MICROGRID OVERSIGHT ACT

SB0235

SENATE BILL 235

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

INTRODUCED BY

Jeff Steinborn
and
Antoinette Sedillo Lopez

and
Joanne J. Ferrary
and
Patricia Roybal Caballero

AN ACT

RELATING TO UTILITIES; ENACTING THE MICROGRID OVERSIGHT ACT;
REQUIRING THE PUBLIC REGULATION COMMISSION TO PROMULGATE A RULE
CREATING A RENEWABLE PORTFOLIO STANDARD FOR MICROGRIDS;
REQUIRING ANNUAL REPORTING FROM MICROGRIDS; PROHIBITING PUBLIC
UTILITY RATE INCREASES TO COVER THE COSTS ASSOCIATED WITH
MICROGRID INFRASTRUCTURE DEVELOPMENT.

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

SECTION 1.
[
NEW MATERIAL
] SHORT TITLE.--This act may be
cited as the "Microgrid Oversight Act".

SECTION 2.
[
NEW MATERIAL
]

DEFINITIONS.--As used in the
Microgrid Oversight Act:

A. "commission" means the public regulation
commission;

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

C. "microgrid" means a permanent or temporary
electric system that:

(1) includes a self-source generation
resource;

(2) is capable of generating not less than
twenty megawatts; and

(3) is capable of operating independently or
connected to the grid;

D. "self-source generation resource"
means a
permanent or temporary electricity-generating resource that is
dedicated to primarily serving the persons connected either
directly or indirectly through business affiliates to a
microgrid
; and

E. "zero carbon resource" means an electricity-generating resource that emits no carbon dioxide into the
atmosphere.

SECTION 3.
[
NEW MATERIAL
] OVERSIGHT AUTHORITY--POWERS AND
DUTIES OF COMMISSION.--

A. On or before July 1, 2027, the commission shall
begin promulgating a rule to create a microgrid renewable
portfolio standard that an owner or operator of a microgrid
shall comply with that requires a microgrid to achieve
incremental benchmarks for electricity generation from
renewable and zero carbon resources, culminating in one hundred
percent electricity generation from zero carbon resources by
2045.

B. The commission may:

(1) require and collect fees that are used to
cover the cost of the commission's oversight of compliance with
the rule promulgated pursuant to Subsection A of this section;
and

(2) prohibit the operation of a microgrid that
fails to meet the requirements of the rule promulgated pursuant
to Subsection A of this section.

C. Beginning January 1, 2029 and January 1 every
year thereafter, an owner or operator of a microgrid shall
issue a report to the commission that includes:

(1) total annual energy generation measured in
megawatt-hours;

(2) total annual energy generation of
renewable energy measured in megawatt-hours, organized by
technology type;

(3) the status of compliance with the
microgrid renewable portfolio standard;

(4) total water use, including water used for
power generation and cooling of facilities directly served by
the microgrid; and

(5) other information the commission may
require to verify compliance.

SECTION 4.
Section 62-17-12 NMSA 1978 (being Laws 2025,
Chapter 93, Section 6) is recompiled in the Microgrid Oversight
Act and is amended to read:

"SELF-SOURCED POWER GENERATION.--

A. Persons located within the state may receive
electricity service using a [
qualified
] microgrid that may also
deliver electricity to equipment, lines and facilities operated
by an electric public utility; provided that the person and the
electric public utility enter into an electric service
agreement.

B. [
This section authorizes
] An electric public
utility, subject to approval by the [
public regulation
]
commission, [
to
]
may
acquire self-source generation resources
or energy and dedicate those resources or energy to retail
services, wholesale services or self-generation services, or
any combination of those services [
and rates established for
those services shall take into account the public interest and
need, reliability and affordability
]. The [
public regulation
]
commission shall not approve an acquisition pursuant to this
section from a facility that does not qualify as a self-source
generation resource
or if the acquisition would increase rates
to cover the costs associated with microgrid infrastructure
development
.

[
C. Energy generated and sold from a self-source
generation resource that is owned in whole or in part by a
qualified microgrid shall not be considered retail sales or
energy as contemplated under Sections 62-15-34, 62-16-4 and
62-18-10 NMSA 1978 until 2035, whether serving the qualified
microgrid or purchased in whole or in part by the electric
public utility to provide service. By 2045, all of the energy
that a qualified microgrid generates and sells shall be from
net-zero carbon resources. An operator of a qualified
microgrid shall file reports as required by the public
regulation commission, certifying the qualified microgrid's
progress toward and compliance with the net-zero carbon
resource standard.
]

C. The owner or operator of a microgrid may
purchase energy from an electric public utility; provided that
the purchase does not increase rates to cover the costs
associated with microgrid infrastructure development.

D. A person [
who
]
that
only provides [
self-source
generation sales
]
or sells electricity
from a self-source
generation resource to that person's employees or tenants, when
the service or commodity is not resold to or used by others,
shall not be considered an electric public utility.

[
E. As used in this section:

(1) "electric public utility" means an
electric public utility certified by the public regulation
commission to provide retail electric service in New Mexico
pursuant to the Public Utility Act that is not also a
distribution cooperative utility;

(2) "net-zero carbon resource" means an
electricity generation resource that emits no carbon dioxide
into the atmosphere, or that reduces methane emitted into the
atmosphere in an amount equal to no less than one-tenth of the
tons of carbon dioxide emitted into the atmosphere, as a result
of electricity production;

(3) "qualified microgrid" means a permanent or
temporary electrical system that:

(a) incorporates a microgrid controller;

(b) includes a self-source generation
resource that is capable of generating not less than twenty
megawatts; and

(c) is capable of operating
independently and disconnected from the grid;

(4) "self-source generation resource" means a
permanent or temporary electricity generating resource that is
dedicated to primarily serving the persons connected either
directly or indirectly through business affiliates to the
construction and installation of a qualified microgrid; and

(5) "self-source generation sales" means sales
of electricity to persons or utilities generated from a self-source generation resource.
]"

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