UTILITY & ENERGY CHANGES

SB0308

SENATE BILL 308

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

INTRODUCED BY

William E. Sharer

AN ACT

RELATING TO THE ENVIRONMENT; PERMITTING PUBLIC UTILITIES TO
PETITION FOR A WAIVER OF RENEWABLE PORTFOLIO STANDARDS;
ALLOWING PUBLIC UTILITIES WITH WAIVERS TO PURCHASE, CONSTRUCT
OR ACQUIRE CARBON-BASED ENERGY GENERATION FACILITIES AND TO
OPERATE THOSE FACILITIES FOR THE DURATION OF THEIR USEFUL LIFE;
ALLOWING PUBLIC UTILITIES WITH WAIVERS TO PURCHASE ENERGY
PRODUCED OUTSIDE THE STATE; ENACTING A NEW SECTION OF THE
ENVIRONMENTAL IMPROVEMENT ACT; ESTABLISHING A VOLUNTARY
CERTIFIED NATURAL GAS MONITORING AND REPORTING PROGRAM;
REQUIRING THE ENVIRONMENTAL IMPROVEMENT BOARD TO ADOPT A CARBON
INTENSITY STANDARD FOR NEW MEXICO NATURAL GAS PRODUCTION;
PROVIDING FOR ANNUAL RENEWAL OF CERTIFICATION; RECOGNIZING
CERTIFICATION AS A VOLUNTARY COMPLIANCE MECHANISM TO SUPPORT
STATEWIDE GREENHOUSE GAS EMISSIONS REDUCTIONS; AUTHORIZING
PUBLIC UTILITIES, ELECTRIC GENERATION RESOURCES AND QUALIFIED
MICROGRIDS TO PROCURE AND USE CERTIFIED NATURAL GAS; CREATING
THE GREENHOUSE GAS-REDUCING NATURAL GAS TECHNOLOGY CORPORATE
INCOME TAX CREDIT.

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

SECTION 1.
Section 62-16-4 NMSA 1978 (being Laws 2004,
Chapter 65, Section 4, as amended) is amended to read:

"62-16-4. RENEWABLE PORTFOLIO STANDARD.--

A. A public utility shall meet the renewable
portfolio standard requirements, as provided in this section,
to include renewable energy in its electric energy supply
portfolio as demonstrated by its retirement of renewable energy
certificates; provided that the associated renewable energy is
delivered to the public utility and assigned to the public
utility's New Mexico customers. For public utilities other
than rural electric cooperatives and municipalities,
requirements of the renewable portfolio standard are:

(1) no later than January 1, 2015, renewable
energy shall comprise no less than fifteen percent of each
public utility's total retail sales
of electricity
to New
Mexico customers;

(2) no later than January 1, 2020, renewable
energy shall comprise no less than twenty percent of each
public utility's total retail sales
of electricity
to New
Mexico customers;

(3) no later than January 1, 2025, renewable
energy shall comprise no less than forty percent of each public
utility's total retail sales of electricity to New Mexico
customers;

(4) no later than January 1, 2030, renewable
energy shall comprise no less than fifty percent of each public
utility's total retail sales of electricity to New Mexico
customers;

(5) no later than January 1, 2040, renewable
energy resources shall supply no less than eighty percent of
all retail sales of electricity in New Mexico; provided that
compliance with this standard until December 31, 2047 shall not
require the public utility to displace zero carbon resources in
the utility's generation portfolio on [
the effective date of
this 2019 act
]
June 14, 2019
; and

(6) no later than January 1, 2045, zero carbon
resources shall supply one hundred percent of all retail sales
of electricity in New Mexico. Reasonable and consistent
progress shall be made over time toward this requirement.

B. In administering the standards required by
Paragraphs (5) and (6) of Subsection A of this section, the
commission shall:

(1) not jeopardize the operation of a sewage
treatment facility that captures and combusts methane gas in
the facility's operations;

(2) maintain and protect the safety, reliable
operation and balancing of loads and resources on the electric
system;

(3) prevent unreasonable impacts to customer
electricity bills, taking into consideration the economic and
environmental costs and benefits of renewable energy resources
and zero carbon resources;

(4) prevent carbon dioxide emitting
electricity-generating resources from being reassigned,
redesignated or sold as a means of complying with the standard;

(5) in consultation with the energy, minerals
and natural resources department, undertake programs not
prohibited by law to achieve the standard;

(6) in consultation with the department of
environment, ensure that the standard does not result in
material increases to greenhouse gas emissions from entities
not subject to commission oversight and regulation; and

(7) in consultation with electricity
transmission system operators responsible for balancing New
Mexico electricity loads and resources, issue a report to the
legislature by July 1, 2020, and each July 1 every four years
thereafter. The report shall include:

(a) review of the standard, with a focus
on technologies, forecasts, existing transmission,
environmental protection, public safety, affordability and
electricity transmission and distribution system reliability;

(b) evaluation of the anticipated
financial costs and benefits to electric utilities in
implementing the standard, including the impacts and benefits
to customer electricity bills; and

(c) identification of the barriers to,
and benefits of, achieving the standard.

