New legislation (called the Energy Transition Act) introduced in New Mexico’s legislature would put the state on course to nation (and planet) leading renewable energy targets and 100 percent carbon free electricity generation by 2045. If enacted, this would put New Mexico, which is today dominated by fossil electricity production, among the leading jurisdictions in the world for clean energy. Our recent analysis also shows that it would spur immediate economic benefits and job growth as well as pollution reduction and health benefits.
I moved back to my home state of New Mexico almost six years ago. I came back to be near family, my favorite mountains and rivers, and green chiles, but at the time, New Mexico was in an energy policy drought. Thankfully, that’s changing. New leadership in the state is taking climate change seriously. There is enthusiasm and optimism in the state I have never seen before.
Gov. Michelle Lujan Grisham’s recent executive order put New Mexico on the map for climate and clean energy leadership. Now the ball is in the legislature’s court. The Energy Transition Act is central to this opportunity. The bill also incorporates language from the renewable portfolio standard released this past week from the governor. It already has her support, as well as that of key state senate and house sponsors of that legislation. It then goes further, getting the state to zero carbon electricity by 2045. It also charts a path away from coal that protects customers and invests in worker and community opportunities to ensure all New Mexicans benefit from moving to clean energy.
With the declining price for renewables and the aging coal infrastructure, New Mexico can transition away from coal. Unfortunately, PNM, New Mexico’s largest utility, has substantial coal plant costs approved for recovery, costs that customers are on the hook to pay despite lower-cost, cleaner options. The bill would allow use of a tool called securitization, which is not currently available to the Public Regulation Commission. Securitization would provide a low-cost financing method to pay off coal plant costs and close the facilities. Securitization is like refinancing a mortgage at a lower rate. The utility would give up all earnings on the remaining capital and instead utilize lower interest, AAA-rated bonds to reduce the overall cost of closing coal plants by as much as 40 percent. Customers will get even further savings because using new renewable energy is now cheaper than running the aging coal plant.
Some of the savings from these low-cost bonds are directed back to the community affected by the coal plant closure: The bill directs that $40 million be put into worker training and community economic investment in San Juan County.
As I discussed in this podcast, the Energy Transition Act would help the state take a giant step forward in cleaning up its electric sector. There are other important pieces to move New Mexico along, too—including increasing energy efficiency investments; encouraging investment in electric vehicles and electric charging infrastructure; providing tax credits for electric vehicles; and community solar deployment.
There’s lots we can do to help grow our economy, clean our air and address the challenges of climate change. We know we can do all three, and it’s exciting that our leaders in Santa Fe recognize the vast opportunities that await us if we do.