NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

SPONSOR:

McSorley

 

DATE TYPED:

03/3/03

 

HB

 

 

SHORT TITLE:

Clean Energy Act

 

SB

865

 

 

ANALYST:

Valenzuela

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

NFI

See Narrative

 

 

 

 

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

 

 

 

 

FY05: $6.5 million

$6.5 million

Recurring

Clean Energy Fund

 

FY10: $15.5 million

$15.5 million

Recurring

Clean Energy Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

Office of the Attorney General

Energy, Minerals and Natural Resources Department

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 865 proposes enacting a new statute, the Clean Energy Act, that would authorize, on July 1, 2004, an assessment of $0.0003/kWh on retail sales billed by public utilities, municipal utilities and distribution cooperatives. On July 1, 2009, the assessment will double to $0.0006/kWh. The generated revenues will accrue to the clean energy fund, which would be appropriated to EMNRD. EMNRD will administer the fund in accordance with criteria defined in the bill and report to the LFC annually on its activities.

 

 

     Significant Issues

 

As currently, the Act identifies the following discretionary recurring appropriations from the fund, totaling approximately $9,800.0:

 

$    300.0 est.   Administrative overhead for EMNRD (5 percent maximum)

$    500.0         Low-income energy assistance funding administered by the New Mexico Mortgage Finance Authority (minimum)

$ 1,000.0         Renewable energy or energy efficiency projects at state-owned buildings (maximum)

$ 4,000.0         Renewable energy or energy efficiency projects at universities, public schools, or local governments (maximum)

$ 4,000.0         Develop electric services for low-income communities or Indian nation, tribe or pueblo (maximum)

 

No state agency responded with revenue projections for the fund in its analysis of Senate Bill 865. The LFC projections, with assumptions, of the estimated revenue into the fund are provided in the table below:

 

 

1993

1998

2003 (est.)

2009 (est.)

Utility Retail Sales Revenue (MWh)[1]

14,926,879

18,173,120

21,696,192[2]

25,902,2532

Percent Change (5-yr cumulative)

17.0 %

21.7%

19.4%

19.4%

Assessment amount per KWh

 

 

$         0.0003

$         0.0006

Estimated Revenue from Assessment

 

 

$       6,508.9

$      15,541.4

Earmarked Appropriation in the Act

 

 

$       9,800.0

$        9,800.0

 

As shown in the table, the intended effect of Senate Bill 865 would not occur until the assessment doubles to $0.0006/KWh, which is slated to occur on January 1, 2009. In fact, the fund will be short by roughly $3.2 million during the first years of implementation.

 

FISCAL IMPLICATIONS

 

Revenue generated will not revert to the general fund.  This bill creates a new fund and provides for continuing appropriations.  The LFC objects to including continuing appropriation language in the statutory provisions for newly created funds.  Earmarking reduces the ability of the legislature to establish spending priorities.

 

ADMINISTRATIVE IMPLICATIONS

 

SB 865 does not define when utility companies would be required to transfer the assessment revenue to the state, whether on an monthly, quarterly or annual basis.

 

RELATIONSHIP

 

Senate Bill 865 creates a fund similar to the systems benefit charge fund (Section 62-3A-13 NMSA 1978) that would be repealed if the Electric Utility Industry Restructuring Act is repealed by Senate Bill 718.

 

MFV/sb/njw

 


[1]1 “State Energy Profiles: New Mexico,” U.S. Department of Energy, Energy Information Administration, http://www.eia.doe.gov/.

[2]2 Estimate is based on averaging the historical cumulative percentage increases over the past 15 years.