1. A. A public utility shall meet the renewable portfolio standard requirements, as provided in this section, to include renewable energy in its electric energy supply portfolio as demonstrated by its retirement of renewable energy certificates; provided that the associated renewable energy is delivered to the public utility and assigned to the public utility's New Mexico customers. For public utilities other than rural electric cooperatives and municipalities, requirements of the renewable portfolio standard are:

   1. (1) no later than January 1, 2015, renewable energy shall comprise no less than fifteen percent of each public utility's total retail sales to New Mexico customers;
   2. (2) no later than January 1, 2020, renewable energy shall comprise no less than twenty percent of each public utility's total retail sales to New Mexico customers;
   3. (3) no later than January 1, 2025, renewable energy shall comprise no less than forty percent of each public utility's total retail sales of electricity to New Mexico customers;
   4. (4) no later than January 1, 2030, renewable energy shall comprise no less than fifty percent of each public utility's total retail sales of electricity to New Mexico customers;
   5. (5) no later than January 1, 2040, renewable energy resources shall supply no less than eighty percent of all retail sales of electricity in New Mexico; provided that compliance with this standard until December 31, 2047 shall not require the public utility to displace zero carbon resources in the utility's generation portfolio on the effective date of this 2019 act; and
   6. (6) no later than January 1, 2045, zero carbon resources shall supply one hundred percent of all retail sales of electricity in New Mexico. Reasonable and consistent progress shall be made over time toward this requirement.

2. B. In administering the standards required by Paragraphs (5) and (6) of Subsection A of this section, the commission shall:

   1. (1) not jeopardize the operation of a sewage treatment facility that captures and combusts methane gas in the facility's operations;
   2. (2) maintain and protect the safety, reliable operation and balancing of loads and resources on the electric system;
   3. (3) prevent unreasonable impacts to customer electricity bills, taking into consideration the economic and environmental costs and benefits of renewable energy resources and zero carbon resources;
   4. (4) prevent carbon dioxide emitting electricity-generating resources from being reassigned, redesignated or sold as a means of complying with the standard;
   5. (5) in consultation with the energy, minerals and natural resources department, undertake programs not prohibited by law to achieve the standard;
   6. (6) in consultation with the department of environment, ensure that the standard does not result in material increases to greenhouse gas emissions from entities not subject to commission oversight and regulation; and

   7. (7) in consultation with electricity transmission system operators responsible for balancing New Mexico electricity loads and resources, issue a report to the legislature by July 1, 2020, and each July 1 every four years thereafter. The report shall include:

      1. (a) review of the standard, with a focus on technologies, forecasts, existing transmission, environmental protection, public safety, affordability and electricity transmission and distribution system reliability;
      2. (b) evaluation of the anticipated financial costs and benefits to electric utilities in implementing the standard, including the impacts and benefits to customer electricity bills; and
      3. (c) identification of the barriers to, and benefits of, achieving the standard.
3. C. Any customer that is a political subdivision of the state, or any educational institution designated in Article 12, Section 11 of the constitution of New Mexico with an enrollment of twenty thousand students or more during the fall semester on its main campus, with consumption exceeding twenty thousand megawatt-hours per year at any single location or facility and that owns facilities that produce renewable energy or hosts such facilities through a renewable purchased power agreement, shall not be charged by the utility for power purchases of one year or less or fuel on the amount of electricity purchased from the utility equal to the amount of renewable energy produced or hosted by the customer. The customer shall annually certify to the state auditor and notify the commission and the customer's serving electric utility of the amount of renewable energy produced at the customer-owned or customer-hosted facilities that generate renewable energy. The customer shall also certify to the state auditor and notify the commission that the customer will retire all renewable energy certificates associated with the renewable energy produced by those facilities. Any financial benefits as a result of the provisions of this subsection shall accrue to the customer immediately upon the effective date of this 2019 act and shall be reflected in customer bills each month, subject to annual true-up and reconciliation. The provisions of this subsection shall not prevent the utility from recovering all of its reasonable and prudent fuel and purchased power costs.
4. D. Upon a motion or application by a public utility the commission shall, or upon a motion or application by any other person the commission may, open a docket to develop and provide financial or other incentives to encourage public utilities to produce or acquire renewable energy that exceeds the applicable annual renewable portfolio standard set forth in this section; results in reductions in carbon dioxide emissions earlier than required by Subsection A of this section; or causes a reduction in the generation of electricity by coal-fired generating facilities, including coal-fired generating facilities located outside of New Mexico. The incentives may include additional earnings and capital investment opportunities for resources used in furtherance of the outcomes described in this subsection.
5. E. If, in any given year, a public utility determines that the average annual levelized cost of renewable energy that would need to be procured or generated for purposes of compliance with the renewable portfolio standard would be greater than the reasonable cost threshold, the public utility shall not be required to incur that excess cost; provided that the existence of this condition excusing performance in any given year shall not operate to delay compliance with the renewable portfolio standard in subsequent years. The provisions of this subsection do not preclude a public utility from accepting a project with a cost that would exceed the reasonable cost threshold. When a public utility can generate or procure renewable energy at or below the reasonable cost threshold, it shall be required to do so to the extent necessary to meet the applicable renewable portfolio standard and shall not be precluded from exceeding the standard.

6. F. By September 1, 2007 and until June 30, 2019, a public utility shall file a report to the commission on its procurement and generation of renewable energy during the prior calendar year and a procurement plan that includes:

   1. (1) the cost of procurement for any new renewable energy resource in the next calendar year required to comply with the renewable portfolio standard; and
   2. (2) testimony and exhibits that demonstrate that the proposed procurement is reasonable as to its terms and conditions considering price, availability, reliability, any renewable energy certificate values and diversity of the renewable energy resource; or
   3. (3) demonstration that the plan is otherwise in the public interest.

7. G. By July 1, 2020, and each July 1 thereafter, a public utility shall file a report to the commission on the public utility's procurement and generation of renewable energy since the last report and a procurement plan that includes:

   1. (1) the cost of procurement for new renewable energy required to comply with the renewable portfolio standard;
   2. (2) the capital, operating and fuel costs on a per-megawatt-hour basis during the preceding calendar year of each nonrenewable generation resource rate-based by the utility, or dedicated to the utility through a power purchase agreement of one year or longer, and the nonrenewable generation resources' carbon dioxide emissions on a per-megawatt-hour basis during that same year;

   3. (3) information, including exhibits, as applicable, that demonstrates that the proposed procurement:

      1. (a) was the result of competitive procurement that included opportunities for bidders to propose purchased power, facility self-build or facility build-transfer options;
      2. (b) has a cost that is reasonable as evidenced by a comparison of the price of electricity from renewable energy resources in the bids received by the public utility to recent prices for comparable energy resources elsewhere in the southwestern United States; and
      3. (c) is in the public interest, considering factors such as overall cost and economic development opportunities; and
   4. (4) strategies used to minimize costs of renewable energy integration, including location, diversity, balancing area activity, demand-side management and load management.
8. H. The commission shall approve or modify a public utility's procurement plan within ninety days and may approve the plan without a hearing, unless a protest is filed that demonstrates to the commission's reasonable satisfaction that a hearing is necessary. The commission may modify a plan after notice and hearing. The commission may, for good cause, extend the time to approve a procurement plan for an additional ninety days. If the commission does not act within the ninety-day period, the procurement plan is deemed approved.
9. I. The commission may reject a procurement plan if, within forty days of filing, the commission finds that the plan does not contain the required information and, upon the rejection, shall provide the public utility the time necessary to file a revised plan; provided that the total amount of renewable energy required to be procured by the public utility shall not change.

