PART 2†††††††††††††††† ENERGY EFFICIENCY†††††††††††††††† ISSUING AGENCY:The New Mexico Public Regulation Commission.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† SCOPE:This rule applies to all electric, gas and rural electric cooperative utilities subject to the commissionís jurisdiction.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† STATUTORY AUTHORITY:NMSA 1978, Sections 8-8-16, 63-3-1, 62-8-6, 62-17-1 et seq.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† DURATION:Permanent.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† EFFECTIVE DATE:May 3, 2010, unless a later date is cited at the end of a section.Applications filed prior to this effective date shall be governed by the specific orders related to those applications.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† OBJECTIVE:The purpose of this rule is to implement the Efficient Use of Energy Act such that public utilities and distribution cooperative utilities include all cost-effective and achievable energy efficiency and load management resources in their energy resource portfolios; and to set forth the commissionís policy and requirements for energy efficiency and load management programs.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††††† DEFINITIONS:As used in this rule:

††††††††††††††† A.††††††††††† achievable means those energy efficiency or load management resources available to the utility using its best efforts;

††††††††††††††† B.††††††††††† affected customer class means a rate class comprised of either electricity or natural gas customers thatpay for utility energy efficiency and load management programs;

††††††††††††††† C.††††††††††† alternative energy efficiency provider means an entity that assumes, with the consent of the utility, the duties and responsibilities of the public utility to provide ratepayer-funded load management and energy efficiency programs to the utilityís customers;

††††††††††††††† D.††††††††††† avoided supply side costs means gas and electricity commodity costs, and avoided generation, transportation, transmission, distribution, operations and maintenance, administrative and general costs, and other avoided costs of supplying energy or capacity to customers;

††††††††††††††† E.†††††††††††† commission means the New Mexico public regulation commission;

††††††††††††††† F.†††††††††††† contractor means an individual, entity or governmental instrumentality with whom a utility or an alternative energy efficiency provider enters into a written contract for services related to the provision of one or more energy efficiency programs;

††††††††††††††† G.††††††††††† cost-effective means that the energy efficiency or load management program meets the total resource cost test, except that for self-direct programs a cost-effective measure has a simple payback of more than one year but less than seven years;

††††††††††††††† H.††††††††††† customer means a utility customer at a single, contiguous field, location or facility, regardless of the number of meters at that field, location or facility;

††††††††††††††† I.††††††††††††† deemed savings means expected energy and demand savings attributed to well-known or commercially available energy efficiency and load management devices or measures based on standard engineering calculations, ratings, simulation models or field measurement studies, periodically adjusted as appropriate for New Mexico specific data, including building and household characteristics, and climate conditions in pertinent region(s) within the state;

††††††††††††††† J.†††††††††††† demand savings means the load reduction occurring during the relevant peak period(s) as a direct result of energy efficiency and load management programs;

††††††††††††††† K.††††††††††† distribution cooperative utility means a utility with distribution facilities organized as a rural electric cooperative pursuant to Laws 1937, Chapter 100 or the Rural Electric Cooperative Act or similarly organized in other states;

††††††††††††††† L.††††††††††† economic benefit means a net financial benefit which members of a customer class can achieve through available program participation;

††††††††††††††† M.†††††††††† emissions means all air emissions regulated by state or federal authorities, including but not limited to all criteria pollutants and hazardous air pollutants, plus mercury and CO2 (carbon dioxide);

††††††††††††††† N.††††††††††† energy efficiency means measures, including energy conservation measures, or programs that target consumer behavior, equipment or devices, to result in a decrease in consumption of electricity or natural gas without reducing the level or quality of energy services;

††††††††††††††† O.††††††††††† energy savings means the reduction in a customerís consumption of energy as a direct result of an energy efficiency program(s);

††††††††††††††† P.††††††††††† interested parties means intervenors in the public utilityís last general rate case and energy efficiency filing, plus persons specifically expressing to the utility an interest in energy efficiency, and excluding persons expressing to the utility that they are not interested;

††††††††††††††† Q.††††††††††† large customer means a customer with electricity consumption greater than seven thousand megawatt-hours per year or natural gas use greater than three hundred sixty thousand decatherms per year;

††††††††††††††† R.††††††††††† life cycle means the expected useful life of the energy efficiency measure being deployed;

††††††††††††††† S.††††††††††† load management means measures or programs that target equipment or devices that result in decreased peak electricity demand or to shift demand from peak to off-peak periods;

††††††††††††††† T.††††††††††† low income customer means a customer that lives with an annual household income at or below 200% of the federal poverty level as published each year by the U.S. department of health and human services;

††††††††††††††† U.††††††††††† measures means the components of a public utility program, and includes any material, device, technology, educational program, practice or facility alteration that makes it possible to deliver a comparable level and quality of end-use energy service while using less energy than would otherwise be required;

††††††††††††††† V.††††††††††† measurement and verification or M&V means commission-directed activities to determine or approximate with a high degree of certainty the actual demand and energy reductions from energy efficiency and load management programs;

