SENATE CORPORATIONS AND TRANSPORTATION COMMITTEE SUBSTITUTE FOR
SENATE BILL 1006
47th legislature - STATE OF NEW MEXICO - first session, 2005
AN ACT
RELATING TO PUBLIC UTILITIES; REQUIRING PUBLIC UTILITIES AND RURAL ELECTRIC COOPERATIVES TO MAKE NET METERING SERVICES AVAILABLE TO CUSTOMERS THAT OPERATE FACILITIES THAT PRODUCE ELECTRICAL ENERGY FROM RENEWABLE ENERGY RESOURCES; CREATING AND CHANGING DEFINITIONS IN THE PUBLIC UTILITY ACT; PROVIDING REQUIREMENTS FOR CHARGES AND CREDITS FOR NET METERING; PROVIDING REQUIREMENTS FOR SAFETY AND PERFORMANCE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 62-3-3 NMSA 1978 (being Laws 1967, Chapter 96, Section 3, as amended) is amended to read:
"62-3-3. DEFINITIONS.--Unless otherwise specified, when used in the Public Utility Act:
A. "affiliated interest" means a person who directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with a public utility. Control includes instances where a person is an officer, director, partner, trustee or person of similar status or function or owns directly or indirectly or has a beneficial interest in ten percent or more of any class of securities of a person;
B. "average operating margin" means the average of the operating margins of a rural electric cooperative over the past five years;
C. "clean generation source" means a facility that produces electrical energy:
(1) generated by the use of low- or zero- emissions generation technology with substantial long-term production potential;
(2) generated by the use of a renewable energy resource that may include a solar, wind, hydropower or geothermal resource or by the use of a biomass resource such as agriculture or animal waste, small diameter timber, salt cedar and other phreatophyte or woody vegetation removed from a river basin or watershed in New Mexico, landfill gas and anaerobically digested waste biomass or hydrogen produced from renewable sources used in fuel cells; and
(3) that is not generated by use of fossil fuel or nuclear energy;
[B.] D. "commission" means the public regulation commission;
[C.] E. "commissioner" means a member of the commission;
F. "customer-generator" means a retail customer of a public utility or rural electric cooperative who is also the operator of a clean generation source;
[D.] G. "municipality" means a municipal corporation organized under the laws of the state, and H-class counties;
H. "net metering" means measurement of the difference between the electricity supplied to a customer-generator by a public utility or rural electric cooperative and the electricity that is generated by the customer-generator and delivered to a public utility or rural electric cooperative at the same point of interconnection during a billing period;
I. "net metering revenue reduction" means the difference between a rural electric cooperative's or public utility's applicable tariff energy charge and the lower of the avoided cost as filed with the commission or three cents ($.03) per kilowatt-hour, multiplied by the total number of kilowatt-hours that the commission estimates has been generated by all of the clean generation sources that are net metered by the public utility or rural electric cooperative;
J. "operating margin" means the amounts received or receivable from the furnishing of electric service by a rural electric cooperative in excess of costs incurred in the furnishing of that service;
K. "peak generating capacity" means the total maximum rated output, in kilowatts, of a clean generation source;
[E.] L. "person" means an individual, firm, partnership, company, rural electric cooperative organized under Laws 1937, Chapter 100 or the Rural Electric Cooperative Act, corporation or lessee, trustee or receiver appointed by any court. "Person" does not mean a class A county as described in Section 4-36-10 NMSA 1978 or a class B county as described in Section 4-36-8 NMSA 1978. "Person" does not mean a municipality as defined in this section unless the municipality has elected to come within the terms of the Public Utility Act as provided in Section 62-6-5 NMSA 1978. In the absence of voluntary election by a municipality to come within the provisions of the Public Utility Act, the municipality shall be expressly excluded from the operation of that act and from the operation of all its provisions, and no such municipality shall for any purpose be considered a public utility;
M. "rural electric cooperative" means a rural electric cooperative organized pursuant to the Rural Electric Cooperative Act;
[F.] N. "securities" means stock, stock certificates, bonds, notes, debentures, mortgages or deeds of trust or other evidences of indebtedness issued, executed or assumed by a utility;
