1 AN ACT 2 RELATING TO PUBLIC UTILITIES; ENACTING THE ENERGY TRANSITION 3 ACT; AUTHORIZING CERTAIN UTILITIES THAT ABANDON CERTAIN 4 GENERATING FACILITIES TO ISSUE BONDS PURSUANT TO A FINANCING 5 ORDER ISSUED BY THE PUBLIC REGULATION COMMISSION; PROVIDING 6 PROCUREMENT OF REPLACEMENT RESOURCES, INCLUDING LOCATION OF 7 THE REPLACEMENT RESOURCES; AUTHORIZING THE COMMISSION TO 8 IMPOSE A FEE ON THE QUALIFYING UTILITY TO PAY COMMISSION 9 EXPENSES FOR CONTRACTS FOR SERVICES FOR LEGAL COUNSEL AND 10 FINANCIAL ADVISORS TO PROVIDE ADVICE AND ASSISTANCE FOR 11 PURPOSES RELATED TO THE ACT; PROVIDING PROCEDURES FOR 12 REHEARING AND JUDICIAL REVIEW; PROVIDING FOR THE TREATMENT OF 13 ENERGY TRANSITION BONDS BY THE COMMISSION; CREATING SECURITY 14 INTERESTS IN CERTAIN PROPERTY; PROVIDING FOR THE PERFECTION 15 OF INTERESTS IN CERTAIN PROPERTY; EXEMPTING ENERGY TRANSITION 16 CHARGES FROM CERTAIN GOVERNMENT FEES; CREATING THE ENERGY 17 TRANSITION INDIAN AFFAIRS FUND, THE ENERGY TRANSITION 18 ECONOMIC DEVELOPMENT ASSISTANCE FUND AND THE ENERGY 19 TRANSITION DISPLACED WORKER ASSISTANCE FUND; PROVIDING FOR 20 NONIMPAIRMENT OF ENERGY TRANSITION CHARGES AND BONDS; 21 PROVIDING FOR CONFLICTS IN LAW; PROVIDING THAT ACTIONS TAKEN 22 PURSUANT TO THE ENERGY TRANSITION ACT SHALL NOT BE 23 INVALIDATED IF THE ACT IS HELD INVALID; REQUIRING THE PUBLIC 24 REGULATION COMMISSION TO APPROVE PROCUREMENT OF ENERGY 25 STORAGE SYSTEMS; PROVIDING NEW REQUIREMENTS AND TARGETS FOR SCORC/SB 489 Page 1 1 THE RENEWABLE PORTFOLIO STANDARD FOR RURAL ELECTRIC 2 COOPERATIVES AND PUBLIC UTILITIES; AMENDING CERTAIN 3 DEFINITIONS IN THE RENEWABLE ENERGY ACT AND RURAL ELECTRIC 4 COOPERATIVE ACT; REQUIRING THE HIRING OF APPRENTICES FOR THE 5 CONSTRUCTION OF FACILITIES THAT PRODUCE OR PROVIDE 6 ELECTRICITY; ALLOWING COST RECOVERY FOR EMISSIONS REDUCTION; 7 PROVIDING POWERS AND DUTIES FOR THE PUBLIC REGULATION 8 COMMISSION OVER VOLUNTARY PROGRAMS FOR PUBLIC UTILITIES AND 9 RURAL ELECTRIC COOPERATIVES; REQUIRING THE PROMULGATION OF 10 RULES TO IMPLEMENT THE RENEWABLE ENERGY ACT; REQUIRING THE 11 ENVIRONMENTAL IMPROVEMENT BOARD TO PROMULGATE RULES TO LIMIT 12 CARBON DIOXIDE EMISSIONS OF CERTAIN ELECTRIC GENERATING 13 FACILITIES. 14 15 16 17 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO: SECTION 1. act may be cited as the "Energy Transition Act". 18 SECTION 2. 19 Transition Act: 20 SHORT TITLE.--Sections 1 through 23 of this A. DEFINITIONS.--As used in the Energy "adjustment mechanism" means a formula-based 21 calculation used to make adjustments to the energy transition 22 charges that are necessary to correct for any over-collection 23 or under-collection of the energy transition charges, to 24 provide for the timely and complete payment of scheduled 25 principal and interest on energy transition bonds and the SCORC/SB 489 Page 2 1 payment and recovery of other financing costs in accordance 2 with a financing order; 3 B. "ancillary agreement" means a bond, insurance 4 policy, letter of credit, reserve account, surety bond, 5 interest rate lock or swap arrangement, hedging arrangement, 6 liquidity or credit support arrangement or other similar 7 agreement or arrangement entered into in connection with the 8 issuance of an energy transition bond that is designed to 9 promote the credit quality and marketability of the bond or 10 to mitigate the risk of an increase in interest rates; C. 11 "assignee" means a person or legal entity, that 12 may be newly created by the qualifying utility, to which an 13 interest in energy transition property is sold, assigned, 14 transferred or conveyed, other than as security, and any 15 successor to or subsequent assignee of such a person or legal 16 entity; 17 18 19 D. "commission" means the public regulation commission; E. "electric delivery service" means transmission, 20 distribution, generation, energy or any other service from a 21 qualifying utility pursuant to commission-approved rate 22 schedules or special contracts; 23 F. "energy transition bond" means a bond or other 24 evidence of indebtedness or ownership that is issued by a 25 qualifying utility or an assignee pursuant to a financing SCORC/SB 489 Page 3 1 order, the proceeds of which are secured by or payable from 2 energy transition property and that are non-recourse to the 3 qualifying utility; 4 G. "energy transition charge" means a 5 non-bypassable charge paid by all customers of a qualifying 6 utility for the recovery of energy transition costs; 7 H. "energy transition cost" means the sum of: 8 (1) financing costs; 9 (2) abandonment costs, which for a 10 qualifying generating facility shall not exceed the lower of 11 three hundred seventy-five million dollars ($375,000,000) or 12 one hundred fifty percent of the undepreciated investment in 13 a qualifying generating facility being abandoned, as of the 14 date of the abandonment. 15 this limitation shall include: 16 (a) The abandonment costs subject to up to thirty million dollars 17 ($30,000,000) per qualifying generating facility in costs not 18 previously collected from the qualifying utility's customers 19 for plant decommissioning and mine reclamation costs, subject 20 to any limitations ordered by the commission prior to January 21 1, 2019 and affirmed by the New Mexico supreme court prior to 22 the effective date of the Energy Transition Act, associated 23 with the abandoned qualifying generating facility; 24 25 (b) up to twenty million dollars ($20,000,000) per qualifying generating facility in costs for SCORC/SB 489 Page 4 1 severance and job training for employees losing their jobs as 2 a result of an abandoned qualifying generating facility and 3 any associated mine that only services the abandoned 4 qualifying generating facility; (c) 5 undepreciated investments as of the 6 date of abandonment on the qualifying utility's books and 7 records in a qualifying generating facility that were either 8 being recovered in rates as of January 1, 2019 or are 9 otherwise found to be recoverable through a court decision; 10 and (d) 11 other undepreciated investments in 12 a qualifying generating facility incurred to comply with law, 13 whether established by statute, court decision or rule, or 14 necessary to maintain the safe and reliable operation of the 15 qualifying generating facility prior to the facility's 16 abandonment; (3) 17 any other costs required to comply with 18 changes in law enacted after January 1, 2019 incurred by the 19 qualifying utility at the qualifying generating facility; and (4) 20 21 22 payments required pursuant to Section 16 of the Energy Transition Act; I. "energy transition property" means the rights 23 and interests of a qualifying utility or an assignee under a 24 financing order, including the right to impose, charge, 25 collect and receive energy transition charges in an amount SCORC/SB 489 Page 5 1 necessary to provide for full payment and recovery of all 2 energy transition costs identified in the financing order, 3 including all revenues or other proceeds arising from those 4 rights and interests; 5 J. "energy transition revenues" means revenues 6 collected by or on behalf of a qualifying utility through an 7 energy transition charge; 8 9 K. "financing cost" means the cost incurred by the qualifying utility or an assignee to issue and administer 10 energy transition bonds, including: 11 (1) 12 13 payment of the fee authorized pursuant to Subsection L of Section 5 of the Energy Transition Act; (2) principal, interest, acquisition, 14 defeasance and redemption premiums that are payable on energy 15 transition bonds; 16 (3) any payment required under an ancillary 17 agreement and any amount required to fund or replenish a 18 reserve account or other account established under any 19 indenture, ancillary agreement or other financing document 20 relating to the energy transition bonds; 21 (4) any costs, fees and expenses related to 22 issuing, supporting, repaying, servicing and refunding energy 23 transition bonds, the application for a financing order, 24 including related state board of finance expenses, or 25 obtaining an order approving abandonment of a qualifying SCORC/SB 489 Page 6 1 generating facility; (5) 2 any costs, fees and related expenses 3 incurred relating to any existing secured or unsecured 4 obligation of a qualifying utility or an affiliate of a 5 qualifying utility that are necessary to obtain any consent, 6 release, waiver or approval from any holder of such an 7 obligation to permit a qualifying utility to issue or cause 8 the issuance of energy transition bonds; (6) 9 10 assessments imposed on energy transition bonds; (7) 11 12 15 preliminary and continuing costs associated with subsequent financing; and (8) 13 14 any taxes, fees, charges or other any other related costs approved for recovery in the financing order; L. "financing order" means an order of the 16 commission that authorizes the issuance of energy transition 17 bonds, authorizes the imposition, collection and periodic 18 adjustments of the energy transition charge and creates 19 energy transition property; 20 M. "financing party" means a trustee, collateral 21 agent or other person acting for the benefit of a bondholder, 22 and a party to an ancillary agreement or the energy 23 transition bonds, the rights and obligations of which relate 24 to or depend upon the existence of energy transition 25 property, the enforcement and priority of a security interest SCORC/SB 489 Page 7 1 in energy transition property or the timely collection and 2 payment of energy transition revenues; 3 N. "lowest cost objective" means that the 4 structuring, marketing and pricing of energy transition bonds 5 results in the lowest energy transition charges consistent 6 with prevailing market conditions at the time of pricing of 7 energy transition bonds and the structure and terms of energy 8 transition bonds approved pursuant to the financing order; 9 O. "municipality" means any incorporated city, 10 town or village, whether incorporated under general act, 11 special act or special charter, incorporated counties and H 12 class counties; 13 P. "non-bypassable" means that the payment of an 14 energy transition charge may not be avoided by an electric 15 service customer located within a utility service area and 16 shall be paid by the customer that receives electric delivery 17 service from the qualifying utility imposing the charge for 18 as long as the energy transition bonds secured by the charge 19 are outstanding and the related financing costs have not been 20 recovered in full; 21 Q. "non-utility affiliate" means, with respect to 22 a qualifying utility, a person that is an affiliated 23 interest, as that term is used in the Public Utility Act, but 24 a "non-utility affiliate" does not include a public utility 25 that provides retail utility service to customers in the SCORC/SB 489 Page 8 1 2 state; R. "public utility" means "public utility" as used 3 in the Public Utility Act, but "public utility" does not 4 include a distribution cooperative utility organized pursuant 5 to the Rural Electric Cooperative Act; 6 S. "qualifying generating facility" means a 7 coal-fired generating facility in New Mexico that may be 8 composed of multiple generating units that: (1) 9 has been granted a certificate of public 10 convenience and for which abandonment authority is granted 11 after December 31, 2018; (2) 12 13 is owned or leased, in whole or in part, by a qualifying utility; (3) 14 if operated by a qualifying utility 15 prior to the effective date of the Energy Transition Act, is 16 to be abandoned prior to January 1, 2023; and (4) 17 if not operated by a qualifying utility 18 prior to the effective date of the Energy Transition Act, is 19 to be abandoned prior to January 1, 2032; and 20 T. "qualifying utility" means a public utility 21 that meets the requirements of Paragraph (1) of Subsection G 22 of Section 62-3-3 NMSA 1978 and owns or leases all or a 23 portion of a qualifying generating facility and its successor 24 or assignees. 25 SECTION 3. LOCATION OF RESOURCE DEVELOPMENT AFTER SCORC/SB 489 Page 9 1 ABANDONMENT.-A. 2 For a qualifying utility that abandons a 3 qualifying generating facility in New Mexico prior to 4 January 1, 2023, the qualifying utility shall, no later than 5 one year after approval of the abandonment, apply for 6 commission approval of competitively procured replacement 7 resources. 8 addition to the criteria set forth in Subsections B and C of 9 this section, projects shall be ranked based on their cost, As part of that competitive procurement, and in 10 economic development opportunity and ability to provide jobs 11 with comparable pay and benefits to those lost due to the 12 abandonment of a qualifying generating facility. 13 qualitative and quantitative data and analysis used to 14 establish the ranking shall be available for review by 15 parties to the commission proceeding. 16 B. The In determining whether to approve replacement 17 resources, the commission shall prefer resources with the 18 least environmental impacts, those with higher ratios of 19 capital costs to fuel costs and those able to reduce the cost 20 of reclamation and use for lands previously mined within the 21 county of the qualifying generating facility. 22 C. In considering responses to requests for 23 proposals for replacement resources pursuant to this section, 24 a qualifying utility shall inform prospective bidders that 25 it promotes and encourages the use of workers residing in SCORC/SB 489 Page 10 1 New Mexico to the greatest extent practicable and shall take 2 that use into consideration in evaluating proposals. D. 3 The commission shall grant all necessary 4 approvals for replacement resources; provided that the 5 commission may determine that the particular resource 6 proposed by the qualifying utility should not be approved and 7 that, instead, an alternative replacement resource that meets 8 the conditions of this section should be approved. 