February 17, 2017

Mexico Energy Regulatory Commission Waives Mandatory Open Season for NG Ducts

Holland & Knight Alert
Alberto Esenaro

Under Mexico's Hydrocarbons Law, permit holders for natural gas (NG) ducts are required to have a mandatory open season for expansions, extensions or the development of new systems. This provision keeps competition in NG markets and allows users, traders and final users to receive non-discriminatory treatment. Such an open season must be approved by Mexico's Energy Regulatory Commission (CRE).

In December 2016, CRE ruled that the open season obligation could be waived as long as NG duct expansions, extensions or the development of new systems comply with certain conditions.

  1. Length: It cannot be no larger than 0.62 miles or, for expansions, must not release a higher amount of capacity equivalent to that length.
  2. Location: It must be in a class 1 or 2 location according to the standards for NG transport, and must not be inside an industrial park or zone.
  3. Evidence: Transporter must provide adequate evidence showing that all conditions are met and that there are no potential users found in an area three times the length of the new system, or that those potential users waive interconnection or demand.

This provision will allow duct projects to increase functionality without incurring any additional compliance that might not serve the regulatory purpose of open seasons.

Holland & Knight's energy law attorneys have extensive experience on matters in the power generation industry, including a variety of projects in the energy and related hydrocarbons sector. For more information, contact Holland & Knight's Mexico City office.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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