[G.] O. "public utility" or "utility" means every person not engaged solely in interstate business and, except as stated in Sections 62-3-4 and 62-3-4.1 NMSA 1978, that may own, operate, lease or control:
(1) any plant, property or facility for the generation, transmission or distribution, sale or furnishing to or for the public of electricity for light, heat or power or other uses;
(2) any plant, property or facility for the manufacture, storage, distribution, sale or furnishing to or for the public of natural or manufactured gas or mixed or liquefied petroleum gas for light, heat or power or other uses; but the term "public utility" or "utility" shall not include any plant, property or facility used for or in connection with the business of the manufacture, storage, distribution, sale or furnishing of liquefied petroleum gas in enclosed containers or tank truck for use by others than consumers who receive their supply through any pipeline system operating under municipal authority or franchise and distributing to the public;
(3) any plant, property or facility for the supplying, storage, distribution or furnishing to or for the public of water for manufacturing, municipal, domestic or other uses; provided, however, nothing contained in this paragraph shall be construed to apply to irrigation systems, the chief or principal business of which is to supply water for the purpose of irrigation;
(4) any plant, property or facility for the production, transmission, conveyance, delivery or furnishing to or for the public of steam for heat or power or other uses; [or]
(5) any plant, property or facility for the supplying and furnishing to or for the public of sanitary sewers for transmission and disposal of sewage produced by manufacturing, municipal, domestic or other uses; provided that the terms "public utility" or "utility" as used in the Public Utility Act do not include any utility owned or operated by a class A county as described in Section 4-36-10 NMSA 1978 either directly or through a corporation owned by or under contract with such a county; or
(6) any plant, property or facility for the sale or furnishing to or for the public of goods or services to reduce the consumption of or demand for electricity or natural gas that is a public utility under the definition found in Paragraph (1) or (2) of this subsection;
[H.] P. "rate" means every rate, tariff, charge or other compensation for utility service rendered or to be rendered by a utility and every rule, regulation, practice, act, requirement or privilege in any way relating to such rate, tariff, charge or other compensation and any schedule or tariff or part of a schedule or tariff thereof;
[I.] Q. "renewable energy" means electrical energy generated by means of a low- or zero-emission generation technology that has substantial long-term production potential and may include, without limitation, solar, wind, hydropower, geothermal, landfill gas, anaerobically digested waste biomass or fuel cells that are not fossil fueled. "Renewable energy" does not include fossil fuel or nuclear energy;
[J.] R. "service" or "service regulation" means every rule, regulation, practice, act or requirement relating to the service or facility of a utility;
[K.] S. "Class I transaction" means the sale, lease or provision of real property, water rights or other goods or services by an affiliated interest to a public utility with which it is affiliated or by a public utility to its affiliated interest;
[L.] T. "Class II transaction" means:
(1) the formation after May 19, 1982 of a corporate subsidiary by a public utility or a public utility holding company by a public utility or its affiliated interest;
(2) the direct acquisition of the voting securities or other direct ownership interests of a person by a public utility if such acquisition would make the utility the owner of ten percent or more of the voting securities or other direct ownership interests of that person;
(3) the agreement by a public utility to purchase securities or other ownership interest of a person other than a nonprofit corporation, contribute additional equity to, acquire additional equity interest in or pay or guarantee any bonds, notes, debentures, deeds of trust or other evidence of indebtedness of any such person; provided, however, that a public utility may honor all agreements entered into by such utility prior to May 19, 1982; or
(4) the divestiture by a public utility of any affiliated interest that is a corporate subsidiary of the public utility;
[M.] U. "corporate subsidiary" means any person ten percent or more of whose voting securities or other ownership interests are directly owned by a public utility; and
[N.] V. "public utility holding company" means an affiliated interest that controls a public utility through the direct or indirect ownership of voting securities of that public utility."
