VALUATION OF ENERGY STORAGE PROPERTY

HB0309

HOUSE BILL 309

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Nathan P. Small

AN ACT

RELATING TO TAXATION; AMENDING A SPECIAL METHOD OF VALUATION TO
INCLUDE PROPERTY USED FOR STORAGE OF ELECTRIC POWER OR ENERGY.

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

SECTION 1.
Section 7-36-29 NMSA 1978 (being Laws 1975,
Chapter 165, Section 10, as amended) is amended to read:

"7-36-29. SPECIAL METHOD OF VALUATION--PROPERTY USED FOR
THE GENERATION, TRANSMISSION, [
OR
] DISTRIBUTION
OR STORAGE
OF
ELECTRIC POWER OR ENERGY.--

A. All property used for the generation,
transmission, [
or
] distribution
or storage
of electric power or
energy subject to valuation for property taxation purposes
shall be valued in accordance with the provisions of this
section.

B. As used in this section:

(1) "depreciation" means straight line
depreciation over the useful life of the item of property;

(2) "electric plant" means all property
situated in this state used or useful for the generation,
transmission, [
or
] distribution
or storage
of electric power or
energy, but does not include land, land rights, general
buildings and improvements, construction work in progress,
materials and supplies and licensed vehicles;

(3) "construction work in progress" means the
total of the balances of work orders for an electric plant in
process of construction on the last day of the preceding
calendar year exclusive of land, land rights and licensed
vehicles;

(4) "general buildings and improvements" means
buildings of the nature of offices, residential housing,
warehouses, shops and associated improvements in general use by
the taxpayer and not directly associated with generation,
transmission, [
or
] distribution
or storage
of electric power or
energy;

(5) "materials and supplies" means the cost,
including sales, use and excise taxes, and transportation costs
to point of delivery in this state, less purchases and trade
discounts, of all unapplied material and supplies on hand in
this state as of December 31 of the preceding calendar year;
[
and
]

(6) "storage" means energy storage technology
that converts, stores and returns electricity to alleviate
disparities between electricity supply and demand, to
facilitate the dispatching of electricity or to increase
economic return on the sale of electricity; and

[
(6)
]
(7)
"tangible property cost" means the
actual cost of acquisition or construction of property,
including additions, retirements, adjustments and transfers,
but without deduction of related accumulated provision for
depreciation, amortization or other purposes; "tangible
property cost" excludes the cost of property contributed to, or
acquired with funds contributed to, a utility by or on behalf
of a ratepayer or potential ratepayer for the expansion,
improvement or replacement of property used for the
transmission or distribution of electric power of the utility.

C. An electric plant shall be valued as follows:

(1) the department shall determine the
tangible property cost of the electric plant;

(2) such tangible property cost shall then be
reduced by the related accumulated provision for depreciation
and any other justifiable factors, including functional and
economic obsolescence, such as the limitation on the use of the
property based on the available reserves committed to the
property; and

(3) notwithstanding the foregoing
determination of value for property taxation purposes, the
value for property taxation purposes of an electric plant shall
not be less than twenty percent of the tangible property cost
of the electric plant.

D. The value of construction work in progress shall
be fifty percent of the amount expended and entered upon the
accounting records of the taxpayer as of December 31 of the
preceding calendar year as construction work in progress.

E. The value of materials and supplies shall be the
tangible property cost for such property as of December 31 of
the preceding calendar year.

F. Each item of property having a taxable situs in
the state and valued under this section shall have its net
taxable value allocated to the governmental units in which the
property is located.

G. The department shall adopt regulations [
under
Section 72-31-88 NMSA 1953
] to implement the provisions of this
section."

SECTION 2.
APPLICABILITY.--The provisions of this act
apply to property tax years beginning on or after January 1,
2027.

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