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New Mexico Lawmakers Grapple With Proposed Surcharge on Oil, Gas

A New Mexico legislative proposal, SB 288, to fund early childhood education with surcharges on oil and natural gas, as well as electricity production, failed to get out of committee on Tuesday. Industry representatives oppose the proposal.

The bill may be reconsidered on Thursday if a full complement of Democratic members move it out of committee. It failed to move on a 4-4 tie vote with a key Democrat missing, an industry representative at the hearing told NGI on Wednesday.

State Sen. Michael Padilla, a Democrat from Albuquerque, developed the legislation to produce an estimated $320 million in annual revenues in an early childhood education fund supported by a one-hundredth percent (0.01%) oil/gas surtax and a 1 cent/kWh tax on electricity produced in the state.

During a Senate Conservation Committee meeting, some energy company and utility representatives testified against the proposal; no one testified in support. Those opposing the measure include PNM, El Paso Electric Co., Xcel Energy and Tri-State Generation and Transmission.

Xcel's Bernard Treat told state legislators that a surcharge could adversely affect energy production in the state, even including renewable energy plans.

The Permian Basin Petroleum Association's (PBPA) Michael Miller, governmental affairs director in Santa Fe, NM, said the proposal "is not dead but it's on life support."

"At this point in time, the proposal is on the table, but what happens if it gets out of committee is anyone's guess; I don't think it would stand a chance of being signed by the governor," Miller told NGI. "You can't put it to rest just yet."

On Tuesday, Miller told the state legislative committee that PBPA supports education but the oil and gas industry is still trying to recover from two years-plus of depressed commodity prices. SB 288 would be an obstacle to the ongoing recovery.

Padilla argued that funding early childhood education is a way to boost the state's overall economy longer term by helping to create what he called "a world-class workforce.” He cited a University of Chicago economist's contention that early childhood programs provide annual returns of 13% per child with early education programs developing more productive citizens and a healthier economy.

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