HB 291 — EFFICIENT USE OF ENERGY ACT CHANGES

C.

"customer" means a utility customer at a single, contiguous field, location or facility, regardless of HB 291/a Page 1 the number of meters at that field, location or facility;

"energy efficiency" means measures, including energy conservation measures, or programs that target consumer behavior, equipment or devices to result in a decrease in consumption of electricity and natural gas without reducing the h amount or quality of energy services;

u » r G.

"large customer" means a customer with t h g e l i electricity consumption greater than seven thousand megawatt- h r i s hours per year or natural gas use greater than three hundred h , e h sixty thousand decatherms per year;

t u g e b l e e , gh H.

"load management" means measures or programs n d d i = = o h that target equipment or devices to result in decreased peak l ] b ,d i a º r electricity demand or shift demand from peak to off-peak e r = t e w d m a n o periods;

dI. m :

b r e t º o t n = .212462.1 s k m e - 5 - e a n e d r e l u [ A d I.

"public utility" means a public utility that is HB 291/a Page 2 not also a distribution cooperative utility;

"utility cost test" means a standard that is met if the monetary costs that are borne by the public utility and that are incurred to develop, acquire and operate energy efficiency or load management resources on a life-cyclelife- cycle basis are less than the avoided monetary costs associated with developing, acquiring and operating the associated supply-side resources.resources." SECTION 2.

[InSection developing62-17-5 thisNMSA test1978 for(being energyLaws efficiency2005, andChapter load341, managementSection programs5, directedas toamended low-incomeby customers,Laws the2013, commissionChapter shall124, eitherSection quantify2 or assign a reasonable value h to reductions in working capital, reduced collection costs, u » r lower bad-debt expense, improved customer service effectiveness t h g e l i and otherby appropriateLaws factors2013, asChapter utility220, systemSection economic2) his ramended ito sread: benefits.]" h , e h HENRCº SECTION 3.

SECTION"62-17-5. 2.»HENRC Section 62-17-5 NMSA t u g e b l e e , gh 1978 (being Laws 2005, Chapter 341, Section 5, as amended by n d d i = = o h Laws 2013, Chapter 124, Section 2 and by Laws 2013, Chapter l ] b ,d i a º r 220, Section 2) is amended to read:

eCOMMISSION rAPPROVAL--ENERGY =EFFICIENCY tAND eLOAD wMANAGEMENT dPROGRAMS--DISINCENTIVES.-- mA. a n o "62-17-5.

COMMISSION APPROVAL--ENERGY EFFICIENCY AND LOAD d m :

b r e t º o t n = .212462.1 s k m e - 6 - e a n e d r e l u [ A d MANAGEMENT PROGRAMS--DISINCENTIVES.-- A.

Before the commission approves an energy efficiency and load management program for a public utility, it [must ] shall find that the portfolio of programs is cost- HB 291/a Page 3 effective and designed to provide every affected customer class with the opportunity to participate and benefit economically.

The commission shall determine the cost-effectivenesscost- effectiveness of energy efficiency and load management measures using the utility cost test.

In determining life-cyclelife- cycle costs and benefits of energy h efficiency programs, the commission shall not adjust for taxes g o t hr when selecting a discount rate.

In determining life-cycle g e i k costs and benefits for energy efficiency and load management h r i s programs directed to low-income customers, the commission shall h , t, either quantify or assign a reasonable value to:

e u g e b l e e h (1) reductions in working capital;

n d d i = = o h (2) reduced collection costs;

l ] b ,d i a º e (3) lower bad-debt expense;

r i = r t e w d m a n o (4) improved customer service effectiveness;

dand m(5) :other appropriate factors as utility system economic benefits.

b e d s º o t n = .212462.1 s k m e - 7 - e a n e d r e l u [ A d and (5) other appropriate factors as utility system economic benefits.

Public utilities proposing new energy efficiency and load management programs shall, before HB 291/a Page 4 seeking commission approval, solicit nonbinding recommendations on the design, implementation and use of third-party energy service contractors through competitive bidding on the programs from commission staff, the attorney general, the energy, minerals and natural resources department and other interested parties.

