House committee advances bill to expand New Mexico geothermal development fund with $20 million recurring appropriation

Representative Roybal Caballero presented House Bill 289, known as the Geothermal Projects Development Fund, to the House Energy, Environment & Natural Resources Committee, saying the bill "would expand the state's economic support for development of the state's geothermal resources as a reliable, renewable, constant source of dispatchable electric power to reduce the state's use of coal and natural gas generators and provide round the clock backup for solar and wind energy sources."

The bill would make a recurring, nonreverting appropriation of $20,000,000 from the general fund beginning in fiscal year 2026 to the geothermal projects development fund, according to Caballero's presentation. "HB 289 makes a recurring non reverting appropriation of $20,000,000 from the general fund to the geothermal projects development fund, which will begin in fiscal year 26 and then thereafter subsequent years," Caballero said.

Department and industry witnesses told the committee the funding would be used for a mix of mapping, pilot projects and rulemaking to establish a regulatory structure for geothermal development. "We've been able to begin some of the mapping, of where the geological resources are highest in the state," Puck Sarin, director of the Energy Conservation and Management Division at the Energy, Minerals and Natural Resources Department, said. Sarin listed many counties with high geothermal potential and described statewide economic benefit.

Lucy Derego, chief commercial officer at XGS Energy, said the company is "terrifically excited about the opportunities we see here in New Mexico" and urged support. Tom Solomon of 350 New Mexico and the New Mexico Geothermal Working Group described growing private and capital interest and said the bill aims to offer incentives sufficient to compete with other geothermal states. "We realized that there was another step up in the level of incentives that would be necessary to compete with some of the other geothermal development states like Colorado and California," Solomon said.

Supporters from environmental and energy trade groups also testified. Melissa Bernardin of the Sierra Club Rio Grande Chapter said geothermal development "deserves our attention" and that grants to private entities could advance the technology. Travis Kellerman, senior climate adviser to the governor, said the bill aligns with the Energy Transition Act and urged committee support. Michael Barrio of Advanced Energy United described the proposal as supporting grid reliability and an economic transition for workers.

Committee members probed whether grants to private entities would raise anti-donation concerns under the state constitution. Committee members quoted Article IX, Section 14(h), and asked where the bill requires that funded energy services be used "primarily for residential purposes." Director Sarin said the bill does not state that language explicitly and that the department would address implementation in rulemaking. "That particular (constitutional) provision does not say that explicitly, the bill. That's something we would follow in rulemaking," Sarin said. Sarin and other witnesses noted the department's experience administering federal grants and that cost-share or match requirements could be implemented in rulemaking even if not in the bill text.

After discussion, the committee voted to give HB 289 a do-pass recommendation. The committee chair said the bill passed "by the other 6 to 4," and added he expected the anti-donation issue to be addressed before floor consideration. "I'd like to see the anti donation clause issue addressed. I voted yes so the bill could advance. If it's not addressed, I'll oppose it on the floor," the chair said.

The bill now advances to further legislative consideration. Committee members and witnesses said rulemaking and additional clarifications — particularly on eligibility, cost-share expectations and the residential-purpose carve-out cited in the state constitution — will be necessary during implementation.