RENAME & CREATE GEOTHERMAL TAX CREDITS
HB62 revises New Mexico’s geothermal tax credit statutes by renaming the existing geothermal electricity generation income tax credit and corporate income tax credit as geothermal energy production credits. It also expands the credit structure from a flat per-kilowatt-hour amount to a tiered schedule that varies by the taxable year of production, beginning at 1.5 cents per kilowatt-hour and rising to 4 cents in the sixth year before tapering down through the tenth year. The bill applies to taxable years beginning on or after January 1, 2026, and extends eligibility through taxable years ending before January 1, 2036.
The bill broadens the definition of qualifying geothermal activity to include facilities that produce and deliver either electricity or thermal energy from geothermal resources for industrial, commercial, or residential use. It also clarifies that a kilowatt-hour of geothermal energy can mean either generated electricity or net thermal energy delivered to a customer, and it preserves eligibility for new facilities beginning construction on or after January 1, 2025, as well as existing facilities that at least double production after that date. The bill keeps the credits transferable, allows unused credits to be carried forward for three years, and requires certification by the Energy, Minerals and Natural Resources Department before the credit can be claimed.
HB62 significantly changes the fiscal structure of the program by replacing the prior $5 million annual aggregate cap with a much larger $55 million annual aggregate cap for the combined geothermal energy production income and corporate credits. Of that amount, $11 million is reserved for tribal businesses and small businesses. The bill also requires the credits to be included in the state tax expenditure budget, which means the state must account for the revenue impact in its annual fiscal reporting.
The overall sentiment reflected by the bill text is strongly supportive of geothermal development and tax incentive expansion, with a clear policy goal of encouraging more geothermal energy production in New Mexico. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of debate, support, or opposition from legislators or stakeholders in the available materials. The structure of the bill suggests an emphasis on economic development, renewable energy investment, and targeted support for tribal and small businesses.
Potential points of contention are likely to center on the increased fiscal exposure from the much higher annual cap, the expanded eligibility for thermal energy projects, and the transferability of credits, which can increase program utilization and complexity. Another possible issue is the reservation of $11 million for tribal and small businesses, which may be viewed as beneficial targeted support by some and as a limitation on general access by others. However, no specific objections or amendments are documented in the provided context.
HB62 amends Sections 7-2-18.38 and 7-2A-24.1 of the New Mexico Statutes Annotated to rename the geothermal electricity generation credits as geothermal energy production credits and to expand the credits to cover both electricity and thermal energy produced from geothermal resources. It replaces the prior flat credit amount with a production-year-based schedule, increases the annual statewide cap from $5 million to $55 million, reserves $11 million for tribal businesses and small businesses, and allows credit certificates to be transferred. The bill also extends the sunset date to 2036 and applies to taxable years beginning on or after January 1, 2026, affecting taxpayers, geothermal facility owners, and the Energy, Minerals and Natural Resources Department.
The bill appears to have a generally favorable policy orientation toward geothermal energy development, tax incentives, and broader clean-energy investment. The text reflects an intent to encourage new and expanded geothermal projects by increasing the available credit pool, extending the credit period, and making the credit more flexible and transferable. No committee discussion or vote history was provided, so there is no recorded public sentiment from legislative debate in the available materials.
The main likely areas of contention are fiscal cost, program design, and distribution of benefits. The jump from a $5 million cap to a $55 million cap could raise concerns about reduced state revenue and the scale of the subsidy. The tiered credit schedule and inclusion of thermal energy may also prompt questions about whether the program is too broad or difficult to administer. Supporters would likely emphasize the reserved funding for tribal businesses and small businesses, while critics might argue that the reservation constrains broader access or that transferable credits could complicate oversight.