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Local Choice Energy
From monopoly dirty energy to competitive, renewable generation at lower cost.
What is Local Choice Energy?
The Local Choice Energy Act (Senate Bill 165), aka Community Choice Aggregation, changes the law to allow municipalities and counties the option to choose their electricity generation sources and expand energy options for tribal nations while saving up to 15-20% for ratepayers.
Right now there are three Investor Owned Utilities (IOU) in New Mexico that serve 73% of New Mexico households - PNM, SPS and EPE. They were granted monopoly rights to 1) generate energy 2) transmit that energy, and then 3) distribute it locally to homes in their service area. Local Choice Energy (LCE) gives local governments the option to compete - to build and/or purchase electricity while still utilizing transmission and distribution service from their existing utility provider. LCE legislation also allows a municipality or tribe to share excess energy from generating facilities they own with other communities.
Why do we need competition in energy generation?
IOU’s continue to slow-walk the energy transition, extract wealth from communities and charge a premium to ratepayers. Private investor owned utilities have monopoly control over their service areas and a fiduciary duty to put shareholder profit above all other concerns. They decide how and where our energy will be generated, they decide if they will invest in new technologies or upgrade infrastructure, and they transfer the profit from their energy sales to shareholders on Wall St. Where has this led us? The three IOU’s that serve more than 73% of New Mexico households continue to slow walk the energy transition (In 2021 PNM had 30% solar/wind, SPS had 36% and EPE just 5% in 2020), charge 7% more than public utilities, and extracted more than $280M from the state in 2021.
LOCAL CHOICE IN NM
Local Choice Energy was introduced in the NM State Legislature in 2019, 2021 and 2023 but was defeated due to fierce opposition from PNM and other private utilities. It will be re-introduced in a later session.
The bill received support from the All Pueblo Council of Governors, the City of Santa Fe, the City of Las Cruces, the County of Santa Fe and numerous community and non-profit organizations including: Earthcare, YUCCA (Youth United for Climate Crisis Action), New Energy Economy, Retake Our Democracy, Wild Earth Guardians, Physicians for Social Responsibility, Southwest Native Cultures, Pueblo Action Alliance, Ripple Catalyst Studio, Veterans for Peace, NM Working Families Party, Tewa Women United, Citizens for Fair Rates and the Environment, 350 Santa Fe, Common Ground Rising, Seeds for SW NM, NM Environmental Law Center, and PNM Shareholders for a Responsible Future
Why is Local Choice Energy the solution we need now?
Local Choice Energy gives New Mexicans the option to control the kind of energy we want, to decide whether to build locally, and to decide what to do with the profits from energy sales. Its benefits include:
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Accelerated transition to Renewable Energy: Science demands that we transition away from fossil fuels by 2030 to avoid catastrophic climate impacts - a timeline shorter than the RPS currently in place in NM. Science will not negotiate. New Mexicans are already feeling the impacts and absorbing the costs of heat waves, drought, fires and floods that will only continue to escalate. LCE will help us reach 100% renewable energy by 2030. Of 72 US cities that reached their clean energy goals in early 2021, 67 were LCE members.
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Local Wealth Creation: Because LCE providers are locally managed not-for-profit entities, any excess revenue earned from the sale of energy is reinvested into the community through on-bill savings and innovative energy programs, often focusing on historically underserved and disadvantaged communities, including rebates, no-cost and low-cost energy programs, job training and employment programs and more. Rural communities can benefit from lower rates, local jobs, and construction of local generation.
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Local Jobs: Local Choice providers hire local administrators and can prioritize construction of local energy infrastructure that both improves grid resiliency and employs members of the community.
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Lower Rates: By aggregating demand, municipalities and tribes gain leverage for better rates either by owning the resources or purchasing from competitive suppliers, or a combination of both. Renewable energy results in cheaper rates and creates more jobs than oil and gas.
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Community Resilience & Reliability: The development of local and distributed energy resources makes both urban and rural communities more resilient, protecting from the threat of brownouts and blackouts as temperatures become more extreme and disasters more common.
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Innovation & Competition: IOU’s have a fiduciary duty to shareholders and thus are disincentivized to take advantage of innovation, promote efficiency or spend money on new technologies for the distributed energy future by implementing leading grid software tools and smart technologies for engineering, power supply, and operations. Local Choice providers are responsive to community values and priorities, including promotion of cleaner energy, efficiency and reliability. Further, LCE diversifies the energy market, providing opportunities for a wider range of companies to participate in the energy sector.
Importantly, direct pay provisions for Investment and Production tax credits in the recently enacted Inflation Reduction Act make this the opportune time for enacting Local Choice Energy, unleashing billions of dollars for government entities and non-profits that want to generate renewable energy.
Didn’t we just pass Community Solar? How is LCE different?
Local Choice Energy is a platform that enables communities to use renewables and launch renewable programs, while community solar is just one program. Community Solar is limited in its reach: a maximum of 200MW statewide and 5MW per project. Local Choice Energy would allow communities to generate or purchase as much renewable energy as they need. (For comparison, the City of Santa Fe alone uses nearly 200 MW at its peak.) The financial benefits of Community Solar go to the private developer and subscribers of the project, whereas Local Choice Energy revenues benefit the local communities they serve and are reinvested back into local government budgets for community needs. Also, the IOUs are delaying the implementation of the Community Solar Act the legislature passed and the governor signed into law in 2021 through lawsuits, unfair billing proposals, proposed limitations, and other regulatory filings, because they fear that community-generated solar energy is a threat to their business. New Mexicans deserve more choices.
Is Local Choice Energy a proven concept?
Community Choice Aggregation is authorized in 10 states, and more than 36 million customers in more than 1800 US communities are served by Local Choice aggregators. Studies show that where LCE has been adopted, rates are up to 15-20% lower, communities enjoy more jobs and more local investment, and renewable energy adoption is accelerated.
Can Local Choice Energy work in New Mexico?
Yes. LCE allows for choice, innovation and competition in the energy sector, leveraging millions of public and private dollars to diversify our energy sources. It does not mandate change, but it makes change possible.
Look at the great job Santa Fe has done since acquiring the water utility. This graph shows water usage from four sources, highlighting the rapid demand growth until 1995 when the City bought the Sangre de Cristo Water Company from PNM and began to focus on conservation, shifting away from reliance on groundwater. Keep in mind that Santa Fe’s population was growing substantially.
Imagine if we had the same success in the energy sector. Las Cruces sends $12.5 million from energy sales out of the state every year. Santa Fe sends $26 million. With Local Choice Energy those funds can stay in our communities and we can reach 100% renewable electricity generation by 2030.