Skip to content

State Energy Efficiency Policy Database

New Mexico

#24

Related Publications & Documents

Related Items

Related External Links

Helps consumers, businesses, utilities, and local and state governments use energy efficiently.

and/or...  
Compare 2 or more States



Summary

New Mexico has taken a number of steps to fund and implement energy efficiency programs in the state. The Efficient Use of Energy Act, which was enacted in 2005, directed utilities to develop and implement cost-effective DSM programs, established cost recovery mechanisms for both electric and natural gas utilities, and directed the Commission to remove financial disincentives for utilities to reduce customer energy use through DSM programs—i.e., enact some type of decoupling.

Subsequent policy activity yielded additional provisions to support energy efficiency programs. In 2008, Governor Richardson signed into law HB 305, which directs electric and natural gas utilities to acquire all cost-effective and achievable energy efficiency resources.  The targets contained in this energy efficiency resource standard were amended in 2013 by HB 267. Under the state’s current EERS, electric investor-owned utilities are required to reduce electricity use by 5% by 2014 and 8% by 2020 as a result of DSM programs implemented starting in 2007. The Public Regulation Commission is required to provide utilities with a positive financial incentive for implementing cost-effective DSM programs.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

Links:

Top of Page

November 8, 2013


Customer Energy Efficiency Programs

In 2010, the New Mexico Public Regulation Commission (PRC) established new energy efficiency rules that encourage electric utilities to look toward low-cost energy efficiency programs before building costly and potentially unnecessary power plants to meet the state’s energy demand. The 2010 version of the PRC’s energy efficiency rule was annulled and vacated by the New Mexico Supreme Court in July 2011.

Enacted in 2005, the Efficient Use of Energy Act directs utilities to develop and implement cost-effective DSM programs. It also directed the PRC to establish rules for integrated resource planning and enact decoupling. In 2013, the legislature passed House Bill 267, which amends the Efficient Use of Energy Act, setting demand side management budgets at 3% of sales revenue for electric IOUs, and capping budgets at 3% of sales for natural gas revenues.

The state’s main electric utility, Public Service Company of New Mexico (PNM), began implementing energy conservation programs in 2007. Xcel Energy (Southwestern Public Service Company) and El Paso Electric (EPE) also offer their customers a wide range of energy efficiency programs. Xcel Energy offers self-direct programs to customers with average demand greater than 2 MW and annual consumption greater than 10 GWh. Companies can aggregate to meet the minimum thresholds.  Self-direct customers continue to pay their assigned cost-recovery mechanism (CRM) fees and self-direct projects are reimbursed through a rebate of up to 50% of the incremental project costs.  Self-direct customers provide their own engineering analysis and must meet the same total resource cost test as all the other industrial and commercial offerings.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

Links:

Top of Page

November 8, 2013


Energy Efficiency Resource Standards

Summary: 5% reduction from 2005 total retail electricity sales by 2014, and an 8% reduction by 2020.

In 2008, New Mexico legislature passed HB 305, which amended the Efficient Use of Energy Act (first passed in 2005) and established energy efficiency targets for the state. The 2008 law required investor-owned utilities to achieve a 5% reduction from 2005 total retail electricity sales by 2014 and a 10% reduction by 2020 (see NM Stat. § 62-17-1 et seq.).

The state’s targets were amended in 2013 with the passage of HB 267. The law established a fixed tariff rider for funding energy efficiency and load management programs. The bill was a compromise among energy efficiency advocates, New Mexico’s utilities, and representatives of the Public Regulation Commission, and preserved the targets but reduced the energy savings requirement in 2020 for electric utilities from 10% to 8% of sales.

Though targets have been adjusted downward, steady funding makes it likely that long-term targets will be surpassed. If a utility determines it cannot achieve the energy saving requirements, it must report to the Commission, explain the shortfall, and propose alternative requirements based on acquiring all cost-effective and achievable energy efficiency and load management resources. If the commission determines that the requirements exceed the achievable amount of energy efficiency and load management available, it may establish lower requirements for the utility (see NMAC 17.7.2).

Distribution cooperative utilities, which are not fully regulated by the PRC, must annually consider self-imposed electricity reduction targets and design demand side management programs to enable them to meet those targets. Each cooperative utility must submit a report to the PRC annually describing their demand side management efforts from the previous year.

New Mexico has no Natural Gas EERS.


Top of Page

August 9, 2013


Alternative Business Models

In March of 2011 the New Mexico Public Regulation Commission issued an Order approving Southwestern Public Service Company’s 2010/11 energy efficiency and load management plan which included a rider intended to remove regulatory disincentives and to provide an incentive (See Case No. 09-00352-UT), however the utility is not currently seeking removal of any regulatory disincentives (See Case No. 11-00400-UT).

A decoupling proposal by Public Service of New Mexico was rejected in 2007 and removed by agreement in 2010 (See Case No. 10-00086-UT). 


Top of Page

August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

The amendments to the Efficient Use of Energy Act direct the Commission to provide utilities with a positive financial incentive for implementing cost-effective DSM programs. The new rules adopted in April 2010 provide for a financial bonus to utilities for energy savings achieved through their PRC-approved efficiency programs.

On November 3, 2011, the PRC issued an order affirming the legality of the incentive for efficiency programs. The legality of the Adder was called into question by a New Mexico Supreme Court decision. In its Order, the PRC stated that the Adder it had previously approved was evidence-based, cost-based, and utility specific, as required by the Supreme Court (Case No. 11-00308-UT).  

Public Service of New Mexico is currently earning an incentive based on energy savings (See Case No. 10-000380-UT). In March of 2011 the New Mexico Public Regulation Commission issued an Order approving Southwestern Public Service Company’s 2010/11 energy efficiency and load management plan which included an Adder intended to remove regulatory disincentives and to provide an incentive (See Case No. 09-00352-UT), however the utility is not currently seeking any incentives (See Case No. 11-00400-UT).


Top of Page

August 21, 2013


Energy Efficiency as a Resource

The 2005 Efficient Use of Energy Act directs the New Mexico Public Regulation Commission (PRC) to establish rules for integrated resource planning. In 2010 the PRC established new energy efficiency rules that encourage electric utilities to look toward low-cost energy efficiency programs before building costly and potentially unnecessary power plants to meet the state’s energy demand. However, this rule was annulled and vacated by the New Mexico Supreme Court in 2011. Currently, New Mexico utilities have a legislative mandate that requires them to acquire all cost-effective and achievable energy efficiency resources as per HB 305.

Utilities must file integrated resource plans (IRPs) every three years, and include expected retirement dates of existing generating units.

For more information on energy efficiency as a resource, click here.


Top of Page

August 8, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: UCT
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in New Mexico relies on legislative mandates (Efficient Use of Energy Act (NMSA 1978 Chapter 62, Article 17, Section 8)). Evaluations are mainly administered by the New Mexico Public Regulation Commission. There are no specific legal requirements for these evaluations in New Mexico. Evaluations are conducted for each of the utilities. In terms of a benefit-cost test, the Utility Cost Test (UCT) is conducted in New Mexico and is considered to be the primary test for decision making. The benefit-cost tests are required for total program level screening. The rules for benefit-cost tests are stated in the Efficient Use of Energy Act (NMSA 1978 Chapter 62, Article 17, Section 5C).


Top of Page

August 21, 2013