NM lawmakers go big on renewables, handle oil, gas with kid gloves

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Oil Pump silhoutte in black against setting sun

It was a mixed session for people who care about climate change and its effects. The state secured some large-scale wins, but failed to advance measures that would diversify the electrical grid and support individual households in reducing their own carbon footprint. And while measures to hold oil and gas companies accountable for violations of the Oil and Gas Act passed, there was little appetite among lawmakers for drawing more royalty money from an industry responsible for a billion dollar surplus this year.

The flagship win for Democrats was the Energy Transition Act, SB 489, which commits the state to 100 percent carbon-free power by 2050. That bill schedules a payment plan for closing the San Juan Generating Station, a coal-fired power plant that supplies Public Service Company of New Mexico (PNM). Major environmental groups endorsed it; the utilities didn’t vehemently oppose it; and the governor championed it, so it passed despite opposition from the city staff and elected officials from Farmington who sought a delay in the bill so they could explore keeping the coal mine and power plant running. The legislation overcame that request, a Senate filibuster, and coal miners and power plant workers who traveled from the northwest corner of the state to fill meetings and line hallways as the bill moved through committees.

“All of us have worked hard to move New Mexico from a scarcity psychology to a new economic era of prosperity, bold ideas, and a bright economic future for all new Mexicans,” Rep. Antonio Maestas, D-Albuquerque, said in a press conference after the session adjourned. “The Energy Transition Act launches New Mexico into not only the moral leader nationally with renewable energy, but also tapping into the market that that renewable energy portfolio brings.”

The rest of the successful legislation affecting electricity offered more tweaks than major transitions.

Lawmakers added a new section to the Public Utility Act that would order utilities to draft a plan to support electric vehicles through HB 521. The bill directs that plan to serve low-income communities, reduce greenhouse gases, and match consumer choices for electric vehicles. They also passed the Solar Energy Improvement Special Assessment Act, HB 440, to adjust a 2009 program that allows counties and municipalities to work together to install solar energy, then recover those costs through property taxes.

While there was support for requiring, and helping, utilities ramp up to using  renewable power, individual users and small groups saw initiatives wither that would have helped them with the costs of adding solar power on their own.

Those misses included tax credits for installing solar panels on homes, small businesses and farms (SB 518), allocating $5 million annually, to be doled out in one $6,000 credit at a time until Jan. 1, 2029. The tax credit expired in recent years and a legislative efforts to revive it was vetoed by Gov. Susana Martinez. This time around, the bill cleared the Senate but sat in the House until the end. House Speaker Brian Egolf said Friday evening and Saturday morning he might call the bill onto the floor, but it never made it to the top of the agenda.

The Community Solar Act, HB 210, would have opened up solar power as an option for many more people, including low-income families, renters, homeowners with shady rooftops, and even municipalities by allowing them to develop and cooperatively own solar arrays through subscriptions.

The bill passed the House only to stall out among senators. The bill had been opposed by lobbyists from the state’s major utilities, PNM and El Paso Electric, who said they appreciated the interest in more solar power, but didn’t think the approach was right for consumers. Republican lawmakers expressed skepticism about what subscribers would do for power when the sun didn’t shine and argued these community solar arrays could leave utilities or other ratepayers shouldering the costs of maintaining or upgrading the grid on behalf of those projects.

Other measures that would have transformed the process by which power is procured barely budged. SB 456 would have required an independent evaluator oversee the bidding process when investor-owned utilities determine where and how to purchase power. The Local Choice Energy Act, SB 374, would have allowed municipalities, counties, Indian nations, tribes or pueblos to combine the power requirements of several customers and take bids for meeting that demand. It didn’t even see a committee hearing.

Oil and gas ‘fared reasonably well’

“Some, but not too much” fairly well summarizes the majority Democrats’ approach to oil and gas regulations this session. Lawmakers discussed updating some rules and regulations while avoiding strangling the golden goose that produced a $1.2 billion surplus for the state budget this year.

A last-minute shuffle merged a bill originally written to regulate waste water from oil wells, HB 546, with a bill written to restore the Oil Conservation Division’s authority to fine operators who break the Oil and Gas Act, SB 186. Over the course of committee meetings, those fines were lowered, as was the trigger when a court was required to take a look at a fine.

After this session, oil and gas companies will be asked to pay fees for drilling applications, administrative hearings and surface waste management facilities — a match to other states with an oil patch — after passing SB 553. The fees are estimated to generate $1.9 million annually for the Oil Conservation Division, and that money will go toward upgrading the Oil Conservation Division’s information technology. The division still requires drilling applications be submitted on paper. The division’s budget has dropped by 44 percent over roughly the same time that oil and gas production has increased by 400 percent, according to the Energy, Minerals and Natural Resources Department.

The division has had to raid the Oil and Gas Reclamation Fund to pay agency salaries. SB 361 amends the Oil and Gas Act to reduce the division’s reliance on the fund for that purpose. By 2025, the division will only be able to use 15 percent of those dollars to cover salaries. Raiding of the Reclamation Fund has left the state division short of cash to pay for reclamation projects like the brine well in Carlsbad. Lawmakers approved dedicating more than $40 million to that reclamation last year, in hopes of repairing it before a sinkhole opens in town.

Oil and gas companies and trade associations stood in support of these measures as increasing efficiency of the division.

Lawmakers declined to advance bills that would have increased the royalty rate on state lands or halt hydraulic fracturing permits for four years, a move that would have cost the state $3.2 billion in taxes, royalties, bonuses and Land Grant Permanent Fund distributions, according to the fiscal impact report.

“Realize that that’s the industry that’s causing the wheels to turn in New Mexico, and to immediately ban that would be irresponsible and would have done great harm to the state,” Minority Leader James Townsend, R-Artesia, said at a press conference after adjournment.

On the whole, the oil and gas industry “fared reasonably well under the conditions,” he said, though he credits the work of his fellow Republicans.

“When you have an industry that’s working so hard to fuel New Mexico, there ought to be a few friends in the Legislature, and that’s what these guys and gals were, they were friends to the industry,” he said.