††††††††††††††† W.†††††††††† non-energy benefits means benefits which do not affect the total resource cost of a program, including but not limited to benefits of low-income customer participation in utility programs, and reductions in greenhouse gas emissions, regulated air emissions, water consumption and natural resource depletion;

††††††††††††††† X.††††††††††† portfolio means all programs which will continue to be offered, and those proposed to be offered, by the public utility;

††††††††††††††† Y.††††††††††† program costs mean the reasonable costs incurred by a utility as a result of developing, implementing and administering approved program(s);

††††††††††††††† Z.††††††††††† program means one or more measures provided as part of a single offering to consumers.An example of a program is a weatherization program which includes insulation replacement, weather stripping, and window replacement;

††††††††††††††† AA.†††††††† public utilityor utility means a public utility as defined in the Public Utility Act (NMSA 1978, Section 62-3-1 et seq.) that is not also a distribution cooperative utility;

††††††††††††††† BB.†††††††† statutory tariff cap means seventy-five thousand dollars ($75,000) per year per customer; and

††††††††††††††† CC.†††††††† total resource cost test or TRC test means a standard that is met if the monetary costs that are borne by the utility and the participants and that are incurred to develop, acquire and operate energy efficiency or load management resources on a life-cycle basis are less than the avoided monetary costs associated with developing, acquiring and operating the associated supply-side resources.


††††††††††††††† A.††††††††††† Solicitation of public input from interested parties.Public utilities shall, during the program planning and development process, and before seeking commission approval, solicit non-binding recommendations on the design, implementation and use of third-party energy service contractors through competitive bidding on programs from commission staff, the attorney general, the energy, minerals and natural resources department and other interested parties.

††††††††††††††† B.††††††††††† Section 62-17-6.A consents.If the utility plans to propose a tariff that exceeds the statutory tariff cap, it shall first obtain consent from the affected customer.Each consent must be in writing and must specify an amount and period for which the cap will be exceeded.


††††††††††††††† A.††††††††††† Compliance with pre-filing requirements.The utility shall describe the public participation process it used to obtain input from interested parties during the planning and development of its proposed program(s), and shall provide any written consents obtained pursuant to Subsection B of NMAC.

††††††††††††††† B.††††††††††† Timing.Requests for program approval shall be made in a single filing at least every two years, except for good cause shown or as otherwise ordered by the commission.

††††††††††††††† C.††††††††††† Program selection.

††††††††††††††††††† (1)†††† Cost effectiveness is a mandatory criterion for program selection; only programs that are cost effective are eligible for approval.

††††††††††††††††††† (2)†††† When selecting among multiple potential programs, all of which are cost effective, a utility shall consider the following criteria:

††††††††††††††††††††††††††††† (a)†††† the extent to which the program provides significant system benefits to all members of a customer class, including non-participants;

†††††††† †††††††††††††††††††††(b)†††† the extent to which the program offers potential for broad participation within an affected customer class;

††††††††††††††††††††††††††††† (c)†††† the programís ratio of cost effectiveness under the TRC test;

†††††††††††††††††† †††††††††††(d)†††† total estimated energy and demand savings;

††††††††††††††††††††††††††††† (e)†††† the existence of substantial non-energy benefits, consistent with the legislative findings in the Efficient Use of Energy Act;

††† ††††††††††††††††††††††††††(f)†††† administrative ease of program deployment;

††††††††††††††††††††††††††††† (g)†††† overall portfolio development considerations; and

††††††††††††††††††††††††††††† (h)†††† performance risk of the technologies and methods required for the program.

††††††††††††††††††† (3)†††† As part of its application, the utility shall explain how it applied these criteria to select the proposed program(s).

††††††††††††††† D.††††††††††† Indirect impact measures that may not, in and of themselves, be cost effective, such as general education activities, energy audits, and research and development, are permissible to the extent that those measures do not negate the overall cost effectiveness of the utilityís energy efficiency portfolio.

††††††††††††††† E.†††††††††††† In its applications for program approval, a utility shall provide to the commission and interested parties, along with an executive summary to facilitate commission review, the following:

††††††††††††††††††† (1)†††† summary of existing programs and description of their relationship to the proposed programs, including a detailed explanation of all customer education efforts;

††††††††††††††††††† (2)†††† the program objectives, including measures and projected savings;

††††††††††††††††††† (3)†††† rate impact and customer bill impact, including data showing that the tariff rider will not cause any customer to be charged an amount greater than that permitted by the Efficient Use of Energy Act;

††††††††††††††††††† (4)†††† program implementation and administration plan;

††††††††††††††††††† (5) ††††a description of the responsibilities which will be assigned to utility personnel and to contractors;

††††††††††††††††††† (6)†††† the targeted market segment, and the programís marketing and outreach plan;

††††††††††††††††††† (7)†††† program participation requirements, if any;

††††††††††††††††††† (8)†††† the time period during which the program will be offered;

††††††††††††††††††† (9)†††† the expected useful life of the measures;

