U.S. Senators Jeff Bingaman and Tom Udall today introduced a bill that will shield homeowners from paying taxes on renewable electricity that they sell to the electric grid. Representatives Martin Heinrich, Harry Teague and Ben Ray Luján have introduced a companion bill in the House of Representatives.
Under New Mexico's statewide Renewable Portfolio Standard (RPS), all electric utilities (except rural cooperatives) must generate 20 percent of their electricity from renewable sources by 2020. To meet their obligations, New Mexico's major utilities -- PNM Resources, El Paso Electric, and Excel -- have each created initiatives whereby grid-connected customers generating their own qualified renewable electricity, typically through solar panels, can sell their electricity back to the utility. These initiatives are intended to give New Mexico homeowners an added incentive to install solar PV and wind energy systems.
But under current law, homeowners are required to consider payments from utilities as income and therefore subject to federal income taxation. As such, it could discourage homeowners from helping utilities meet the RPS.
The New Mexico lawmakers' bill would exempt $2,000 in payments from federal taxes annually. While this could benefit similar incentive initiatives nationwide, it is particularly important in New Mexico given the state's strong push to promote renewable energy technologies and its vast solar and wind resources.
"Transitioning to a cleaner economy requires doing all we can to encourage the production of renewable energy sources, like solar and wind," said Bingaman, who chairs the Senate Energy and Natural Resources Committee. "Ensuring that payments to homeowners are not taxed helps provide New Mexicans with an added incentive to invest in renewable energy technologies."
"When you add them together, individual investments in renewable energy have the potential to make a big difference in our effort to transition to an economy based on clean energy resources," Udall said. "With this legislation, we provide an additional incentive for New Mexican homeowners to participate in this worthwhile program."
"New Mexico is fortunate to be home to vast renewable energy resources and technology. This bill will encourage homeowners to capitalize on the fast growing industry of clean, home-grown energy like solar and wind--all while saving hundreds of dollars on their home utility bills," Heinrich said.
"In order to end our dependence on foreign oil, we must pursue a Do It All and Do It In America approach. This means responsibly exploring and encouraging all our available alternative energy resources, not only through business investments but through New Mexican homeowners as well. Our legislation will do just that -- promote residential investment in alternative energy by shielding families from taxes on their renewable energy production," Teague said.
"Homeowners in New Mexico are taking the initiative to transition to a more sustainable economy, and by providing an additional incentive for these homeowners, we can expand the use of clean energy in our state," Luján said.
"We should encourage individual investments in renewable energy, but our federal tax structure was penalizing the very incentives designed to encourage those investments," said Pat Vincent-Collawn, President and CEO of PNM Resources. "We have worked closely with Sen. Bingaman to fix this problem and are very pleased with the legislation being introduced. "We have worked closely with Sen. Bingaman to fix this problem and are very pleased with the legislation being introduced. It is an important step to help our New Mexico customers support renewable energy at a more affordable cost."
The bill was referred to the Senate Finance Committee; Bingaman is a member of that panel.