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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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

SPONSOR M Sanchez

DATE TYPED 2/10/05

HB

SHORT TITLE Renewable Energy and Transmission Act

SB 627

ANALYST Wilson

APPROPRIATION

Appropriation Contained

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY07

FY08

$1,000.0

$750.0

$750.0 Recurring

Renewable En-

ergy Transmis-

sion Fund

Duplicates HB748

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06 FY 2015

*$2.500.0 Non-Rec

General Fund

*Appropriations must be repaid by June 30, 2015.

See Narrative for EMNRD revenue estimates.

SOURCES OF INFORMATION

LFC Files

Responses Received From

Energy, Minerals & Natural Resourced Department (EMNRD)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of Bill

Senate Bill 627 appropriates $1 million in fiscal year 2006, $750 thousand in fiscal year 2007

and $750 thousand in fiscal year 2008 from the general fund to the Renewable Energy Transmis-

sion and Storage Authority operational fund for expenditure by the New Mexico Renewable En-

ergy Transmission and Storage Authority to carry out the purposes of the New Mexico Renew-

able Energy Transmission and Storage Authority Act.

Senate Bill 627 -- Page 2

This bill creates a quasi-governmental agency that will serve to finance transmission and storage

projects with an emphasis on renewable energy and facilitate the in-state use of and exportation

of New Mexico generated renewable power. The purpose is to promote the development of re-

newable energy facilities in the state by providing additional transmission facilities to take the

power to market both within New Mexico and out of state.

The bill will establish an interstate authority that will have specialized expertise in electric

transmission infrastructure and storage issues. The authority will have the power to issue reve-

nue bonds that will provide financing stimulus for public and private entities to construct and

operate new transmission lines and electric storage facilities, both inside and outside of New

Mexico.

The Governor will appoint five board members, with the advice and consent of the senate, pro-

vided that no more than three are from the same political party. All must have extensive knowl-

edge of the utility industry and renewable energy development and displayed ability to protect

the public interest.

The PRC will retain permitting and siting authority over jurisdictional transmission lines. New

Mexico regulated utility companies will evaluate the benefits of participation in projects, with

PRC oversight of retail rates.

The authority will engage in interstate commerce and will be subject to Federal Energy Regula-

tory Commission (FERC) jurisdiction.

The authority will have the power of eminent domain for acquiring property for public use for

the purpose of constructing electric transmission lines and related infrastructure.

Significant Issues

The EMNRD believes this bill will provide economic development in New Mexico’s rural areas.

A typical New Mexico wind project can generate approximately $40 million for the local in-state

economy over a 25 year period.

This bill will also provide New Mexicans with greater access to clean renewable energy and im-

proved transmission system reliability.

FISCAL IMPLICATIONS

The appropriation of $1 million in fiscal year 2006, $750 thousand in fiscal year 2007 and $750

thousand in fiscal year 2008 from the general fund contained in this bill is a recurring expense to

the general fund. Any unexpended or unencumbered balance remaining at the end of each fiscal

shall not revert to the general fund; however, it is the intent of the legislature that money appro-

priated by this bill is to be used for initial implementation and, as balance accrue to the renew-

able energy transmission and storage authority operational fund above the amounts needed by

the authority to perform its duties. The excess balances are to be deposited in the general fund so

that the appropriation made by the bill shall be completely refunded to the general fund no later

than June 30, 2015.

Senate Bill 627 -- Page 3

This bill creates a new fund and provides for continuing appropriations. The LFC objects to in-

cluding continuing appropriation language in the statutory provisions for newly created funds.

Earmarking reduces the ability of the legislature to establish spending priorities.

EMNRD believes this bill’s provision will increase tax revenues received by New Mexico. Po-

tentially, $10 million in tax revenues can be generated over a 25-year period including property

taxes, severance taxes, gross receipts tax.

The authority will have the power to borrow money and evidence the borrowing in the issuance

and sale of bonds or other obligations in order to finance projects.

The authority’s bonds will not represent any type of guarantee or obligation from the State of

New Mexico, but are stand-alone instruments similar to New Mexico Finance Authority bonds.

ADMINISTRATIVE IMPLICATIONS

This bill creates a quasi-state agency, specializing in electric transmission, storage and infrastruc-

ture financing.

DUPLICATION

SB 627 duplicates HB 748.

DW/yr:lg