On April 30, 2014, the Federal Government submitted to Congress a package of nine new laws and twelve energy statutes to be amended ("supplemental laws)," resulting from the recent changes to Mexico's Federal Constitution with respect to the energy reforms.
The most important aspects of the Electricity Industry Act proposal (the "Law") are described below:
- Planning and control of the National Electricity System ("SEN" for its Spanish acronym) and the transmission and distribution utilities are strategic areas that may only be carried out by the State; however, the State may enter into agreements for such services with private entities.
- The Federal Electricity Commission ("CFE" for its Spanish acronym) will continue being the electricity service supplier to residential users and small and medium commercial and industrial users.
- The National Energy Control Center ("CENACE" for its Spanish acronym) is now an independent and impartial entity responsible for the planning and operational control of SEN. It is also in charge of operating the wholesale electricity market and ensuring open access to the national transmissions network and general distribution network.
- The concept of "qualified users" is proposed to refer to large users as well as those that are currently are being supplied with electricity under self-supply, cogeneration or importation regimes. Such users will have the opportunity to contract supply directly from the electricity market.
- A wholesale electricity market is contemplated where producers, sellers, or qualified users who have entered into an agreement with the CENACE, will participate.
- The owners of transmission and distribution networks will not buy or sell the energy flowing through their lines. Sale transactions will be entered into among generators, traders, qualified users, and the CENACE.
- As instructed by the Ministry of Energy, carriers and distributors will carry out expansion and modernization projects of the National Transmission Network and general distribution networks by the creation of associations or entering into agreements with private entities for financing, installation, maintenance, management, operation, and infrastructure expansion in the provision of utility services.
- The President will have a six-month period following the effective date of the Law to create the CENACE.
- The CFE and the Management and Sale of Goods Service ("SAE" for its Spanish acronym) will have a three-month period following the creation of the CENACE to transfer certain assets to CENACE for its operation.
- The CENACE will provide the necessary support to CFE for up to 12 months after its creation, so that the CFE may continue operating the Public Transmission and Distribution of Electrical Energy Service networks.
- The Energy Regulatory Commission ("CRE" for its Spanish acronym) will issue framework agreements within a 12-month period following the effective date of the Law.
- The CENACE will enter into the agreements with market participants, distributors and carriers, within a period not exceeding six months after the issuance of the relevant agreements by the CRE.
- Permits granted prior to the effective date of the Law will be respected in accordance with their terms until the entry into operation of the wholesale electricity market. Subsequently, supply permits, cogeneration, small production, independent production and export permits will maintain their original timeframe but will become generation permits.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.