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Panelists tell committee DOE cancellations halted $135M in New Mexico energy, resilience and research projects
Summary
State analysts, a rural electric cooperative and university researchers told the Water & Natural Resources Committee that the federal administration canceled roughly $135 million in Department of Energy awards affecting 10 New Mexico projects, leaving microgrid, carbon-storage and research work in limbo and prompting appeals and requests for state assistance.
Austin Davidson, the Legislative Finance Committee’s natural resource analyst, told the Water & Natural Resources Committee that "the federal administration canceled a 135,000,000 of Department of Energy funding related to 10 separate energy projects in New Mexico," affecting projects at utilities, research centers and industry. He said total project costs for the 10 projects were about $244.8 million and the cancellations represented a 55.3% reduction in federal awards.
Luis Reyes, CEO of Kit Carson Electric Cooperative, described a DOE-funded microgrid program that the coop won in 2023 and began implementing. Reyes said Kit Carson had expended about $4.7 million, purchased batteries and held a signed DOE contract that allocated award funding; he said DOE later notified the coop that $15.4 million of its battery-storage award had been canceled. "If we cannot get this money back," Reyes told the committee, "that would increase our rates," because the cooperative has no outside investors and the remaining costs fall to ratepayers.
Reyes said the coop is pursuing an informal dispute and a formal appeal with DOE, has filed a supplemental appeal citing recent budget language supporting microgrids for resilience, and is exploring alternate funding (tax credits, state or private match) to cover an estimated $6 million gap to finish the three-microgrid project.
Robert Bolch, director of the Petroleum Recovery Research Center at New Mexico Tech, said cancellations also affected university research and student positions. He said two active projects were terminated (including a 4-Corners carbon-storage hub and a direct-air-capture membranes project), and several negotiated awards appear likely to lapse; Bolch estimated lost staff and student support and said projects already spent on the ground may pause while appeals and accounting proceed.
Bolch described broader risks: established research programs can be left in limbo, student research opportunities vanish, and the local economies that host demonstration work lose contracting and drilling activity. He said New Mexico Tech has appealed terminations, suggested rescoped work to keep funds in-state, and diversified funding sources to weather changes in federal priorities.
Committee members pressed for timelines and remedies. Representative Ortiz asked about appeal timing; Reyes said DOE acknowledged the dispute, was responsive and had 30 days to respond to the dispute stage, with an expected decision on the initial dispute by November. Members asked whether the attorney general or the state would join multi-state litigation; Davidson said he would check and follow up for the committee. Edward Martinez of the New Mexico Forest and Watershed Restoration Institute asked the committee for $1.2 million in state support to replace funding lost to federal cuts.
The panelists urged legislative awareness and, where appropriate, short-term state support while appeals proceed. Several members suggested the state consider how to position projects to match current federal priorities and to explore bridging funds to avoid passing costs to ratepayers or interrupting ongoing community work.
The committee took no formal vote on funding or legislation during the hearing; presenters were asked to provide follow-up materials and cost analyses to staff.