Section 2. A new section of the Public Utility Act is enacted to read:
"[NEW MATERIAL] NET METERING SERVICE.--
A. If a public utility or a rural electric cooperative makes net metering services available to a customer-generator with a clean generation source that the public utility or rural electric cooperative serves, the customer-generator shall pay all costs for the acquisition and installation of the necessary metering equipment and customer-owned facilities required by a public utility or rural electric cooperative for interconnection. The customer-generator shall also pay all costs incurred by the public utility or rural electric cooperative for net metering, including costs for equipment or services that are necessary to meet safety and performance standards pursuant to the Public Utility Act.
B. A public utility or a rural electric cooperative may charge a customer-generator for the installation of any metering equipment required for net metering that is in addition to equipment that is required for the rate tariff under which the customer is normally served. A public utility or a rural electric cooperative may install additional equipment that it deems necessary to meter the total electricity flow in each direction. If the clean generation source of the customer-generator has a peak generating capacity of ten kilowatts or less, a party requesting the additional equipment shall pay the cost of additional equipment. If the clean generation source of the customer-generator has a peak generating capacity exceeding ten kilowatts, the public utility or rural electric cooperative may require the customer-generator to pay the cost of the additional equipment.
C. Costs imposed by a public utility or a rural electric cooperative on a customer-generator shall not exceed those necessary to meet safety and interconnection requirements pursuant to the Public Utility Act.
D. A customer-generator is responsible for costs associated with operating and maintaining a clean generation source of the customer-generator and for costs related to modification of the clean generation source required for the purposes of interconnectivity, safety and reliability.
E. A public utility or rural electric cooperative shall make net metering available to a customer-generator with a clean generation source with peak generating capacity of ten kilowatts or less that meets the safety and interconnection requirements pursuant to the Public Utility Act.
F. A public utility that is not a rural electric cooperative shall make net metering available to a customer-generator with a clean generation source that meets the safety and interconnection requirements pursuant to the Public Utility Act and that has a peak generating capacity exceeding ten kilowatts, but not exceeding one hundred kilowatts; provided that making net metering available to that customer-generator does not increase the cumulative peak generating capacity of all clean generation sources on the public utility's distribution system above one percent of the average of that public utility's peak retail demand over the past three calendar years.
G. A rural electric cooperative shall make net metering available to a customer-generator with a clean generation source that meets the safety and interconnection requirements pursuant to the Public Utility Act and that has a peak generating capacity exceeding ten kilowatts, but not exceeding one hundred kilowatts; provided that making net metering available to that customer-generator does not increase the net metering revenue reduction above one percent of the rural electric cooperative's average operating margins.
H. A rural electric cooperative may allow, with thirty days' notice to customers, additional net metering of customer-generators beyond the limits imposed by Subsection G of this section unless, within the thirty-day period after notice, the cooperative receives customer protests from customers representing a majority of the cooperative's load.
I. Once interconnected, net metering shall not be withdrawn from a customer-generator on the basis of the limitations specified in Subsections E through G of this section.
J. The commission shall adopt rules for this 2005 act that shall become effective before June 1, 2006, including uniform interconnection and safety standards consistent with the requirements of Subsection C of this section and the safety and performance standards of the Public Utility Act that include application procedures, reporting requirements for peak loads and operating margins and provisions ensuring compliance and timely response by public utilities and rural electric cooperatives, including reporting requirements for disapproved applications, to customer requests for interconnection."
Section 3. A new section of the Public Utility Act is enacted to read:
"[NEW MATERIAL] TARIFFS--CREDITS.--
A. An applicable tariff for retail electric service by a public utility or rural electric cooperative to a customer-generator shall be based on the applicable tariff of the public utility or rural electric cooperative that is applicable to the customer-generator's customer class.
