New Mexico's legislature passed the Energy Transition Act this week and because it is supported by the state's Governor, it’s expected to become law. This law will put the state on course to lead the nation in renewable energy.
The bill will double renewable energy use in the state by 2025, require 50% renewable energy by 2030 and 100 percent carbon free electricity generation by 2045. This means New Mexico can quickly transition from dependence on fossil fuels for electricity to joining other states to lead a new clean energy economy. Our recent analysis also shows that it would spur immediate economic benefits and job growth as well as pollution reduction and health benefits.
The bill responds to the economic changes brought about by the decline of coal power. New Mexico's largest coal plants are no longer economic and the utilities, both in state and around the region, are closing them down. By directing new investment in the community where these plants will close and ensuring replacement power will also be located there, the new law will help mitigate the tax base loss and spur new clean energy jobs. It also sets new standards for energy generation projects to ensure increasing apprenticeship opportunities, helping make sure New Mexican's have opportunities for good paying clean energy jobs.
The bill also uses a financial tool to save customers money in the move away from coal. 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.
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.
Governor Michelle Lujan Grisham’s recent executive order put New Mexico on the map for climate and clean energy leadership. The legislature has now passed a key element of that roadmap. It will arrive on her desk for a signature this week. The bill passed both chambers with bipartisan votes and has an enormous list of supporters, from labor to chambers of commerce, utilities, environmental groups (including NRDC), low income advocates and progressive groups.