New Mexico introduces grid modernization rules restricting cost recovery for certain customers

House Bill 93, introduced by the New Mexico House of Representatives on April 8, 2025, aims to enhance the state's electric grid through modernization efforts. The bill outlines key provisions for the approval and funding of grid modernization projects, which are designed to improve the reliability and efficiency of the electrical system.

One of the central features of House Bill 93 is the establishment of a tariff rider mechanism. This allows utility companies to propose cost recovery for grid modernization projects, with a stipulation that if the New Mexico Public Regulation Commission does not approve or suspend the tariff within thirty days, it will automatically be deemed approved. This provision is intended to streamline the process for implementing necessary upgrades to the electrical infrastructure.

The bill specifies that costs associated with grid modernization projects benefiting only certain customers—those served by electric distribution systems—cannot be recovered from customers receiving service at higher voltage levels (110,000 volts or more) from electric transmission systems. However, exceptions are made for advanced grid technology projects. Additionally, distribution cooperatives organized under the Rural Electric Cooperative Act are exempt from these provisions.

The term "grid modernization" is defined within the bill to encompass a range of improvements, including advanced metering infrastructure, which aims to enhance grid reliability, resilience, and security against cyber and physical threats. The bill also emphasizes the importance of energy efficiency and conservation.

Debate surrounding House Bill 93 has focused on its potential economic implications, particularly regarding the costs that may be passed on to consumers. Critics argue that the automatic approval of tariff riders could lead to increased utility bills without sufficient oversight. Supporters, however, contend that modernizing the grid is essential for accommodating renewable energy sources and improving overall service reliability.

As New Mexico continues to navigate the transition to cleaner energy, House Bill 93 represents a significant step toward modernizing the state's electrical infrastructure. The bill's progress will be closely monitored, as its outcomes could have lasting effects on energy costs and the state's ability to meet future energy demands. The next steps involve further discussions and potential amendments as it moves through the legislative process.