††††††††††††††††††† (10)†††† detailed program budgets with projected expenditures, identifying program costs which will be borne by the utility and collected from its customers, with customer class allocations if appropriate;

††††††††††††††††††† (11)†††† the participant costs;

††††††††††††††††††† (12)†††† demonstration that the program is cost effective pursuant to the total resource cost test;

††††††††††††††††††† (13)†††† a plan for how program energy and capacity savings can be measured and verified;

††††††††††††††††††† (14)†††† the rationale and methodology used by the utility to estimate the proposed expenditures, and allocate the expenditures across programs and customer classes;

††††††††††††††††††† (15)†††† proposed market transformation, and building code and appliance standard reforms, if any, which they have studied or propose as part of their program portfolios;

††††††††††††††††††† (16)†††† forecasts of proposed program expenditures, energy and capacity savings, cost effectiveness and other items in a manner that facilitates comparison with actual results for purposes of measurement and verification, and compilation of annual reports;

††††††††††††††††††† (17)†††† a general description of the programs which the utility specifically studied and rejected; and

†††††††††††††††† †††(18)†††† a description of any competitive bid process for programs undertaken by the utility.

††††††††††††††† F.†††††††††††† Cost effectiveness using the total resource cost (TRC) test.While each program proposed by a utility must be cost effective, each measure within a program need not be cost effective.

††††††††††††††† G.††††††††††† The utility shall separately identify and present the assumptions, calculations and other elements associated with the TRC test.Those elements include, but are not limited to:

††††††††††††††††††† (1)†††† cost of capital and discount rate employed by the utility and determination of net present value calculations;

††††††††††††††††††† (2)†††† program costs to both the utility and participants;

††††††††††††††††††† (3)†††† shared or allocated program costs or investments, along with a description of the sharing or allocation method;

†††††††††† †††††††††(4)†††† expected number of participants and program savings per participant in energy units and dollars;

††††††††††††††††††† (5)†††† value of the energy/or capacity savings expected, including deemed savings, from the program to both participants and non-participants; and

††††††††††††††††††† (6)†††† the period of analysis (life cycle) and a description of all resources which are assumed to be avoided by deployment of the efficiency program, including other quantifiable monetary savings.

††††††††††††††† H.††††††††††† In calculating the total resource cost of programs, costs shared among individual programs, such as market research and planning, program design, measurement and verification and annual reporting shall be allocated to individual programs in proportion to the direct costs assigned to those programs, unless the utility demonstrates that another allocation method is more appropriate.

††††††††††††††† I.††††††††††††† General advertising, market transformation and education-type costs that promote energy efficiency or load management not tied to a specific program, should not be included as program costs for purposes of calculating a programís TRC test.

††††††††††††††† J.†††††††††††† Participation and benefits requirements:

††††††††††††††††††† (1)†††† the utility shall demonstrate that the portfolio ofprograms it offers or will offer is cost-effective and designed to provide every affected customer class with the opportunity to participate and benefit economically; and

††††††††††††††††††† (2)†††† the overall design of portfolio offerings shall achieve widespread program access and availability within each affected customer class; for the residential class some utility energy efficiency programs shall be designed to enable low-income customer participation; utilities shall describe the extent to which the programs offered allow low-income customers to participate, recognizing the financial constraints of those customers.

††††††††††††††† K.††††††††††† Incentives and regulatory disincentives or barriers.This sub-section addresses the statutory requirement applicable to electric public utilities that regulatory disincentives or barriers be removed to the extent possible and that electric public utilities have the opportunity to earn a profit on cost-effective energy efficiency and load management resource development that, with satisfactory program performance, is financially more attractive to the utility than supply-side utility resources.

††††††††††††††††††† (1)†††† Tariff rider or base rate adder.An adder to the tariff rider or base rates will be determined each year based upon the energy and demand savings achieved by the electric public utility.This adder shall commence with savings projected for programs in effect in the calendar year of the effective date of this rule.

††††††††††††††††††† (2)†††† Caps on adders.Notwithstanding any other provision of this sub-section:

††††††††††††††††††††††††††††† (a)†††† no adder shall be paid with respect to any energy efficiency or load management program that has been determined by the independent program evaluatorís measurement and verification report filed with the commission to have a ratio of cost effectiveness under the TRC cost test of less than one, as determined before any amounts for the adders set forth in this sub-section are taken into account;

††††††††††††††††††††††††††††† (b)†††† the amount of any revenues for any adder received with respect to any energy efficiency or load management program shall be limited to the amount which, when added to the programís other program costs, does not cause that programís ratio of cost effectiveness under the TRC to become less than one (1); and

††††††††††††††††††††††††††††† (c)†††† the amount of any revenues for any adder received with respect to any energy efficiency or load management program shall be limited to the amount which, when added to all amounts recovered through the tariff rider or in base rates, will not cause any customer to be charged an amount greater than that permitted by the Efficient Use of Energy Act.

