State Energy Efficiency Policy Database

Historically, utilities in New Mexico have funded and provided few energy efficiency programs for their customers. New Mexico has recently taken a number of steps to fund and implement energy efficiency programs that has dramatically changed this picture.

On April 8, 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 Commission’s action further implements the state’s Efficient Use of Energy Act, designed to spur more utility investment in energy efficiency programs. The new rules provide a financial bonus to utilities for energy savings achieved through their PRC-approved efficiency programs. Increased efficiency investment could mean over $400 million in customer savings and almost 2 million metric tons of avoided CO2 emissions over the next 20 years, according to PNM’s most recent long term plan.

The Efficient Use of Energy Act , enacted in 2005, does several things. The Act: (1) directs utilities to develop and implement cost-effective DSM programs, (2) defines "cost-effectiveness" in terms of the total resource cost test, (3) establishes cost recovery mechanisms for both electric and natural gas utilities, (4) directs the New Mexico Public Regulation Commission to establish rules for integrated resource planning, and (5) directs the Commission to remove financial disincentives for utilities to reduce customer energy use through DSM programs—i.e., enact some type of decoupling.

The PRC approved a new demand-side management (DSM) plan for Southwestern Public Service Company (SPS) in March 2011. The plan calls for SPS to spend $10.9 million or about 3.2% of retail sales revenue on DSM programs in 2011. SPS expects to save about 37 GWh and nearly 14 MW of peak demand per year as a result of its new DSM plan. The annual energy savings are equivalent to about 0.8% of the utility’s retail electricity sales, and are 18% greater than the energy savings SPS achieved in 2010.

New Mexico electric utilities reported efficiency program savings of 58,916 MWh in 2009 and 97,282 MWh in 2010.

Reported budgets for energy efficiency programs for 2011, and electricity savings for 2010, are in the State Spending and Savings Tables.

In New Mexico, 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.  More information on large customer self-direct programs can be found in the ACEEE report, Follow the Leaders: Improving Large Customer Self-Direct Programs.

Links:

• Database of State Incentives for Renewables and Efficiency

Summary: 5% reduction from 2005 total retail electricity sales by 2014, and a 10% reduction by 2020.

In 2008, New Mexico adopted an amended version of the Efficient Use of Energy Act which: (1) directs utilities to develop and implement cost-effective DSM programs, (2) defines “cost-effectiveness” in terms of the total resource cost test, (3) establishes cost recovery mechanisms for both electric and natural gas utilities, (4) directs the New Mexico Public Regulation Commission to establish rules for integrated resource planning, and (5) directs the Commission to remove financial disincentives for utilities to reduce customer energy use through DSM programs. On February 27, 2008, Governor Bill Richardson signed House Bill 305 into law, amending the Efficient Use of Energy Act to establish energy efficiency targets for the state. Investor-owned utilities are now required to achieve a 5% reduction from 2005 total retail electricity sales by 2014, and a 10% reduction by 2020.

A utility that determines it cannot achieve the energy saving requirements shall 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.

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.

Links:

• Authority: N.M. Stat. § 62-17-1 et seq.

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. (Case No. 09-00352-UT).

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).