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New Mexico

New Mexico

Incentives/Policies for Renewables & Efficiency

Printable Version
Energy Efficiency Resource Standard   

Last DSIRE Review: 12/23/2014
Program Overview:
State: New Mexico
Incentive Type: Energy Efficiency Resource Standard
Eligible Efficiency Technologies: Custom/Others pending approval
Applicable Sectors: Investor-Owned Utility, Gas Utilities
Electric Sales Reduction5% of 2005 total retail kWh sales by 2014
8% of 2005 total retail kWh sales by 2020
Web Site:
Authority 1:
N.M. Stat. ยง 62-17-1 et seq.
Authority 2:
Date Enacted:
Date Effective:
Final Order Adopting Corrected Stipulation (El Paso Electric)
Authority 3:
Date Enacted:
Final Order Approving Southwest Public Service Program Plans and Financial Incentive (Docket No. 13-00286-UT)
Authority 4:
Date Enacted:
Southwest Public Service Stipulation of Settlement Approved by Final Order (Docket No. 13-00286-UT)
Authority 5:
Date Enacted:
Final Order Partially Approving Public Service Co. of New Mexico (PNM Resources) Program Plans and Financial Incentive (Docket No. 12-00317-UT)


In 2008, New Mexico enacted H.B. 305, the Efficient Use of Energy Act, which created an Energy Efficiency Resource Standard (EERS) for New Mexico’s electric utilities, and a requirement that all natural gas utilities pursue all cost-effective energy efficiency and demand-side management measures. In 2013, the compromise bill H.B. 267—which had revised the original standard of 10% of 2005 retail sales by 2020 down to 8%—also changed the cost-effectiveness test from Total Resource Cost test (TRC) to the Utility Cost Test (UCT).

Electric Energy Reduction Standard

Year Requirement (Cumulative % of 2005 Sales)
2010-2014 Amounts Leading to 5%
2014-2020 >5%
2020 and After >8%

Investor-owned utilities are required to offer demand-side management and load management programs to their customers under the Efficient Use of Energy Act. The programs must be designed to achieve electricity savings totaling 5% of 2005 retail sales by 2014 and 8% of 2005 retail sales by 2020. 

Distribution cooperative utilities, which are not regulated by the PRC, are required to develop their own self-imposed electricity reduction targets and to design demand side management programs to enable them to meet those targets. Each cooperative utility must submit a report to the PRC annually describing their demand side management efforts from the previous year.

Per the EUEA, rural electric distribution cooperative utilities must develop their own self-imposed energy efficiency and load management goals and design programs to meet those goals.  Under the law, the cooperatives are not required to submit their energy efficiency programs to the PRC for approval; each cooperative’s governing board shall approve their menu of programs.  However, the cooperatives must file annual reports with the commission that describe the portfolio of energy efficiency programs, the costs and the energy reductions achieved pursuant to the EUEA.

Program Administrator Type

New Mexico’s utilities administer the programs that provide the energy savings necessary for compliance with the Energy Efficiency Resource Standard.

Cost-Effectiveness and Program Evaluation

To evaluate the cost effectiveness of its efficiency and demand reduction activities, New Mexico utilizes the Utility Cost Test (UCT) as its primary test for measuring the cost-effectiveness of energy efficiency programs. Prior to the passage of H.B. 267, New Mexico utilized the Total Resource Cost test (TRC).

Utility Cost Recovery Provisions

The Efficient Use of Energy Act allows New Mexico’s public utilities that meet the standard to receive a financial incentive on their energy efficiency and demand-side management program efforts that partially decouples their revenues from their sales of electricity. Public Service Company of New Mexico and El Paso Electric receive financial incentives as a percentage share of their program costs. receives an incentive based on a recovery of program costs, while Southwest Public Service receives an incentive on its program costs that is conditional on several highly specific aspects of program performance.

Special Provisions (Self-Direction of Program Funds and Customer Cost Limits)

Large energy users that consume more than 7,000 MWh per year in the service territories of New Mexico’s public utilities are eligible to offset up to 70% of the amount they would pay to public utilities with investments in energy efficiency and demand-side management programs that they have invested in on or after January 1, 2005. The ability to self-direct program funds is permitted for no more than 2 years at a time, and must be accompanied by engineering studies that show that the user has exhausted all efforts to pursue cost-effective efficiency and demand-side management projects at their facilities.

The law also requires gas utilities to "acquire all cost-effective and achievable energy efficiency and load management resources" through an identical surcharge, but stops short of establishing a percentage-based savings target for them. To fund energy efficiency and demand-side management programs, electric and gas utilities are entitled to apply a surcharge to customer utility bills. Total program budgets are not to exceed the amount of the lessor of 3% of all customer bills, or of $75,000 per year per customer.

If a utility finds that they cannot meet the 5% and 8% electricity savings targets, they will report to the PRC and propose a new target based on what they determine to be their maximum cost-effective savings. If the PRC agrees with the utility, they may establish new, lower targets for the utility. Under H.B. 267, New Mexico’s utilities are not permitted to spend more than 3% of their revenue on energy efficiency and demand-side management programs, excluding taxes and fees on electric service. 

  Heidi Pitts
New Mexico Public Regulation Commission
PERA Building
1120 Paseo De Peralta, P.O. Box 1269
Santa Fe, NM
Phone: (505) 827-6971
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2014 - 2015 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.