C. Any customer that is a political subdivision of
the state, or any educational institution designated in Article
12, Section 11 of the constitution of New Mexico with an
enrollment of twenty thousand students or more during the fall
semester on its main campus, with consumption exceeding twenty
thousand megawatt-hours per year at any single location or
facility and that owns facilities that produce renewable energy
or hosts such facilities through a renewable purchased power
agreement, shall not be charged by the utility for power
purchases of one year or less or fuel on the amount of
electricity purchased from the utility equal to the amount of
renewable energy produced or hosted by the customer. The
customer shall annually certify to the state auditor and notify
the commission and the customer's serving electric utility of
the amount of renewable energy produced at the customer-owned
or customer-hosted facilities that generate renewable energy.
The customer shall also certify to the state auditor and notify
the commission that the customer will retire all renewable
energy certificates associated with the renewable energy
produced by those facilities. Any financial benefits as a
result of the provisions of this subsection shall accrue to the
customer immediately [
upon the effective date of this 2019 act
]

on June 14, 2019
and shall be reflected in customer bills each
month, subject to annual true-up and reconciliation. The
provisions of this subsection shall not prevent the utility
from recovering all of its reasonable and prudent fuel and
purchased power costs.

D. Upon a motion or application by a public utility
the commission shall, or upon a motion or application by any
other person the commission may, open a docket to develop and
provide financial or other incentives to encourage public
utilities to produce or acquire renewable energy that exceeds
the applicable annual renewable portfolio standard set forth in
this section; results in reductions in carbon dioxide emissions
earlier than required by Subsection A of this section; or
causes a reduction in the generation of electricity by coal-fired generating facilities, including coal-fired generating
facilities located outside of New Mexico. The incentives may
include additional earnings and capital investment
opportunities for resources used in furtherance of the outcomes
described in this subsection.

E. If, in any given year, a public utility
determines that the average annual levelized cost of renewable
energy that would need to be procured or generated for purposes
of compliance with the renewable portfolio standard would be
greater than the reasonable cost threshold, the public utility
shall not be required to incur that excess cost; provided that
the existence of this condition excusing performance in any
given year shall not operate to delay compliance with the
renewable portfolio standard in subsequent years. The
provisions of this subsection do not preclude a public utility
from accepting a project with a cost that would exceed the
reasonable cost threshold. When a public utility can generate
or procure renewable energy at or below the reasonable cost
threshold, it shall be required to do so to the extent
necessary to meet the applicable renewable portfolio standard
and shall not be precluded from exceeding the standard.

F. By September 1, 2007 and until June 30, 2019, a
public utility shall file a report to the commission on its
procurement and generation of renewable energy during the prior
calendar year and a procurement plan that includes:

(1) the cost of procurement for any new
renewable energy resource in the next calendar year required to
comply with the renewable portfolio standard; and

(2) testimony and exhibits that demonstrate
that the proposed procurement is reasonable as to its terms and
conditions considering price, availability, reliability, any
renewable energy certificate values and diversity of the
renewable energy resource; or

(3) demonstration that the plan is otherwise
in the public interest.

G. By July 1, 2020, and each July 1 thereafter, a
public utility shall file a report to the commission on the
public utility's procurement and generation of renewable energy
since the last report and a procurement plan that includes:

(1) the cost of procurement for new renewable
energy required to comply with the renewable portfolio
standard;

(2) the capital, operating and fuel costs on a
per-megawatt-hour basis during the preceding calendar year of
each nonrenewable generation resource rate-based by the
utility, or dedicated to the utility through a power purchase
agreement of one year or longer, and the nonrenewable
generation resources' carbon dioxide emissions on a per-megawatt-hour basis during that same year;

(3) information, including exhibits, as
applicable, that demonstrates that the proposed procurement:

(a) was the result of competitive
procurement that included opportunities for bidders to propose
purchased power, facility self-build or facility build-transfer
options;

(b) has a cost that is reasonable as
evidenced by a comparison of the price of electricity from
renewable energy resources in the bids received by the public
utility to recent prices for comparable energy resources
elsewhere in the southwestern United States; and

(c) is in the public interest,
considering factors such as overall cost and economic
development opportunities; and

(4) strategies used to minimize costs of
renewable energy integration, including location, diversity,
balancing area activity, demand-side management and load
management.

