Mexico reforms: Electric power sector to be overhauled
While much of the talk surrounding Mexico's energy reforms has focused on oil and gas, the biggest transformation will be seen in the country's electricity sector as it evolves into a wholesale market of multiple players.
The key change being brought in by the reforms is the creation of independent regulatory bodies that will oversee the market, according to BNamericas' latest Intelligence Series report on electric power.
The reforms, which were approved in December and are close to being implemented after the senate's approval this week of modifications to the so-called secondary legislation governing how the new-look energy sector will operate, allow for power generation and trade among private operators while taking the regulatory function out of the hands of state power company CFE.
The reforms create Cenace, the national energy control center, to oversee the granting of permits to expand the transmission grid, in a similar way that new regulator Cenegas, the national gas control center, will be the watchdog keeping an eye on gas market partnerships between the state and private sector firms.
The umbrella-like energy regulatory commission (CRE) will be the watchdog for the energy sector as a whole.
The CFE will become a productive entity, capable of competing in an open market, and no longer tasked with regulating or operating the electricity network.
"There is going to be a vertical division and a horizontal division, above all in electricity generation," undersecretary of electricity César Hernández said in the Intelligence Series report.
"But the other thing is that these divisions must also be considered as the best way to guarantee open access and competition in the market."
The energy ministry is also prioritizing the development of clean energy generation, the setting of targets and the implementation of portfolio standards, although there are critics who say these measures do not go far enough in promoting green energy use in Mexico, according to the report.
While it will take years before the wholesale market envisioned by the reforms takes shape, the change begins now as the legislation awaits the signature of President Enrique Peña Nieto.
You can read the full report here.
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