Energy Articles


The Legal Separation of Mexico’s Federal Electricity Commission

By Jose María Lujambio

The constitutional energy reforms enacted in Mexico in late 2013, mandated Congress to grant the Department of Energy (known by its Spanish acronym as “SENER”) the authority to establish rules strictly separating certain activities of the electricity sector in order to promote open access and efficient operation, and to monitor its compliance. Since then, the bases for the disaggregation of the sector’s value chain activities have been established, aimed to serve as a fundamental component of ensuring effective competition.   The Electric Industry Law (known by its Spanish acronym as “LIE”) of 2014 provided that the activities of generation, transmission, distribution, commercialization and supply of primary products should be performed independently, under a strict regime of legal separation. Further, when … read more


Electricity Reform and Political Shift in Mexico

By José María Lujambio

Despite the recent political storm in the Mexican electricity sector, it appears that the electricity reform of 2013 and 2014 is protected in various ways from political and ideological shifts in the federal administration. The strongest evidence of such protection lies in the fact that the main contents of the reform were established at a constitutional level, specifically in both the substantive and the transitory articles of the decree of constitutional reforms published in the Official Journal of the Federation on December of 2013. A constitutional amendment requires the vote of a two-thirds majority in both chambers of Federal Congress, a majority of state legislatures, and the Mexico City legislature. No political party or coalition has, on its own, gained … read more


Electric Supply Alternatives for Large Consumers

By Jose Maria Lujambio

Based on the Electricity Industry Law (“LIE” for its acronym in Spanish) of 2014, many companies that currently consume large quantities of electricity can access the benefits of receiving their electricity supply from a company other than Mexico’s Federal Electricity Commission (CFE) as a Supplier of Basic Services, if they register as qualified end users with the Energy Regulatory Commission (“CRE” for its acronym in Spanish). In order to register with the CRE, the contracted load must be one (1) megawatt (MW) or more. This is not the actual volume of electricity consumption, measured in MWh, but instead a maximum consumption capacity. End users belonging to the same economic interest group may aggregate their loads to reach the minimum of … read more


“Electricity Reform in Mexico” Third Annual Conference Highlights

“Electricity Reform in Mexico” Third Annual Conference Highlights

By José Maria Lujambio

The third annual conference entitled “Electricity Reform in Mexico” was held in San Antonio, Texas on September 28-29, 2017. This recurring event was again organized by Kinetic (www.becomekinetic.com). It is worth noting the generous participation of many keynote speakers, such as: Commissioner Marcelino Madrigal of the Energy Regulatory Commission (“CRE”); Mauricio Herrera, General Director of Electrical Market Surveillance for the CRE; Efraín Téllez, founding partner of the Enix consultancy; Alejandro Ibarra, research professor of the EGADE of Tecnológico de Monterrey; as well as the illuminating contributions in discussion panels by Rebecca Bollenbach (Essentia Advisors); Cristian de Cosío (Cemex Energía); Alberto Ríos (Acclaim Energy); Austin Collins (Energy Network); Al García (Association of Energy Marketers); Tom Ottem (Yes Energy); Geoff Street (Tenaska); … read more


The United States’ Energy Objectives in the NAFTA Renegotiation

By José María Lujambio

In mid-July, the United States government issued a 17 page document summarizing the country’s goals for the renegotiation of the North American Free Trade Agreement (NAFTA). It is noteworthy that the section on energy contains only three lines, but with huge substance and meaning: Preserve and strengthen investment, market access, and state-owned enterprise disciplines, benefiting energy production and transmission and support North American energy security and independence, while promoting continuing energy market-opening reforms. The Mexican reforms of 2013 and 2014 ended the state’s monopoly on the energy sector and welcomed competition. As a result, great opportunities for private investment in the Mexican energy sector, both domestic and foreign, arose. It was obvious that this opening would awaken the appetite of … read more


New Regulations on Distributed Generation, by José María Lujambio

In 2010, the Energy Regulatory Commission (“CRE”) published in the Official Journal of the Federation (“DOF”) the Models of interconnection contracts for medium and small-scale renewable energy sources, based on its role promoting of the use of such sources, derived from the  2008 energy reform. The main contribution of this regulatory instrument was the introduction in Mexico of the figure of net metering, by which generators of electricity with a capacity of up to 0.5 MW, especially those using photovoltaic panels, had the ability to carry out a monthly compensation between the energy received from the Federal Electricity Commission (“CFE”) and their own production. This measure, coupled with the dramatic reduction in technology costs in the past decade, helped the … read more


Regulatory Updates on the Occupation of Land for Electric Generation Projects, by José María Lujambio

Article 71 of the Electric Industry Law (EIL) provides that the occupation of the surface or the establishment of easements for the construction of power plants shall take place in cases in which the characteristics of the project require a specific location. Since the publication of the EIL in the Official Journal of the Federation in August 2014, there has been concern within the industry as to whether such precept should be understood as applicable to all electric generation projects that use renewable sources or only some of them.  The definition was of utmost importance in order to determine the types of projects that would be subject to the strict rules of the EIL applicable to the negotiation and agreement … read more


New Steps toward Opening the Fuels Market, by José María Lujambio

On February 23, 2016, the Department of Energy (“SENER”) published in the Official Journal of the Federation (“DOF”) a notice informing that, as of April 1, 2016, it will be able to grant permits for the importation of gasoline and diesel to any interested party who fulfills the applicable legal requirements. Therefore, parties will not have to wait until January 1, 2017, which was the date originally set forth for such purposes in the fourteenth transitory article of Mexico’s Hydrocarbons Law.    This policy measure is justified by the SENER considering that it will promote free competition by eliminating restrictions on the current supply model; it will offer consumers access to prices below the maximums, particularly along the border; and … read more


Industrial Security and Environmental Protection in the Hydrocarbons Sector

By Jose Maria Lujambio I.

One of the most important developments that the energy reform has brought to Mexican law is the creation of a new institution known as the National Agency for Industrial Security and Environmental Protection in the hydrocarbons sector. Due to its lengthy name, in April 2015, it was announced that such agency will be officially identified as the Security, Energy and Environment Agency (ASEA for its Spanish acronym). The constitutional reform of December 2013 ordered Congress to create a decentralized agency of the Department of the Environment and Natural Resources (SEMARNAT for its Spanish acronym), with technical and administrative autonomy, and a certain degree of budget autonomy. Contrary to the National Commission of Hydrocarbons (CNH for its Spanish acronym) and the … read more


Relevant Aspects and Current Situation of Pemex Following the Implementation of the Energy Reform

By Antonio Franck

In the midst of Mexico’s implementation of the energy reform, and the complicated situation with the fall of oil prices, the internal restructure and the development of investment projects by Petróleos Mexicanos (Pemex) remains at a halt. For the past several months, the private sector has drawn up new strategies and alliances in search of opportunities for investments due to the opening of the sector, while preparing to compete for the best technical tools and financial strategies. Pemex appears to be facing the competition alone and is also faced with converting itself into a productive state entity. Its biggest challenges are the following: (i) a lack of clear investment objectives; (ii) financial debt and employment liabilities such as pensions and … read more