H. The commission shall approve or modify a public
utility's procurement plan within ninety days and may approve
the plan without a hearing, unless a protest is filed that
demonstrates to the commission's reasonable satisfaction that a
hearing is necessary. The commission may modify a plan after
notice and hearing. The commission may, for good cause, extend
the time to approve a procurement plan for an additional ninety
days. If the commission does not act within the ninety-day
period, the procurement plan is deemed approved.

I. The commission may reject a procurement plan

if, within forty days of filing, the commission finds that the
plan does not contain the required information and, upon the
rejection, shall provide the public utility the time necessary
to file a revised plan; provided that the total amount of
renewable energy required to be procured by the public utility
shall not change.

J. A public utility may petition the commission to
grant a waiver of the renewable portfolio standards and zero
carbon emission requirements on establishing that efforts to
meet the renewable portfolio standards would result in
residential rate increases greater than one-half percent to
maintain the same level of reliability for its system in the
state. The waiver shall allow the public utility to purchase,
construct or otherwise acquire a carbon-based energy generation
facility, and the public utility shall be allowed to continue
to produce electricity from the facility as provided in the
waiver for the entire useful life of the facility. A waiver
may also allow the purchase of energy produced out of state
from a carbon-based energy generation source, and the waiver
shall be recognized for the duration of the purchase contract
term for the out-of-state energy. Any waiver granted by the
commission shall be reported to the governor and the
legislature in the commission's annual report.
"

SECTION 2.
A new section of the Environmental Improvement
Act is enacted to read:

"[
NEW MATERIAL
] CERTIFIED NEW MEXICO NATURAL GAS PROGRAM--VOLUNTARY MONITORING AND REPORTING--CARBON INTENSITY STANDARD--UTILITY USE.--

A. The department shall establish a voluntary
certified natural gas monitoring and reporting program for
operators of oil and gas wells seeking to market natural gas as
"certified New Mexico low-emission gas".

B. An operator shall not represent natural gas as
certified pursuant to this section unless the producer or
operator is enrolled in the voluntary monitoring and reporting
program established by the department. Participation in the
voluntary monitoring and reporting program is not mandatory;
however, participation may provide a pathway for demonstrating
emissions reductions, methane mitigation and market
differentiation consistent with statewide greenhouse gas
planning and reduction efforts.

C. The board shall promulgate rules establishing
robust quantification, monitoring, reporting and verification
protocols to ensure that certification is credible,
measurement-based and transparent. Rules adopted pursuant to
this section shall prioritize empirical and measurement-based
emissions monitoring systems, including continuous monitoring,
remote sensing and leak detection technologies, rather than
reliance solely on default emission factors.

D. The board shall promulgate rules governing the
voluntary monitoring and reporting program, including
requirements for:

(1) monitoring and measurement of methane
emissions and greenhouse gas emissions associated with natural
gas production;

(2) reporting of emissions data in a form and
manner prescribed by the department;

(3) verification procedures, including
third-party audits as the board deems appropriate;

(4) confidentiality protections and
transparency requirements;

(5) eligibility criteria for certification;

(6) consideration of qualified greenhouse
gas-reducing natural gas technology and operational practices
that may be used to reduce emissions and achieve compliance
pursuant to this section; and

(7) procedures under which monitoring and
reporting conducted pursuant to this section may satisfy, in
whole or in part, applicable greenhouse gas monitoring and
reporting requirements adopted by the board.

E. Monitoring and reporting requirements adopted
pursuant to this section shall include emissions associated
with production, gathering, boosting, processing, compression
and transmission up to the first point of sale or delivery.

F. Following establishment of the voluntary
monitoring and reporting program, the department shall collect
monitoring and reporting data from enrolled operators for a
period of not less than one year. The department shall ensure
that collected data are accurate, consistent and sufficient to
support benchmarking and standard-setting pursuant to this
section. Following completion of the one-year data collection
period, the board shall adopt by rule a carbon intensity
standard for New Mexico natural gas production.

G. In developing the carbon intensity standard, the
board shall consider:

(1) emissions monitoring data collected
pursuant to this section;

(2) recommendations from the department;

(3) technical and regulatory input from the
oil conservation division of the energy, minerals and natural
resources department;

(4) utility procurement and reliability
considerations from the public regulation commission; and

(5) a technical report prepared by San Juan
college evaluating emissions performance, measurement
methodologies, mitigation practices and benchmarking of
certified natural gas programs in New Mexico, Wyoming and the
Rocky Mountain region.

H. The carbon intensity standard adopted pursuant
to this section may include methane intensity thresholds, life
cycle greenhouse gas limits, tiered certification grades and
progressive tightening requirements over time. In promulgating
rules and adopting the carbon intensity standard, the board
shall consider the availability, feasibility and deployment of
qualified greenhouse gas-reducing natural gas technology and
operational practices that reduce methane emissions and life
cycle greenhouse gas intensity.

