Mexico Ministry of Energy Revises Dates for CENACE's Operation of Wholesale Power Market
- Mexico's Ministry of Energy, or Secretaría de Energía (SENER), published a resolution on Jan. 5, 2017, authorizing additional revisions to the dates to be observed by the National Center for Energy Control (CENACE) in relation to operative provisions for ruling the Wholesale Power Market, or Mercado Eléctrico Mayorista (MEM).
- The resolution sets new deadlines for CENACE to comply with the Rules of the MEM, the Manual of Practices and other operative provisions for Interconnected Systems of National, Baja California and Baja California Sur, including temporary provisions to operate the MEM until the final operative provisions are issued.
The main objective of Mexico's Energy Reform of 2013 was to open activities of the Power Market to private investors. Mexico's Ministry of Energy, or Secretaría de Energía (SENER), is in charge of reorganizing the Federal Electricity Commission, or Comisión Federal de Electricidad (CFE), in business units for different purposes so that competition can be fair among for both state and private participants. One of those units guarantees basic supply for lower-end users and is operated though the Wholesale Power Market, or Mercado Eléctrico Mayorista (MEM). Previously, CFE bought that energy from independent power producers (IPPs).
According to Mexico's Power Industry Law, the National Center for Energy Control (CENACE) is the non-centralized government body that operates the MEM according to the Rules of the Power Market (Rules). Under those Rules, CENACE will promote the development of the National Power System (Sistema Eléctrico Nacional).
SENER published a resolution on Jan. 5, 2017, authorizing additional revisions to the dates to be observed by CENACE in relation to operative provisions for ruling the MEM.
The resolution sets new deadlines for CENACE to comply with the Rules of the MEM, the Manual of Practices and other operative provisions for Interconnected Systems of National, Baja California and Baja California Sur, including temporary provisions to operate the MEM until the final operative provisions are issued.
Because the resolution is a technical document, it is highly advisable for companies interested in participating in the MEM, or with related business, to read all technical details to design or adjust its business strategy. Resolution highlights include the following:
- CFE will settle resettlements for charges and tariffs, such as distribution tariffs, generated by its participation in the MEM
- calculations made according to the draft of Settlements Manual (currently in regulatory review) that are revised in the final version must be adjusted within 150 days of publication
- as long as CENACE does not have contracts or permits for programming import and export operations to ensure the reliability of the National Power System, operations will be made through commercial contracts of CFE; during that time, settlements will be assigned to units of CFE in charge of those operations
- on a temporary basis, CENACE will accept offers and allow new positions of participants higher than guarantees granted, as well as for basic service suppliers; until March 31, 2018, Intermediary Generators must guarantee 20 percent of the aggregate estimated liability
- as long as the Market Information System (MIS) is not fully functional, CENACE will accept offers through email and physical filing; in principle, MIS will be fully functional within a year, including the module "UPC Dinámicamente Programada"
- for real-time settlements, prices can be calculated with the "In-Advance Daily Market"; thereafter, it is possible to use ex-post simulations for Interconnected National, Baja California and Baja California Sur Systems for periods of 18, 14 and 20 months after the first day of operation of the MEM
- until official final standards, or Norma Oficial Mexicana (NOMs), are published, electrical measuring equipment and instrument transformers must follow current standards
- as long as generators representing legacy power plants, transporters and distributors do not guarantee quality of measurement information, CENACE may estimate information for settlements, even by the use of supervisory control and data acquisition (SCADA); settlements for legacy financial rights will be paid until Nov. 30, 2017
- as long as calculation for real loss is not measured, CENACE will estimate losses using information acknowledged by the Energy Regulatory Commission
- on a temporary basis, interested parties may file and obtain contracts of participants in more than one type of participation, even if they require strict legal separation; thereafter, contracts must be assigned to legally separated parties
- on a temporary basis, CENACE may apply simplified registration mechanisms to allow access to IPPs
- for criteria on restricting or suspending participants, as well as market practices, CENACE will apply Rules of the MEM until the corresponding manuals are published; controversies from auctions will be solved according to the bases of the auction
Although the MEM is not yet operational, this resolution shows the efforts of the Mexican government to make MEM functional for developing the power industry in Mexico.
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.
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