History: Laws 2004, ch. 65, § 4; 2007, ch. 4, § 8; 2011, ch. 93, § 1; 2014, ch. 41, § 1; 2019, ch. 65, § 29.

ANNOTATIONS

The 2019 amendment, effective June 14, 2019, required that public utilities demonstrate compliance with the renewable portfolio standard requirements by their retirement of renewable energy certificates, expanded the renewable energy standard to require forty percent renewable energy by the year 2025, fifty percent by the year 2030, eighty percent by the year 2040, and one hundred percent emission free by the year 2045, provided additional duties for the public regulation commission in administering new standards, expanded the application of certain provisions to educational institutions with an enrollment of twenty thousand students or more, expanded a directive to the public regulation commission to provide incentives to public utilities to exceed the law's renewable requirements, and provided additional reporting requirements for public utilities; in Subsection A, added "as demonstrated by its retirement of renewable energy certificates; provided that the associated renewable energy is delivered to the public utility and assigned to the public utility's New Mexico customers. For public utilities other than rural electric cooperatives and municipalities", deleted Paragraph A(1) and Subparagraphs A(1)(a) and A(1)(b) and redesignated former Subparagraphs A(1)(c) and A(1)(d) as Paragraphs A(1) and A(2), respectively, deleted former Paragraph A(2) and added new Paragraphs A(3) through A(6); added a new Subsection B and redesignated former Paragraph A(3) as Subsection C, Paragraph A(5) as Subsection D, and former Subsection B as Subsection E, respectively; in Subsection C, after "with an enrollment of", deleted "twenty-four" and added "twenty", after "consumption exceeding twenty", deleted the remaining language of former Paragraph A(3), deleted Paragraph A(4) and added the remainder of the subsection; in Subsection D, after "Upon a", deleted "commission", after "shall", added "or upon a motion or application by any other person the commission may", after "docket to", added "develop and", after "provide", deleted "appropriate performance-based", after "public utilities to", added "produce or", and deleted "The commission shall initiate rules by June 1, 2008 to implement this subsection; and", deleted former Paragraph A(6) and added the remainder of the subsection; in Subsection E, after "determines that the", added "average annual levelized", after "shall not operate to delay", deleted "the annual increases in" and added "compliance with", added "The provisions of this subsection do not preclude a public utility from accepting a project with a cost that would exceed the reasonable cost threshold.", after "required to", deleted "add renewable energy resources" and added "do so to the extent necessary", and after "applicable renewable portfolio standard", deleted "applicable in the year when the renewable energy resources are being added"; deleted former Subsection C and redesignated former Subsection D as Subsection F; in Subsection F, deleted "and July 1 of each year thereafter until 2022, and thereafter as determined necessary by the commission" and added "and until June 30, 2019", in Paragraph F(2), after "availability", deleted "dispatchability" and added "reliability"; added a new Subsection G and redesignated former Subsections E and F as Subsections H and I, respectively; in Subsection H, after "modify a public utility's", deleted "procurement or transitional"; in Subsection I, after "may reject a", deleted "procurement or transitional", after "procurement plan if", added "within forty days of filing, the commission", after "upon the rejection", deleted "may suspend the public utility's obligation to procure additional resources for" and added "shall provide the public utility", and after "total amount of renewable energy", added "required"; and deleted former Subsections G and H.

The 2014 amendment, effective May 21, 2014, exempted certain state educational institutions from charges for renewable energy procurements; and in Subsection A, in Paragraph (3), after "political subdivision of the state", added "or any educational institution designated in Article 12, Section 11 of the constitution of New Mexico, with an enrollment of twenty-four thousand students or more during the fall semester on its campus".

The 2011 amendment, effective June 17, 2011, added Paragraph (3) of Subsection A to exempt certain political subdivisions from all charges by public utilities for renewable energy procurements if the political subdivision certifies that it will expend two and one-half percent of annual electricity charges to develop renewable energy generation.

