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New Electricity Legal Framework in Mexico




by:
Alejandro Creel-Ysita
José Estandía
Mariana González
Alberto de la Parra
Jones Day - Mexico, D.F. Office

 
August 27, 2014

Previously published on August 2014

Further to the Mexican Energy Constitutional Amendments approved on December 12, 2013, President Enrique Peña Nieto signed decrees enacting Secondary Laws for Mexico's Energy Reform. Published in the Federal Official Gazette on August 11, 2014, this new legislation consists of nine new laws and 12 amendments to existing laws.

Highlights of the secondary laws focusing on the electric power sector include:

  • Newly independent production, transmission, distribution, purchase, sale and supply activities in the electricity industry ensure open access and efficient operation in the electric sector.

  • Generation, purchase and sale of electricity are now open to free competition, and private investment is now allowed.

  • The Comisión Federal de Electricidad ("CFE") was transformed into a State Productive Entity, responsible for public electric power transmission and distribution services. The proposed legal scheme contemplates contracts between CFE and private parties, in which the private parties contribute technology and experience to expand and improve Mexico's transmission and distribution networks.

  • The Electric Industry Law distinguishes between a "Producer" and an "Exempt Producer" on the basis of installed capacity. Additionally, based on their electricity consumption, users are classified as "Basic Users" and "Qualified Users."

  • Suppliers are required to obtain a permit from the Comision Reguladora de Energia ("CRE") to provide services and must execute supply agreements with final users using forms approved by CRE.

  • The Centro Nacional de Control de Energía ("CENACE") will become a decentralized federal government entity in charge of programming for the Mexico's national electricity system, including planning and control. CENACE will guarantee to all the participants free access to Mexico's transmission and distribution networks on nondiscriminatory terms.

  • A wholesale electricity market was created and will be operated by CENACE under conditions that promote competition, efficiency and no undue discrimination, in accordance with market rules. Participants in the wholesale electricity market may enter into transactions for the purchase of: (a) electricity, (b) related services, (c) potency or any other product that guarantees the sufficiency of resources to satisfy demand for electricity, (d) the import or export of the above mentioned products, (e) financial rights regarding transmission, (f) clean energy certificates, and (g) any other products required for the operation of the national electric system.

  • Planned legal mechanisms will ensure that real property may be obtained for land that must be occupied or will otherwise be affected by electric industry activities.

  • Obligations to acquire Clean Energy Certificates will be established.

  • CRE will be in charge of, among other things (a) granting permits, (b) establishing accounting guidelines applicable to transmission, distribution and basic supply activities, as well as CENACE's operations, and (c) issuing the method for calculating and adjusting tariffs for transmission and distribution services, the supply of basic services, CENACE's operations, and the related services that are not part of the wholesale electricity market.

  • The Geothermic Energy Law will regulate the exploration and development of geothermal resources in Mexico, both for the electricity sector and otherwise. Private parties may obtain the exclusive right to develop a geothermal field for a period of up to 30 years, through a concession granted by the Secretaría de Energía.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Alejandro Creel-Ysita
José Estandía
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Energy
 
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