Secure State Energy Actions 2010 UPDATE

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1 Clean and Secure State Energy Actions 2010 UPDATE

2 The National Governors Association (NGA), founded in 1908, is the instrument through which the nation s governors collectively influence the development and implementation of national policy and apply creative leadership to state issues. Its members are the governors of the 50 states, three territories and two commonwealths. The NGA Center for Best Practices is the nation s only dedicated consulting firm for governors and their key policy staff. The NGA Center s mission is to develop and implement innovative solutions to public policy challenges. Through the staff of the NGA Center, governors and their policy advisors can: Quickly learn about what works, what doesn t and what lessons can be learned from other governors grappling with the same problems; Obtain specialized assistance in designing and implementing new programs or improving the effectiveness of current programs; Receive up-to-date, comprehensive information about what is happening in other state capitals and in Washington, D.C., so governors are aware of cutting-edge policies; and Learn about emerging national trends and their implications for states, so governors can prepare to meet future demands. For more information about NGA and the Center for Best Practices, please visit ACKNOWLEDGEMENTS This report was authored by Rachel Escobar and Sue Gander of the National Governors Association Center for Best Practices (NGA Center), with writing and research assistance from Greg Dierkers, Devashree Saha, Andrew Kambour, and Katherine George, also of the NGA Center.

3 Category Actions Being Taken Energy Efficiency Building Energy Codes Utility Demand-Side-Management Utility Rate Realignment Energy Savings Targets/Energy Efficiency Resource Standards Residential and Commercial: 2006 IECC, mandatory statewide, plus additional green code measures; new Green Building Bureau established The Efficient Use of Energy Act (EUEA) requires electric utilities to acquire all cost-effective and achievable energy efficiency, with funding mechanisms EUEA directs the utility commission to eliminate energy efficiency disincentives and create a regulatory structure that establishes a financial preference for energy efficiency vis-a-vis building and operating new power plants EUEA establishes minimum floors of 5% energy efficiency savings by utilities from 2005 electricity retail sales by 2014 and 10% by 2020; Governor s executive order establishes statewide energy efficiency targets of 10% by 2012 and 20% by 2020 Provides Sustainable Building Tax Credits for constructing LEED Silver or better sustainable commercial, non-profit, institutional and residential buildings, with an additional energy efficiency standard beyond LEED; the Energy Efficiency and Renewable Energy Bonding Act allows state agencies and public schools to fund energy efficiency and renewable energy renovations from energy utility bill savings Sustainable building tax credit provisions amended to clarify that manufactured and modular homes installed on a permanent pad qualify for the credit (even if manufactured out-of-state) Adds new Build Green New Mexico residential levels Allows EMNRD to categorize multi-family dwellings as commercial if the annual aggregate residential cap has been reached in a given year Allows non-profit organizations (such as affordable housing builders) to take the credit via transferability Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Two separate bills authorizing local governments to offer Property-Assessed Clean Energy (PACE) financing enacted Authorizes municipalities and counties to create renewable energy financing districts (REFD) for the purpose of providing financing for consenting property owners within the district to install renewable energy technologies (SB 647) Includes photovoltaics, solar thermal, geothermal and wind as eligible technologies Authorizes counties to pass an ordinance that creates a solar energy improvement special assessment provision (HB 572) County itself is not authorized to provide funding directly to property owners but is directed to create rules for certifying certain private banks and financing institutions as solar energy improvement financing institutions Certified institutions authorized to loan property owners up to 40% of the assessed value of the property for the purposes of solar energy (photovoltaic or solar thermal) improvements Clean Electricity Renewable/Alternative Energy Portfolio Standards and Goals Net Metering and Interconnection Standards Investor-owned utilities are required to generate 20% of total retail sales to New Mexico customers from renewable energy resources by 2020, with interim standards of 10% by 2011 and 15% by 2015 and a standard for rural electric cooperatives of 10% by 2020 (utilities document compliance with the RPS through the use of renewable energy certificates - RECs) Interconnection standards and net metering is available to qualifying facilities under PURPA, which generally includes all renewable-energy systems and combined-heat-and-power systems up to 80 MW in capacity (excludes municipal utilities) The actions taken from July 2008-May 2010 are listed in bold and blue, below the information included in the original 2008 report. 110 Clean and Secure State Energy Actions