B. A public utility or rural electric cooperative shall provide a credit for net metering to a customer-generator equal to the applicable tariff of the public utility or rural electric cooperative for the customer-generator's customer class with respect to the customer-generator's production of electricity.
C. If a customer-generator's net aggregate bill from the public utility or rural electric cooperative is less than zero, a credit for net metering shall be carried over to future bills of that customer-generator until the credit balance equals zero.
D. A customer-generator shall not claim a credit for net metering pursuant to this section from a public utility or rural electric cooperative with respect to a clean generation source pursuant to the Public Utility Act if the customer-generator has claimed a credit for net metering from another public utility or rural electric cooperative for the same clean generation source."
Section 4. A new section of the Public Utility Act is enacted to read:
"[NEW MATERIAL] SAFETY, INTERCONNECTION AND PERFORMANCE REQUIREMENTS.--
A. A net metering system used by a customer-generator shall comply with all relevant public utility or rural electric cooperative safety and interconnection requirements and all federal, state and local safety and performance standards and codes.
B. Safety and interconnection requirements for clean generation sources approved by the commission shall comply with the standards of the institute of electrical and electronics engineers for interconnecting distributed resources with electric power systems.
C. A public utility or rural electric cooperative may require a customer-generator, at that customer-generator's expense, to provide lockable switching equipment capable of isolating a clean generation source from the public utility's or rural electric cooperative's system.
D. The public utility or rural electric cooperative shall not be liable directly or indirectly for permitting or continuing to allow interconnection of a clean generation source or for an act or omission of a customer-generator that causes loss or injury to a person or property, including death of a customer-generator or a third party. A customer-generator shall indemnify a public utility or rural electric cooperative for damage to a person or property and for any damage or loss incurred by a third party or an heir or successor of that party as the result of the installation or operation of a clean generation source.
E. A customer-generator shall notify its public utility or rural electric cooperative and the commission of the intent to install a clean generation source at least sixty days before its installation on an application form prescribed by the commission. The public utility or rural electric cooperative shall approve or disapprove the application and notify the customer-generator of its approval or disapproval within thirty days of the public utility's receipt of the application. The public utility or rural electric cooperative shall notify the commission of its approval or disapproval in accordance with the commission's rules."
Section 5. Section 62-16-4 NMSA 1978 (being Laws 2004, Chapter 65, Section 4) is amended to read:
"62-16-4. RENEWABLE PORTFOLIO STANDARD.--
A. A public utility shall meet the renewable portfolio standard requirements, as provided in this section, to include renewable energy in its electric energy supply portfolio. Requirements of the renewable portfolio standard are:
(1) no later than January 1, 2006, renewable energy shall comprise no less than five percent of each public utility's total retail sales to New Mexico customers;
(2) the renewable portfolio standard shall increase by one percent per year thereafter until January 1, 2011, when the renewable portfolio standard shall reach a level of ten percent of a public utility's annual retail sales in New Mexico and shall remain fixed at ten percent for each year thereafter;
(3) the renewable portfolio standard established by this section shall be reduced, as necessary, to provide for the following specific procurement requirements for nongovernmental customers at a single location or facility, regardless of the number of meters at that location or facility, with consumption exceeding ten million kilowatt-hours per year. On and after January 1, 2006, the kilowatt-hours of renewable energy procured for these customers shall be limited so that the additional cost of the renewable portfolio standard to each customer does not exceed the lower of one percent of that customer's annual electric charges or forty-nine thousand dollars ($49,000). The calculation of the additional cost of the renewable portfolio standard to each customer shall include the amount of the total net metering revenue reductions, as defined by the Public Utility Act, that the commission determines should be recovered from that customer. This procurement limit criteria shall increase by one-fifth percent or ten thousand dollars ($10,000) per year until January 1, 2011, when the procurement limit criteria shall remain fixed at the lower of two percent of that customer's annual electric charges or ninety-nine thousand dollars ($99,000). After January 1, 2012, the commission may adjust the ninety-nine-thousand-dollar ($99,000) limit for inflation. Nothing contained in this paragraph shall be construed as affecting a public utility's right to recover all reasonable costs of complying with the renewable portfolio standard, pursuant to Section [6 of the Renewable Energy Act] 62-16-6 NMSA 1978. The commission may authorize deferred recovery of the costs of complying with the renewable portfolio standard, including carrying charges;
(4) the renewable portfolio shall be diversified as to the type of renewable energy resource, taking into consideration the overall reliability, availability, dispatch flexibility and cost of the various renewable energy resources made available by suppliers and generators; and
(5) renewable energy resources that are in a public utility's electric energy supply portfolio on July 1, 2004 shall be counted in determining compliance with this section.