9 commission shall not disallow recovery of reasonable costs 10 associated with requirements as to where the resources are 11 located. 12 E. The Replacement resources shall be subject to local 13 property taxes or a binding commitment to make an equivalent 14 payment in lieu of taxes. 15 F. As used in this section, "replacement 16 resources" means up to four hundred fifty megawatts of 17 nameplate capacity identified by the qualifying utility as 18 replacement for a qualifying generating facility, and may 19 include energy storage capacity; provided that such resources 20 are located in the school district in New Mexico where the 21 abandoned facility is located, are necessary to maintain 22 reliable service and are in the public interest as determined 23 by the commission. 24 25 SECTION 4. FINANCING ORDER--APPLICATION CONTENTS-- PENDING APPLICATIONS.-- SCORC/SB 489 Page 11 A. 1 A qualifying utility that is abandoning a 2 qualifying generating facility may apply to the commission 3 for a financing order pursuant to this section to recover all 4 of its energy transition costs through the issuance of energy 5 transition bonds. 6 utility shall obtain approval to abandon a qualifying 7 generating facility pursuant to Section 62-9-5 NMSA 1978. 8 The application for the financing order may be filed as part 9 of the application for approval to abandon a qualifying 10 generating facility. B. 11 12 To obtain a financing order, a qualifying An application for a financing order shall include: (1) 13 a description of the facility that the 14 qualifying utility proposes to abandon or for which 15 abandonment authority was granted after December 31, 2018; (2) 16 17 18 an estimate of the energy transition costs and shall: (a) identify the severance pay and job 19 training expenses for affected employees losing their jobs as 20 a result of an abandoned qualifying generating facility and 21 any associated mine that only services the abandoned 22 qualifying generating facility; 23 (b) identify costs not previously 24 collected from the qualifying utility's customers for plant 25 decommissioning and mine reclamation costs, subject to any SCORC/SB 489 Page 12 1 limitations ordered by the commission prior to January 1, 2 2019 and affirmed by the New Mexico supreme court prior to 3 the effective date of the Energy Transition Act, associated 4 with the abandoned qualifying generating facility; and (c) 5 include an estimate of the 6 financing costs associated with each series of energy 7 transition bonds proposed to be issued; 8 9 (3) an estimate of the amount of energy transition charges necessary to recover the costs in 10 Paragraph (2) of this subsection and the proposed calculation 11 thereof, based on the estimated date of issuance and 12 estimated principal amount of each series of energy 13 transition bonds proposed to be issued; 14 (4) a description of the proposed adjustment 15 mechanism that complies with the provisions of Section 6 of 16 the Energy Transition Act; 17 (5) a memorandum with supporting exhibits 18 from a securities firm, such firm to be attested to by the 19 state board of finance as being experienced in the marketing 20 of bonds and capable of providing such a memorandum, that the 21 proposed issuance satisfies the current published AAA rating 22 or equivalent rating criteria of at least one nationally 23 recognized statistical rating organization for issuances 24 similar to the proposed energy transition bonds. 25 for such attestation may be made by a qualifying utility The request SCORC/SB 489 Page 13 1 prior to an application for a financing order, and the state 2 board of finance shall act upon such a request promptly; 3 (6) a commitment by the qualifying utility 4 to file with the commission following the issuance of the 5 energy transition bonds: (a) 6 7 structure and pricing of the bonds; (b) 8 9 10 13 updated financing costs and payment amount required pursuant to Section 16 of the Energy Transition Act; and (c) 11 12 a description of the final an updated calculation of the energy transition charges; (7) an estimate of timing of the issuance 14 and term of the energy transition bonds, or series of bonds; 15 provided that the scheduled final maturity for each bond 16 issuance shall be no longer than twenty-five years; 17 (8) identification of plans to sell, assign, 18 transfer or convey, other than as a security, interest in 19 energy transition property, including identification of an 20 assignee, and demonstration that the assignee will be a 21 financing entity wholly owned, directly or indirectly, by the 22 qualifying utility that will be initially capitalized by the 23 qualifying utility in such a way that equity interests in the 24 financing entity are at least one-half percent of the total 25 capital of the assignee; SCORC/SB 489 Page 14 (9) 1 identification of ancillary agreements 2 that may be necessary or appropriate; 3 (10) a description of a proposed ratemaking 4 process to reconcile and recover or refund any difference 5 between the energy transition costs financed by the energy 6 transition bonds and the actual final energy transition costs 7 incurred by the qualifying utility or the assignee; (11) 8 a proposed ratemaking method to account 9 for the reduction in the qualifying utility's cost of service 10 associated with the amount of undepreciated investments being 11 recovered by the energy transition charge at the time that 12 charge becomes effective; and (12) 13 a statement from the qualifying utility 14 committing that the qualifying utility will use commercially 15 reasonable efforts to obtain the lowest cost objective. 16 C. The application may include requests for 17 approvals for new resources necessitated by the abandonment 18 of a qualifying generating facility. 19 D. The qualifying utility or the commission may 20 defer applications for needed approvals for new resources to 21 a separate proceeding; provided that the application 22 identifies adequate potential new resources sufficient to 23 provide reasonable and proper service to retail customers. 24 25 E. If an application for approval to abandon a qualifying generating facility is pending before the SCORC/SB 489 Page 15 1 commission on the effective date of the Energy Transition 2 Act, the qualifying utility may file a separate application 3 for a financing order, and the commission may join or 4 consolidate the application for a financing order with the 5 pending proceeding involving abandonment of the qualifying 6 generating facility, with the consent of the applicant. 7 such joinder or consolidation, the time periods prescribed by 8 the Energy Transition Act shall become applicable to the 9 joined or consolidated case as of the date of the joinder or 10 11 On consolidation. F. If a qualifying utility does not recover energy 12 transition costs pursuant to the Energy Transition Act, the 13 energy transition costs may be recovered pursuant to other 14 applicable provisions of the Public Utility Act. 15 SECTION 5. FINANCING ORDER--ISSUANCE--TERMS OF BONDS-- 16 REPORTS TO COMMISSION OF DISBURSEMENT OF BOND PROCEEDS-- 17 REVIEW AND AUDIT OF RECORDS.-- 18 A. The commission may approve an application for a 19 financing order without a formal hearing if no protest 20 establishing good cause for a formal hearing is filed within 21 thirty days of the date when notice is given of the filing of 22 the application for the financing order. 23 held, the commission shall issue an order granting or denying 24 the application for the financing order to a qualifying 25 utility that is abandoning a qualifying generating facility If a hearing is SCORC/SB 489 Page 16 1 and an order on an accompanying application of the qualifying 2 utility for approval to abandon the qualifying generating 3 facility within six months from the date the application for 4 the financing order is filed with the commission. 5 cause shown, the commission may extend the time for issuing 6 the order for an additional three months. 7 B. For good Failure to issue an order approving the 8 application or advising of the application's noncompliance 9 pursuant to Subsection E of this section within the time 10 prescribed by Subsection A of this section shall be deemed 11 approval of the application for a financing order and 12 approval to abandon the qualifying generating facility, if 13 abandonment approval was requested as part of the application 14 for the financing order pursuant to this subsection. 15 commission shall issue an order acknowledging the deemed 16 approvals within seven days of the expiration of the time 17 period described in Subsection A of this section. 18 C. The If an application for a financing order is 19 accompanied by a request for approval of new resources, this 20 section provides an alternative time frame to that provided 21 in Subsection C of Section 62-9-1 NMSA 1978, and the time 22 frame specified in this section shall govern, unless the 23 request has been deferred to a separate proceeding pursuant 24 to Subsection D of Section 4 of the Energy Transition Act. 25 D. The issuance of a financing order shall be the SCORC/SB 489 Page 17 1 only approval required for the authority granted in the 2 financing order. 3 E. The commission shall issue a financing order 4 approving the application if the commission finds that the 5 qualifying utility's application for the financing order 6 complies with the requirements of Section 4 of the Energy 7 Transition Act. 8 utility's application does not comply with Section 4 of the 9 Energy Transition Act, the commission shall advise the If the commission finds that a qualifying 10 qualifying utility of any changes necessary to comply with 11 that section and provide the applicant an opportunity to 12 amend the application to make such changes. 13 changes being made, the commission shall issue a financing 14 order approving the application. 15 16 17 F. Upon those A financing order shall include the following provisions: (1) approval for the qualifying utility or 18 assignee to issue energy transition bonds as requested in the 19 application, to use energy transition bonds to finance the 20 maximum amount of the energy transition costs as requested in 21 the application, as may be adjusted pursuant to Paragraph (6) 22 of Subsection B of Section 4 of the Energy Transition Act, 23 and to use the proceeds provided in Subsection A of Section 24 10 of the Energy Transition Act; 25 (2) approval for the qualifying utility to SCORC/SB 489 Page 18 1 recover the energy transition costs, as may be adjusted 2 pursuant to Paragraph (6) of Subsection B of Section 4 of the 3 Energy Transition Act, requested in the application through 4 energy transition charges; (3) 5 approval of the energy transition 6 charges necessary to recover the authorized energy transition 7 costs, to be imposed through a non-bypassable energy 8 transition charge as a separate line item on the qualifying 9 utility's customer bills, assessed consistent with energy and 10 demand cost allocations within each customer class, subject 11 to update pursuant to the notice filing contemplated by 12 Paragraph (6) of Subsection B of Section 4 of the Energy 13 Transition Act and subject to the application of the 14 adjustment mechanism as provided in Section 6 of the Energy 15 Transition Act, until the energy transition bonds issued 16 pursuant to the financing order and the financing costs 17 related to those bonds are paid in full; (4) 18 19 approval of the adjustment mechanism in compliance with Section 6 of the Energy Transition Act; (5) 20 a description of the energy transition 21 property that is created by the financing order that may be 22 used to pay, and secure the payment of, the energy transition 23 bonds and financing costs authorized to be issued in the 24 financing order; 25 (6) approval to enter into necessary or SCORC/SB 489 Page 19 1 appropriate ancillary agreements; (7) 2 approval of any plans for selling, 3 assigning, transferring or conveying, other than as a 4 security, an interest in energy transition property; and (8) 5 approval of the proposed ratemaking 6 process and method included in the application pursuant to 7 Paragraphs (10) and (11) of Subsection B of Section 4 of the 8 Energy Transition Act. 9 G. A financing order shall provide that the 10 creation of energy transition property shall be simultaneous 11 with the sale of the energy transition property to an 12 assignee as provided in the application and the pledge of the 13 energy transition property to secure energy transition bonds. 14 H. A financing order shall authorize the 15 qualifying utility to issue one or more series of energy 16 transition bonds for a scheduled final maturity of no more 17 than twenty-five years for each series; provided that a rated 18 final maturity may exceed twenty-five years. 19 authorization, the qualifying utility shall not subsequently 20 be required to secure a separate financing order prior to 21 each issuance. 22 I. With such The commission may require, as a condition of 23 the financing order and in every circumstance subject to the 24 limitations set forth in Subsection A of Section 7 of the 25 Energy Transition Act, that, during any period in which SCORC/SB 489 Page 20 1 energy transition bonds issued pursuant to the financing 2 order are outstanding, an assignee that is a non-utility 3 affiliate and issues energy transition bonds shall provide in 4 the affiliate's articles of incorporation, partnership 5 agreement or operating agreement, as applicable, that in 6 order for a person to file a voluntary bankruptcy petition on 7 behalf of that assignee, the prior unanimous consent of the 8 directors, partners, managers or members, as applicable, 9 shall be required. Any such provision shall constitute a 10 legal, valid and binding agreement of such shareholders, 11 partners or members of the assignee and is enforceable 12 against such shareholders, partners or members. 