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Mexico's state-owned power utility wants immediate costs hike for competitors

Alfredo Estrella/AFP

President Andres Manuel Lopez Obrador, left, listens as Manuel Bartlett speaks during a press conference in Mexico City in 2019.

- Company head calls on regulator to increase transmission costs
- Will use all tools to keep CFE producing 54% of nation's power

By Justin Villamil and Amy Stillman/Bloomberg

Petroleumworld 05 26 2020

Unfazed by criticism it is unfairly blocking renewable energy projects, Mexico's state-owned utility is doubling down on demands for regulators to protect its market share.

The Comision Federal de Electricidad , which says it produces 54% of the nation's power, wants regulators to raise transmission costs for private companies immediately, company head Manuel Bartlett said in an interview.

A raft of new measures intended to boost the market power of the state utility have come under harsh rebuke by the European Union and Canada, as well as business groups from the U.S. and Mexico. They say the policies of President Andres Manuel Lopez Obrador will drive off international investment and directly imperil electricity projects worth $30 billion across 18 states. Raising transmission costs risks grinding renewable energy projects to a halt.

“The private sector and all interested parties are aware of the request,” Bartlett said. “It's not a secret. I want them to resolve it now, it's already taken more than half a year.”

Bartlett said his proposal to the regulator includes requiring renewable producers to pay to back up their power plants, which he called unreliable.

Read More: Mexico's CFE Aims to Consolidate Power in Renewables Sector

Bartlett said he'd do whatever he can, without changing the law, to ensure the utility produces 54% of the nation's power, even if it comes at the cost of private clean energy projects that are in the works.

To boost the prospects of the utility hanging onto their 54% target, Bartlett said that he's planning to work with companies like Industrias Penoles and Cia Minera Autlan on hydroelectric projects that will bolster renewable capacity.

Bartlett reiterated points made by Energy Minister Rocio Nahle when she announced separate clean energy generation limits in the country in mid-May. Bartlett said that the limits -- which include adding testing for new wind and solar projects -- are meant to ensure the stability of Mexico's energy grid, which he said have been put at risk by renewable plants.

Read More: Mexico Grants Powers for Public Utility, Hurting Renewables

Still, one set of government measures announced at the start of May has already run into legal trouble. Those measures would have suspended pre-operative testing for clean energy plants -- effectively a short-term death blow. Mexican courts have granted more than a dozen companies, including Italian energy giant Enel SpA , temporary injunctions against those rules.

On Monday, at least 18 of those companies won permanent injunctions, according to two people close to the matter who asked not to be named as cases are private.

Bartlett is unfazed by the backlash.

Recent policies “have generated a series of false criticisms from various private players,” he said. “The obligation of the state in any part of the world is to maintain the stability of the grid. And the stability of the grid is what we're taking care of with these rules.”

Reporting from Bloomberg.
05 25 2020



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