B. If a public utility finds that, in any given year, the cost of renewable energy that would need to be procured or generated for purposes of compliance with the renewable portfolio standard would be greater than the reasonable cost threshold as established by the commission pursuant to this section, the public utility shall not be required to incur that cost; provided that the existence of this condition excusing performance in any given year shall not operate to delay the annual increases in the renewable portfolio standard in subsequent years. When a public utility can generate or procure renewable energy at or below the reasonable cost threshold, it shall be required to add renewable energy resources to meet the renewable portfolio standard applicable in the year when the renewable energy resources are being added.
C. By December 31, 2004, the commission shall establish, after notice and hearing, the reasonable cost threshold above which level a public utility shall not be required to add renewable energy to its electric energy supply portfolio pursuant to the renewable portfolio standard. The commission may thereafter modify the reasonable cost threshold as changing circumstances warrant, after notice and hearing. In establishing and modifying the reasonable cost threshold, the commission shall take into account:
(1) the price of renewable energy at the point of sale to the public utility;
(2) the transmission and interconnection costs required for the delivery of renewable energy to retail customers;
(3) the impact of the cost for net metering and renewable energy on overall retail customer rates;
(4) the overall diversity, reliability, availability, dispatch flexibility, cost per kilowatt-hour and life cycle cost on a net present value basis of renewable energy resources available from suppliers; and
(5) other factors, including public benefits, the commission deems relevant; provided that nothing in the Renewable Energy Act shall be construed to permit regulation by the commission of the production or sale price at the point of production of the renewable energy.
D. By September 1 of each year until 2012, and thereafter as determined necessary by the commission, a public utility shall file a report to the commission on its purchases of renewable energy during the prior calendar year and a procurement plan that includes:
(1) the cost of procurement for any new renewable energy resource in the next calendar year required to comply with the renewable portfolio standard; and
(2) testimony and exhibits that demonstrate that the proposed procurement is reasonable as to its terms and conditions considering price, availability, dispatchability, any renewable energy certificate values and diversity of the renewable energy resource; or
(3) demonstration that the plan is otherwise in the public interest.
E. The commission shall approve or modify a public utility's procurement or transitional procurement plan within sixty days and may approve the plan without a hearing, unless a protest is filed that demonstrates to the commission's reasonable satisfaction that a hearing is necessary. The commission may modify a plan after notice and hearing. The commission may, for good cause, extend the time to approve a procurement plan for an additional sixty days. If the commission does not act within the sixty-day period, the procurement plan is deemed approved.
F. The commission may reject a procurement or transitional procurement plan if it finds that the plan does not contain the required information and, upon the rejection, may suspend the public utility's obligation to procure additional resources for the time necessary to file a revised plan; provided that the total amount of renewable energy to be procured by the public utility shall not change.
G. A public utility may file a transitional procurement plan requesting that the commission determine that the costs of renewable energy resources that the public utility has committed to, or may commit to, prior to the commission's establishing a reasonable cost threshold, are reasonable and recoverable pursuant to Section [6 of the Renewable Energy Act] 62-16-6 NMSA 1978. The requirements of annual procurement plan filings shall be applicable to any transitional procurement plan filing pursuant to this section."
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