The commission may for good cause require public h utilities to solicit competitive bids for energy efficiency and g o t hr load management resources.

g e i k F.

h r i s (1) upon petition or its own motion, identify h , t, and remove regulatory disincentives or barriers for public e u g e b l e e h utility expenditures on energy efficiency and load management n d d i = = o h measures [and ensure that they are removed ] in a manner that l ] b ,d i a º e balances the public interest, consumers' interests and r i = r t e w d m a n o investors' interests;

[The(2) upon petition by a public utility, remove regulatory disincentives through the adoption of a rate adjustment mechanism that ensures that the revenue per customer approved by the commission shallin alsoa ]general drate mcase :proceeding is recovered by the public utility without regard to the quantity of electricity actually sold by the public utility subsequent to the date the rate took effect.

bRegulatory edisincentives dremoved sthrough º o t n = .212462.1 s k m e - 8 - e a nrate eadjustment dmechanism rshall ebe lseparately ucalculated [for Athe drate (2)class uponor petitionclasses byto awhich public utility, remove regulatory disincentives through the adoption of a rate adjustment mechanism thatapplies ensuresand thatcollected theor revenueHB per291/a customerPage approved5 refunded by the commissionutility inthrough a generalseparately rateidentified casetariff proceedingrider isthat recoveredshall bynot thebe publicused utility without regard to thecollect quantitycommission- ofapproved electricityenergy actuallyefficiency soldand byload themanagement publicprogram utilitycosts subsequentand toincentives; the date the rate took effect.

Regulatory(3) disincentivesprovide removedpublic throughutilities aan rateopportunity adjustmentto mechanismearn shalla beprofit separatelyon calculatedcost-effective forenergy theefficiency rate class or classes to which the mechanism applies and collectedload ormanagement refundedresource bydevelopment thethat, utilitywith throughsatisfactory aprogram separatelyperformance, identifiedis tarifffinancially ridermore thatattractive shall not be used to collectthe commission-approvedutility energythan efficiencysupply-side andutility loadresources; management program costs and incentives;

(3)and provide(4) publicnot utilitiesreduce ana opportunityutility's toreturn earnon aequity profitbased on cost-effectiveapproval energyof efficiencya anddisincentive loadremoval managementmechanism resourceor developmentprofit that,incentives withpursuant satisfactory program h performance, is financially more attractive to the utilityEfficient thanUse uof »Energy rAct. supply-side utility resources;

andG. t h g e l i (4) not reduce a utility's return on equity h r i s based on approval of a disincentive removal mechanism or profit h , e h incentives pursuant to the Efficient Use of Energy Act.

tPublic uutilities gproviding eelectricity band lnatural egas eservice ,to ghNew G.Mexico customers shall, subject to commission approval, acquire the cost-effective and achievable energy efficiency and load management resources available in their service territories.

PublicThis requirement, however, for public utilities providing electricity andservice, nshall dnot dbe iless =than =savings oof hfive naturalpercent gasof service2020 tototal Newretail Mexicokilowatt-hour customerssales shall, subject to lNew ]Mexico bcustomer ,dclasses ithat ahave ºthe ropportunity commissionto approval,participate acquirein HENRCºcalendar maximum»HENRCyear e2025 ras =a tresult eof wenergy defficiency mand aload nmanagement oprograms HENRCºthe»HENRCimplemented cost-effectivein andyears achievable2021 energythrough d2025. m :

bNo rlater ethan tJune º30, o2025, tthe ncommission =shall .212462.1adopt, sthrough kHB m291/a ePage -6 9rulemaking, -energy esavings atargets nfor eelectric dutilities rfor eyears l2026 uthrough [2030 Abased don efficiencycost-effective and loadachievable managementenergy resourcessavings availableand inprovide theirutility serviceincentives territories.based on savings achieved.

ThisH. requirement, however, for public utilities providing electricity service, shall not be less than savings of five percent of [2005 ] 2020 total retail kilowatt- hour sales to New Mexico [customers ] customer classes that have the opportunity to participate in calendar year [2014 and eight percent of 2005 total retail kilowatt-hour sales to New Mexico customers in 2020] 2025 as a result of energy efficiency and load management programs implemented [starting in 2007 ] in years 2021 through 2025.

NoA laterpublic thanutility Junethat 30,determines 2025,it cannot achieve the commissionminimum requirements established in Subsection G of this section shall adopt,report throughto rulemaking,the HENRCºminimum»HENRCcommission energyon savingswhy targetsit forcannot electricmeet utilitiesthose forrequirements yearsand 2026shall throughpropose 2030alternative requirements based on HENRCºmaximum»HENRCacquiring cost-effective and achievable energy savingsefficiency HENRCºandand provideload utilitymanagement incentivesresources. based on savings achieved»HENRC.

hIf H.the commission determines, after hearing, that the minimum requirements of Subsection G of this section exceed the achievable amount of energy efficiency and load management available to the public utility or that the program costs of energy efficiency and load management to achieve the minimum requirements of Subsection G of this section exceed the program costs funding established in Subsection A of Section 62-17-6 NMSA 1978, the commission shall establish lower minimum energy savings requirements for the utility based on the maximum amount of energy efficiency and load management that it determines can be achieved." SECTION 3.

