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SENATE BILL 418
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Michael Padilla
AN ACT
RELATING TO PUBLIC UTILITIES; PERMITTING THE GENERATION AND
DISTRIBUTION OF SELF-SOURCED POWER; CREATING THE QUALIFIED
MICROGRID INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of Chapter 62 NMSA 1978 is
enacted to read:
"[NEW MATERIAL] SELF-SOURCED POWER GENERATION.--
A. Persons and entities located within the state
may receive electricity service using a qualified microgrid
that may also deliver electricity to equipment, lines and
facilities operated by a public utility or a distribution
cooperative; provided that the person or entity and the public
utility or distribution cooperative enter into an electric
service agreement.
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B. Nothing in this section shall prevent a public
utility or distribution cooperative from acquiring self-source
generation resources and dedicating those resources to retail
services, wholesale services or self-generation services, or
any combination of those services, and rates established for
those services shall take into account the public interest and
need, reliability and affordability.
C. Energy generated and sold from a self-source
generation resource built to serve in whole or in part a
qualified microgrid shall not be considered retail sales as
contemplated under Sections 62-15-34 and 62-16-4 NMSA 1978,
whether serving the qualified microgrid or purchased in part by
the utility.
D. A person who only provides self-source
generation sales from a self-source generation resource shall
not be considered a public utility or a distribution
cooperative.
E. As used in this section:
(1) "qualified microgrid" means a permanent or
temporary electrical system that:
(a) incorporates a microgrid controller;
(b) includes a self-source generation
resource that is capable of generating not less than twenty
megawatts; and
(c) is capable of operating
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independently and disconnected from the grid;
(2) "self-source generation resource" means a
permanent or temporary electricity generating resource that is
dedicated to primarily serving the persons connected either
directly or indirectly through affiliates to the construction
and installation of a qualified microgrid; and
(3) "self-source generation sales" means sales
of electricity to persons or utilities generated from a self-
source generation resource."
SECTION 2. A new section of the Income Tax Act is enacted
to read:
"[NEW MATERIAL] CREDIT--QUALIFIED MICROGRID INCOME TAX
CREDIT.--
A. A taxpayer who is not a dependent of another
individual and who constructs and installs a qualified
microgrid in an underserved community in New Mexico prior to
January 1, 2031 may claim a credit against the taxpayer's tax
liability imposed pursuant to the Income Tax Act; provided that
a taxpayer shall not be eligible to claim the credit if the
taxpayer is allowed a credit for any of the costs for which a
credit is allowed pursuant to another section of the Income Tax
Act. The credit authorized pursuant to this section may be
referred to as the "qualified microgrid income tax credit".
B. The amount of the tax credit shall be in an
amount equal to the costs to construct and install the
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qualified microgrid, not to exceed one hundred thousand dollars
($100,000) per qualified microgrid constructed and installed.
C. A taxpayer shall apply for certification of
eligibility for the tax credit from the energy, minerals and
natural resources department on forms and in the manner
prescribed by that department within twelve months following
the calendar year in which the qualified microgrid is
installed. Except as provided in Subsections G and H of this
section, only one tax credit shall be certified per taxpayer
per taxable year. If the energy, minerals and natural
resources department determines that the taxpayer meets the
requirements of this section, that department shall issue a
dated certificate of eligibility to the taxpayer providing the
amount of tax credit for which the taxpayer is eligible and the
taxable years in which the credit may be claimed. The energy,
minerals and natural resources department may promulgate rules
governing the procedure for administering the provisions of
this subsection. The energy, minerals and natural resources
department shall provide the department with the certificates
of eligibility issued pursuant to this subsection in an
electronic format at regularly agreed upon intervals.
D. Applications for certification of the credit
shall be made no later than one year from the date on which the
qualified microgrid is installed.
E. A certificate of eligibility for the credit may
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be sold, exchanged or otherwise transferred to another taxpayer
for the full value of the credit. The parties to such a
transaction shall notify the department of the sale, exchange
or transfer within ten days of the sale, exchange or transfer
in an electronic format prescribed by the department.
F. That portion of the tax credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed may be carried forward for twenty
consecutive taxable years until the amount is exhausted.
G. Married individuals filing separate returns for
a taxable year for which they could have filed a joint return
may each claim only one-half of the tax credit that would have
been claimed on a joint return.
H. A taxpayer may be allocated the right to claim a
qualified microgrid income tax credit in proportion to the
taxpayer's ownership interest if the taxpayer owns an interest
in a business entity that is taxed for federal income tax
purposes as a partnership or limited liability company and that
business entity has met all of the requirements to be eligible
for the credit. The total credit claimed by all members of the
partnership or limited liability company shall not exceed the
allowable credit pursuant to this section.
I. A taxpayer allowed to claim a tax credit
pursuant to this section shall claim the tax credit in a manner
required by the department. The credit shall be claimed within
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one taxable year of the end of the year in which the energy,
minerals and natural resources department certifies the credit.
J. The credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the total annual aggregate cost of
the credit.
K. As used in this section:
(1) "qualified microgrid" means a permanent or
temporary electrical system that:
(a) incorporates a microgrid controller;
(b) includes a self-source generation
resource that is capable of generating not less than twenty
megawatts; and
(c) is capable of operating
independently and disconnected from the grid;
(2) "self-source generation resource" means a
permanent or temporary electricity generating resource that is
dedicated to primarily serving the persons connected either
directly or indirectly through affiliates to the construction
and installation of a qualified microgrid; and
(3) "underserved community" means an area in
the state, including a county, municipality or neighborhood, or
a subset of such an area, where the median income of the area
is at or near the federal poverty level."
SECTION 3. APPLICABILITY.--The provisions of Section 2 of
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this act apply to taxable years beginning on or after January
1, 2025.
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