Interim Leg Watch: Energy Industry Wants Less Regulations, More Incentives

By Charlotte Chinana

“You’re preaching to the choir…we need to put people back to work – we need to put people back in [the] uranium mines.”

~ Sen. David Ulibarri (D – Grants) commenting on (while simultaneously commending) presentations from representatives from the mining, oil and gas industries in NM.

The interim Economic and Rural Development Committee recently held their July meetings (in Tucumcari and Santa Rosa), and I had the opportunity to take a little “legislative road trip” to sit in on a couple of agenda items – namely the “Energy Panel: Update on Projects, Tax Incentives and Laws and Regulations That Are Helping or Hurting Industry,” and the “Oil and Gas Energy Report.”

During the committee hearing, industry panelists took a moment to mention what their companies have done and/or will do for New Mexico – with regards to the number of jobs created and payments made to the state (by way of taxes, fees and royalties); they also spent the bulk of their presentations outlining what the state can (additionally) do for industry – specifically related to relaxing (if not entirely eliminating) regulations, while providing more incentives to do business in the state.

The Energy Panel Updates

Representatives from two of the state’s utility providers, Xcel Energy (an electric and natural gas company that operates in eight states – including NM), and Tri-State Generation and Transmission Association (a wholesale electric power producer/supplier that serves 44 rural electric cooperatives and public power districts in four states – with 12 in NM), spoke extensively about the reliability of service provided by their companies, as well as the importance of cost containment measures.

While each highlighted the need to keep and utilize a diverse energy portfolio, it was stressed that the companies pretty much only added solar and wind, because they were mandated to do it.

Sonia Phillips, the NM State Affairs Manager from Xcel Energy, noted the cost difference in terms of solar production, using the example that it costs her company about 13 cents to generate a kilowatt of solar, vs. 2 or 3 cents to generate that same kilowatt – using coal. Phillips also said that some “basic, good incentives” would be nice which, according to a handout from her company, would include:

  • Expedited permitting;
  • Transmission cost recovery riders;
  • Clean energy improvement riders; and
  • Less regulatory lag (as regulatory lag increases investment risk)

Sen. Clinton Harden (R – Clovis) asked if NM’s current electricity demands were being met, to which Phillips replied “yes,” and elaborated that utility companies in the state are meeting the demand “92% of the time.”

Phillips then when on to mention that her company has “customers who want power when they want it” – as part of a pitch for an investment in infrastructure modifications to the power grid/s that the state uses (which were built in the 70s), and that “customers have been able to enjoy low rates for over 35 years” – related to possible, future rate increases.

Rhonda Mitchell, from Tri-State Generation and Transmission Association, added that her company was doing what it can to educate their co-op members about the rising cost of energy production and transmission (i.e. why customers can expect to pay more), though it was unclear as to whether or not said education equally emphasizes energy conservation.

As for the reliability factor, she added that:  “Sometimes, we do too good of a job in being reliable … people [can] take it for granted.”

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