Luis Antonio Rojas/Bloomberg
Mexico's Renewable Power Suppliers Face Risks Under Grid Proposal
CFE seeks to cancel some contracts and raise transmission fees
State utility aims to consolidate power in renewable sector
By Amy Stillman / Bloomberg
Petroleumworld 23 12 2019
Mexico's Federal Electricity Commission is proposing to cancel some contracts and eliminate discounts on transmission costs for power generators to use its network, dealing the latest blow to Mexico's budding private renewable energy market.
CFE, as the state utility is known, is seeking to eliminate 50% discounts on transmission costs for so-called legacy permits granting vested rights to projects holding a power permit or an application filed with the Energy Regulatory Commission, or CRE, before the enactment of Mexico's 2014 electricity reforms, according to the draft proposal from the CFE obtained by Bloomberg. It also looks to cancel some self-supply power contracts that allow companies to generate electricity for their own businesses, using mostly solar energy or natural gas. CFE did not immediately respond to a request for comment outside of the normal business week.
A draft proposal seeking to increase transmission costs for private companies and give the CFE preference over private generation when electricity is dispatched into the national grid was first reported by the Financial Times on Saturday. The elimination of incentives for the private sector could significantly hamper investment in renewable energy and raise electricity costs for consumers, the report said.
The government of Andres Manuel Lopez Obrador has sought to dial back reforms from the previous center-right administration and consolidate power in the hands of Mexico's state-owned energy companies CFE and Petroleos Mexicanos .
The CFE proposal addressed to the CRE, the National Energy Control Center known as CENACE, the Energy Ministry and the Finance Ministry identified 80 areas to strengthen the state utility by adjusting regulations and agreements without affecting the law. Of these, 14 “strategic issues” require “immediate attention” including giving CFE more control over tariffs that today are set by the regulator, according to the document. If approved, the measures could affect hundreds of contracts with local and international power generators including Iberdrola SA , Enel SpA and Acciona SA , among others.
On Saturday, Lopez Obrador said that the state utility would take over 70% of the electricity market if private companies didn't invest enough before the end of his administrative in 2024, national newspaper Milenio reported.
Lopez Obrador has been criticized for failing to prioritize the environment when it conflicts with his energy goals. Last month, his government sought to change rules for clean-energy credits , allowing aging hydroelectric dams operated by Mexico's state-owned utility to qualify. But the rule was suspended by a federal judge in December following injunctions from private power companies. Last week, Petroleos Mexicanos was granted a five-year extension on meeting a nationwide requirement to sell ultra-low-sulfur diesel, a move that may worsen air pollution in parts of the country.
Story by Amy Stillman from Bloomberg
bloomberg.com 12 22 2019
We invite you to join us as a sponsor.Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.________________________
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels