New Mexico's Cap-and-Trade Proposal
Cap-and-trade continues to be another controversy that will potentially stymie energy development in New Mexico.
In November 2010, members of the New Mexico Environment Improvement Board (EIB) narrowly approved a proposal to establish what state officials call the most comprehensive greenhouse gas pollution reduction regulations in the nation.
Championed by former Democratic Gov. Bill Richardson and environmental groups, the so called “cap and trade” proposal contains rules aimed at establishing a cap and trade program and curbing greenhouse gas emissions. These rules, however, could lead to higher electricity costs for consumers and an exodus of businesses and jobs to surrounding states.
Public Service Co. of New Mexico, the state's largest electric utility, said annual costs to comply with the new regulations are estimated to reach $110 million by 2020. The utility, a subsidiary of PNM Resources Inc., said those costs will have to be passed on to customers.
The (EIB) spent more than four hours before considering a petition by the Environment Department to allow the state to participate in a regional cap-and-trade program with the other Western states and Canadian provinces that make up the Western Climate Initiative.
This program included language that would allow the state to propose cost containment measures if the cost of allowances exceeds a certain level.
The state's program calls for 2 percent reductions to begin in 2012. Facilities that are over the cap would be able to buy and even bank allowances or offsets as part of the regional trade mechanism. Facilities under the cap could profit by selling their unneeded emission allowances.
Newly-elected New Mexico Governor Susanna Martinez replaced the members of the EIB, and the board is working towards overturning or revising the cap-and-trade regulation so it is not a burden to New Mexico consumers. New Mexico’s largest electric utilities, the oil and natural gas industry and others are seeking to have the state’s greenhouse gas emissions rules overturned.
Petitions to repeal the rules have been filed with the state Environmental Improvement Board with a decision to move forward pending.
The rules were approved in the waning weeks of Governor Richardson’s tenure, and Republican Gov. Susana Martinez disagrees with the rule, calling the effort a “cap and tax.”
The utilities and industry groups argue in their petitions that the rules will have devastating consequences for New Mexico’s economy.
