HB 243 — GRID MODERNIZATION PLANS

HOUSE ENERGY, ENVIRONMENT AND NATURAL RESOURCES COMMITTEE SUBSTITUTE FOR HOUSE BILL 243 56TH LEGISLATURE -STATEOFNEWMEXICO- FIRST SESSION, 2023 INTRODUCED4 BY6 Tara8 L.10 AN ACT RELATING TO ENERGY;

LujanREQUIRING 6ELECTRIC 8PUBLIC 10UTILITIES ANTO ACTFILE RELATINGA TOGRID ENERGY;MODERNIZATION PLAN WITH THE PUBLIC REGULATION COMMISSION;

REQUIRINGAUTHORIZING ELECTRICTHE PUBLIC UTILITIESREGULATION COMMISSION TO FILEMAKE ARULES REGARDING GRID MODERNIZATION PLANPLANS. WITH THE PUBLIC REGULATION COMMISSION.

1516 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

e t 17 SECTION 1.

SectionA 62-8-13new NMSAsection 1978of (beingChapter Laws62, 2020,Article e8 tNMSA 17w Chapterl 15,n Sectiond 3,18 as1978 amended) is amendedenacted to read:

w= = 19 a l n"[NEW dMATERIAL] 18GRID "62-8-13.MODERNIZATION PLAN.-- i a e r 20 A.

APPLICATIONPursuant FORto GRIDthe MODERNIZATIONcommission's PROJECTS.--rulemaking =a =t 19m m 21 authority, an electric public utility subject to the ratemaking d r e 22 jurisdiction of the commission shall periodically file a lgrid A.c e s k 23 modernization plan with the commission.

A publicgrid utilitymodernization maye filea ann applicationb with24 iplan amay einclude rmeasures 20of thecost-effectiveness commissionand toreliability approveu grid[ modernizationof projectsthe thatdistribution aregrid aand thow mthe mplans 21are neededconsistent bywith the.225274.3 utility,HENRC/HB or243 uponthe requeststate's ofroadmap thefor commission.grid modernization.

d r e 22 Applications may include requests for approval of investments c e s k 23 or incentives to facilitate grid modernization, rate designs or e a n b 24 programs that incorporate the use of technologies, equipment or u [ infrastructure associated with grid modernization and customer .223688.2 education and outreach programs that increase awareness of grid modernization programs and of the benefits of grid modernization.

Applications shall include the utility's estimate of costs for grid modernization projects and demonstrate that the grid modernization projects are cost- effective pursuant to a least-cost, best-fit analysis and minimize the net present value of revenue requirements.

Applications for grid modernization projects shall be filed pursuant to Sections 62-9-1 and 62-9-3 NMSA 1978, as applicable.

WhenBy consideringOctober applications1, for2024, approval, the commission shall reviewadopt therules reasonablenessto ofimplement athe proposedprovisions grid modernization project and as part of thatthis reviewsection. shall consider whether the requested investments, incentives, programs and expenditures are:

(1)C. reasonably expected to improve the public e t 17 utility's electrical system efficiency, reliability, resilience w l n d 18 and security;

maintainThe reasonableprovisions operations,of maintenancethis andsection do not apply to a distribution cooperative organized pursuant to the Rural Electric Cooperative Act." - 2 - 9 11 13 15 e t 17 w l n d 18 = = 19 a l ratepayeri costs;a e r 20 a t m m 21 d r e 22 c e s k 23 e a n b 24 u [ .225274.3

and meet energy demands through a flexible, i a e r 20 diversified and distributed energy portfolio, including energy a t m m 21 standards established in Section 62-16-4 NMSA 1978;

d r e 22 (2) designed to support connection of New c e s k 23 Mexico's electrical grid into regional energy markets and e a n b 24 increase New Mexico's capability to supply regional energy u [ needs through export of clean and renewable electricity;

.223688.2 - 2 - (3) reasonably expected to increase access to and use of clean and renewable energy, with consideration given for increasing access to low-income users and users in underserved communities;

(4) designed to contribute to the reduction of air pollution, including greenhouse gases;

(5) reasonably expected to support increased product and program offerings by utilities to their customers;

allow for private capital investments and skilled jobs in related services;

and provide customer protection, information or education;

(6) transparent, incorporating public reporting requirements to inform project design and commission policy;

[and] (7) reasonably expected to be favorable pursuant to a least-cost, best-fit analysis;

and e t 17 [(7)] (8) otherwise consistent with the w l n d 18 state's grid modernization planning process and priorities.

= = 19 a l C.

Except as provided in Subsection D of this i a e r 20 section, a public utility that undertakes grid modernization a t m m 21 projects approved by the commission may recover its reasonable d r e 22 costs through an approved tariff rider or in base rates, or by c e s k 23 a combination of the two.

Costs that are no greater than the e a n b 24 amount approved by the commission for a utility grid u [ modernization project are presumed to be reasonable.

A tariff .223688.2 - 3 - rider proposed by a public utility to fund approved grid modernization projects shall go into effect thirty days after filing, unless suspended by the commission for a period not to exceed one hundred eighty days.

If the tariff rider is not approved or suspended within thirty days after filing, it shall be deemed approved as a matter of law.

If the commission has not acted to approve or disapprove the tariff rider by the end of the suspension period, it shall be deemed approved as a matter of law.

D.

Costs for a grid modernization project that only benefits customers of an electric distribution system shall not be recovered from customers served at a level of one hundred ten thousand volts or higher from an electric transmission system in New Mexico.

E.

The provisions of this section do not apply to a distribution cooperative organized pursuant to the Rural e t 17 Electric Cooperative Act.

w l n d 18 F.

As used in this section:

= = 19 a l (1) "grid modernization" means improvements to i a e r 20 electric distribution or transmission infrastructure through a t m m 21 investments in assets, technologies or services that are d r e 22 designed to modernize the electrical system by enhancing c e s k 23 electric distribution or transmission grid reliability, e a n b 24 resilience, interconnection of distributed energy resources, u [ distribution system efficiency, grid security against cyber and .223688.2 - 4 - physical threats, customer service or energy efficiency and conservation and includes:

[(1)] (a) advanced metering infrastructure and associated communications networks;

[(2)] (b) intelligent grid devices for real time or near-real time system and asset information;