†††††††††† †††††††††(3)†††† Calculation of the adder.The adder will be calculated as follows:

††††††††††††††††††††††††††††† (a)†††† lifetime energy savings will be the total lifetime KWh savings from additional participation in all programs in the utilityís portfolio during a twelve-month period, grossed up to account for system losses;

††††††††††††††††††††††††††††† (b)†††† annual demand savings will be the reduction to annual peak KW the utility achieves each year through its energy efficiency and load management programs; and

††††††††††††††††††††††††††††† (c)†††† the adder each year will equal the lifetime KWh energy savings times $0.01 per KWh, plus the total annual KW demand savings times $10 per KW.

††††††††††††††††††† (4)†††† Adjustment to the adder calculation for low-income customer programs.In determining the lifetime energy savings from a given utility portfolio, lifetime energy savings from programs targeted exclusively to low-income customers will be valued at 1.25 times the actual KWh savings.

††††††††††††††††††† (5)†††† Adjustment to the adder calculation for better performance.If in any calendar year the additional annual energy savings from programs in that year are 1% or more of the total utility retail sales in that calendar year, the adder shall equal $0.0125/KWh times the lifetime energy savings.If the excess is 1.5% or more, the adder shall equal $0.015/KWh times the lifetime energy savings.

††††††††††††††††††† (6)†††† True-up of the adder calculation for measurement and performance results.After each comprehensive independent evaluatorís measurement and verification report, the adder shall be adjusted to true-up the KW and KWh savings for which the adder was calculated and paid with the KW and KWh savings as determined in the report.The true-up process shall include adjustments to the adder level for performance at the levels specified in paragraphs (5) above and (7)(b)) below.

††††††††††††††††††† (7)†††† Rate design and ratemaking modifications.The commission will develop rate design and ratemaking methods that address regulatory disincentives or barriers to electric public utilities to achieve energy efficiency savings.

††††††††††††††††††††††††††††† (a)†††† Any party may, and each investor-owned electric utility shall, make a filing that proposes rate design and ratemaking methods to remove regulatory disincentives or barriers for that utility to achieve energy efficiency savings.Such proposal shall be included as part of that utilityís general rate case, provided that the general rate case is filed on or before July 1, 2010.If a general rate case for a utility has not been initiated by July 1, 2010, then the utility shall, unless otherwise ordered by the commission, file such a proposal for consideration and approval in a rate design proceeding by no later than July 1, 2010.If a utility does not file such a proposal by July 1, 2010, and has not been granted an extension of time to file such a proposal by the commission on or before that date, that utilityís authority to receive the adder shall terminate automatically on July 1, 2010, unless otherwise ordered by the commission.These methods may include allowing the recovery of some or all fixed costs through fixed charges to customers, decoupling or other ratemaking and rate design methodologies.In presenting its proposal, the utility shall provide, for informational or other purposes, a rate schedule for residential customers that adjusts fixed charges only for customers other than low-use residential customers.

††††††††††††††††††††††††††††(b)†††† Reduced Adder.From and after the date that the commission-approved rate design or ratemaking methods for removing regulatory disincentives or barriers become effective for each electric public utility, the adder for new energy savings achieved from programs for such utility shall be reduced to $0.005 per KWh plus $10 per KW for savings less than 1%, and $0.00625 and $0.0075 per KWh for savings of at least 1% and 1.5% respectively, plus 10KW, as described in Paragraph (5) of this sub-section. ††This reduced adder shall remain in effect unless and until the commission, upon the petition of any party or upon the commissionís own motion, determines that another amount is appropriate to accomplish the removal of disincentives and provision of incentives.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††† RESIDENTIAL PROGRAMS:

††††††††††††††† A.††††††††††† Purpose.This section requires public utilities to establish cost-effective energy efficiency programs to ensure that residential customers, regardless of income, have the opportunity to participate and benefit economically.The programs should be intended to assist residential customers or households, including low-income customers, with conserving energy, reducing demand or reducing residential energy bills.

††††††††††††††† B.††††††††††† A public utility may establish an energy efficiency program specifically for its low-income customers to assist the utilityís efforts in offering a balanced portfolio of energy efficiency programs.

†††††††††††††††††††† (1)††† Low-income program funding.A public utility's allocation of total energy efficiency program funding to low-income programs is to be based upon factors to be articulated by the utility such as:

††††††††††††††††††††††††††††† (a)†††† the programís expected customer participation rates for eligible customers;

††††††††††††††††††††††††††††† (b)†††† the programís potential to reduce the burden of utility costs on low-income customers; and

††††††††††††††††††††††††††††† (c)†††† the programís ability to reduce energy demand and consumption.

†† †††††††††††††††††(2)†††† Integration.

††††††††††††††††††††††††††††† (a)†††† A public utility may coordinate program service with existing resources in the community, including affordable housing programs, and low-income weatherization programs managed by the state of New Mexico.This section does not preclude the utility from designing and proposing low-income programs.

