Legislation to give low-income New Mexicans cheaper utility rates passes Senate

People with low incomes could have cheaper utility bills if legislation that senators approved on Tuesday can make it through the Roundhouse in four days. 

After discussions on Monday and Tuesday, the Senate passed the Low-Income Solar Act, Senate Bill 432, by a vote of 25-11. All the votes against the legislation were from Republican lawmakers, though Sen. Gay Kernan (R-Hobbs) voted for its passage.

The bill has to pass the House by Saturday at noon, which is when this year’s legislative session ends. If representatives approve any changes to the legislation, it has to go back to the Senate again for concurrence.

Senate Bill 432 proposes that investor-owned utilities, like PNM, give bill credits to rental residents of low-income multi-unit housing — like apartments, townhouses or duplexes — that primarily use renewable energy for electricity generation.

Proposal to create permanent renewable energy office headed to governor’s desk

These could be units that help low-income New Mexicans, unhoused Native Americans or victims of violence, like domestic abuse or sexual assault, according to language in the bill.

Federal tax credits will be the incentive to get property owners on board. Based on the proposal, that could include a private landowner, or property operated by tribal, state or federal entities. 

The Inflation Reduction Act allows up to 30% off of solar installation costs in the form of tax credits and another 20% if the project is for a low-income residential building. So whoever owns the property and pays for or installs a solar system would get the federal tax credits, and their residents would get utility bill credits.

“Should this bill pass, that gives us access to that money so that those folks who are in affordable housing — designated affordable housing — can have the opportunity to reduce their utility costs,” bill sponsor Sen. Carrie Hamblen (D-Las Cruces) said.

The Energy, Minerals and Natural Resources Department said this legislation makes renewable energy more accessible throughout the state and described this as “community solar on a smaller scale.”

“For many years putting solar on our homes was for those who could afford it,” Hamblen said.

The savings would be dependent on the property owner choosing to install solar systems on low-incoming housing units. Sen. David Gallegos (R-Eunice), who voted against the bill’s passage, asked a question that pointed this out, and Hamblen said he’s right.

“Although we still have a way to go, we are starting that process by using federal monies to reduce the costs of a solar system in half so that those who need help reducing their utility cost have that opportunity,” Hamblen said.

The amount of bill credits tenants get have to be equal between all people living in the space, since the legislation specifies that this can only apply for housing with multiple people, like apartments. Sen. George Muñoz (D-Gallup) questioned how equitable that really is.

He brought up a hypothetical scenario where one tenant’s average utility bill is $1,000, another’s is $2,000 and someone else’s is $5,000. He asked if those people all still have the same utility savings.

Hamblen said yes. 

She said the federal rules are strict on this front, but there will still be savings through any federal money that arrives.

“I understand the question about if somebody is using a little bit more electricity than another person. However, that is beyond our control because of those federal monies and the guidelines in those federal monies,” Hamblen said. “However, they all still do get a reduction in their utility costs.”

Muñoz recused himself from the vote following this answer.

Electric cooperatives, like rural city-owned utilities, wouldn’t have to adhere to this legislation. Most New Mexicans get their energy from investor-owned utilities, like the Public Service Company of New Mexico.

A metering system would determine how much the electricity bill credits are for tenants. Unused credits could be carried forward, according to the legislation.

Utility companies would have to install metering systems, and the bill specifies that companies like PNM can’t charge people for “reasonable costs” for installations or upgrades, or charge them any other fees for participating in this credit program that other customers don’t have to pay.

It would be up to the state’s Public Regulation Commission to enforce all these credit rules, which would have to go into effect by Jan. 1, 2024 if the legislation passes. However, in the bill’s fiscal impact report, the PRC said that the agency would need at least a year to prepare to enforce the rules.

Republican senators repeatedly asked how this bill would benefit the building owner. The PRC also questioned that in the report. Hamblen said in addition to solar system costs being cut in half, the longevity of utility rates would be lower.

She said this needs to happen while the state can use these federal tax credits. The credits go through until 2034, though the amount starts to decline after 2032.

“This is not something that is long term,” Hamblen said. “This is something that we really want to take advantage of now.”