I. The board shall consider participation in the
voluntary certified natural gas monitoring and reporting
program as a mechanism that may contribute to statewide
greenhouse gas emissions reductions.

J. The board may recognize certified natural gas
production pursuant to this section as a voluntary compliance
mechanism or benchmark for greenhouse gas intensity reductions
in future rulemaking adopted pursuant to the Environmental
Improvement Act or the Air Quality Control Act.

K. The department may incorporate certified natural
gas program data into statewide greenhouse gas emissions
inventories and reports to demonstrate voluntary reductions
achieved by New Mexico producers.

L. Certification granted pursuant to this section
shall be valid for not more than one year. Each certified
operator shall apply for renewal annually in accordance with
procedures established by the department and rules promulgated
by the board. Renewal shall require submission of updated
emissions monitoring data, demonstration of continued
compliance with the carbon intensity standard and verification
documentation as required by rule. Failure to renew
certification shall result in expiration of certification
status, and the operator shall not represent its production as
certified pursuant to this section. The department shall
maintain a registry of certified operators and certified gas
volumes, subject to confidentiality protections adopted by
rule.

M. A public utility, electric generation resource
or qualified microgrid operating in New Mexico may procure,
transport, deliver and use certified New Mexico low-emission
natural gas produced pursuant to this section for electricity
generation or for reliability and resilience purposes.

N. The public regulation commission shall allow a
public utility to include certified natural gas procurement as
part of a resource portfolio or fuel supply plan; provided that
the procurement is otherwise reasonable and prudent.

O. Nothing in this section shall be construed to
require a public utility or generation resource to procure
certified natural gas; however, certified natural gas shall be
recognized as an eligible voluntary compliance and emissions-reduction mechanism supporting statewide greenhouse gas
planning efforts.

P. As used in this section, "qualified greenhouse
gas-reducing natural gas technology" means any equipment,
facility, system, process, software or operational practice
that is installed, deployed or implemented to reduce, prevent,
capture, convert, destroy or otherwise mitigate emissions of
carbon dioxide, methane or other greenhouse gases associated
with the production, gathering, processing, transportation,
storage, distribution or end use of natural gas, as compared to
conventional or uncontrolled operations. "Qualified greenhouse
gas-reducing natural gas technology" includes:

(1) methane leak detection, monitoring and
repair systems;

(2) continuous emissions monitoring systems;

(3) direct air capture equipment;

(4) advanced valves, seals, compressors and
zero- or low-bleed pneumatic devices;

(5) vapor recovery units and reduced venting
or flaring systems;

(6) electrification of field equipment or
compression systems;

(7) carbon capture, utilization and storage
technologies;

(8) combustion efficiency improvements that
reduce greenhouse gas emissions;

(9) digital, automated or remote sensing
technologies that optimize operations to reduce emissions; and

(10) gas treatment or conditioning
technologies that reduce life cycle greenhouse gas intensity."

SECTION 3.
A new section of the Corporate Income and
Franchise Tax Act is enacted to read:

"[
NEW MATERIAL
] GREENHOUSE GAS-REDUCING NATURAL GAS
TECHNOLOGY CORPORATE INCOME TAX CREDIT.--

A. A taxpayer that installs qualified greenhouse
gas-reducing natural gas technology, as defined by Section 2 of
this 2026 act, may claim a tax credit against the taxpayer's
tax liability imposed pursuant to the Corporate Income and
Franchise Tax Act. The tax credit authorized pursuant to this
section may be referred to as the "greenhouse gas-reducing
natural gas technology corporate income tax credit".

B. The amount of the tax credit shall be in an
amount equal to fifteen percent of the purchase price of
equipment and software, including the purchase of a license for
software, necessary to install or deploy qualified greenhouse
gas-reducing natural gas technology that was purchased and
installed during the taxable year in which the tax credit is
claimed.

C. A taxpayer shall apply for certification of
eligibility for the tax credit from the department of
environment on forms and in the manner prescribed by that
department. If the department of environment determines that a
taxpayer meets the requirements of this section, that
department shall issue a dated certificate of eligibility to
the taxpayer providing the amount of tax credit for which the
taxpayer is eligible and the taxable year in which the tax
credit may be claimed. The department of environment shall
provide the department with the certificates of eligibility
issued pursuant to this subsection in an electronic format at
regularly agreed-upon intervals.

D. Any excess not used in a taxable year shall not
be refunded and shall not be carried forward to subsequent
taxable years.

E. A taxpayer allowed a tax credit pursuant to this
section shall report the amount of the tax credit to the
department in a manner required by the department.

F. The tax credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the total annual aggregate cost of
the tax credit."

SECTION 4.
APPLICABILITY.--The provisions of Section 3 of
this act apply to taxable years beginning on or after January
1, 2026.

SECTION 5.
EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2026.

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