VIRTUAL POWER PLANT ACT

HB0311

HOUSE BILL 311

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

INTRODUCED BY

Dayan Hochman-Vigil

AN ACT

RELATING TO UTILITIES; ENACTING THE VIRTUAL POWER PLANT ACT;
REQUIRING ELECTRIC PUBLIC UTILITIES TO IMPLEMENT VIRTUAL POWER
PLANT PROGRAMS; PROVIDING AUTHORITY FOR THE PUBLIC REGULATION
COMMISSION TO PROMULGATE RULES RELATED TO VIRTUAL POWER PLANT
PROGRAMS; ESTABLISHING PARTICIPATION AND COST RECOVERY
CONDITIONS FOR A VIRTUAL POWER PLANT PROGRAM.

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

SECTION 1.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] SHORT TITLE.--This act may be cited as the
"Virtual Power Plant Act"."

SECTION 2.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] DEFINITIONS.--As used in the Virtual Power
Plant Act:

A. "commission" means the public regulation
commission;

B. "distributed energy resource" means distributed
generation, energy storage systems, electric vehicles,
microgrids, smart panels, fuel cells and demand-side management
measures that are deployed at the distribution system level on
either the customer or utility side of the meter;

C. "distributed energy resource aggregator" means a
person that manages customer enrollment, participation and
performance-based compensation and ensures the delivery of grid
services from the distributed energy resources in a virtual
power plant;

D. "electric public utility" means an electric
public utility regulated by the commission pursuant to the
provisions of the Public Utility Act that is not also a
cooperative nonprofit membership corporation organized pursuant
to the provisions of the Rural Electric Cooperative Act;

E. "grid service" means a capacity, an energy or an
ancillary service, including avoided or deferred infrastructure
costs, that supports grid operations;

F. "performance-based compensation" means payments
made in return for, and in proportion to, the provision of grid
services by a virtual power plant;

G. "performance requirements" means the terms by
which a distributed energy resource aggregator is eligible for
performance-based compensation; and

H. "virtual power plant" means an aggregation of
distributed energy resources that are collectively organized
via software to provide grid services, reducing or shifting
customer load or exporting power as needed."

SECTION 3.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] VIRTUAL POWER PLANT PROGRAMS--RULEMAKING
AUTHORITY.--

A. On or before December 31, 2026, the commission
shall promulgate rules to require an electric public utility to
implement a virtual power plant program that creates a
framework enabling distributed energy resources to be
aggregated, by the utility or a third party, as a virtual power
plant to provide grid services.

B. In promulgating rules regarding virtual power
plant programs, the commission shall:

(1) consider the potential interaction between
a virtual power plant program and other programs an electric
public utility is required to implement;

(2) identify strategies to maximize benefits
in avoided generation, transmission and distribution
investments through the implementation of virtual power plant
programs;

(3) require electric public utilities to file
tariffs establishing performance requirements and performance-based compensation specific to the applicable technologies that
may be used as part of a virtual power plant program; provided
that the tariff shall allow owners or end-users of distributed
energy resources to lock in the compensation levels in effect
at the time that the commission approves the virtual power
plant program for a period of five years;

(4) prescribe methods for setting and revising
performance-based compensation that reflect the full value of
grid services provided by a virtual power plant program;

(5) ensure that:

(a) an electric public utility serving
as a distributed energy resource aggregator does not have a
competitive advantage over a third-party aggregator based on
access to customer data, marketing or other information to
which the electric public utility has access;

(b) a distributed energy resource
aggregator or an owner or end-user of a distributed energy
resource is not disqualified from participation in a virtual
power plant program based on that distributed energy resource
aggregator's or owner's or end-user's underlying rate schedule
or receipt of other incentives; and

(c) a distributed energy resource
aggregator or an owner or end-user of a distributed energy
resource shall not be compensated more than once for providing
a service; and

(6) determine:

(a) an initial virtual power program
parameter that shall be set at no less than fifteen percent of
peak demand during the first five years of the program;

(b) an appropriate regulatory process
for review and revision of virtual power plant program
parameters, including expanding the program size after the
first five years of the program;

(c) data access requirements for
distributed energy resource aggregators, including third-party
aggregator access to customer data, grid data and hosting
capacity analysis;

(d) grid event parameters for when and
how the owner or end-user of a distributed energy resource
shall respond to a grid event, including frequency, duration
and notice; and

(e) protocols for stakeholders to
provide input on the virtual power plant programs proposed by
electric utilities."

SECTION 4.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] VIRTUAL POWER PLANT PROGRAM--APPLICATIONS.--

A. No later than February 1, 2027, an electric
public utility shall submit an application to implement a
virtual power plant program.

B. The commission shall approve, deny or order
revisions to an electric public utility's application to
implement a virtual power plant program."

SECTION 5.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] ELIGIBILITY OF ENERGY STORAGE SYSTEMS.--

A. To be eligible to participate in a virtual power
plant program, an owner or end-user of an energy storage
resource with a usable energy capacity of one megawatt or
higher shall be subject to minimum wage and benefit rate
requirements pursuant to the provisions of the Public Works
Minimum Wage Act.

B. The distributed energy resource aggregator
administering a virtual power plant program shall file an
affidavit with the commission and the workforce solutions
department stating that all energy storage resources with a
usable energy capacity of one megawatt or higher participating
in the program are in compliance with this section.

C. If the distributed resource aggregator adds
additional energy storage resources to a virtual power plant
program after an affidavit has been filed, the aggregator shall
file an updated affidavit with the commission.

D. The commission may request additional
information related to compliance with this section from an
electric public utility or a distributed energy resource
aggregator."

SECTION 6.
A new section of Chapter 62 NMSA 1978 is
enacted to read:

"[
NEW MATERIAL
] COST RECOVERY FOR ELECTRIC PUBLIC
UTILITIES.--

A. An electric public utility may recover
reasonable costs resulting from the implementation of a virtual
power plant program through cost recovery mechanisms approved
by the commission.

B. Recoverable costs include:

(1) foundational, operating and information
technology costs or investments; and

(2) operating technology costs or
investments."

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