the commission
shall adopt rules to establish a virtual power plant program
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and require an electric public utility to file an application
to implement a virtual power plant program.
B. In adopting rules pursuant to this section, the
commission shall:
(1) establish annual cost-effective capacity
procurement and performance targets for the virtual power plant
program that take into account the capabilities of the
distribution system and distributed energy resource deployment.
The commission may establish corresponding performance
incentives for achieving the target established for each year
of the performance period;
(2) consider how a virtual power plant program
would interact with or complement other programs;
(3) require the filing of a tariff
establishing performance requirements and performance-based
compensation for virtual power plant programs that may vary
depending upon applicable technologies and may allow for
customers to opt-out of participation in events that exceed the
requirements;
(4) prescribe the method or methods for
setting performance-based compensation that reflect the full
value of grid services to the extent applicable and practicable
provided by a virtual power plant;
(5) allow both third-parties and electric
public utilities to serve as distributed energy resource
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aggregators, while ensuring that utilities serving as
distributed energy resource aggregators do not have a
competitive advantage over third-party aggregators based on
access to customer data, marketing or other exclusive electric
public utility advantages;
(6) ensure that potential virtual power plant
program participants are not disqualified from participation in
a commission-approved virtual power plant program or
performance-based compensation due to receipt of other
incentives, including up-front incentives or performance
payments for energy, capacity or other grid services that are
distinct from the virtual power plant program; and
(7) consider operational, reliability or
market guidelines and requirements established by the New
Mexico renewable energy transmission authority to which the
utility belongs and by the federal energy regulatory
commission.
C. The compensation provided by an electric public
utility to customers participating in that utility's program
shall be commensurate with additional services provided as a
result of participation in a virtual power plant program,
beyond those services provided as a result of participation in
other programs. The participants shall not be compensated for
providing the same service more than once.
D. The commission shall provide opportunities for
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stakeholders to provide input on the virtual power plant
programs proposed by each electric public utility under this
section.
E. The commission may approve, deny or order
revisions to a public electric utility's proposed virtual power
plant program or slate of programs, including applicable tariff
terms.
F. Nothing in this section shall affect an electric
public utility's net metering program for energy that is
exported outside of a commission-approved virtual power plant
program.
G. To participate in a virtual power plant program
pursuant to this section, an individual energy storage project
with a usable energy capacity of one megawatt or higher shall
be subject to Public Works Minimum Wage Act. The distributed
energy resource aggregator administering the virtual power
plant program shall file an affidavit under penalty of perjury
with the commission and the workforce solutions department
stating that all energy storage systems with a usable energy
capacity of one megawatt or higher participating in the virtual
power plant program are in compliance with this section. The
commission may ask the electric public utility to obtain
additional information or documentation from the distributed
energy resource aggregator if the commission deems it necessary
to ensure compliance with this section. After the initial
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filing of the affidavit with the commission and the workforce
solutions department, if a distributed energy resource
aggregator adds an individual additional storage system
capacity of one megawatt or higher, the distributed energy
resource aggregator shall file another affidavit with the
commission and the workforce solutions department.
H. An electric public utility may recover
reasonable costs to facilitate a commission-approved virtual
power plant program, including foundational technology costs or
investments, operations and maintenance expenses, operating
technology costs or investments and information technology
costs or investments.
I. Notwithstanding the provisions of Subsection H
of this section, an electric public utility shall recover the
cost of virtual power plant program performance payments and
any other payments made to program participants through cost
recovery mechanisms approved by the commission.
J. As used in this section:
(1) "distributed energy resource" means
distributed generation, energy storage systems, electric
vehicles, microgrids, fuel cells and demand-side management
measures, including energy efficiency, demand response and
demand flexibility that are deployed at the distribution system
level on either the customer or utility side of the meter;
(2) "distributed energy resource aggregator"
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means a company or an organization that manages customer
enrollment, participation and compensation in a virtual power
plant program and ensures the performance of the aggregated
distributed energy resources in a virtual power plant;
(3) "grid service" means a capacity, energy or
ancillary service that supports grid operations;
(4) "performance-based compensation" means
monetary payments made in return for, and in proportion to, the
provision of grid services by a virtual power plant;
(5) "performance requirements" means the terms
by which the provision of grid services by distributed energy
resource aggregators participating in a virtual power plant
program shall be eligible for performance-based compensation;
and
(6) "virtual power plant" means an aggregation
of distributed energy resources that are orchestrated via
software to provide grid services, reducing or shifting
customer load or exporting power as needed."
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