4 Category Advanced Coal and Clean Coal Actions Being Taken Advanced energy facilities including advanced technology coal and solar thermal generation may qualify for up to $60 million in credits; the credit is equal to 6% of facility development and construction expenditures The largest NM utility has a utility-commission approved solar REC 13 cent/kwh buy back program for residential PV systems, as part of complying with RPS requirements (likely to be expanded to include commercial this year) In 2007, the State Legislature created the Renewable Energy Transmission Authority (RETA), a state-level financing authority whose primary focus is developing electric transmission infrastructure to facilitate the development and export of NM s renewable energy resources; RETA may finance or acquire interstate projects, coordinate with out-of-state authorities on transmission corridors, and fund energy storage projects Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Under the Renewable Energy Production Tax Credit, each renewable energy generator of 1 MW or more may earn an income tax credit (personal or corporate) averaging 2.7 cents per kwh for solar and 1 cent per kwh for wind or biomass over a 10-year period (available regardless of entity s NM tax liability); the Alternative Energy Product Manufacturer s Tax Credit provides manufacturers of photovoltaic, solar thermal, wind, biomass and electric generation systems, electric or hybrid vehicles, and fuel cell systems a tax credit of up to 5% of their capital expenses; Advanced Energy Tax Credits provide advanced energy facilities, such as solar thermal electric, advanced technology coal or recycled energy up to $60 million in credits up to 6% of facility development and construction expenditures; the Solar Market Development Income Tax Credit augments the federal solar tax credit by reimbursing 30% of the cost of a solar photovoltaic or solar thermal system up to $9,000; the Gross Receipts Tax Exemption for Solar Energy Systems provides a gross receipts (sales) tax exemption for solar electric and solar thermal energy systems where the generated power is used on-site; the Wind Energy Equipment Gross Receipts Tax Deduction provides a gross receipts tax deduction for receipts from selling wind turbines, nacelles, rotors, blades and related equipment to a state or federal government entity; the Biomass-Related Equipment Compensating Tax Deduction provides deducts the value of equipment such as a boiler, turbine-generator, storage facility, feedstock processor, interconnection transformer or biomass material used for biopower, biofuels or bio-based products from the computation of the compensating tax due; House Bill 375 created a tax credit in New Mexico for geothermal heat pumps purchased and installed between January 1, 2010, and December 31, 2020, on property owned by the tax payer the credit is worth 30% of the system s cost up to $9,000 and can be applied to individual or corporate income taxes Advanced Energy Tax Credit amended to make the 6% (of project development costs) credit more accessible to renewable energy developers Personal and corporate income taxes are added as types of taxes that can be used toward the credit; carry forward period is extended from 5-10 years Geothermal and solar photovoltaic systems are added to the types of advanced energy technologies that qualify for the credit Alternative Fuels & Vehicles Consumption Targets/Renewable Fuel Standards After July 1, 2012, all diesel fuel sold to consumers for use in on-road motor vehicles must be B5 The actions taken from July 2008-May 2010 are listed in bold and blue, below the information included in the original 2008 report UPDATE 111

5 Category Financial Incentives Loans, Rebates, Taxes, Bonds, Etc. Actions Being Taken The Alternative Energy Product Manufacturer s Tax Credit provides manufacturers of electric or hybrid vehicles and fuel cell systems a tax credit of up to 5% of their capital expenses; the Biomass-Related Equipment Compensating Tax Deduction allows the value of equipment such as a boiler, turbine-generator, or feedstock processor used for biofuels or bio-based products to be deducted in computing the compensating tax cue; the Biofuels Infrastructure Tax Incentive provides a corporate income tax credit on fuel containing a minimum of 2% biodiesel and a tax deduction of up to $50,000 per biodiesel facility and infrastructure installation; the Hybrid Tax Exemption allows buyers of a hybrid-gasoline-electric vehicle that gets 27.5 mpg or better to receive a one-time exemption from the Motor Vehicle Excise Tax worth between $600 and $1,000 Lead By Example Building Efficiency Green Power Purchasing Alternative Fuel and Vehicle Fleets All Executive Branch state agencies, including the Higher Education Department, are required to adopt the US Green Buildings Council s LEED rating system; new construction of public buildings over 15,000 square feet or using over 50 kw peak electrical demand and renovations involving the replacement of more than three major systems (HVAC, lighting, etc.) must achieve a minimum rating of LEED Silver; projects between 5,000 and 15,000 square feet must achieve a minimum delivered energy performance standard of one half of the US energy consumption for that building type as defined by the US Department of Energy; New Mexico has set a goal for all Executive Branch state agencies to achieve a 20% reduction below 2005 levels in energy usage in state buildings for all Executive Branch state agency operations by 2015 By 2011, all state agencies must purchase 100% of their electricity from renewable resources After July 1, 2010, all diesel fuel sold to state agencies, political subdivisions of the state, and public schools for use in operating on-road motor vehicles must contain at least 5% biodiesel (B5); all state agency fleets in the executive branch must reduce their transportation energy consumption 20%, based on 2005 levels, by 2015; By 2010, all cabinet-level state agencies, public schools (K-12), and institutions of higher education are required to take action toward obtaining 15% of their total transportation fuel requirements from renewable fuels such as ethanol and biodiesel; requires that 75% of state government and educational institution fleet vehicles purchased be bi-fuel or dedicated AFVs or HEVs GHG Emissions GHG Policies Sets statewide GHG emission reduction targets of 2000 emission levels by 2012, 10% below 2000 levels by 2020, and 75% below 2000 emission levels by 2050; the New Mexico Climate Advisory Report was completed in 2006; WCI participant; will adopt CA vehicle emissions standards pending EPA approval; goal to reduce emissions from state energy use 4% by 2006 and 6% by 2010 Clean Energy RD&D Partnerships, Grants, Awards, and Dedicated Funding The Economic Development Department is directed to establish the Hydrogen and Fuel Cell Technologies Development Program to foster the development of hydrogen and fuel cell-related commercialization and economic development in the state; the Program will establish a public-private partnership to provide guidance and support for hydrogen and fuel cell initiatives; the Energy Innovation Fund, established in 2007 with an initial $2 million appropriation was created to accelerate innovation and commercial adaptation of clean energy technologies in New Mexico The Clean Energy State The actions taken from July 2008-May 2010 are listed in bold and blue, below the information included in the original 2008 report. 112 Clean and Secure State Energy Actions

