On February 23, 2021, the House of Representatives discussed and approved the draft of the Amendment of the Electricity Industry Law proposed by Mexico President López Obrador with a total of 304 votes. One of the most relevant features of the Amendment is the modification of the dispatch order, disregarding economic efficiency mechanics, which will
A Mexican Court issued a provisional suspension in an amparo proceeding of the new hydrocarbons and fuels import and export rules enacted by the Ministry of Energy on December 26, 2020. As a result, the permitting regulation for the import and export of hydrocarbons and petroleum products originally published by the Ministry of Energy on…
The electricity industry in Mexico is under stress. The President of Mexico has proposed amendments to the Electricity Industry Law that could result in the undoing of the energy reform that permitted private investment in the power market. In parallel, the Mexican Supreme Court issued a decision rejecting a number of provisions of the Ministry…
On January 18, 2021, the Energy Regulatory Commission (Comisión Reguladora de Energía, “CRE”) published in the Official Gazette of the Federation (Diario Oficial de la Federación, “DOF”) a resolution suspending again all deadlines and terms of actions and procedures before the CRE.
In a manner similar to the last suspension resolution, the…
On December 26, 2020, the Ministry of Economy (“SE”) published in the Federal Official Gazette (“DOF”) the “Resolution that Establishes the Goods Whose Import and Export are Subject to Regulations Issued by the Ministry of Energy” (the “Resolution”) superseding the permitting regulation for import and export of hydrocarbons and petroleum products, originally published …
On December 1, 2020, the Ministry of Energy (“SENER”) and the Ministry of Economy presented a draft resolution before the National Commission for Regulatory Improvement (“CONAMER”) the “Resolution that Establishes the Goods Whose Import and Export are Subject to Regulations Issued by the Ministry of Energy” (the “Draft Resolution”), which may be consulted here.
The Draft Resolution, will supersede the current permitting regulation for import and export of hydrocarbons and petroleum products, originally published by SENER in the Federal Official Gazette (“DOF”) on December 29, 2014 (as amended, the “Current Regulations”). In parallel, the Draft Resolution also regulates other goods (i.e. softwares, nuclear and radioactive material).
The principles behind the Draft Resolution contemplate a regulatory environment that is very different from the 2014 energy reform regulations. The Draft Resolution constrains the procedure for filing and obtaining import and export permits and establishes additional requirements. As an example, applicants will have to demonstrate that the export of hydrocarbons will not impact the domestic supply in the mid and long term. This is an extremely vague requirement that could likely result in disagreements, delaying the issue of such permits and the activities of the relevant parties. The fact that a permit will be deemed rejected if SENER fails to issue a resolution on its application is another serious difference with the Current Regulations. Finally, the fact that state-owned companies, such as Pemex, may be consulted to determine the convenience of any such permits may also be problematic and add uncertainty to the process.
It is important that companies that may be affected by this new regulation provide comments within the public consultation timeline so that they can be considered before the Draft Resolution is published and enters into effect.
The Policy of Reliability, Safety, Continuity, and Quality in the National Electricity System (the “Policy”) published on May 15, 2020 in the Federal Official Gazette (Diario Oficial de la Federación) was subject to several judicial proceedings due to its controversial content.
The Policy, based on the current health emergency, slowed the dispatch of renewable electric energy to the National Electricity System indefinitely due to its supposed lack of reliability, granting priority to CFE’s electricity generation despite the fact that it implies greater pollution and a higher cost to the end user.
The Federal Commission of Economic Competition (Comisión Federal de Competencia Económica) filed constitutional controversy docket 89/2020, which resulted in the Court’s decision to suspend, with general effects, the application of the Policy since June 2020.
The President –through the Executive Power Legal Counsel- filed an appeal against such decision.
Notwithstanding the foregoing, the Court determined unanimously that the complaint filed by the Executive Power was unfounded and on October 21, 2020, the Supreme Court of Justice confirmed the decision to suspend the Policy. We estimate that the definitive resolution of this procedure could take up to one year.
On the other hand, in November 2020 the final judgement of the amparo trial filed by EGP Magdalena Solar –one of several renewable energy companies that challenged the Policy-was published and it was the first judgment that analyzed the merits of the case. The judge considered that the Policy affects free competition and violates regulatory requirements; therefore, the Policy was suspended with general effects.
As a consequence of the foregoing, the Policy will not be part of the legal framework of the power industry and the relevant players of the sector may continue operations as if the Policy had never been issued. This may be further altered if SENER appeals such decision.
In Spanish below
Leer versión en castellano abajo
During the last couple of months the Mexican power sector has been impacted by regulatory changes and bills of amendments that may disrupt the way power companies operate and plan their investments since the enactment of the energy reform. At present there is uncertainty with new investments given the change in the energy policy of the government with respect to renewable energy, restrictions on legacy offtake agreements and other measures impacting competition in the power sector. However, there is still opportunity within the power sector, and therefore many companies are analyzing the feasibility of entering distributed and isolated generation, given both are exempted activities that do not require generation permits from the Energy Regulatory Commission (“CRE”, Comisión Reguladora de Energía) and the applicable interconnection regulations are less strict than for other projects connected with the national grid.