††††††††††††††††††††††††††††† (b)†††† Low-income energy efficiency programs should be designed, whenever possible, to provide program services through providers that have demonstrated experience and effectiveness in the administration and provision of low-income energy efficiency services and in identification of and outreach to low-income households. In the absence of qualified independent agencies, a public utility electing not to provide program services directly may solicit competitive bids for the provision of services by providers of related housing and construction services, and ensure appropriate training of such providers.

†††††††† ††††††††††††(3)††† Notification.Public utilities shall notify customers experiencing ability-to-pay problems of the utilityís energy efficiency programs and hardship funds.

†††††††††††††††††††† (4)††† Total resource cost test for low-income customer programs.In developing the TRC test for energy efficiency and load management programs directed to low income customers, unless otherwise quantified by the commission in a proceeding, electric public utilities shall assume that 20% of the calculated energy savings is the reasonable value of reductions in working capital, reduced collection costs, low or bad-debt expense, improved customer service effectiveness and other appropriate utility system economic benefits associated with low income programs.


††††††††††††††† A.††††††††††† General.Large customer self-directed programs shall not require approval of the commission.The utility, however, shall describe the process it employs for such self-directed programs on its system either in its annual report or its application.A large customer shall receive approval for a credit for and equal to the incremental expenditures that customer has made at its facilities on and after January 1, 2005 toward cost-effective energy efficiency and load management, upon demonstration to the reasonable satisfaction of the utility or self-direct program administrator that its expenditures are cost-effective.The utility shall assign a person to evaluate and approve or disapprove large customer requests for credits or exemptions.The commission may appoint a self-direct program administrator, in lieu of the utilityís designated person, for good cause shown.

††††††††††††††† B.††††††††††† Eligibility.Large customers applying for an electricity credit or exemption must meet the electricity consumption size criterion, and those applying for a gas credit or exemption must meet the gas consumption criterion.Projects by qualified customers that save electricity are eligible for an electricity credit only. Projects that save natural gas are eligible for a gas credit only.Projects that save electricity and gas are eligible for both credits, although the same energy efficiency expenditures cannot be used twice.Customers become eligible for self-direct program credits only after expenditures for a qualifying energy efficiency project(s) are made.Expenditures must be documented and approved by the utility or administrator prior to the credit being awarded.If expenditures are ongoing, the customer should present and receive approval for its expenditures to the utility or program administrator annually.

††††††††††††††† C.††††††††††† Requirements for approval of self-direct projects or exemptions.Self-direct program participants, or large customers seeking exemption, shall submit qualified in-house or contracted engineering studies, and such other information as may be reasonably required by the utility or program administrator, to demonstrate qualification for self-direct program credits or exemptions.Large customers must respond to reasonable utility or administrator information requests and allow the utility or administrator to perform site visits if necessary.Eligible expenditures shall have a simple payback period of more than one year but less than seven years.Projects that have received rebates, financial support or other substantial program support from a utility are not eligible for a credit. The utility or administrator shall act in a timely manner on requests for self-direct program approval.

††††††††††††††† D.††††††††††† Requirements for exemptions from the tariff rider.A large customer shall receive an exemption to paying seventy percent (70%) of the tariff rider if that customer demonstrates to the reasonable satisfaction of the utility or self-direct program administrator that it has exhausted all cost-effective energy efficiency measures in its facility (or group of facilities if facilities are aggregated in order to qualify).A determination of exemption is valid for 24 months.After the expiration of 24 months, a customer may request approval for exemption again by demonstrating that it has exhausted all cost effective energy efficiency in its facility or facilities.

††††††††††††††† E.†††††††††††† Review procedure.Approvals or disapprovals of credits or exemptions by the utility or administrator shall be subject to commission review.The utility or administrator shall file notice of each self-direct program approval or disapproval with the commission, and serve that notice on interested parties, within five business days of the action.Notice of an appeal of an approval or disapproval shall be filed with the commission within 30 days of the approval or disapproval action.

††††††††††††††† F.†††††††††††† Credits for self-direct programs.Credits for approved self-direct programs may be used to offset up to seventy percent (70%) of the tariff rider authorized by the Efficient Use of Energy Act until the credit is exhausted.Any credit not fully utilized in the year it is received shall carry over to subsequent years.The process of reviewing self-direct programs and awarding credits shall be designed to minimize utility administrative costs.

††††††††††††††† G.††††††††††† Measurement and verification of self-direct programs.Self-direct projects, expenditures and exemptions under this section shall be evaluated by the independent program evaluator.Large customers with approved self-direct programs or exemptions shall permit the evaluator access to all relevant engineering studies and documentation needed to verify energy savings of the project, and allow access to its site for reasonable inspections, at reasonable times.All records relevant to a self-direct program shall be maintained by the large customer for the duration of that program.The evaluator shall use the measurement and verification standards described in NMAC, subject to appropriate protections for confidentiality, and the evaluatorís findings shall be reported in the annual report to the commission pursuant to the Efficient Use of Energy Act.Following a determination by the independent program evaluator that a project is not achieving the cost-effectiveness requirements of this section, the customerís credit for that project shall be suspended, unless otherwise ordered by the commission.

††††††††††††††† H.††††††††††† Confidentiality.Upon request by the large customer, the information provided pursuant to this section by large customers to the utility or program administrator, program evaluator or others shall remain confidential except as otherwise ordered by the commission.


††††††††††††††† A.††††††††††† General requirements.A public utility that undertakes approved cost-effective energy efficiency and load management programs shall have the option of recovering its prudent and reasonable costs and, for electric public utility adders, for such programs through an approved tariff rider, which, for electric utilities, shall be annually adjusted, or in base rates, or through a combination of the two.A utility may, with the approval of the commission, , recover such amounts as a single-year expensed amount, or amortized over a reasonable period, with a return at the utilityís last-approved cost of capital, unless a different returnis ordered by the commission.

††††††††††††††† B.††††††††††† Cost eligibility for recovery.All costs that are consistent with program approvals are recoverable so long as the utility acts reasonably to address significant changed circumstances which may occur between the time of program approval and program expenditure.

††††††††††††††† C.††††††††††† Tariff rider recovery.If tariff rider cost recovery is sought, a utility shall present a proposed tariff rider or riders to the commission for approval.The proposed tariff rider(s) shall incorporate recovery of any costs currently permitted recovery, as well as any new costs for which the utility seeks recovery.All proposed tariff riders, including those that are filed to recover the adders permitted by Subsection K of NMAC, or that propose to adjust the adder pursuant to Paragraph (6) of Subsection K of NMAC, shall be accompanied by an advice notice containing the information required by NMAC and served upon the individuals and entities set forth in that rule.

††††††††††††††††††† (1)†††† A tariff rider proposed by a public utility to fund approved energy efficiency and load management programs shall go into effect thirty (30) days after filing, unless suspended by the commission for a period not to exceed one hundred eighty (180) days.If the tariff rider is not approved or suspended within thirty (30) days after filing, it shall be deemed approved as a matter of law.If the commission has not acted to approve or disapprove the tariff rider by the end of an ordered suspension period, it shall be deemed approved as a matter of law.Applications for tariff rider approval filed prior to related program approval shall not be subject to the suspension and approval deadlines set forth in this paragraph, until program approval is obtained.

††††††††††††††††††† (2)†††† It is standard practice that tariff riders will be collected on a monthly basis.If the utility desires a tariff rider recovery which occurs other than monthly, it shall demonstrate to the commission why such a recovery frequency is preferable to monthly.

††††† ††††††††††††††(3)†††† Except for good cause shown, cost recovery should be implemented no earlier than the first billing cycle in which the affected customer class has an opportunity to participate.

††††††††††††††††††† (4)†††† Tariff riders will be assessed on a percentage-of-bill basis, unless the utility demonstrates that its proposed tariff rider shall not result in customers paying tariff-rider amounts greater than those authorized by statute.

††††††††††††††††††† (5)†††† The proposed tariff rider(s) shall be consistent with program approval findings that every affected customer class has the opportunity to participate and benefit economically.

††††††††††††††††††† (6)†††† Over-recoveries or under-recoveries shall be credited or charged to the tariff rider along with any carrying charge approved by the commission.

††††††††††††††† D.††††††††††† Recovery in base rates.If base rate recovery of costs and adders is sought, a utility shall present proposed treatment to the commission for approval.The proposal shall incorporate recovery of any costs currently permitted recovery, as well as any new costs for which the utility seeks base rate recovery.The proposed recovery rate design shall be consistent with program approval findings that every affected customer class has the opportunity to participate and benefit economically.

††††††††††††††† E.†††††††††††† The time period over which recovery is being sought shall be included as part of the utilityís cost recovery filing request, as well as any request for carrying costs on deferrals.Deferral costs will also be permitted for cost overruns associated with exceeded participation levels and incorrect assumptions about billing determinants which cause over- or under-recoveries.

††††††††††††††† F.†††††††††††† Program costs and incentives may be deferred for future recovery through creation of a regulatory asset, provided that the deferred recovery does not cause the tariff rider, or customer impact, to any customer to exceed $75,000 per year.In addition, if the utility proposes that program costs be capitalized, the utility shall demonstrate that the proposed pre-tax cost of capital associated with the program is reasonable.Any combination of proposed tariff rider and base rate recovery shall not increase any customerís bill by more than $75,000 per year without the customerís consent.

††††††††††††††† G.††††††††††† Impact of rate moratoriums.Utilities which are subject to a rate moratorium or freeze and which seek to implement energy efficiency or load management programs during the moratorium shall obtain advance commission determinations on whether costs incurred during the rate moratorium period will be permitted recovery.

††††††††††††††† H.††††††††††† Except as otherwise required by law or ordered by the commission, the value of proceeds from the sale or trade of any emission credits or allowances resulting from a utilityís energy efficiency programs shall be used to offset program costs.This subsection shall not preclude a utility or other party from seeking alternative treatment for these credits or allowances.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††† REPORTING REQUIREMENTS:

††††††††††††††† A.††††††††††† General.Each utility providing energy efficiency or load management programs shall file an annual report with the commission, and post that report on a publicly accessible website.

††††††††††††††† B.††††††††††† Timing.Public service company of New Mexico (and its successors) shall file its report on on April 1st of each year.Southwestern public service company (and its successors) shall file its report on May 1 of each year.†† El Paso electric company (and its successors) shall file its report on June 1 of each year.All other public utilities with greater than 250,000 New Mexico customers shall file their reports on April 1st of each year.All other public utilities with fewer than 250,000 New Mexico customers shall file their reports on August 1st of each year.

††††††††††††††† C.††††††††††† Contents.Annual reports shall include the following:

††††††††††††††††††(1)†††† the most recent measurement and verification report (M&V report) of the independent program evaluator, which includes documentation, at both the total portfolio and individual program levels, of expenditures, measured and verified savings, and cost-effectiveness of all utility programs including self-direct programs, as well as deemed savings assumptions and all other assumptions used by the evaluator; the M&V report shall also include such other information as the commission may from time-to-time require; M&V processes should confirm that measures were actually installed, the installation meets reasonable quality standards, and the measures are operating correctly and are expected to generate the predicted savings;

††††††††††††††† ††††(2)†††† a statement of any program-related expenditures not covered by the independent measurement and verification report;

††††††††††††††††††† (3)†††† a statement of any funds that were budgeted but not spent during the prior year;

†††††††††††††††††† (4)†††† any material variances in any projected total program costs, with an explanation for the variance;

††††††††††††††††††† (5)†††† reconciliation of tariff-rider collections from the prior year, along with an adjustment to the rider as necessary to make up under- or over-collections;

††††††††††††††††††† (6)†††† the following specific, documented information for each utility program for the previous calendar year:

††††††††††††††††††††††††††††† (a)†††† a comparison of forecasted savings to verified achieved savings for each of the utilityís energy efficiency programs;

††††††††††††††††††††††††††††† (b)†††† number of program participants served by each project;

††††††††††††††††††††††††††††† (c)†††† utility and participant costs, including M&V costs broken down by program;

††††††††††††††††††††††††††††† (d)†††† total avoided supply-side costs broken down by type of avoided cost (generation, transmission, distribution, etc.);

††††††††††††††††††††††††††††† (e)†††† total cost per kilowatt hour (KWh), kilowatt (KW) or therm saved over the life of the measure;

††††††††††††††††††††††††††††† (f)†††† total economic benefits for the reporting period; and

††††††††††††††† ††††††††††††††(g)†††† net present value of all economic benefits for the life of the measures;

†††† †††††††††††††††(7)†††† a description and, to the extent practical, quantification of the non-energy benefits of the utilityís portfolio of programs; this description shall include the emission reductions associated with the saved energy, as well as associated emissions credits the utility has received, and the disposition of those credits; and

††††††††††††††††††† (8)†††† information on the number of customers applying for and participating in self-direct programs, the number of customers applying for and receiving exemptions, measurement and verification of self-direct program targets, payback periods and achievements, expenditures by customers on qualifying projects, and expenses incurred by the utility or administrator to oversee these programs.

††††††††††††††† D.††††††††††† Audit.The commission may order a utility to submit an external audit that examines whether the utilityís energy efficiency and load management program costs are being properly assigned to programs in accordance with this rule, commission orders, and other applicable requirements and standards.The cost of such audit shall be considered recoverable program costs, unless the audit results in an order of the commission containing findings of malfeasance on the part of the utility, in which case, the costs of the audit shall not be recoverable by the utility through the ratemaking process.


††††††††††††††† A.††††††††††† Measurement and verification (M&V).The development of energy efficiency programs that deliver reliable energy savings for New Mexico ratepayers depends on well-designed methods of independent program measurement and verification, as follows:

††††††††††††††††††† (1)†††† independent program evaluator selection and scope of work:the commission will direct and control the independent evaluation of energy efficiency programs; initially, the commission will accomplish this by appointing an evaluation committee for each utility upon the effective date of this rule; the evaluation committee shall consist of a representative of the utility, representatives of consumers, environmental interests, commission staff and such other persons as the commission may from time-to-time name; committee members shall serve at the pleasure of the commission; this committee will establish a competitive bidding process for evaluator selection, develop the scope and term of work for the program evaluation, establish any rotating program evaluation schedule as may be desirable, and select an independent program evaluator(s);

††††††††††††††††††† (2)†††† all potential evaluators shall submit competitive bids, shall be qualified by education and experience, and shall disclose any professional services provided to the utility, any of its affiliates or any of the evaluation committee members within the last seven years; the financial interests of the independent evaluator must be independent of evaluation results; the contract for evaluator services shall be between the utility and evaluator, with funding for the evaluator contract to be recovered from the tariff rider; the contract shall specify that the work is to be performed for the benefit of the commission and that approval or denial of payments under the contract may be reviewed by the evaluation committee at its discretion; renewals of the evaluatorís contract shall also be determined by the evaluation committee; disputes within the evaluation committee shall be resolved by the commission; the commission may review this procedure at any time;

