MICROGRID OVERSIGHT ACT

SB0039

SENATE BILL 39

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

INTRODUCED BY

Jeff Steinborn

AN ACT

RELATING TO UTILITIES; ENACTING THE MICROGRID OVERSIGHT ACT;
PROVIDING AUTHORITY FOR THE PUBLIC REGULATION COMMISSION TO
REGULATE MICROGRIDS; CREATING A MICROGRID RENEWABLE PORTFOLIO
STANDARD; PROHIBITING RATE INCREASES DUE TO PUBLIC UTILITIES
PURCHASING POWER FROM MICROGRIDS.

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 certified by the commission to provide retail
electric service in New Mexico, pursuant to the Public Utility
Act, that is not also a distribution cooperative utility;

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

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

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

D. "renewable energy" means electric energy
produced by use of a renewable energy resource;

E. "renewable energy resource" means the following
energy resources, with or without energy storage:

(1) solar, wind and geothermal;

(2) hydropower facilities;

(3) biomass resources, limited to agriculture
or animal waste, small-diameter timber not to exceed eight
inches, salt cedar and other phreatophyte or woody vegetation
removed from river basins or watersheds in New Mexico; provided
that these resources are from facilities certified by the
energy, minerals and natural resources department to:

(a) be of appropriate scale to have
sustainable feedstock in the near vicinity;

(b) have zero life cycle carbon
emissions; and

(c) meet scientifically determined
restoration, sustainability and soil nutrient principles;

(4) fuel cells that do not use fossil fuels to
create electricity; and

(5) landfill gas and anaerobically digested
waste biogas;

F. "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
;

G. "zero carbon energy" means electric energy
produced by use of a zero carbon resource; and

H. "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. The commission has authority over matters
relating to the approval and operation of microgrids in the
state.

B. The commission may:

(1) require and collect fees that are used to
cover the cost of the commission's oversight of microgrids from
owners and operators of microgrids; and

(2) enter premises occupied by a microgrid,
during reasonable hours and after providing notice to the owner
or operator of the microgrid, to exercise powers or duties
pursuant to the Microgrid Oversight Act.

C. The commission shall:

(1) promulgate rules regarding the microgrid
renewable portfolio standard, including requirements regarding
compliance, accurate metering, energy auditing, recordkeeping
and reporting; and

(2) approve new microgrids only if the owner
or operator can provide evidence that the microgrid will be
compliant with current microgrid renewable portfolio standards.

SECTION 4.
[
NEW MATERIAL
] MICROGRID RENEWABLE PORTFOLIO
STANDARD.--

A. A microgrid shall meet the microgrid renewable
portfolio standard requirements to include renewable energy in
its electric energy supply portfolio, as demonstrated by
accurate metering and energy audits.

B. Renewable energy shall comprise no less than
forty percent of a microgrid's total annual energy generation:

(1) for a microgrid that begins operation on
or after May 20, 2026; and

(2) no later than January 1, 2028 for a
microgrid in operation prior to May 20, 2026.

C. Renewable energy shall comprise no less than
fifty percent of a microgrid's total annual energy generation
no later than January 1, 2030.

D. Renewable energy shall comprise no less than
eighty percent of a microgrid's total annual energy generation
no later than January 1, 2040.

E. Zero carbon energy shall comprise one hundred
percent of a microgrid's total annual energy generation no
later than January 1, 2045.

F. An owner or operator of a microgrid shall issue
a report to the commission beginning July 1, 2027, and January
1 every year thereafter, 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 5.
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
or otherwise adversely affect ratepayers.

C. The owner or operator of a microgrid may
purchase energy from an electric public utility; provided that
the purchase does not increase rates for existing customers of
the utility or otherwise adversely impact ratepayers.

[
C.
]
D.
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.

D.
]
E.
A person who 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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