SENATE BILL 59
53rd legislature - STATE OF NEW MEXICO - first session, 2017
INTRODUCED BY
Clemente Sanchez
AN ACT
RELATING TO TRADE PRACTICES; ENACTING THE TRUTH IN MARKETING DISTRIBUTED GENERATION ACT; PROVIDING MINIMUM DISCLOSURES FOR THE FINANCING, LEASE OR SALE OF A DISTRIBUTED ENERGY GENERATION SYSTEM; PROVIDING FOR DISCLOSURES IN AGREEMENTS; PROVIDING FOR AN EXCEPTION; PROVIDING FOR PENALTIES AND REMEDIES FOR VIOLATIONS; ENACTING A NEW SECTION OF THE REAL ESTATE DISCLOSURE ACT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of Chapter 57 NMSA 1978 is enacted to read:
"[NEW MATERIAL] SHORT TITLE.--Sections 1 through 4 of this act may be cited as the "Truth in Marketing Distributed Generation Act"."
SECTION 2. A new section of Chapter 57 NMSA 1978 is enacted to read:
"[NEW MATERIAL] DEFINITIONS.--As used in the Truth in Marketing Distributed Generation Act:
A. "buyer" means a person that purchases a distributed energy generation system from a seller or marketer or electricity generated by a distributed energy generation system from the owner of the distributed energy generation system;
B. "distributed energy generation system" means a device or system that is used to generate or store electricity, that has an electric delivery capacity, individually or in connection with other similar devices or systems, greater than one kilowatt or one kilowatt hour, and that is used primarily for on-site consumption, but it does not include an electric generator that is intended for occasional use;
C. "energized" means that the distributed energy generation system is installed and operational for its intended purposes of generating or storing electricity;
D. "financing" includes arrangements whereby the buyer enters into an agreement to borrow funds to pay for the purchase of a distributed energy generation system and repay the loan over time and arrangements to purchase the power generated by the distributed energy generation system from the owner of the distributed energy generation system;
E. "interconnected" means a distributed energy generation system that is connected to the power grid and that is able to transfer electricity to the power grid;
F. "lessee" means a person that leases a distributed energy generation system from the owner of the distributed energy generation system;
G. "person" means, where applicable, a natural person, corporation, trust, partnership, association, cooperative association, club, company, firm, joint venture or syndicate; and
H. "seller or marketer" means a person acting through its officers, employees, brokers or agents that markets, sells or solicits the sale, financing or lease of distributed energy generation systems or negotiates or enters into agreements for the sale, financing or lease of distributed energy generation systems."
SECTION 3. A new section of Chapter 57 NMSA 1978 is enacted to read:
"[NEW MATERIAL] DISTRIBUTED ENERGY GENERATION SYSTEM AGREEMENTS--DISCLOSURES--EXCEPTION.--
A. After the effective date of the provisions of the Truth in Marketing Distributed Generation Act, an agreement governing the financing, sale or lease of a distributed energy generation system to any person, entity or political subdivision of this state shall:
(1) be in writing and signed by the person buying, financing or leasing the distributed energy generation system and shall be dated. Any agreement that contains blank spaces affecting the timing, value or obligations of the agreement in a material manner when signed by the buyer or lessee is voidable at the option of the buyer or lessee until the distributed energy generation system is energized. Any blank spaces in the agreement must be shown to and initialed by the buyer or lessee at the time the buyer or lessee signs the agreement;
(2) be in ten-point type or larger;
(3) include a provision, which must be separately acknowledged by the buyer or lessee, granting the buyer or lessee the right to rescind the financing, sale or lease agreement within a period of not less than five calendar days after the agreement is signed by and delivered to the buyer or lessee and before the distributed energy generation system is energized;
(4) describe the capacity and expected energy production of the distributed energy generation system compared to the buyer's or lessee's consumption for the prior twelve-month period, which disclosure shall be separately acknowledged by the buyer or lessee and shall not be left blank; if consumption data for the prior twelve-month period is not available, the comparison shall be made to estimated consumption for the next twelve-month period and include the method and assumptions used to estimate the consumption;
(5) provide a description of the makes and models of the distributed energy generation system's major components, including the solar panel or inverter quality performance rating. This description shall include a guarantee concerning energy production output that the distributed energy generation system being sold or leased will provide over the life of the agreement. If the warranty period for any major component is less than the duration of the agreement, the length of the warranty shall be disclosed to and separately acknowledged by the buyer or lessee;
(6) separately set forth the following items, which shall be separately acknowledged by the buyer or lessee, if applicable:
(a) the total purchase price or total cost to the buyer or lessee under the agreement for the distributed energy generation system over the life of the agreement;
(b) any interest, installation fees, document preparation fees, service fees or other costs to be paid by the buyer or lessee of the distributed energy generation system;
(c) if the distributed energy generation system is being financed or leased, the total number of payments, the payment frequency, the amount of the payment expressed in dollars, the effective annual percentage rate and the payment due date; and
(d) contact information for emergency repair or service capable of responding within twenty-four hours;
(7) provide a disclosure in the sale and financing agreements, to the extent that they are used by the seller or marketer in determining the purchase price of the agreement, that identifies all current tax incentives and rebates or other state or federal incentives, including renewable energy credits, for which the buyer or lessee may be eligible, and any conditions or requirements pursuant to the agreement to obtain these tax incentives rebates or other incentives, including expiration dates or deadlines, as applicable;
(8) identify the tax obligations, with a statement that the buyer or lessee should contact a tax advisor, associated with buying, financing or leasing a distributed energy generation system that the buyer or lessee may be required to pay, including:
(a) the assessed value and the property tax assessments associated with the distributed energy generation system, calculated in the year the agreement is signed;
(b) the gross receipts taxes that may be passed through to the buyer or lessee; and