13 J. A financing order may require the qualifying 14 utility to file with the commission a periodic report showing 15 the receipt and disbursement of proceeds of energy transition 16 bonds and any other documents necessary for the qualifying 17 utility to implement the financing order. 18 the energy transition bonds, the qualifying utility shall 19 file an advice notice with the commission, subject to review 20 by the commission for errors and corrections, that identifies 21 the actual energy transition charges to be included on 22 customers' bills, effective fifteen days from the date the 23 advice notice is filed. 24 K. 25 Upon issuance of A financing order may authorize the commission to review and audit the books and records of the qualifying SCORC/SB 489 Page 21 1 utility and of an assignee that is a non-utility affiliate 2 and issues energy transition bonds, relating to energy 3 transition property and the receipt and disbursement of 4 proceeds of energy transition bonds. 5 L. After review and approval by the department of 6 finance and administration with regard to reasonableness of 7 contracts for services, a financing order may authorize the 8 commission to impose a fee on the qualifying utility to pay 9 commission expenses for contract bond counsel accredited by a 10 nationally recognized association of bond lawyers to provide 11 advice and assistance to commission staff in reviewing an 12 application for a financing order and the structure and 13 marketing of the proposed energy transition bonds. 14 15 M. The provisions of this section shall not be construed to limit the authority of the commission to: (1) 16 17 investigate the practices of or to audit the books and records of a qualifying utility; or (2) 18 issue such further orders as may be 19 necessary to effectuate the provisions of the Energy 20 Transition Act. 21 SECTION 6. ADJUSTMENT MECHANISM--ADJUSTMENT 22 PROCEDURES--HEARING PROCEDURES IF COMMISSION DETERMINES 23 ADJUSTMENT MADE IN ERROR.-- 24 25 A. If the commission issues a financing order, the qualifying utility for which the order is issued may charge SCORC/SB 489 Page 22 1 all of the qualifying utility's customers an energy 2 transition charge, which shall be allocated to customer 3 classes consistent with the production cost allocation 4 methodology established by the commission in the qualifying 5 utility's most recent general rate case. 6 charges shall be assessed consistent with the production cost 7 allocation methodology and the determination of energy and 8 demand costs within each customer class, both of which shall 9 be subject to the adjustment mechanism. 10 B. Energy transition The commission shall periodically approve 11 adjustments of the energy transition charges pursuant to the 12 adjustment mechanism approved in the financing order to 13 correct for any over-collection or under-collection of the 14 energy transition charge and to provide for timely payment of 15 scheduled principal of and interest on the energy transition 16 bonds and the payment and recovery of financing costs in 17 accordance with the financing order. 18 Subsection C of this section, the qualifying utility shall 19 file at least semiannually, or more frequently as provided in 20 the financing order: 21 (1) Except as provided in a calculation estimating whether the 22 existing energy transition charge is sufficient to provide 23 for timely payment of scheduled principal of and interest on 24 the energy transition bonds and the payment and recovery of 25 other financing costs in accordance with the financing order SCORC/SB 489 Page 23 1 or if either an over-collection or under-collection is 2 projected; and (2) 3 a calculation showing the adjustment to 4 the energy transition charge to correct for any 5 over-collection or under-collection of energy transition 6 charges. C. 7 The qualifying utility shall file the 8 calculations described in Subsection B of this section at 9 least quarterly during the two-year period preceding the 10 final maturity date of the energy transition bonds. D. 11 The adjustment mechanism shall remain in effect 12 until the energy transition bonds and all financing costs 13 have been fully paid and recovered, any under-collection is 14 recovered from customers and any over-collection is returned 15 to customers. 16 E. On the same day the qualifying utility files 17 with the commission its calculation of the adjustment to the 18 energy transition charge, the qualifying utility shall cause 19 notice of the filing to be given to the parties of record in 20 the case in which the financing order was issued. F. 21 An adjustment to the energy transition charge 22 filed by the qualifying utility shall be deemed approved 23 without hearing thirty days after filing the adjustment 24 unless: 25 (1) no later than twenty days from the date SCORC/SB 489 Page 24 1 the qualifying utility filed the calculation of the 2 adjustment, the commission is notified of a potential 3 mathematical or transcription error in the adjustment; 4 provided that the notice identifies the error with 5 specificity; and (2) 6 the commission determines that the 7 calculation of the adjustment is unlikely to provide for 8 timely payment, or is likely to result in a material 9 overpayment, of scheduled principal of and interest on the 10 energy transition bonds and the payment and recovery of other 11 financing costs in accordance with the financing order and, 12 based on that determination, suspends operation of the 13 adjustment, pending a hearing limited to the issue of the 14 error in the adjustment; provided that the suspension shall 15 be for a period not to exceed sixty days from the date the 16 qualifying utility filed the calculation of the adjustment. 17 G. If the commission determines that a hearing is 18 necessary, the commission shall hold a hearing on the 19 proposed adjustment that shall be limited to determining 20 whether there is a mathematical or transcription error in the 21 calculation of the adjustment. 22 commission determines that the calculation of the adjustment 23 contains a mathematical or transcription error, the 24 commission shall issue an order that rejects and corrects the 25 adjustment. If, after a hearing, the The qualifying utility shall adjust the energy SCORC/SB 489 Page 25 1 transition charge in accordance with the commission's 2 calculation within five days from issuance of the order. 3 the commission does not issue an order rejecting the 4 adjustment with a determination of the corrected calculation 5 within sixty days from the date the qualifying utility filed 6 the adjustment, the adjustment to the energy transition 7 charge shall be deemed approved. 8 9 H. If No adjustment pursuant to this section, and no proceeding held pursuant to this section, shall affect the 10 irrevocability of the financing order pursuant to Section 7 11 of the Energy Transition Act. 12 SECTION 7. 13 AMENDMENTS.-- 14 A. FINANCING ORDER--IRREVOCABILITY-- A financing order is irrevocable and the 15 commission shall not reduce, impair, postpone or terminate 16 the energy transition charges approved in the financing 17 order, the energy transition property or the collection or 18 recovery of energy transition revenues. 19 B. Subject to the limitation provided in 20 Subsection A of this section, a financing order may be 21 amended at the request of the qualifying utility to commence 22 a proceeding and issue an amended financing order that: 23 (1) provides for refinancing, retiring or 24 refunding all or a portion of an outstanding series of energy 25 transition bonds issued pursuant to the original financing SCORC/SB 489 Page 26 1 order; provided that the commission includes in the amended 2 financing order the findings and requirements specified in 3 Section 5 of the Energy Transition Act; or (2) 4 adjusts the amount of energy transition 5 costs to be financed by energy transition bonds that have not 6 yet been issued to reflect updated estimated or actual costs 7 that differ from costs estimated at the time of the initial 8 financing order or to correct any errors. 9 C. The commission shall issue an order granting or 10 denying the proposed amended financing order within thirty 11 days of the filing of the request by the qualifying utility. 12 No change in the credit rating of a qualifying utility from 13 the credit rating at the time of issuance of a financing 14 order shall impair the irrevocability of a financing order. 15 16 17 SECTION 8. AGGRIEVED PARTIES--REQUEST FOR REHEARING-- JUDICIAL REVIEW.-A. A financing order shall be issued as a separate 18 order from any other order issued by the commission on a 19 requested approval in the application proceeding and is a 20 final order of the commission. 21 issuance of a financing order may apply to the commission for 22 a rehearing in accordance with Section 62-10-16 NMSA 1978; 23 provided that such application shall be due no later than ten 24 calendar days after issuance of the financing order. 25 application for rehearing shall be deemed denied if not acted A party aggrieved by the An SCORC/SB 489 Page 27 1 upon by the commission within ten calendar days after the 2 filing of the application. 3 B. An aggrieved party may file a notice of appeal 4 with the supreme court in accordance with Section 62-11-1 5 NMSA 1978; provided that such notice shall be due no later 6 than ten calendar days after denial of an application for 7 rehearing or, if rehearing is not applied for, no later than 8 ten calendar days after issuance of the financing order. 9 supreme court shall proceed to hear and determine the appeal 10 11 12 13 The as expeditiously as practicable. SECTION 9. CONDITIONS THAT KEEP FINANCING ORDERS IN EFFECT AND ENERGY TRANSITION CHARGES IMPOSED.-A. A financing order shall remain in effect until 14 the energy transition bonds issued pursuant to the financing 15 order and any related financing costs have been paid in full. 16 B. A financing order shall remain in effect and 17 unabated notwithstanding the bankruptcy, reorganization or 18 insolvency of the qualifying utility or any non-utility 19 affiliate or the commencement of any proceeding for 20 bankruptcy or appointment of a receiver. 21 C. If energy transition bonds issued pursuant to a 22 financing order are outstanding and the related energy 23 transition costs have not been paid in full, the energy 24 transition charges authorized by the financing order shall be 25 collected by the qualifying utility or its successors or SCORC/SB 489 Page 28 1 assignees, or a collection agent, in full through a 2 non-bypassable charge that is a separate line item on 3 customer bills and not a part of the qualifying utility's 4 base rates. The charge shall be paid by all customers: (1) 5 receiving electric delivery service from 6 the qualifying utility under commission-approved rate 7 schedules or special contracts; and 8 (2) 9 who acquire electricity from an alternative or subsequent electricity supplier in the utility 10 service area, to the extent that such acquisition is 11 permitted by New Mexico law. 12 13 SECTION 10. A. QUALIFYING UTILITY DUTIES.-- Except as provided in Section 16 of the Energy 14 Transition Act, a qualifying utility that is abandoning a 15 qualifying generating facility shall use the proceeds of the 16 issuance of energy transition bonds only for purposes related 17 to providing utility service to customers and to pay 18 financing costs. 19 B. Energy transition revenues shall be applied 20 solely to the repayment of energy transition bonds and the 21 ongoing financing costs. 22 C. The failure of a qualifying utility to comply 23 with any provision of the Energy Transition Act shall not 24 invalidate, impair or affect a financing order, energy 25 transition property, energy transition charge or energy SCORC/SB 489 Page 29 1 transition bonds and financing costs. 2 bondholders or financing parties on the energy transition 3 bonds shall be made on a quarterly or semiannual basis 4 pursuant to the terms of the energy transition bonds. D. 5 Payments to For a qualifying utility that receives approval 6 of a financing order and issues sources of energy transition 7 bonds, the qualifying utility's generation and sources of 8 energy procured pursuant to power purchase agreements with a 9 term of twenty-four months or longer, and that are dedicated 10 to serve the qualifying utility's retail customers, shall not 11 emit, on average, more than four hundred pounds of carbon 12 dioxide per megawatt-hour by January 1, 2023, and not more 13 than two hundred pounds of carbon dioxide per megawatt-hour 14 by January 1, 2032 and thereafter. 15 measured and verified every three years with the first period 16 commencing on January 1, 2023. 17 rules to implement the requirements of this subsection. 18 19 20 21 22 23 24 25 SECTION 11. Compliance shall be The commission shall adopt COMMISSION TREATMENT OF ENERGY TRANSITION BONDS.-A. If the commission issues a financing order, the commission shall not treat: (1) energy transition bonds issued pursuant to the financing order as debt of the qualifying utility; (2) the energy transition charges paid under the financing order as revenue of the qualifying utility; or SCORC/SB 489 Page 30 (3) 1 the energy transition costs to be 2 financed by energy transition bonds as costs of the 3 qualifying utility. B. 4 Reasonable actions taken by a qualifying 5 utility to comply with the financing order shall be deemed to 6 be just and reasonable for ratemaking purposes. 