ASection public62-17-6 utilityNMSA that1978 determines(being itLaws cannot2005, gChapter o341, tSection hr6, achieveas theamended minimumby requirementsLaws established2013, inChapter Subsection124, GSection of3 g e i k this section shall report to the commission on why it cannot h r i s meet those requirements and shallby proposeLaws alternative2013, hChapter ,220, t,Section e3) uis gamended requirementsto basedread: on acquiring cost-effective and achievable e b l e e h energy efficiency and load management resources.

IfHB the291/a nPage d7 d"62-17-6. i = = o h commission determines, after hearing, that the minimum l ] b ,d i a º e requirements of Subsection G of this section exceed the r i = r t e w d m a n o HENRCº maximum»HENRC achievable amount of energy efficiency and d m :

b e d s º o t n = .212462.1 s k m e - 10 - e a n e d r e l u [ A d load management available to the public utility or that the program costs of energy efficiency and load management to achieve the minimum requirements of Subsection G of this section exceed the program costs funding established in Subsection A of Section 62-17-6 NMSA 1978, the commission shall establish lower minimum energy savings requirements for the utility based on the maximum amount of energy efficiency and load management that it determines can be achieved." HENRCº SECTION 4.

SECTION 3.»HENRC Section 62-17-6 NMSA (being Laws 2005, Chapter 341, Section 6, as amended by Laws 2013, Chapter 124, Section 3 and by Laws 2013, Chapter 220, Section 3) is amended to read:

"62-17-6.

A public utility that undertakes cost-effective energy efficiency and load management programs shall have the option of recovering its prudent and reasonable costs along h with commission-approved incentives for demand-side resources u » r and load management programs implemented after the effective t h g e l i date of the Efficient Use of Energy Act through an approved h r i s tariff rider or in base rates, or by a combination of the two.

h , e h Program costs and incentives may be deferred for future t u g e b l e e , gh recovery through creation of a regulatory asset.

Funding for n d d i = = o h program costs [for investor-owned electric utilities ] shall be l ] b ,d i a º r [three ] as follows:

e(1) rfor =investor-owned telectric eutilities, wno dless mthan athree npercent oand (1)no more than five percent of customer bills, excluding gross receipts taxes and franchise and right-of-way access fees, or seventy-five thousand dollars ($75,000) per customer per calendar year, whichever is less, for investor-ownedcustomer electricclasses utilities,with nothe dopportunity mto :participate;

band r(2) efor tgas ºutilities, o t n = .212462.1 s k m e - 11 - e a n e d r e l u [ A d less than three percent and no more than five percent of customertotal bills,annual excludingrevenues gross receipts taxes and franchise and right-of-way access fees, or seventy-five thousand dollars ($75,000) per customer per calendar year,year. whichever is less, for customer classes with the opportunity to participate HENRCº .»HENRC HENRCº;

and»HENRC [Funding for annual program costs] HENRCºThe commission shall approvefunding greater than three percent if requested by a utility and may consider funding greater than three percent if requested by an intervenor in an energy-efficiency filing;

and»HENRC (2) for gas utilities, [shall not exceed three] no more than five percent of total annual revenues [nor shall charges exceed] or seventy-five thousand dollars ($75,000) per customer per calendar year.

Provided that the public utility's total portfolio of programs remains cost-effective, no less than five h percent of the amount received by the public utility for u » r program costs shall be specifically directed to energy- tHB h291/a gPage e8 l i efficiency programs for low-income customers.

h r i s C.

Unless otherwise ordered by the commission, a h , e h tariff rider approved by the commission shall:

t u g e b l e e , gh (1) require language on customer bills n d d i = = o h explaining program benefits;

and l(2) ]be bapplied ,don i a ºmonthly rbasis. [B.

TheD. tariff rider shall] (2) be applied on e r = t e w d m a n o a monthly basis.

[unless otherwise allowed by the commission.

d m :

b r e t º o t n = .212462.1 s k m e - 12 - e a n e d r e l u [ A d C.] D.

The commission shall approve utility reconciliations of the tariff rider annually." HSEICº SECTION 4.

REPEAL.--Section 62-17-2 NMSA 1978 (being Laws 2005, Chapter 341, Section 2, as amended) is repealed.»HSEICrepealed. - 13 - h u » r t h g e l i h r i s h , e h t u g e b l e e , gh n d d i = = o h l ] b ,d i a º r e r = t e w d m a n o d m :

bHB r291/a ePage t9 º25 o t n = .212462.1 s k m e e a n e d r e l u [ A d