September 19, 2018

Mexico Regulates Financial Guarantees for Interconnection of Power Plants

Holland & Knight Alert
Carlos Ochoa

Leer en Español: México Regula Garantías Financieras para Interconexión de Centrales Eléctricas

A new administration of the Mexican government is taking over for a six-year term on Dec. 1, 2018. The strategy, so far, is to reinforce the Comisión Federal de Electricidad (CFE) with the participation of private companies.

One of the challenges of the electric sector in Mexico is the efficient development of sources of electric generation capable of delivering to the grid at reasonable costs.

On Sept. 13, 2018, Comisión Reguladora de Energía (CRE) approved the methodology (Methodology) to be used by the Centro Nacional de Control de Energía (CENACE) to calculate the financial guarantees for interconnection of power plants and connection of load centers to the General Transmission Network and General Distribution Network.

This Methodology gives more detail to provisions contained in the new interconnection manual (Manual para la Interconexión de Centrales Eléctricas y Conexión de Centros de Carga), replacing the application of the criteria of 2015. Calculation of interconnection guarantees with the new Methodology shall expire on Dec. 31, 2018, and shall be updated annually. (See Holland & Knight alert, "Mexico Issues Interconnection Manuel for Power Plants and Charging Points," Feb. 15, 2018.)

The objective of the Methodology is to reduce costs of interconnection to reflect the international standard and facilitate the times of delivery. Likewise, the projects in process of development may be integrated to the planning modality.

This Methodology consolidates the development of generation projects in Mexico. Therefore, it is necessary, from a technical, legal and financial point of view to analyze the benefit or impact of the new Methodology. This review will determine any prompt change in the development or financing of the projects, as well as the purchase power agreements that could be anchored to the same.

Holland & Knight's energy law attorneys have extensive experience on advising private investors and government in a variety of projects in the electricity 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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