7 the Energy Transition Act shall: (1) 8 9 Nothing in prevent or preclude the commission from investigating the compliance of a qualifying utility with the 10 terms and conditions of a financing order and requiring 11 compliance therewith; (2) 12 prevent or preclude the commission from 13 imposing regulatory sanctions against a qualifying utility 14 for failure to comply with the terms and conditions of a 15 financing order or the requirements of the Energy Transition 16 Act; (3) 17 affect the authority of the commission 18 to apply the adjustment mechanism as provided in Section 6 of 19 the Energy Transition Act; or (4) 20 prevent or preclude the commission from 21 including the qualifying utility's acquisition of replacement 22 power resources in the qualifying utility's cost of service. 23 C. The commission shall not order or require a 24 qualifying utility to issue energy transition bonds to 25 finance any costs associated with abandonment of a qualifying SCORC/SB 489 Page 31 1 generating facility. A utility's decision not to issue 2 energy transition bonds shall not be a basis for the 3 commission to refuse to allow a qualifying utility to recover 4 energy transition costs in an otherwise permissible fashion, 5 or as a basis to refuse or condition authorization to issue 6 securities pursuant to Sections 62-6-6 and 62-6-7 NMSA 1978. 7 SECTION 12. 8 TRANSITION REVENUES.-A. 9 ENERGY TRANSITION PROPERTY--ENERGY Energy transition property that is created in a 10 financing order shall constitute an existing, present 11 property right, notwithstanding that the imposition and 12 collection of energy transition charges depend on the 13 qualifying utility continuing to provide electric energy or 14 continuing to perform its service functions relating to the 15 collection of energy transition charges or on the level of 16 future energy consumption. 17 exist whether or not the energy transition revenues have been 18 billed, have accrued or have been collected and 19 notwithstanding that the value or amount of the energy 20 transition property is dependent on the future provision of 21 electric energy or service to customers by the qualifying 22 utility. 23 B. Energy transition property shall All energy transition property created in a 24 financing order shall continue to exist until the energy 25 transition bonds issued and all related financing costs SCORC/SB 489 Page 32 1 pursuant to a financing order are paid in full. C. 2 All or any portion of energy transition 3 property created in a financing order may be transferred, 4 sold, conveyed or assigned to a non-utility affiliate that 5 is: (1) 6 7 wholly owned, directly or indirectly, by the qualifying utility; and (2) 8 created for the limited purposes of 9 acquiring, owning or administering energy transition property 10 or issuing energy transition bonds under the financing order. 11 D. All or any portion of energy transition 12 property may be pledged to secure the payment of energy 13 transition bonds and all financing costs. 14 E. The formation by a qualifying utility of a 15 non-utility affiliate for the purposes of acquiring, owning 16 or administering energy transition property, issuing energy 17 transition bonds pursuant to a financing order and 18 transacting a transfer, sale, conveyance, assignment, grant 19 of a security interest in or pledge of energy transition 20 property by a qualifying utility to a non-utility affiliate, 21 to the extent previously authorized in a financing order, 22 does not require any further approval of the commission and 23 shall not be subject to the rules of the commission regarding 24 Class I transactions and Class II transactions, as defined by 25 Section 62-3-3 NMSA 1978, except that the commission may SCORC/SB 489 Page 33 1 examine the books and records of the non-utility affiliate. F. 2 If a qualifying utility defaults on any 3 required payment of energy transition bonds, a court with 4 jurisdiction in the matter, on application by an interested 5 party and without limiting any other remedies available to 6 the applying party, shall order the sequestration and payment 7 of the energy transition revenues for the benefit of 8 bondholders, any assignees or financing parties. 9 shall remain in full force and effect notwithstanding any The order 10 bankruptcy, reorganization or other insolvency or 11 receivership proceedings with respect to the qualifying 12 utility or any non-utility affiliate. G. 13 Energy transition property, energy transition 14 revenues and the interests of an assignee, bondholder or 15 financing party in energy transition property and energy 16 transition revenues are not subject to set-off, counterclaim, 17 surcharge or defense by the qualifying utility or any other 18 person or in connection with the bankruptcy, reorganization 19 or other insolvency or receivership proceeding of the 20 qualifying utility, non-utility affiliate or any other 21 entity. 22 H. Any successor to a qualifying utility shall be 23 bound by the requirements of the Energy Transition Act and 24 shall perform and satisfy all obligations of, and have the 25 same rights under a financing order as, the qualifying SCORC/SB 489 Page 34 1 utility under the financing order in the same manner and to 2 the same extent as the qualifying utility, including the 3 obligation to collect and pay energy transition revenues to 4 persons entitled to receive the revenues. 5 SECTION 13. SECURITY INTERESTS--CREATION OF SECURITY 6 INTEREST--PRIORITY OVER OTHER LIENS--ATTACHMENT ON FILING 7 WITH SECRETARY OF STATE.-A. 8 9 Except as otherwise provided in this section, the creation, perfection and enforcement of a security 10 interest in energy transition property to secure the 11 repayment of the principal of and interest on energy 12 transition bonds, amounts payable pursuant to an ancillary 13 agreement and other financing costs are governed by this 14 section. 15 provisions of the Uniform Commercial Code and Chapter 62, 16 Article 13 NMSA 1978, to the extent those provisions are 17 inconsistent with this section. This section shall be deemed to supersede the B. 18 The description or reference to energy 19 transition property in a transfer or security agreement and a 20 financing statement is sufficient only if the description or 21 reference refers to the Energy Transition Act and the 22 financing order creating the energy transition property. 23 This section applies to all purported transfers of, grants of 24 liens on or security interests in, energy transition 25 property. SCORC/SB 489 Page 35 1 2 C. A security interest in energy transition property is created, valid and binding at the latest of when: 3 (1) the financing order is issued; 4 (2) a security agreement is executed and (3) value is received for the energy 5 delivered; or 6 7 8 9 transition bonds. D. The security interest attaches without any physical delivery of collateral or other act and the lien of 10 the security interest shall be valid, binding and perfected 11 against all parties having claims of any kind against the 12 person granting the security interest, regardless of whether 13 such parties have notice of the lien, on the filing of a 14 financing statement with the secretary of state. 15 secretary of state shall maintain the financing statement in 16 the same manner and in the same recordkeeping system 17 maintained for financing statements filed pursuant to the 18 Uniform Commercial Code-Secured Transactions. 19 statements filed pursuant to this section shall be effective 20 until a termination statement is filed. 21 E. The Financing A security interest in energy transition 22 property is a continuously perfected security interest and 23 has priority over any other lien that may subsequently attach 24 to the energy transition property unless the holder of the 25 security interest has agreed in writing otherwise. SCORC/SB 489 Page 36 1 F. The priority of a security interest in energy 2 transition property is not affected by the commingling of 3 energy transition revenues with other funds. 4 secured party shall have a perfected security interest in the 5 amount of all energy transition revenues that are deposited 6 in any account of the qualifying utility and any other 7 security interest that may apply to those funds shall be 8 terminated when they are transferred to a segregated account 9 for the assignee or a financing party. 10 G. Any pledgee or No order of the commission amending a financing 11 order and no application of the adjustment mechanism shall 12 affect the validity, perfection or priority of a security 13 interest in or transfer of energy transition property. 14 SECTION 14. SALE OF ENERGY TRANSITION PROPERTY-- 15 PERFECTING INTERESTS--ABSOLUTE TRANSFER AND TRUE SALE 16 REQUIREMENTS.-- 17 A. Any sale, assignment or transfer of energy 18 transition property to an assignee that is a financing entity 19 that is wholly owned, directly or indirectly, by the utility 20 shall be an absolute transfer and true sale of, and not a 21 pledge of or secured transaction relating to, the seller's 22 right, title and interest in, to and under the energy 23 transition property if the documents governing the 24 transaction expressly state that the transaction is a sale or 25 other absolute transfer. A transfer of an interest in energy SCORC/SB 489 Page 37 1 transition property shall be created when: (1) 2 3 the financing order creating the energy transition property has become effective; (2) 4 the documents evidencing the transfer of 5 energy transition property have been executed and delivered 6 to the assignee; and (3) 7 8 9 B. value is received. On the filing of a financing statement with the secretary of state pursuant to Subsection D of Section 13 of 10 the Energy Transition Act, a transfer of an interest in 11 energy transition property shall be perfected against all 12 third persons, except creditors holding a prior security 13 interest, ownership interest or assignment in the energy 14 transition property previously perfected in accordance with 15 Section 13 of that act. 16 C. The characterization of the sale, assignment or 17 transfer as an absolute transfer and true sale, and the 18 corresponding characterization of the property interest of 19 the purchaser, shall not be affected or impaired by: 20 21 22 23 (1) commingling of energy transition revenues with other funds; (2) the retention by the seller of: (a) a partial or residual interest, 24 including an equity interest, in the energy transition 25 property, whether direct or indirect, or whether subordinate SCORC/SB 489 Page 38 1 or otherwise; or (b) 2 the right to recover costs 3 associated with taxes or license fees imposed on the 4 collection of energy transition revenues; 5 (3) 6 against the seller; 7 (4) 8 9 10 11 any recourse that the purchaser may have any indemnification rights, obligations or repurchase rights made or provided by the seller; (5) the obligation of the seller to collect energy transition revenues on behalf of an assignee; (6) the treatment of the sale, assignment or 12 transfer of energy transition property for tax, financial 13 reporting or other purposes; 14 (7) any subsequent order of the commission 15 amending a financing order pursuant to Subsection B of 16 Section 7 of the Energy Transition Act; 17 (8) 18 approved in the financing order; or 19 (9) 20 21 any use of an adjustment mechanism anything else that might affect or impair the characterization of the property. SECTION 15. FEE ASSESSMENTS.--The energy transition 22 charge stated as a separate line entry on a customer bill 23 sent by a qualifying utility may be subject to an assessment 24 of a franchise fee imposed by a municipality, county or other 25 political subdivision of the state, pursuant to a utility SCORC/SB 489 Page 39 1 franchise agreement. 2 of an energy transition charge is exempt from inspection and 3 supervision fees assessed pursuant to the Public Utility Act. SECTION 16. 4 The imposition, collection and receipt ENERGY TRANSITION INDIAN AFFAIRS FUND-- 5 ENERGY TRANSITION ECONOMIC DEVELOPMENT ASSISTANCE FUND-- 6 ENERGY TRANSITION DISPLACED WORKER ASSISTANCE FUND--COMMUNITY 7 ADVISORY COMMITTEE.-A. 8 9 The "energy transition Indian affairs fund" is created in the state treasury. The fund shall consist of 10 appropriations, gifts, grants, donations and bequests made to 11 the fund. 12 fund, and money in the fund shall not revert or be 13 transferred to any other fund at the end of a fiscal year. Income from the fund shall be credited to the B. 14 The Indian affairs department shall administer 15 the energy transition Indian affairs fund, and money in the 16 fund is subject to appropriation by the legislature only to 17 that department to assist in addressing the conditions and 18 issues of tribes and native peoples in the affected 19 community. C. 20 The Indian affairs department shall develop an 21 Indian affairs assistance plan to assist tribal and native 22 people in the affected community that shall provide for the 23 disbursement of money in the energy transition Indian affairs 24 fund. 25 shall establish a public planning process in the affected In developing the plan, the Indian affairs department SCORC/SB 489 Page 40 1 community to inform the use of money in the fund. 2 affairs department shall engage in consultation with Indian 3 nations, tribes and pueblos in the affected community 4 pursuant to the State-Tribal Collaboration Act. 5 planning process shall include at least three public meetings 6 in the affected community. 7 be made after completion of the plan and as follows: (1) 8 9 10 The Indian The public Expenditures from the fund shall to an entity approved by the Indian affairs department to receive funds for any program established at the Indian affairs department; and (2) 11 to tribal governments, public agencies 12 or private persons to provide services and facilities in the 13 affected community for promoting the welfare of Indian 14 people. D. 15 The "energy transition economic development 16 assistance fund" is created in the state treasury. 