6 Category Actions Being Taken Green Economic Development Established the Clean Energy Development Council a multi-agency one-stop-shop to facilitate the development of clean energy Established a Green Jobs Cabinet to develop recommendations for meeting the education and workforce training needs in the green economy (Executive Order ) Acting on recommendations issued by the Green Jobs Cabinet, called for the development of a green grid, established a Research Applications Center, a Deep Source Geothermal Commercialization Working Group, and charged several departments with different roles in promoting the green economy (Executive Order ) Task Force, Workforce Development, Incentives, Analysis, Etc. Created the Higher Education Alternative Energy Program Awards which funds the development of courses of instruction and degree programs in the fields of alternative energy and energy efficiency at four-year public institutions and two-year institutions to provide alternative energy and energy efficiency programs and courses of instruction for students seeking licensure or certification as electricians, plumbers, mechanics, welders and heating professionals, ventilation and air conditioning personnel, or similar professions (SB 288) Green Jobs Development Training Fund allow the Industrial Training Board to spend up to $1 million of development training funds for the development of training in green industries (SB 318) Green Jobs Act authorizes the establishment of a Green Jobs Fund and directs the Higher Education Department to develop a plan for the development of green jobs training programs (HB 622) Established Renewable Energy Transmission Authority As a means of stimulating or guaranteeing demand at state and local levels for the production of existing clean tech manufacturers and producers, and assisting in attracting new businesses, three pieces of legislation were passed: Solar Energy Improvement Special Assessments (HB 572), Renewable Energy Financing District Act (SB 647) and Public Building Energy Efficiency Standards (SB 200) To provide incentives for job creation, New Mexico offers tax credits in the following categories: renewable energy production, advanced energy, biodiesel blending facility, biodiesel fuel tax, solar market development income, sustainable building, R&D small business, and technology jobs; offers tax exemptions for hybrid vehicles and solar energy systems gross receipts; and offers tax deductions available for research and development gross receipts The following financial incentives were updated or added in 2009 or 2010: tax credits for renewable energy, sustainable building, geothermal heat pumps, solar market development, solar and wind energy equipment gross receipts, and electric generating facility gross receipts The film and television production tax credit is coupled with the Green Filmmaking program The actions taken from July 2008-May 2010 are listed in bold and blue, below the information included in the original 2008 report UPDATE 113

7 NGA Center Divisions The NGA Center is organized into five divisions with some collaborative projects across all divisions. Economic, Human Services & Workforce focuses on best practices, policy options, and service delivery improvements across a range of current and emerging issues, including economic development and innovation, workforce development, employment services, research and development policies, and human services for children, youth, low-income families, and people with disabilities. Education provides information on best practices in early childhood, elementary, secondary, and postsecondary education. Specific issues include common core state standards and assessments; teacher effectiveness; high school redesign; science, technology, engineering and math (STEM) education; postsecondary education attainment, productivity, and accountability; extra learning opportunities; and school readiness. Environment, Energy & Transportation identifies best practices and provides technical assistance on issues including clean energy for the electricity and transportation sectors, energy and infrastructure financing, green economic development, transportation and land use planning, and clean up and stewardship of nuclear weapons sites. Health covers a broad range of health financing, service delivery, and coverage issues, including implementation of federal health reforms, quality initiatives, cost-containment policies, health information technology, state public health initiatives, and Medicaid. Homeland Security & Public Safety supports governors homeland security and criminal justice policy advisors. This work includes supporting the Governors Homeland Security Advisors Council (GHSAC) and providing technical assistance to a network of governors criminal justice policy advisors. Issues include emergency preparedness, interoperability, cyber-crime and cyber-security, intelligence coordination, emergency management, sentencing and corrections, forensics, and justice information technology.

8 John Thomasian, Director NGA Center for Best Practices 444 N. Capitol Street, Suite 267 Washington, DC

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