Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

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

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Martinez

ORIGINAL DATE

LAST UPDATED

1/18/08

HB

SHORT TITLE Residential Energy Efficiency Loan Program

SB 210

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$2,500,000

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Mortgage Finance Authority (NMMFA)

Energy, Minerals and Natural Resources Department (EMNRD)

SUMMARY

Synopsis of Bill

Senate Bill 210, Making an Appropriation for Residential Energy Efficiency Improvement Loan

Program, appropriates $2.5 million from the general fund to DFA for a residential energy

efficiency improvement loan program for expenditure through fiscal years 2008 through 2010..

FISCAL IMPLICATIONS

The appropriation of $2.5 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY10 shall revert to the

general fund.

If appropriated, MFA reports that it will expend the funds over a three-year period to

create and implement a residential energy efficiency improvement loan program for low- and moderate

income households.

SIGNIFICANT ISSUES

NMNRD reports that there are currently nearly 120,000 low-income New Mexico households in

need of energy efficiency retrofits. Natural gas and propane prices have increased in recent years

and the prospect for future price spikes is great. Energy price increases disproportionately affect

Senate Bill 210 – Page 2

low- and moderate-income households by significantly raising the percentage of income required

for utility bills. Energy efficiency retrofits can reduce energy usage and result in savings of

several hundred dollars per household per year.

Solar thermal and photovoltaic systems can offset significant portions of utility-provided heating

fuel and electricity, thus reducing a household’s ongoing utility bills; however, the capital costs

of these systems are frequently too expensive for low- and moderate-income households to

consider. The Loan Program would augment the existing Solar Market Development Tax Credit

and provide an additional way for low- and moderate-income households to finance solar

systems.

MFA notes that:

•

A growing proportion of a household’s disposable income is spent on energy costs, pushing

working families closer to the edge: energy costs comprise up to 30% of low- and moderate

income homeowners’ monthly budgets.

•

New Mexicans can save hundreds—even thousands—of dollars annually when they live in

energy efficient homes and apartments: the average household spends between $1,300 and

$1,500 annually on energy bills, roughly half of which is attributable to heating and cooling

costs.

.

In New Mexico’s climate, spectrally selective low-e windows can cut cooling costs by as

much as 38%.

.

Appropriate insulation for your climate (based on R-value) can increase your comfort and

reduce your heating and cooling costs up to 30%.

.

An Energy Star furnace or air conditioning system, when properly sized and installed,

can save consumers 30 - 40% on heating and cooling bills.

•

New Mexico’s environment will realize significant benefits.

.

The U.S. Environmental Protection Agency estimates an average house releases 22,000

pounds of carbon dioxide (CO2) annually compared to a typical car’s 11,500 pounds of

CO2.

.

Energy production and use account for nearly 80 percent of air pollution, more than 88

percent of greenhouse gas emissions, and more environmental damage than any other

human activity.

.

According to data from the U.S. Energy Information Administration, the Building Sector

is responsible for 48 percent of all greenhouse gas emissions each year, and 76 percent of

all electricity generated by U.S. power plants goes to supply the Building Sector. Action

in the form of reduction of energy use in the Building Sector can thus play a significant

role in creating a solution to the growing problem of global warming.

.

Every kilowatt-hour (kWh) of electricity a consumer avoids using saves more than 1-1/2

pounds of CO2 from being pumped into the atmosphere. If Americans bought only

Energy Star products over the next 15 years, we would shrink our energy bills by more

than $100 billion and eliminate as much greenhouse gas pollution as is produced by 17

million cars for each of those 15 years.

•

If this bill is enacted, MFA will utilize up to 5% of the appropriation to work with valued

lender and builder partners to administer funding through two loan pools:

.

One pool will comprise the Energy$avers Loan Program, which is currently available to

builders and developers for:

-

Low-interest rate loans for energy efficient systems in new construction of affordable

for-sale and rental housing development;

Senate Bill 210 – Page 3

-

Low-interest rate loans for energy efficiency upgrades to projects involving the

acquisition and rehabilitation of affordable for-sale and rental housing development.

.

A second pool will comprise the Energy$avers Rehab Loan Program, which is currently

in development and will soon be available to current low- and moderate income

homeowners for:

-

Low-to-zero interest rate loans for energy efficiency upgrades and retrofits in the

rehabilitation of owner-occupied housing.

.

As they are repaid, funds will be recycled so they may provide future loans to builders,

developers, and homeowners.

PERFORMANCE IMPLICATIONS

EMNRD reports that SB 210 would assist the Energy Conservation and Management Division

(ECMD) in meeting its strategic goal to promote energy conservation in all sectors of New

Mexico’s economy including the residential sector.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 210 relates to SB 189, which makes a distribution to the home energy relief fund, for the

Human Services Department’s low income home energy assistance program; SB 211, which

appropriates $5 million from the general fund to the Department of Finance for FY09 and 2010

for NMMFA to provide for a residential energy conservation program to increase the energy

efficiency and reduce energy expenditures of low-income households and HB 219, which

appropriates $10 million dollars from the general fund to the Human Services Department for

expenditures in FY09 to provide home heating and weatherization for households that qualify for

the low income energy assistance program.

WEP/bb