How local choice energy works



You probably recall that New Energy Economy supported SB83, the Local Choice Energy Act in 2019 and 2021. The bill made it through Senate Conservation and lost by one vote in Senate Tax, Business and Transportation. Local Choice Energy will be filed again in 2023.

Local Choice Energy changes the law to allow municipalities the option to choose their electricity generation sources and expands energy options for tribal nations while lowering costs for customers. 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 in the generation sector - to build and/or purchase electricity while still utilizing transmission and distribution service from their existing utility provider.

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 customers. 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 obstruct the transition to 100% renewables, which are cheaper, more efficient and resilient, and necessary to address the climate challenge. (In 2021 PNM had 30% solar/wind, SPS had 36% and EPE just 5% in 2020) They charge 7% more than public utilities, and extracted more than $280M from the state in 2021.

We hope you will lend your support to get legislative momentum so that Local Choice Energy can make it over the finish line in the 2023 legislative session. Please call or write to the committee members listed below and tell them why Local Choice Energy is important for New Mexico and for you personally.

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:

  • Accelerated transition to Renewable Energy: Science demands that we transition away from fossil fuels by 2030 to avoid catastrophic climate impacts. Science will not negotiate. New Mexicans are already feeling the impacts and absorbing the costs of fires, heat waves, drought, 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.

  • 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.

  • Local Jobs: Local Choice providers hire local administrators and can prioritize construction of local energy infrastructure that both improves grid resiliency and customer responsiveness.

  • 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. (30% of PNM’s and 40% of EPE’s energy portfolio is nuclear from Arizona that is high cost, consumes massive amounts of water, and does not create one job in NM.)

  • 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.

  • Innovation & Competition: IOU’s have a fiduciary duty to shareholders and thus want to sell as much electricity as possible. IOU’s are resistant to technological innovation, energy efficiency or investments load management and orchestration software. Local Choice Energy diversifies the energy market, providing opportunities for a wider range of companies to participate in the energy sector, attracting companies seeking clean, low cost energy, conservation measures and increasing profits for our business community.

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