Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Pettigrew
/mason/Murphy/Henry
LAST UPDATED
ORIGINAL DATE 02/13/2025
SHORT TITLE Certain Natural Gas as Renewable Energy
BILL
NUMBER House Bill 327
ANALYST Gygi
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
EMNRD
No fiscal
impact
No fiscal
impact
No fiscal
impact
No fiscal
impact
Recurring General Fund
PRC
No fiscal
impact
$55.5 $58.7 $114.2 Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Duplicates House Bill 327
Conflicts with House Bill 45
Sources of Information
LFC Files
Agency Analysis Received From
Attorney General (NMAG) Energy, Minerals and Natural Resources Department (EMNRD)
New Mexico Renewable Energy Transmission Authority (NMRETA)
Public Regulation Commission (PRC)
SUMMARY
Synopsis of House Bill 327
House Bill (HB327) adds the term "natural gas using combined cycle technology” to the list of
renewable energy resources in both the Rural Electric Cooperative Act (Section 62-15-37 NMSA
1978) and the Renewable Energy Act (Section 62-16-13 NMSA 1978). The bill also adds the
following exclusion to the definition in the Rural Electric Cooperative Act: “does not include
electric energy generated by use of fossil fuel or nuclear energy, except for natural gas using
combined cycle technology.”
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
House Bill 327 – Page 2
FISCAL IMPLICATIONS
The Public Regulation Commission (PRC), which will be responsible for rulemaking and
implementation, estimates an additional annual cost of $55,500 in FY26 and $58,700 in FY27
for staff time if HB327 is enacted.
The Energy, Minerals and Natural Resources Department (EMNRD) does not anticipate a direct
fiscal impact.
SIGNIFICANT ISSUES
The proposed definition changes in HB327 defy nationally agreed definitions, run counter to the
intent of the two acts to be amended, undermine the state’s renewable portfolio standards, and
could have negative impacts on other state and federal programs.
According to EMNRD:
Defining fossil fuels as a renewable energy resource based on the efficiency of
technology runs counter to established definitions and understanding of what a renewable
energy resource is: i.e., energy derived from natural sources that are replenished at a
higher rate than they are consumed or are replenished on a human rather than geologic
timescale. Even highly efficient combined cycle gas turbines consume fossil gas, a
resource which is not renewable within a human lifetime, at a greater rate than it is
created.
HB327 fails to define “combined cycle technology.” Given the lack of definition, EMNRD
presumes that:
The proposed language means a combined-cycle gas turbine technology that utilizes both
the Brayton cycle of a natural gas fired turbine engine while also utilizing the heat from
the exhaust gases in a fired or unfired Rankine cycle waste heat boiler, thus recovering
over 60 percent of the input energy to create electricity. This is the common definition of
“combined cycle technology” in the power generation industry.
The provisions of HB327 skirt the zero carbon emission provisions in the state’s renewable
portfolio standards (RPS) and Section 62-15-34 of the Rural Electric Cooperative Act. These
standards mandate 100 percent of electricity be generated by zero carbon resources by 2045 and
2050, respectively. The PRC asserts: “By allowing natural gas to be defined as a renewable
resource, utilities may meet annual RPS requirements but won’t achieve the 2045 zero-carbon
target.”
Further, HB327’s proposed definitions do not align with PRC or federal definitions. New
Mexico currently uses the Western Renewable Energy Generation Information System
(WREGIS), an independent, renewable energy tracking system for a 14-state region, to track
“renewable energy certificates” and demonstrate RPS compliance. The PRC and NMRETA
concur that allowing a carbon-emitting generating source would impact verification.
The Attorney General (NMAG) states that “a definition encompassing a fossil fuel source may
cause conflict with the policy objectives of other participating states, which may manifest as
legal challenges.” NMRETA suggests the definition of renewable energy may also generate House Bill 327 – Page 3
conflicts with projects supported under the Renewable Energy Financing District Act (5-18
NMSA 1978).
EMNRD further cautions:
Not all combined cycle technology includes carbon-capture or waste heat boilers, leaving
open the possibility that a non-renewable and potentially carbon emitting technology
would be enshrined in legislation as a renewable energy resource.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
House Bill 327 duplicates House Bill 273 and conflicts with House Bill 45, which creates a
Renewable Energy Production Tax Act containing a different definition of “renewable energy.”
TECHNICAL ISSUES
HB327 lacks a definition for combined-cycle technology.
ALTERNATIVES
PRC raises the possibility of including gas-fired combustion turbines instead of combined-cycle
devices in order to achieve the state’s zero-carbon goal:
HB327’s focuses on combined cycle natural gas excludes gas-fired combustion turbines,
which provide peaking capacity with lower total carbon dioxide emissions due to
intermittent use. Expanding the definition to include peaking turbines with operational
constraints could enhance grid reliability while keeping New Mexico on track for its
2045 zero-carbon goal. Also, combustion turbines can be retrofitted to run on cleaner
fuels like hydrogen, when it becomes economically available.
KG/hj/SL2/SL2