17 shall consist of appropriations, gifts, grants, donations and 18 bequests made to the fund. 19 credited to the fund, and money in the fund shall not revert 20 or be transferred to any other fund at the end of a fiscal 21 year. 22 E. The fund Income from the fund shall be The economic development department shall 23 administer the energy transition economic development 24 assistance fund, and money in the fund is subject to 25 appropriation by the legislature only to that department to SCORC/SB 489 Page 41 1 assist in diversifying and promoting the affected community's 2 economy by fostering economic development opportunities 3 unrelated to fossil fuel development or use. F. 4 The economic development department shall 5 develop an economic diversification and development plan to 6 assist the affected community that shall provide for the 7 disbursement of money in the energy transition economic 8 development assistance fund. 9 economic development department shall request recommendations In developing the plan, the 10 from the affected community's community advisory committee 11 pursuant to Subsection K of this section and establish a 12 public input process in the affected community to inform the 13 use of money in the fund. 14 department shall engage in consultation with Indian nations, 15 tribes and pueblos in the affected area pursuant to the 16 State-Tribal Collaboration Act. 17 shall include at least three public meetings in the affected 18 community. 19 to the plan and as follows: 20 The economic development The public input process Expenditures from the fund shall be made pursuant (1) to an entity approved by the economic 21 development department to receive funds for any program 22 established at the economic development department; 23 (2) to assist employers to qualify for any 24 tax relief for hiring displaced workers established under 25 state or federal law; and SCORC/SB 489 Page 42 (3) 1 to a municipality, county, Indian 2 nation, pueblo or tribe or land grant community in New Mexico 3 for programs designed to promote economic development in the 4 affected community. G. 5 The "energy transition displaced worker 6 assistance fund" is created in the state treasury. The fund 7 shall consist of appropriations, gifts, grants, donations and 8 bequests made to the fund. 9 credited to the fund, and money in the fund shall not revert Income from the fund shall be 10 or be transferred to any other fund at the end of a fiscal 11 year. 12 H. The workforce solutions department shall 13 administer the energy transition displaced worker assistance 14 fund, and money in the fund is subject to appropriation by 15 the legislature only to that department to assist displaced 16 workers in an affected community. 17 I. The workforce solutions department shall 18 develop a displaced worker development plan to assist 19 displaced workers in an affected community that shall provide 20 for the disbursement of money in the energy transition 21 displaced worker assistance fund. 22 the workforce solutions department shall request 23 recommendations from the affected community's community 24 advisory committee pursuant to Subsection K of this section 25 and establish a public input process in the affected In developing the plan, SCORC/SB 489 Page 43 1 community to inform the use of money in the energy transition 2 displaced worker assistance fund. 3 department shall engage in consultation with Indian nations, 4 tribes and pueblos in the affected area pursuant to the 5 State-Tribal Collaboration Act. 6 shall include at least three public meetings in the affected 7 community. 8 worker assistance fund shall be made pursuant to the plan and 9 as follows: The workforce solutions The public input process Expenditures from the energy transition displaced (1) 10 to assist employers of displaced workers 11 to qualify for any tax relief established under state or 12 federal law; (2) 13 (a) 14 15 to the workforce solutions department: to provide assistance to displaced workers using any program established at that department; and (b) 16 for payment of costs associated 17 with displaced workers enrolling and participating in 18 certified apprenticeship programs in New Mexico; and (3) 19 to a municipality, county, Indian 20 nation, pueblo or tribe or land grant community in New Mexico 21 for job training and apprenticeship programs for displaced 22 workers or for programs designed to promote economic 23 development in the affected community. 24 25 J. Within thirty days of receipt of energy transition bond proceeds, a qualifying generating facility SCORC/SB 489 Page 44 1 located in New Mexico shall transfer the following 2 percentages of the financed amount of energy transition bonds 3 as follows: (1) 4 one-half percent to the Indian affairs 5 department for deposit in the energy transition Indian 6 affairs fund; (2) 7 one and sixty-five hundredths percent to 8 the economic development department for deposit in the energy 9 transition economic development assistance fund; and (3) 10 three and thirty-five hundredths percent 11 to the workforce solutions department for deposit in the 12 energy transition displaced worker assistance fund. 13 K. In each affected community, a community 14 advisory committee shall be convened. All meetings of the 15 community advisory committee shall be held pursuant to the 16 Open Meetings Act. 17 economic development and workforce solutions shall appoint 18 three conveners who reside in the affected community, at 19 least one from each major political party and one 20 representing one of the Navajo Nation chapter houses in the 21 affected community. 22 the community advisory committee to include a member from 23 each municipality, county, Indian nation, pueblo, tribe and 24 land grant community, if any, in the affected community, at 25 least four appointees representing diverse economic and The secretaries of Indian affairs, The conveners shall appoint members of SCORC/SB 489 Page 45 1 cultural perspectives of the affected community and one 2 appointee representing displaced workers in the affected 3 community. 4 development department pursuant to Subsection F of this 5 section, or the workforce solutions department pursuant to 6 Subsection I of this section, a community advisory committee 7 shall provide recommendations to the requesting department on 8 the use of available funds intended for the affected 9 community. 10 Within sixty days of a request by the economic L. As used in this section: (1) 11 "affected community" means a New Mexico 12 county located within one hundred miles of a New Mexico 13 facility producing electricity that closes, resulting in at 14 least forty displaced workers; and (2) 15 16 "displaced worker" means a New Mexico resident who: (a) 17 within the previous twelve months, 18 was terminated from employment, or whose contract was 19 terminated, due to the abandonment of a New Mexico facility 20 producing electricity that resulted in displacing at least 21 forty workers; 22 (b) had at least seventy-five percent 23 of the resident's net income, as that term is defined in the 24 Income Tax Act, from the employment or contract described in 25 Subparagraph (a) of this paragraph; SCORC/SB 489 Page 46 (c) 1 has not been able to replace the 2 lost wages described in Subparagraph (b) of this paragraph or 3 whose annual wages are at least twenty-five percent less than 4 when the qualifying facility was operating; and 5 (d) 6 7 does not qualify to take full benefits pursuant to a pension or retirement plan. SECTION 17. ENERGY TRANSITION BONDS NOT PUBLIC DEBT.-- 8 Energy transition bonds issued pursuant to the Energy 9 Transition Act shall not constitute a debt or a pledge of the 10 faith and credit or taxing power of this state or of any 11 county, municipality or any other political subdivision of 12 this state. 13 levied by the legislature or the taxing authority of any 14 county, municipality or other political subdivision of this 15 state for the payment of the principal of or interest on 16 energy transition bonds. 17 bonds does not obligate the state or a political subdivision 18 of the state to levy any tax or make any appropriation for 19 payment of the principal of or interest on the bonds. 20 Bondholders shall have no right to have taxes SECTION 18. The issuance of energy transition ENERGY TRANSITION BONDS AS LEGAL 21 INVESTMENTS.--Energy transition bonds shall be legal 22 investments for all governmental units, permanent funds of 23 the state, finance authorities, financial institutions, 24 insurance companies, fiduciaries and other persons requiring 25 statutory authority regarding legal investments. SCORC/SB 489 Page 47 1 2 SECTION 19. A. STATE PLEDGE NOT TO IMPAIR.-- The state pledges to and agrees with the 3 bondholders, any assignee and any financing parties that the 4 state shall not take or permit any action that impairs the 5 value of energy transition property, except as allowed 6 pursuant to Section 6 of the Energy Transition Act, or 7 reduces, alters or impairs energy transition charges that are 8 imposed, collected and remitted for the benefit of the 9 bondholders, any assignee and any financing parties, until 10 the entire principal of, interest on and redemption premium 11 on the energy transition bonds, all financing costs and all 12 amounts to be paid to an assignee or financing party under an 13 ancillary agreement are paid in full and performed in full. 14 B. Any person who issues energy transition bonds 15 is permitted to include the pledge specified in Subsection A 16 of this section in the energy transition bonds, ancillary 17 agreements and documentation related to the issuance and 18 marketing of the energy transition bonds. 19 SECTION 20. CHOICE OF LAW.--The laws of the state of 20 New Mexico as set forth in the Energy Transition Act shall 21 govern the validity, enforceability, attachment, perfection, 22 priority and exercise of remedies with respect to the 23 transfer of an interest or right of creation of a security 24 interest in energy transition property, an energy transition 25 charge or a financing order. SCORC/SB 489 Page 48 1 SECTION 21. CONFLICTS.--In the event of any conflict 2 between the Energy Transition Act and any other law regarding 3 the attachment, assignment or perfection, or the effect of 4 perfection, or priority of any security interest in or 5 transfer of energy transition property, the Energy Transition 6 Act shall govern to the extent of the conflict. 7 SECTION 22. VALIDITY ON ACTIONS IF ACT HELD INVALID.-- 8 Effective on the date that energy transition bonds are first 9 issued under the Energy Transition Act, if any provision of 10 that act is invalidated, superseded, replaced, repealed or 11 expires for any reason, that occurrence shall not affect the 12 validity of any action allowed pursuant to that act that is 13 taken by the commission, a qualifying utility, an assignee or 14 any other person, a collection agent, a financing party, a 15 bondholder or a party to an ancillary agreement and, to 16 prevent the impairment of energy transition bonds issued or 17 authorized in a financing order issued pursuant to the Energy 18 Transition Act, any such action shall remain in full force 19 and effect with respect to all energy transition bonds issued 20 or authorized in a financing order pursuant to the Energy 21 Transition Act before the date that such provision is held to 22 be invalid or is invalidated, superseded, replaced, repealed 23 or expires for any reason. 24 25 SECTION 23. APPLICABILITY.--The provisions of the Energy Transition Act shall not apply to a qualifying utility SCORC/SB 489 Page 49 1 that makes an initial application for a financing order more 2 than twelve years after the effective date of that act. 3 section shall not preclude a qualifying utility for which the 4 commission has issued a financing order from applying to the 5 commission for a subsequent order amending the financing 6 order, pursuant to Section 7 of the Energy Transition Act. 7 SECTION 24. 8 enacted to read: A new section of the Public Utility Act is "REQUIRING THE HIRING OF APPRENTICES FOR THE 9 10 This CONSTRUCTION OF FACILITIES THAT GENERATE ELECTRICITY.-A. 11 The construction of New Mexico facilities that 12 generate electricity for New Mexico retail customers, and 13 that are not located on the customer side of an electricity 14 meter, shall be subject to the requirements provided in 15 Subsection B of this section if the facilities are built as a 16 result of competitive solicitations issued after July 1, 17 2020. B. 18 Subject to availability of qualified 19 applicants, the construction of facilities that generate 20 electricity for New Mexico retail customers shall employ 21 apprentices from an apprenticeship program during the 22 construction phase of a project at a minimum level of the 23 following percentages of all persons employed for the 24 project: 25 (1) ten percent for projects for which SCORC/SB 489 Page 50 1 on-site construction commences beginning January 1, 2020, and 2 prior to January 1, 2024; (2) 3 seventeen and one-half percent for 4 projects for which on-site construction commences beginning 5 January 1, 2024, and prior to January 1, 2026; and (3) 6 twenty-five percent for projects 7 for which on-site construction commences beginning 8 January 1, 2026. 9 C. Apprenticeship programs used for purposes of 10 this section shall encourage diversity among participants, 11 participation by those underrepresented in the industry 12 associated with that apprenticeship program and participation 13 from disadvantaged communities, as determined by the 14 workforce solutions department. 