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State energy officials tell committee HR 1 and FIAC rules are creating industry confusion and could raise costs
Summary
MNERD’s director of energy conservation told the committee that changes in HR 1 — including FIAC (foreign entity of concern) restrictions and expiring tax credits — are already causing canceled grants and investment paralysis; he recommended state actions on planning, grid investment and utility incentive reform.
Puck Steyr, director of the Energy Conservation and Management Division at the New Mexico Energy, Minerals and Natural Resources Department (MNERD), told the Science, Technology & Telecommunications committee that federal changes under HR 1 and pending Treasury rules have created uncertainty for developers and utilities that could raise electricity costs and slow clean-energy deployment.
Steyr said some federal incentives remain available for a limited period, others have expired (the EV credit expired Sept. 30 and many residential credits expire Dec. 31), and the new foreign-entity-of-concern (FIAC) restrictions create phased eligibility rules that are difficult for industry to navigate. “If you can commence construction of a solar and wind project between January 1 and July 4, you can sort of still apply for some of the tax credits,” he said, and added that Treasury rules defining commenced construction and FIAC compliance likely will not be final until mid-next year, compounding developer confusion.
He also cited canceled federal grant examples, saying his office saw a $35,000,000 VPP grant to PNM canceled and similar terminations that together increase uncertainty in the energy sector. Steyr argued distribution costs (local poles, wires and transformers) are the prime driver of rising bills in New Mexico — due to deferred maintenance, climate impacts, disaster recovery and supply-chain constraints — and that strategic state action could lower costs.
Policy options Steyr presented included ramping up energy-efficiency programs, third-party management of efficiency for commercial/industrial customers, investing in batteries and smart-grid technology, exploring fuel-cost-sharing to reduce volatility, streamlining permitting (citing a Massachusetts model), performance-based utility compensation and a statewide transmission/electrification roadmap. He also recommended aligning incentives so utilities earn returns for outcomes such as reliability, affordability and emissions reductions rather than only capital expenditures.
Legislators asked how planning would advance an RTO or regional transmission, about microgrids and tribal/cooperative engagement, and about acquisitions such as proposals involving private equity and utilities. Steyr said the state’s SETS phase 1 assessment is complete and phase 2 will deliver policy recommendations; he noted federal rules and reclamation requirements complicate reuse of abandoned mines for gravity-storage proposals but said the state should pursue coordinated planning and interagency coordination.
The presentation highlighted immediate choices for the legislature and regulators but produced no formal action; committee members requested follow-up materials and more specificity on modernizing test beds, permitting timelines and potential state financial tools.
