Dear clients and friends,
On March 9, the Federal Official Gazette published the Decree amending and adding several provisions of the Electricity Industry Law (“Decree”).
Although the Decree was due to enter into force on the day following its publication, it was temporarilly injucted two days later, as will be explained below, and definitively injucted last Friday.
The Decree provides amendments to ten articles of the Electricity Industry Law (EIL), as well as additional provisions in its transitory articles.
The most relevant aspects of this reform are the following:
1. Open and non-discriminatory access to the National Transmission Network and General Distribution Networks will be allowed “where technically feasible”.
2. The electricity supply to the Wholesale Electricity Market must first guarantee the Electricity Coverage Contracts with Physical Delivery Commitment and secondly, the supply of clean energy.
3. Permits granted by the Energy Regulatory Commission (ERC) under the Electricity Industry Law (EIL) will be subject to the planning criteria of the National Electricity System issued by the Ministry of Energy (SENER).
4. Regarding the National Transmission Network and General Distribution Networks, the National Center for Energy Control (CENACE) may give priority to Legacy Power Plants and Legacy External Power Plants with a Physical Delivery Commitment.
5. CFE Basic Services Suppliers will no longer be compelled to purchase energy exclusively through public auctions.
6. For the allocation and dispatch of power plants, CENACE shall consider the contracts of Electricity Coverage with Physical Delivery Commitment.
7. Clean Energy Certificates (CEL’s) may be issued to any Generator producing from clean energy sources, regardless of its ownership or entry into operation.
Finally, the transitory articles of the Decree provide for the following:
1. All provisions opposing the Decree are repealed.
2. SENER, CRE and CENACE will have 180 calendar days from the entry into force of the Decree to amend all necessary regulatory instruments in order to align them with the content of the Decree.
3. The CRE may revoke self-supply permits granted under the prior Public Electricity Service Law (PESL) in the event they were obtained “through legal fraud.”
4. Contracts for the Purchase of Electric Power and Generation Capacity Commitments with Independent Power Producers (IPP’s) in terms of the PESL should be reviewed to verify their legality and profitability and may be subject to renegotiation or termination.
It should be noted that on March 11 and 16, the Second and First District Judges Specialized in Antitrust Matters, granted the temporary injuction of the Decree in response to several Amparo lawsuits against it.
This precautionary measure suspends the legal effects and consequences of the Decree and restores the validity of all amended articles and original transitory provisions.
The decision of both judges was based on the risk that the Decree could affect the fundamental rights to free trade and competition in the electricity market, as well as the possibility of imminent and irreparable damage to the environment since de Decree encourages the production and use of conventional energy and discourages the production of clean energies. In their resolution, the judges estimated that the Decree also prevents Mexico from complying with its international environmental commitments.
In all cases, the provisional suspension was granted with general effects, which means that the Decree will not apply to any market participant, nor to those subject to the transitional regime of the LIE previously in force.
Finally, on March 19 the Second District Judge in Administrative Matters Specialized in Economic Competition granted the definitive injuction of the “Decree”, which suspends its entry into force indefinitely.
Should you have any questions related to the foregoing, please do not hesitate to reach out to your usual contact at the Firm.