15 promulgate rules to ensure compliance with this section. 16 D. The department shall As used in this section, "apprenticeship 17 program" means an apprenticeship program registered pursuant 18 to the Apprenticeship Assistance Act." 19 20 21 22 SECTION 25. Section 62-9-1 NMSA 1978 (being Laws 1941, Chapter 84, Section 46, as amended) is amended to read: "62-9-1. A. NEW CONSTRUCTION--RATEMAKING PRINCIPLES.-No public utility shall begin the construction 23 or operation of any public utility plant or system or of any 24 extension of any plant or system without first obtaining from 25 the commission a certificate that public convenience and SCORC/SB 489 Page 51 1 necessity require or will require such construction or 2 operation. 3 secure a certificate for an extension within any municipality 4 or district within which it lawfully commenced operations 5 before June 13, 1941 or for an extension within or to 6 territory already served by it, necessary in the ordinary 7 course of its business, or for an extension into territory 8 contiguous to that already occupied by it and that is not 9 receiving similar service from another utility. This section does not require a public utility to If any 10 public utility or mutual domestic water consumer association 11 in constructing or extending its line, plant or system 12 unreasonably interferes or is about to unreasonably interfere 13 with the service or system of any other public utility or 14 mutual domestic water consumer association rendering the same 15 type of service, the commission, on complaint of the public 16 utility or mutual domestic water consumer association 17 claiming to be injuriously affected, may, upon and pursuant 18 to the applicable procedure provided in Chapter 62, Article 19 10 NMSA 1978, and after giving due regard to public 20 convenience and necessity, including reasonable service 21 agreements between the utilities, make an order and prescribe 22 just and reasonable terms and conditions in harmony with the 23 Public Utility Act to provide for the construction, 24 development and extension, without unnecessary duplication 25 and economic waste. SCORC/SB 489 Page 52 1 B. If a certificate of public convenience and 2 necessity is required pursuant to this section for the 3 construction or extension of a generating plant or 4 transmission lines and associated facilities, a public 5 utility may include in the application for the certificate a 6 request that the commission determine the ratemaking 7 principles and treatment that will be applicable for the 8 facilities that are the subject of the application for the 9 certificate. If such a request is made, the commission 10 shall, in the order granting the certificate, set forth the 11 ratemaking principles and treatment that will be applicable 12 to the public utility's stake in the certified facilities in 13 all ratemaking proceedings on and after such time as the 14 facilities are placed in service. 15 the ratemaking principles and treatment specified in the 16 order in all proceedings in which the cost of the public 17 utility's stake in the certified facilities is considered. 18 If the commission later decertifies the facilities, the 19 commission shall apply the ratemaking principles and 20 treatment specified in the original certification order to 21 the costs associated with the facilities that were incurred 22 by the public utility prior to decertification. 23 C. The commission shall use The commission may approve the application for 24 the certificate without a formal hearing if no protest is 25 filed within sixty days of the date that notice is given, SCORC/SB 489 Page 53 1 pursuant to commission order, that the application has been 2 filed. 3 denying the application within nine months from the date the 4 application is filed with the commission. 5 its order within nine months is deemed to be approval and 6 final disposition of the application; provided, however, that 7 the commission may extend the time for granting approval for 8 an additional six months for good cause shown. The commission shall issue its order granting or D. 9 Failure to issue In an application for a certificate of public 10 convenience and necessity for an energy storage system, the 11 commission shall approve energy storage systems that: (1) 12 reduce costs to ratepayers by avoiding 13 or deferring the need for investment in new generation and 14 for upgrades to systems for the transmission and distribution 15 of energy; 16 (2) reduce the use of fossil fuels for 17 meeting demand during peak load periods and for providing 18 ancillary services; 19 (3) assist with ensuring grid reliability, 20 including transmission and distribution system stability, 21 while integrating sources of renewable energy into the grid; 22 (4) 23 resources and enhance grid security; 24 (5) 25 support diversification of energy reduce greenhouse gases and other air pollutants resulting from power generation; SCORC/SB 489 Page 54 (6) 1 provide the public utility with the 2 discretion, subject to applicable laws and rules, to operate, 3 maintain and control energy storage systems so as to ensure 4 reliable and efficient service to customers; and (7) 5 6 7 feasible alternatives. E. As used in this section: (1) 8 9 are the most cost effective among "energy storage system" means methods and technologies used to store electricity; and (2) 10 "mutual domestic water consumer 11 association" means an association created and organized 12 pursuant to the provisions of: (a) 13 14 Chapter 79; or Laws 1951, Chapter 52; or (b) 15 16 Laws 1947, Chapter 206; Laws 1949, SECTION 26. the Sanitary Projects Act." Section 62-15-34 NMSA 1978 (being Laws 17 2007, Chapter 4, Section 1, as amended by Laws 2014, Chapter 18 24, Section 1, and by Laws 2014, Chapter 25, Section 1) is 19 amended to read: 20 21 "62-15-34. A. RENEWABLE PORTFOLIO STANDARD.-- Except as provided in Subsection E of this 22 section, each distribution cooperative organized under the 23 Rural Electric Cooperative Act shall meet the renewable 24 portfolio standard requirements, as provided in this section, 25 to include renewable energy in its electric energy supply SCORC/SB 489 Page 55 1 portfolio as demonstrated by its retirement of renewable 2 energy certificates. 3 renewable portfolio standard are as follows: (1) 4 Requirements and targets of the no later than January 1, 2015, renewable 5 energy shall comprise no less than five percent of each 6 distribution cooperative's total retail sales to New Mexico 7 customers; 8 9 (2) the renewable portfolio standard shall increase by one percent per year thereafter until 10 January 1, 2020, at which time the renewable portfolio 11 standard shall be ten percent of the distribution 12 cooperative's total retail sales to New Mexico customers; 13 (3) a distribution cooperative shall have 14 the following targets and requirements for renewable energy 15 and zero carbon resources as a percentage of the distribution 16 cooperative's total retail sales in New Mexico: 17 (a) 18 19 20 21 a requirement of forty percent renewable energy by January 1, 2025; (b) a requirement of fifty percent renewable energy by January 1, 2030; and (c) a target of achieving the zero 22 carbon resource standard by January 1, 2050, composed of at 23 least eighty percent renewable energy; provided that: 24 achieving the target is technically feasible; 2) the rural 25 electric cooperative is able to provide reliable electric 1) SCORC/SB 489 Page 56 1 service while implementing the target; and 3) implementing 2 the target shall not cause electric service to become 3 unaffordable; and (4) 4 renewable energy resources that are in 5 a distribution cooperative's energy supply portfolio on 6 January 1, 2008 shall be counted in determining compliance 7 with this section. 8 B. By April 30 of each year, a distribution 9 cooperative shall file with the public regulation commission 10 a report on its purchases and generation of renewable energy 11 during the preceding calendar year. 12 the cost of the renewable energy resources purchased and 13 generated by the distribution cooperative to meet the 14 renewable portfolio standard, an explanation of steps taken 15 to minimize those costs, including competitive procurement 16 and comparison of the price of electricity from renewable 17 energy resources in the bids received by the distribution 18 cooperative to recent prices for such electricity elsewhere 19 in the southwestern United States, and an annual compliance 20 plan for meeting the renewable portfolio standard for the 21 following three years. 22 C. The report shall include If, in any given year, a distribution 23 cooperative determines that the average annual levelized cost 24 of renewable energy that would need to be procured or 25 generated for purposes of compliance with the renewable SCORC/SB 489 Page 57 1 portfolio standard would be greater than sixty dollars 2 ($60.00) per megawatt-hour at the point of interconnection of 3 the renewable energy resource with the transmission system, 4 adjusted for inflation after 2020, the distribution 5 cooperative shall not be required to incur that excess cost; 6 provided that the existence of this condition excusing 7 performance in any given year shall not operate to delay 8 compliance with the renewable portfolio standard in 9 subsequent years. The provisions of this subsection do not 10 preclude a distribution cooperative from accepting a project 11 with a cost that would exceed sixty dollars ($60.00) per 12 megawatt-hour. 13 D. A distribution cooperative shall report to its 14 membership a summary of its purchases and generation of 15 renewable energy during the preceding calendar year. 16 E. A distribution cooperative organized pursuant 17 to the Rural Electric Cooperative Act shall meet the 18 requirements and targets of the renewable portfolio standard 19 pursuant to Subsection A of this section as demonstrated by 20 the cooperative's retirement of renewable energy certificates 21 associated with energy assigned to the cooperative; provided 22 that a generation and transmission cooperative referred to in 23 Section 62-6-4 NMSA 1978 shall be responsible for meeting the 24 requirements and targets for all energy supplied to the 25 distribution cooperatives in New Mexico. Energy from SCORC/SB 489 Page 58 1 renewable energy and zero carbon resources that a generation 2 and transmission cooperative supplies in compliance with the 3 requirements and targets shall be verified at the point where 4 the generation and transmission cooperative produces or takes 5 delivery of the energy on behalf of the distribution 6 cooperatives that the generation and transmission cooperative 7 is serving." 8 9 SECTION 27. Section 62-15-37 NMSA 1978 (being Laws 2007, Chapter 4, Section 4, as amended by Laws 2015, Chapter 10 64, Section 2 and by Laws 2015, Chapter 71, Section 2) is 11 amended to read: 12 13 14 "62-15-37. DEFINITIONS--ENERGY EFFICIENCY--RENEWABLE ENERGY.--As used in the Rural Electric Cooperative Act: A. "energy efficiency" means measures, including 15 energy conservation measures, or programs that target 16 consumer behavior, equipment or devices to result in a 17 decrease in consumption of electricity without reducing the 18 amount or quality of energy services; 19 B. "renewable energy" means electric energy 20 generated by use of renewable energy resources and delivered 21 to a rural electric cooperative; 22 C. "renewable energy certificate" means a 23 certificate or other record, in a format approved by the 24 public regulation commission, that represents all the 25 environmental attributes from one megawatt-hour of SCORC/SB 489 Page 59 1 2 3 electricity generated from renewable energy; D. "renewable energy resource" means electric or useful thermal energy: (1) 4 generated by use of the following energy 5 resources, with or without energy storage and delivered to a 6 rural electric cooperative: 7 (a) solar, wind and geothermal; 8 (b) hydropower facilities brought in 9 service on or after July 1, 2007; (c) 10 other hydropower facilities 11 supplying no greater than the amount of energy from 12 hydropower facilities that were part of an energy supply 13 portfolio prior to July 1, 2007; (d) 14 15 fuel cells that do not use fossil fuels to create electricity; (e) 16 biomass resources, limited to 17 agriculture or animal waste, small diameter timber, not to 18 exceed eight inches, salt cedar and other phreatophyte or 19 woody vegetation removed from river basins or watersheds in 20 New Mexico; provided that these resources are from facilities 21 certified by the energy, minerals and natural resources 22 department to: 23 sustainable feedstock in the near vicinity; 2) have zero life 24 cycle carbon emissions; and 3) meet scientifically determined 25 restoration, sustainability and soil nutrient principles; and 1) be of appropriate scale to have SCORC/SB 489 Page 60 (f) 1 2 digested waste biomass; and (2) 3 4 landfill gas and anaerobically does not include electric energy generated by use of fossil fuel or nuclear energy; E. 5 "useful thermal energy" means renewable energy 6 delivered from a source that can be metered and that is 7 delivered in the state to an end user in the form of direct 8 heat, steam or hot water or other thermal form that is used 9 for heating, cooling, humidity control, process use or other 10 valid end-use energy requirements and for which fossil fuel 11 or electricity would otherwise be consumed; F. 12 "zero carbon resource" means an electricity 13 generation resource that emits no carbon dioxide into the 14 atmosphere, or that reduces methane emitted into the 15 atmosphere in an amount equal to no less than one-tenth of 16 the tons of carbon dioxide emitted into the atmosphere, as a 17 result of electricity production; and G. 18 "zero carbon resource standard" means providing 19 New Mexico rural electric cooperative retail customers with 20 electricity generated from one hundred percent zero carbon 21 resources." SECTION 28. 