The 2007 amendment, effective July 1, 2007, added Paragraph (1) of Subsection A, which added requirements for public utilities other than rural electric cooperatives and municipalities; deleted former Paragraph (2) of Subsection A, which provided that the renewable portfolio standard shall increase by one percent per year until January 1, 2011 when the renewal portfolio standard will remain fixed at ten percent per year; added Subparagraphs (b) through (d) of Paragraph (1) of Subsection A; added Paragraph (4) of Subsection A; in Subsection D, changed the date from September 1 of each year until 2012 to September 1, 2007 and July 1 of each year thereafter until 2022; changed the content of the report from purchases to procurement and generation; in Subsection E, changed all time periods from sixty days to ninety days; and added Subsection H.

Public Regulation Commission did not err in denying financial incentive application. — Where appellant requested a financial incentive in its application for approval of its 2022 Annual Renewable Energy Act Plan, proposing to retire enough renewable energy certificates in 2022, 2023, and 2024 to meet 2025's forty percent standard in each of those years, and where the public regulation commission (PRC) denied appellant's financial incentive request, finding that appellant failed to meet the threshold statutory requirement to qualify for an incentive by failing to introduce any evidence of any firm plans to acquire or produce any additional renewable energy as required by 62-16-4(D) NMSA 1978, the PRC did not err in denying the financial incentive request, because the plain language of 62-16-4(D) NMSA 1978 conditions the award of an incentive on a proposal to produce or acquire renewable energy, and appellant admitted at the hearing on its application that its incentive proposal did not include a specific plan to produce or acquire any additional renewable energy or renewable energy resources. S.W. Pub. Serv. Co. v. N.M. Pub. Regul. Comm'n, 2024-NMSC-012.

Appellant failed to meet its burden to show that the public regulation commission's order adopting amended rule was unreasonable or unlawful. — In response to 2019 amendments to the Renewable Energy Act (REA), 62-16-1 to 62-16-10 NMSA 1978, the public regulation commission (PRC) developed and approved amendments to Rule 572, including adding provisions that govern the availability of financial incentives to encourage public utilities to produce or acquire renewable energy in order to further the outcomes of 62-16-4 NMSA 1978, and following the PRC's adoption of the amendments, appellant challenged the PRC's adoption of the amended rule, arguing that various provisions of the amended rule exceed the scope of the REA, were arbitrary and capricious, and were void for vagueness, the New Mexico supreme court dismissed appellant's challenges because the amended provisions were a reasonable exercise of the PRC's overarching duties under the Public Utility Act, appellant's claims were not supported by substantial evidence in the record, the PRC complied with due process when, in its notice of proposed rulemaking, it included a draft of the proposed rule and requested comments, and appellant failed to show that the challenged provisions of the amended rule were impermissibly vague in all of their applications. S.W. Pub. Serv. Co. v. N.M. Pub. Regul. Comm'n, 2024-NMSC-012.

Recovery of large customer cap costs. — The public regulation commission has discretion to determine whether renewable energy procurement reductions are necessary when large customer cap costs arise, and this section does not bar the allocation of large customer cap costs to customers who are not subject to a legislatively imposed limit on their renewable energy costs. N.M. Att’y. Gen. v. N.M. Pub. Regulation Comm’n, 2015-NMSC-032.

Where the public regulation commission (PRC) approved utility’s renewable energy cost rider which sought to recover $22 million of renewable energy procurement costs from customers who are not subject to a legislatively imposed limit on their renewable energy costs (non-capped customers), the PRC properly allocated large customer cap costs to non-capped customers to enable the utility to recover its reasonable renewable energy procurement costs; such a recovery mechanism is the only viable method of cost recovery that is consistent with the purposes of the Renewable Energy Act, 62-16-1 through 62-16-10 NMSA 1978. N.M. Att’y. Gen. v. N.M. Pub. Regulation Comm’n, 2015-NMSC-032.