(c) any obligation of the buyer or lessee to transfer tax credits or tax incentives of the distributed energy generation system to any other person;
(9) disclose whether the warranty or maintenance obligations related to the distributed energy generation system may be sold or transferred to a third party;
(10) include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, regarding any restrictions pursuant to the agreement on the lessee's or buyer's ability to modify or transfer ownership of the distributed energy generation system, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the distributed energy generation system is subject to review or approval by a third party, the agreement shall identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer;
(11) include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, regarding whether the agreement contains any restrictions on the lessee's or buyer's ability to transfer ownership of or modify the real property to which the distributed energy generation system is installed or affixed, including whether any modification or transfer is subject to review or approval by a third party. If the modification or transfer of the real property to which the distributed energy generation system is affixed or installed is subject to review or approval by a third party, the agreement shall identify the name, address and telephone number of, and provide for updating any change in, the entity responsible for approving the modification or transfer;
(12) provide a full and accurate estimate of the total costs for maintaining and operating the distributed energy generation system over the life of the distributed energy generation system, including financing, maintenance and construction costs related to the distributed energy generation system, together with a statement identifying the party responsible for paying for the operating and maintenance costs, which statement shall be separately acknowledged by the buyer or lessee;
(13) if the agreement contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, provide an estimate of the buyer's or lessee's future utility charges as affected by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of the agreement in one percent increments. Any comparative estimates shall be calculated by applying the entire rate change to the duration of the agreement; and
(14) include a disclosure, the receipt of which shall be separately acknowledged by the buyer or lessee, that states that:
(a) the utility rates and utility rate structures are subject to change, and such changes cannot be accurately predicted;
(b) projected savings from the distributed energy generation systems are therefore subject to change; and
(c) tax and other state and federal incentives are subject to change or termination by executive, legislative or regulatory action.
B. If a document or sales presentation relating to a distributed energy generation system states or implies that the distributed energy generation system will result in financial savings for a buyer or lessee, the document or sales presentation shall substantiate the methodology used to calculate those savings, and if the document or sales presentation is intended for a specific potential buyer or lessee, it shall reasonably quantify the cumulative savings expected for the duration of the agreement.
C. If a document or sales presentation relating to a distributed energy generation system contains financial savings comparative estimates or utility rate comparative estimates, the document or sales presentation shall include historical utility rates for the immediately preceding period of time that is of the same duration as the proposed financing or lease period for the same class of utility customer in the same utility service territory as the prospective buyer or lessee. These historical rates shall be included in any comparative estimates.
D. Before the maintenance or warranty obligations of a distributed energy generation system under an existing lease, financing or purchase agreement are transferred, the person who is currently obligated to maintain or warrant the distributed energy generation system shall disclose the name, address and telephone number of the person who will be assuming the maintenance or warranty of the distributed energy generation system.
E. If a document or sales presentation relating to a distributed energy generation system contains an estimate of the buyer's or lessee's future utility charges based on projected utility rates, the document or sales presentation shall contain an estimate of the buyer's or lessee's future utility charges as affected by potential utility rate changes ranging from at least a five percent annual decrease to at least a five percent annual increase from current utility costs applied to the duration of an agreement for the financing, sale or lease of a distributed energy generation system in one percent increments. Comparative estimates shall be calculated by applying the entire rate change range to the duration of the agreement.
F. The seller or marketer, or any successor in interest to the seller or marketer, shall provide to the buyer or lessee a conformed copy of a financing statement, or any amendment to or assignment or termination of a financing statement, that was filed pursuant to Chapter 55, Article 9 NMSA 1978 within three business days of the filing.
G. Recurring payments under a distributed energy generation system lease shall not begin until the distributed energy generation system is energized and interconnected.
H. This section does not apply to an individual or company, acting through its officers, employees, brokers or agents, that markets, sells, solicits, negotiates or enters into an agreement for the sale, financing or lease of a distributed energy generation system as part of a transaction involving the sale or transfer of the real property to which the distributed energy generation system is or will be affixed."
SECTION 4. A new section of Chapter 57 NMSA 1978 is enacted to read:
"[NEW MATERIAL] VIOLATIONS AS UNFAIR PRACTICES--PENALTIES AND REMEDIES FOR VIOLATIONS.--A violation of any of the provisions of the Truth in Marketing Distributed Generation Act shall be considered to be a violation of the Unfair Practices Act and shall be subject to the private remedies and civil penalties provided for in the Unfair Practices Act. The attorney general shall have the same enforcement authority for the Truth in Marketing Distributed Generation Act as is provided in the Unfair Practices Act."
SECTION 5. A new section of the Real Estate Disclosure Act is enacted to read:
"[NEW MATERIAL] DISCLOSURE OF CERTAIN DISTRIBUTED ENERGY GENERATION SYSTEMS.--The requirements of the Truth in Marketing Distributed Generation Act shall not apply to a transaction involving the sale or transfer of the real property to which the distributed energy generation system is affixed."
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