ABANDONED UTILITY TRANSITION COST RECOVERY

SB0109

SENATE BILL 109

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

INTRODUCED BY

Harold Pope
and
Elizabeth "Liz" Stefanics

and
Micaelita Debbie O’Malley

AN ACT

RELATING TO UTILITIES; PROVIDING THAT A QUALIFYING UTILITY THAT
IS ABANDONING OR THAT HAS ABANDONED A QUALIFYING GENERATING
FACILITY SHALL NOT BE ELIGIBLE TO APPLY TO RECOVER ENERGY
TRANSITION COSTS IF THE QUALIFYING UTILITY CONSTRUCTS NEW
NATURAL GAS RESOURCES.

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

SECTION 1.
Section 62-18-4 NMSA 1978 (being Laws 2019,
Chapter 65, Section 4) is amended to read:

"62-18-4.
FINANCING ORDER--APPLICATION CONTENTS--PENDING
APPLICATIONS.--

A. A qualifying utility that is abandoning a
qualifying generating facility may apply to the commission for
a financing order pursuant to this section to recover all of
its energy transition costs through the issuance of energy
transition bonds. To obtain a financing order, a qualifying
utility shall obtain approval to abandon a qualifying
generating facility pursuant to Section 62-9-5 NMSA 1978. The
application for the financing order may be filed as part of the
application for approval to abandon a qualifying generating
facility.

B. An application for a financing order shall
include:

(1) a description of the facility that the
qualifying utility proposes to abandon or for which abandonment
authority was granted after December 31, 2018;

(2) an estimate of the energy transition costs
and shall:

(a) identify the severance pay and job
training expenses for affected employees losing their jobs as a
result of an abandoned qualifying generating facility and any
associated mine that only services the abandoned qualifying
generating facility;

(b) identify costs not previously
collected from the qualifying utility's customers for plant
decommissioning and mine reclamation costs, subject to any
limitations ordered by the commission prior to January 1, 2019
and affirmed by the New Mexico supreme court prior to the
effective date of the Energy Transition Act, associated with
the abandoned qualifying generating facility; and

(c) include an estimate of the financing
costs associated with each series of energy transition bonds
proposed to be issued;

(3) an estimate of the amount of energy
transition charges necessary to recover the costs in Paragraph
(2) of this subsection and the proposed calculation thereof,
based on the estimated date of issuance and estimated principal
amount of each series of energy transition bonds proposed to be
issued;

(4) a description of the proposed adjustment
mechanism that complies with the provisions of Section [
6 of
the Energy Transition Act
]
62-18-6 NMSA 1978
;

(5) a memorandum with supporting exhibits from
a securities firm, such firm to be attested to by the state
board of finance as being experienced in the marketing of bonds
and capable of providing such a memorandum, that the proposed
issuance satisfies the current published AAA rating or
equivalent rating criteria of at least one nationally
recognized statistical rating organization for issuances
similar to the proposed energy transition bonds. The request
for such attestation may be made by a qualifying utility prior
to an application for a financing order, and the state board of
finance shall act upon such a request promptly;

(6) a commitment by the qualifying utility to
file with the commission following the issuance of the energy
transition bonds:

(a) a description of the final structure
and pricing of the bonds;

(b) updated financing costs and payment
amount required pursuant to Section [
16 of the Energy
Transition Act
]
62-18-6 NMSA 1978
; and

(c) an updated calculation of the energy
transition charges;

(7) an estimate of timing of the issuance and
term of the energy transition bonds, or series of bonds;
provided that the scheduled final maturity for each bond
issuance shall be no longer than twenty-five years;

(8) identification of plans to sell, assign,
transfer or convey, other than as a security, interest in
energy transition property, including identification of an
assignee, and demonstration that the assignee will be a
financing entity wholly owned, directly or indirectly, by the
qualifying utility that will be initially capitalized by the
qualifying utility in such a way that equity interests in the
financing entity are at least one-half percent of the total
capital of the assignee;

(9) identification of ancillary agreements
that may be necessary or appropriate;

(10) a description of a proposed ratemaking
process to reconcile and recover or refund any difference
between the energy transition costs financed by the energy
transition bonds and the actual final energy transition costs
incurred by the qualifying utility or the assignee;

(11) a proposed ratemaking method to account
for the reduction in the qualifying utility's cost of service

associated with the amount of undepreciated investments being
recovered by the energy transition charge at the time that
charge becomes effective; and

(12) a statement from the qualifying utility
committing that the qualifying utility will use commercially
reasonable efforts to obtain the lowest cost objective.

C. The application may include requests for
approvals for new resources necessitated by the abandonment of
a qualifying generating facility.

D. The qualifying utility or the commission may
defer applications for needed approvals for new resources to a
separate proceeding; provided that the application identifies
adequate potential new resources sufficient to provide
reasonable and proper service to retail customers.

E. If an application for approval to abandon a
qualifying generating facility is pending before the commission
on the effective date of the Energy Transition Act, the
qualifying utility may file a separate application for a
financing order, and the commission may join or consolidate the
application for a financing order with the pending proceeding
involving abandonment of the qualifying generating facility,
with the consent of the applicant. On such joinder or
consolidation, the time periods prescribed by the Energy
Transition Act shall become applicable to the joined or
consolidated case as of the date of the joinder or
consolidation.

F. If a qualifying utility does not recover energy
transition costs pursuant to the Energy Transition Act, the
energy transition costs may be recovered pursuant to other
applicable provisions of the Public Utility Act.
The
provisions of this subsection shall not apply to a qualifying
generating facility described in Subsection G of this section.

G. A qualifying utility that is abandoning or has
abandoned a qualifying generating facility shall not be
eligible to apply to the commission for a financing order
pursuant to this section to recover its energy transition costs
if the qualifying utility is investing in, constructing,
acquiring or operating new natural gas resources.
"

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