22 23 Chapter 65, Section 3, as amended) is amended to read: "62-16-3. 24 25 Section 62-16-3 NMSA 1978 (being Laws 2004, Act: DEFINITIONS.--As used in the Renewable Energy SCORC/SB 489 Page 61 1 2 3 A. "commission" means the public regulation commission; B. "energy storage" means batteries or other means 4 by which energy can be retained and delivered as electricity 5 for use at a later time; 6 C. 7 8 9 "municipality" means a municipal corporation, organized under the laws of the state, and H class counties; D. "public utility" means an entity certified by the commission to provide retail electric service in 10 New Mexico pursuant to the Public Utility Act but does not 11 include rural electric cooperatives; 12 E. "reasonable cost threshold" means an average 13 annual levelized cost of sixty dollars ($60.00) per 14 megawatt-hour at the point of interconnection of the 15 renewable energy resource with the transmission system, 16 adjusted for inflation after 2020; 17 F. "renewable energy" means electric energy 18 generated by use of renewable energy resources and delivered 19 to a public utility; 20 G. "renewable energy certificate" means a 21 certificate or other record, in a format approved by the 22 commission, that represents all the environmental attributes 23 from one megawatt-hour of electricity generated from 24 renewable energy; 25 H. "renewable energy resource" means the following SCORC/SB 489 Page 62 1 energy resources, with or without energy storage: 2 (1) solar, wind and geothermal; 3 (2) hydropower facilities brought in service 4 on or after July 1, 2007; (3) 5 biomass resources, limited to 6 agriculture or animal waste, small diameter timber, not to 7 exceed eight inches, salt cedar and other phreatophyte or 8 woody vegetation removed from river basins or watersheds in 9 New Mexico; provided that these resources are from facilities 10 certified by the energy, minerals and natural resources 11 department to: (a) 12 13 sustainable feedstock in the near vicinity; 14 15 have zero life cycle carbon (c) meet scientifically determined restoration, sustainability and soil nutrient principles; (4) 18 19 (b) emissions; and 16 17 be of appropriate scale to have fuel cells that do not use fossil fuels to create electricity; and (5) 20 21 waste biogas; 22 I. landfill gas and anaerobically digested "renewable portfolio standard" means the 23 minimum percentage of retail sales of electricity by a public 24 utility to electric consumers in New Mexico that is required 25 by the Renewable Energy Act to be from renewable energy; SCORC/SB 489 Page 63 1 J. "renewable purchased power agreement" means an 2 agreement that binds an entity generating power from 3 renewable energy resources to provide power at a specified 4 price and binds the purchaser to that price; 5 K. "zero carbon resource" means an electricity 6 generation resource that emits no carbon dioxide into the 7 atmosphere, or that reduces methane emitted into the 8 atmosphere in an amount equal to no less than one-tenth of 9 the tons of carbon dioxide emitted into the atmosphere, as a 10 11 result of electricity production; and L. "zero carbon resource standard" means providing 12 New Mexico public utility customers with electricity 13 generated from one hundred percent zero carbon resources." 14 15 16 17 SECTION 29. Section 62-16-4 NMSA 1978 (being Laws 2004, Chapter 65, Section 4, as amended) is amended to read: "62-16-4. A. RENEWABLE PORTFOLIO STANDARD.-A public utility shall meet the renewable 18 portfolio standard requirements, as provided in this section, 19 to include renewable energy in its electric energy supply 20 portfolio as demonstrated by its retirement of renewable 21 energy certificates; provided that the associated renewable 22 energy is delivered to the public utility and assigned to the 23 public utility's New Mexico customers. 24 other than rural electric cooperatives and municipalities, 25 requirements of the renewable portfolio standard are: For public utilities SCORC/SB 489 Page 64 1 (1) no later than January 1, 2015, renewable 2 energy shall comprise no less than fifteen percent of each 3 public utility's total retail sales to New Mexico customers; 4 (2) no later than January 1, 2020, renewable 5 energy shall comprise no less than twenty percent of each 6 public utility's total retail sales to New Mexico customers; 7 (3) no later than January 1, 2025, renewable 8 energy shall comprise no less than forty percent of each 9 public utility's total retail sales of electricity to 10 11 New Mexico customers; (4) no later than January 1, 2030, renewable 12 energy shall comprise no less than fifty percent of each 13 public utility's total retail sales of electricity to 14 New Mexico customers; 15 (5) no later than January 1, 2040, renewable 16 energy resources shall supply no less than eighty percent of 17 all retail sales of electricity in New Mexico; provided that 18 compliance with this standard until December 31, 2047 shall 19 not require the public utility to displace zero carbon 20 resources in the utility's generation portfolio on the 21 effective date of this 2019 act; and 22 (6) no later than January 1, 2045, zero 23 carbon resources shall supply one hundred percent of all 24 retail sales of electricity in New Mexico. 25 consistent progress shall be made over time toward this Reasonable and SCORC/SB 489 Page 65 1 requirement. B. 2 In administering the standards required by 3 Paragraphs (5) and (6) of Subsection A of this section, the 4 commission shall: (1) 5 not jeopardize the operation of a sewage 6 treatment facility that captures and combusts methane gas in 7 the facility's operations; (2) 8 9 10 maintain and protect the safety, reliable operation and balancing of loads and resources on the electric system; (3) 11 prevent unreasonable impacts to customer 12 electricity bills, taking into consideration the economic and 13 environmental costs and benefits of renewable energy 14 resources and zero carbon resources; 15 (4) prevent carbon dioxide emitting 16 electricity-generating resources from being reassigned, 17 redesignated or sold as a means of complying with the 18 standard; 19 (5) in consultation with the energy, 20 minerals and natural resources department, undertake programs 21 not prohibited by law to achieve the standard; 22 (6) in consultation with the department of 23 environment, ensure that the standard does not result in 24 material increases to greenhouse gas emissions from entities 25 not subject to commission oversight and regulation; and SCORC/SB 489 Page 66 (7) 1 in consultation with electricity 2 transmission system operators responsible for balancing 3 New Mexico electricity loads and resources, issue a report to 4 the legislature by July 1, 2020, and each July 1 every four 5 years thereafter. The report shall include: (a) 6 review of the standard, with a 7 focus on technologies, forecasts, existing transmission, 8 environmental protection, public safety, affordability and 9 electricity transmission and distribution system reliability; (b) 10 evaluation of the anticipated 11 financial costs and benefits to electric utilities in 12 implementing the standard, including the impacts and benefits 13 to customer electricity bills; and (c) 14 15 16 identification of the barriers to, and benefits of, achieving the standard. C. Any customer that is a political subdivision of 17 the state, or any educational institution designated in 18 Article 12, Section 11 of the constitution of New Mexico with 19 an enrollment of twenty thousand students or more during the 20 fall semester on its main campus, with consumption exceeding 21 twenty thousand megawatt-hours per year at any single 22 location or facility and that owns facilities that produce 23 renewable energy or hosts such facilities through a renewable 24 purchased power agreement, shall not be charged by the 25 utility for power purchases of one year or less or fuel on SCORC/SB 489 Page 67 1 the amount of electricity purchased from the utility equal to 2 the amount of renewable energy produced or hosted by the 3 customer. 4 auditor and notify the commission and the customer's serving 5 electric utility of the amount of renewable energy produced 6 at the customer-owned or customer-hosted facilities that 7 generate renewable energy. 8 to the state auditor and notify the commission that the 9 customer will retire all renewable energy certificates 10 associated with the renewable energy produced by those 11 facilities. 12 provisions of this subsection shall accrue to the customer 13 immediately upon the effective date of this 2019 act and 14 shall be reflected in customer bills each month, subject to 15 annual true-up and reconciliation. 16 subsection shall not prevent the utility from recovering all 17 of its reasonable and prudent fuel and purchased power costs. 18 The customer shall annually certify to the state D. The customer shall also certify Any financial benefits as a result of the The provisions of this Upon a motion or application by a public 19 utility the commission shall, or upon a motion or application 20 by any other person the commission may, open a docket to 21 develop and provide financial or other incentives to 22 encourage public utilities to produce or acquire renewable 23 energy that exceeds the applicable annual renewable portfolio 24 standard set forth in this section; results in reductions in 25 carbon dioxide emissions earlier than required by Subsection SCORC/SB 489 Page 68 1 A of this section; or causes a reduction in the generation of 2 electricity by coal-fired generating facilities, including 3 coal-fired generating facilities located outside of 4 New Mexico. 5 and capital investment opportunities for resources used in 6 furtherance of the outcomes described in this subsection. 7 E. The incentives may include additional earnings If, in any given year, a public utility 8 determines that the average annual levelized cost of 9 renewable energy that would need to be procured or generated 10 for purposes of compliance with the renewable portfolio 11 standard would be greater than the reasonable cost threshold, 12 the public utility shall not be required to incur that excess 13 cost; provided that the existence of this condition excusing 14 performance in any given year shall not operate to delay 15 compliance with the renewable portfolio standard in 16 subsequent years. 17 preclude a public utility from accepting a project with a 18 cost that would exceed the reasonable cost threshold. 19 public utility can generate or procure renewable energy at or 20 below the reasonable cost threshold, it shall be required to 21 do so to the extent necessary to meet the applicable 22 renewable portfolio standard and shall not be precluded from 23 exceeding the standard. 24 F. 25 The provisions of this subsection do not When a By September 1, 2007 and until June 30, 2019, a public utility shall file a report to the commission on its SCORC/SB 489 Page 69 1 procurement and generation of renewable energy during the 2 prior calendar year and a procurement plan that includes: (1) 3 the cost of procurement for any new 4 renewable energy resource in the next calendar year required 5 to comply with the renewable portfolio standard; and (2) 6 testimony and exhibits that demonstrate 7 that the proposed procurement is reasonable as to its terms 8 and conditions considering price, availability, reliability, 9 any renewable energy certificate values and diversity of the 10 renewable energy resource; or (3) 11 demonstration that the plan is otherwise 12 in the public interest. 13 G. By July 1, 2020, and each July 1 thereafter, a 14 public utility shall file a report to the commission on the 15 public utility's procurement and generation of renewable 16 energy since the last report and a procurement plan that 17 includes: 18 (1) the cost of procurement for new 19 renewable energy required to comply with the renewable 20 portfolio standard; 21 (2) the capital, operating and fuel costs on 22 a per-megawatt-hour basis during the preceding calendar year 23 of each nonrenewable generation resource rate-based by the 24 utility, or dedicated to the utility through a power purchase 25 agreement of one year or longer, and the nonrenewable SCORC/SB 489 Page 70 1 generation resources' carbon dioxide emissions on a 2 per-megawatt-hour basis during that same year; (3) 3 4 information, including exhibits, as applicable, that demonstrates that the proposed procurement: (a) 5 was the result of competitive 6 procurement that included opportunities for bidders to 7 propose purchased power, facility self-build or facility 8 build-transfer options; (b) 9 has a cost that is reasonable as 10 evidenced by a comparison of the price of electricity from 11 renewable energy resources in the bids received by the public 12 utility to recent prices for comparable energy resources 13 elsewhere in the southwestern United States; and (c) 14 is in the public interest, 15 considering factors such as overall cost and economic 16 development opportunities; and (4) 17 strategies used to minimize costs of 18 renewable energy integration, including location, diversity, 19 balancing area activity, demand-side management and load 20 management. 21 H. The commission shall approve or modify a public 22 utility's procurement plan within ninety days and may approve 23 the plan without a hearing, unless a protest is filed that 24 demonstrates to the commission's reasonable satisfaction that 25 a hearing is necessary. The commission may modify a plan SCORC/SB 489 Page 71 1 after notice and hearing. 