††††††††††††††††††† (3)†† ††utility cooperation with independent program evaluator and availability of records:the utility shall cooperate with the evaluator, and shall make information and personnel available to assist and respond to evaluator inquiries on a reasonable basis; all relevant records shall be maintained by the utility;

††††††††††††††††††† (4)†††† M&V protocols:the evaluator shall employ appropriate international performance measurement and verification protocols (IPMVP), or describe any deviation from those protocols, and the reason for that deviation; and

††††††††††††††††††† (5)†††† deemed savings:the independent program evaluator may utilize deemed savings in the measurement and verification of utility program energy and demand savings; deemed savings will not relieve the evaluator of the duty to verify savings with statistically significant samples.


††††††††††††††† A.††††††††††† General.The commission may direct a utility to modify or terminate a particular energy efficiency or load management program if, after an adequate period for implementation of the program, the commission determines the program is not sufficiently meeting its goals and purposes.Termination of a program or programs shall be accomplished in a manner that allows the utility to fully recover its reasonable and prudent program costs.

††††††††††††††† B.††††††††††† Modification or termination of a program shall not nullify any obligations already incurred by the utility, alternative energy efficiency provider or contractor for the performance or failure to perform prior to the effective date of the modification or termination.

††††††††††††††† C.††††††††††† The utility or any interested party may request that the commission modify or terminate a program or programs for good cause.Utilities shall request program budget modification for any budget changes exceeding 25%.


††††††††††††††† A.††††††††††† With a public utility's consent, the commission may allow for an alternative entity to provide ratepayer-funded energy efficiency and load management to customers of that public utility.That alternative energy efficiency provider shall assume all responsibilities of the utility to provide approved energy efficiency and load management programs to the utilityís customers, including all filing and reporting requirements.

††††††††††††††† B.††††††††††† Utilities are permitted to cooperate with each other on a consensual basis to extend programs offering energy efficiency beyond their customer base.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††† RURAL ELECTRIC COOPERATIVES:

††††††††††††††† A.††††††††††† Distribution cooperative utilities shall, within 24 months after the effective date of this rule and every 24 months thereafter, examine the potential to assist their customers in reducing energy consumption or peak electricity demand in a cost-effective manner.Based on these studies, distribution cooperative utilities shall establish energy efficiency and load management targets and shall begin to implement cost-effective energy efficiency and load management programs that are economically feasible and practical for their members and customers.Approval for such programs shall reside with the governing body of each distribution cooperative utility and not with the commission.

††††††††††††††† B.††††††††††† Each distribution cooperative utility shall file with the commission concurrently with its annual report, filed by May 1st, a report that describes the cooperativeís examination of efficiency potential described in Subsection A of NMAC as well as all of the distribution cooperative utility's programs or measures that promote energy efficiency, conservation or load management.The report shall set forth the costs of each of the programs or measures for the previous calendar year and the resulting effect on the consumption of electricity.In offering or implementing energy efficiency, conservation or load management programs, a distribution cooperative utility shall attempt to minimize any cross-subsidies between customer classes.

††††††††††††††† C.††††††††††† Each distribution cooperative utility shall include in the report required by Subsection B of NMAC a description of all programs or measures to promote energy efficiency, conservation or load management that are planned and the anticipated date for implementation.

††††††††††††††† D.††††††††††† Costs resulting from programs or measures to promote energy efficiency, conservation or load management may be recovered by the distribution cooperative utility through its general rates.In requesting approval to recover such costs in general rates, the distribution cooperative utility may elect to use the procedure set forth in NMSA 1978, Section 62-8-7(G).

††††††††††††††† E.†††††††††††† The commission may develop a form which the cooperatives shall use to comply with this section.

[ NMAC - Rp, NMAC, 5-3-10]†††††††††††††† VARIANCES:Applications for a variance from any of the provisions of this guideline shall:

††††††††††††††† A.††††††††††† state the reason(s) for the variance request;

††††††††††††††† B.††††††††††† identify each of the sections of this guideline for which a variance is requested;

††††††††††††††† C.††††††††††† describe the effect the variance will have, if granted, on compliance with this guideline;

††††††††††††††† D.††††††††††† describe how granting the variance will not compromise, or will further, the purposes of this guideline; and

††††††††††††††† E.†††††††††††† indicate why the proposed variance is a reasonable alternative to the requirements of this guideline.

[ NMAC - Rp, NMAC, 5-3-10]


HISTORY of 17.7.2 NMAC:

Pre NMAC History:none.


History of Repealed Material:

17.7.2 NMAC, Energy Efficiency (filed 02-02-2007), repealed 05-3-2010.


NMAC History:

17.7.2 NMAC, Energy Efficiency (filed 02-02-2007) was replaced by 17.7.2 NMAC, Energy Efficiency, effective 05-3-2010.