The Efficient Use of Energy Act of 2005 allows public electric and natural gas utilities to implement cost-effective energy reduction programs. The programs may be funded through a tariff rider for energy efficiency and load management programs. The charges on the consumer cannot exceed the lesser of 3% of the customer’s bill or $75,000 per year per customer. 

A distribution cooperative may recover costs for energy efficiency, conservation, and load management programs and measures through general rates. Distribution cooperatives, in offering and implementing such programs, shall attempt to minimize any cross-subsidies between customer classes.

The Act also provides for monitoring, verification, and periodic reporting by the utility on its energy efficiency expenditures and overall program effectiveness. Public utilities must obtain Commission approval of energy efficiency and load management programs before they are implemented. All investor-owned utilities in New Mexico have received approval for their energy efficiency programs.

Electric cooperatives must provide written submission of their energy efficiency programs to the Commission, but approval for such programs shall reside with the governing body of each cooperative utility.

Large customers may participate in a self-directed program to pay only 30% of the tariff rider and implement their own energy efficiency improvements. These customers must demonstrate that they have exhausted all cost-effective energy efficiency measures at their facilities.