2 cause, extend the time to approve a procurement plan for an 3 additional ninety days. 4 within the ninety-day period, the procurement plan is deemed 5 approved. I. 6 The commission may, for good If the commission does not act The commission may reject a procurement plan 7 if, within forty days of filing, the commission finds that 8 the plan does not contain the required information and, upon 9 the rejection, shall provide the public utility the time 10 necessary to file a revised plan; provided that the total 11 amount of renewable energy required to be procured by the 12 public utility shall not change." 13 14 15 16 17 SECTION 30. Section 62-16-5 NMSA 1978 (being Laws 2004, Chapter 65, Section 5, as amended) is amended to read: "62-16-5. RENEWABLE ENERGY CERTIFICATES--COMMISSION DUTIES.-A. The commission shall establish: (1) 18 a system of renewable energy 19 certificates that can be used by a public utility to 20 establish compliance with the renewable portfolio standard 21 and that may include certificates that are monitored, 22 accounted for or transferred by or through a regional system 23 or trading program for any region in which a public utility 24 is located; and 25 (2) requirements and procedures concerning SCORC/SB 489 Page 72 1 requirements for renewable energy certificates pursuant to 2 Subsections B and C of this section. 3 B. (1) 4 5 Renewable energy certificates: are owned by the generator of the renewable energy unless: (a) 6 the renewable energy certificates 7 are transferred to the purchaser of the electricity through 8 specific agreement with the generator; (b) 9 the generator is a qualifying 10 facility, as defined by the federal Public Utility Regulatory 11 Policies Act of 1978, in which case the renewable energy 12 certificates are owned by the public utility purchaser of the 13 renewable energy; or (c) 14 a contract for the purchase of 15 renewable energy is in effect prior to July 1, 2019, in which 16 case the renewable energy certificates are owned by the 17 purchaser of the electricity for the term of such contract, 18 unless otherwise agreed to in a contract approved by the 19 commission; 20 (2) may be traded, sold or otherwise 21 transferred by their owner, unless the certificates are from 22 a rate-based public utility plant, in which case the entirety 23 of the renewable energy certificates from that plant shall be 24 retired by the utility on behalf of itself or its customers. 25 Any contract to purchase renewable energy entered into by a SCORC/SB 489 Page 73 1 public utility on or after July 1, 2019 shall include 2 conveyance to the purchasing utility of all renewable energy 3 certificates, and the entirety of those certificates shall be 4 retired by that utility on behalf of itself or its customers 5 or subsequently transferred to a retail customer for 6 retirement under a voluntary program for purchasing renewable 7 energy approved by the commission. 8 that it is providing renewable energy from generation 9 resources for which it has traded, sold or transferred the A utility shall not claim 10 associated renewable energy certificates. 11 shall not disallow the recovery of the cost associated with 12 any expired renewable energy certificate. 13 shall annually file a report with the commission discussing: (a) 14 15 The commission The public utility its use, sale, trading or transfer of renewable energy certificates; and (b) 16 whether and how its public claims 17 of renewable energy generation account for renewable energy 18 certificates that it has traded, sold or transferred; 19 (3) that are used for the purpose of meeting 20 the renewable portfolio standard shall be registered with a 21 renewable energy generation information system that is 22 designed to create and track ownership of renewable energy 23 certificates and that, through the use of independently 24 audited generation data, verifies the generation and delivery 25 of electricity associated with each renewable energy SCORC/SB 489 Page 74 1 certificate and protects against multiple counting of the 2 same renewable energy certificate; and (4) 3 may be carried forward for up to four 4 years from the date of issuance to establish compliance with 5 the renewable portfolio standard, after which they shall be 6 deemed retired by the public utility. 7 C. A public utility shall be responsible for 8 demonstrating that a renewable energy certificate used for 9 compliance with the renewable portfolio standard is derived 10 11 12 13 14 15 from eligible renewable energy resources." SECTION 31. Section 62-16-6 NMSA 1978 (being Laws 2004, Chapter 65, Section 6, as amended) is amended to read: "62-16-6. COST RECOVERY FOR RENEWABLE ENERGY AND EMISSIONS REDUCTION.-A. A public utility that procures or generates 16 renewable energy shall recover, through the rate-making 17 process, the reasonable costs of complying with the renewable 18 portfolio standard. 19 commission approval of procurement plans or transitional 20 procurement plans shall be deemed to be reasonable. 21 B. Costs that are consistent with The commission shall not exclude from such cost 22 recovery reasonable interconnection and transmission costs 23 and costs to comply with electric industry reliability 24 standards incurred by the public utility in order to deliver 25 renewable energy to retail New Mexico customers. SCORC/SB 489 Page 75 1 C. If a public utility has been granted a 2 certificate of public convenience and necessity prior to 3 January 1, 2015 to construct or operate an electric 4 generation facility and the investment in that facility has 5 been allowed recovery as part of the utility's rate-base, the 6 commission may require the facility to discontinue serving 7 customers within New Mexico if the replacement has less or 8 zero carbon dioxide emissions into the atmosphere; provided 9 that no order of the commission shall disallow recovery of 10 any undepreciated investments or decommissioning costs 11 associated with the facility." 12 13 14 15 16 SECTION 32. Section 62-16-7 NMSA 1978 (being Laws 2004, Chapter 65, Section 7) is amended to read: "62-16-7. COMMISSION--POWERS AND DUTIES--VOLUNTARY PROGRAMS.-A. The commission: (1) 17 shall adopt rules regarding the 18 renewable portfolio standard, including a provision for 19 public utility records and reports; and (2) 20 may require that a public utility offer 21 its retail customers a voluntary program for purchasing 22 renewable energy that is in addition to electricity provided 23 by the public utility pursuant to the renewable portfolio 24 standard, under rates and terms that are approved by the 25 commission. SCORC/SB 489 Page 76 B. 1 2 All renewable energy purchased by a retail customer through an approved voluntary program shall: (1) 3 have all associated renewable energy 4 certificates retired by the retail customer, or on that 5 customer's behalf, by the public utility, and the 6 certificates shall not be used to meet the public utility's 7 renewable portfolio standard requirements pursuant to 8 Subsection A of Section 62-16-4 NMSA 1978; (2) 9 be excluded from the total retail sales 10 to New Mexico customers used to determine the renewable 11 portfolio standard requirements pursuant to Subsection A of 12 Section 62-16-4 NMSA 1978; and (3) 13 not be subject to charges by the public 14 utility to recover costs of complying with the renewable 15 portfolio standard requirements pursuant to Subsection A of 16 Section 62-16-4 NMSA 1978." 17 18 19 20 21 22 23 SECTION 33. Section 62-16-8 NMSA 1978 (being Laws 2004, Chapter 65, Section 8, as amended) is amended to read: "62-16-8. RURAL ELECTRIC COOPERATIVE--VOLUNTARY TARIFFS.-A. The commission may require that a rural electric cooperative: (1) offer its retail customers a voluntary 24 program for purchasing renewable energy under rates and terms 25 that are approved by the commission; SCORC/SB 489 Page 77 (2) 1 2 report to the commission the demand for renewable energy pursuant to a voluntary program; and (3) 3 comply with the requirements for the 4 procurement of renewable energy set forth in the Rural 5 Electric Cooperative Act. B. 6 The commission shall establish and amend rules 7 and regulations for the implementation of renewable portfolio 8 standards consistent with the Rural Electric Cooperative 9 Act." 10 11 12 SECTION 34. Section 62-16-9 NMSA 1978 (being Laws 2004, Chapter 65, Section 9) is amended to read: "62-16-9. EXISTING RULES.--The commission shall 13 promulgate rules to implement the provisions of the Renewable 14 Energy Act." 15 16 17 SECTION 35. Section 62-16-10 NMSA 1978 (being Laws 2004, Chapter 65, Section 10) is amended to read: "62-16-10. FEDERAL REQUIREMENTS.--Renewable energy 18 procured or generated by a public utility to comply with a 19 federal law, rule or regulation may be used to satisfy the 20 required procurements of the Renewable Energy Act." 21 22 23 24 25 SECTION 36. Section 74-2-5 NMSA 1978 (being Laws 1967, Chapter 277, Section 5, as amended) is amended to read: "74-2-5. DUTIES AND POWERS--ENVIRONMENTAL IMPROVEMENT BOARD--LOCAL BOARD.-A. The environmental improvement board or the SCORC/SB 489 Page 78 1 local board shall prevent or abate air pollution. B. 2 3 The environmental improvement board or the local board shall: (1) 4 adopt, promulgate, publish, amend and 5 repeal rules and standards consistent with the Air Quality 6 Control Act to attain and maintain national ambient air 7 quality standards and prevent or abate air pollution, 8 including: (a) 9 rules prescribing air standards, 10 within the geographic area of the environmental improvement 11 board's jurisdiction or the local board's jurisdiction, or 12 any part thereof; and (b) 13 standards of performance that limit 14 carbon dioxide emissions to no more than one thousand one 15 hundred pounds per megawatt-hour on and after January 1, 2023 16 for a new or existing source that is an electric generating 17 facility with an original installed capacity exceeding three 18 hundred megawatts and that uses coal as a fuel source; and (2) 19 adopt a plan for the regulation, 20 control, prevention or abatement of air pollution, 21 recognizing the differences, needs, requirements and 22 conditions within the geographic area of the environmental 23 improvement board's jurisdiction or the local board's 24 jurisdiction or any part thereof. 25 C. Rules adopted by the environmental improvement SCORC/SB 489 Page 79 1 board or the local board may: (1) 2 include rules to protect visibility in 3 mandatory class I areas to prevent significant deterioration 4 of air quality and to achieve national ambient air quality 5 standards in nonattainment areas; provided that such 6 regulations: (a) 7 shall be no more stringent than but 8 at least as stringent as required by the federal act and 9 federal regulations pertaining to visibility protection in 10 mandatory class I areas, pertaining to prevention of 11 significant deterioration and pertaining to nonattainment 12 areas; and (b) 13 14 shall be applicable only to sources subject to such regulation pursuant to the federal act; (2) 15 prescribe standards of performance for 16 sources and emission standards for hazardous air pollutants 17 that, except as provided in this subsection and in 18 Subparagraph (b) of Paragraph (1) of Subsection B of this 19 section: (a) 20 shall be no more stringent than but 21 at least as stringent as required by federal standards of 22 performance; and (b) 23 24 25 shall be applicable only to sources subject to such federal standards of performance; (3) include regulations governing emissions SCORC/SB 489 Page 80 1 from solid waste incinerators that shall be at least as 2 stringent as, and may be more stringent than, any applicable 3 federal emission limitations; (4) 4 include regulations requiring the 5 installation of control technology for mercury emissions that 6 removes the greater of what is achievable with best available 7 control technology or ninety percent of the mercury from the 8 input fuel for all coal-fired power plants, except for 9 coal-fired power plants constructed and generating electric 10 power and energy before July 1, 2007; (5) 11 require notice to the department or the 12 local agency of the intent to introduce or permit the 13 introduction of an air contaminant into the air within the 14 geographical area of the environmental improvement board's 15 jurisdiction or the local board's jurisdiction; and (6) 16 17 contaminant to: 18 19 20 require any person emitting any air (a) install, use and maintain emission (b) sample emissions in accordance with monitoring devices; 21 methods and at locations and intervals as may be prescribed 22 by the environmental improvement board or the local board; 23 24 25 (c) establish and maintain records of the nature and amount of emissions; (d) submit reports regarding the nature SCORC/SB 489 Page 81 1 and amounts of emissions and the performance of emission 2 control devices; and (e) 3 4 5 provide any other reasonable information relating to the emission of air contaminants. D. Any regulation adopted pursuant to this section 6 shall be consistent with federal law, if any, relating to 7 control of motor vehicle emissions. 8 9 E. In making its regulations, the environmental improvement board or the local board shall give weight it 10 deems appropriate to all facts and circumstances, including 11 but not limited to: 12 (1) 13 14 character and degree of injury to or interference with health, welfare, visibility and property; (2) the public interest, including the 15 social and economic value of the sources and subjects of air 16 contaminants; and 17 (3) technical practicability and economic 18 reasonableness of reducing or eliminating air contaminants 19 from the sources involved and previous experience with 20 equipment and methods available to control the air 21 contaminants involved." 22 23 24 25 SCORC/SB 489 Page 82