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Amendment to the general provisions for requesting modification of generation permits (self-supply and cogeneration)

On October 7, 2020, the Energy Regulatory Commission (Comisión Reguladora de Energía, "CRE") published in the Federal Official Gazette ("DOF")1  a resolution (the "Resolution") to amend the "General provisions that establish the terms to request an authorization to modify or transfer electricity generation permits or electricity supply permits,"2  in connection with the possibility of modifying generation permits in the modalities of self-supply (autoabastecimiento) and cogeneration (cogeneración), which were granted under the now repealed Electricity Utility Law (Ley del Servicio Público de Energía Eléctrica, "LSPEE").

The Resolution refers that the amendments to the general provisions are intended to prevent that permit holders could, indefinitely: (i) modify the expansion plans of the self-supply and cogeneration permits in order to include new off-takers that were not originally approved in the permit or in subsequent amendments thereto, and (ii) include load points that have entered into power supply agreements under the Electricity Industry Law (Ley de la Industria Eléctrica, "LIE").

The CRE stated in the recitals of the Resolution that allowing the foregoing has resulted in: (i) distortion of the nature, purpose and object of the self-supply and cogeneration permits; (ii) distortions in the market under the LIE; and (iii) the existence of a parallel market, which contravenes both the supply schemes established in the LIE and the LSPEE.

The amendment consists of the following:

  • Establishes that power generation permits (referring to self-supply and cogeneration permits) cannot be modified for the purpose of including load points that have entered into a basic supply agreement under the LIE
  • Establishes that load points that have been registered in the Qualified Users Registry (either voluntarily or mandatory), and have concluded their registration by removal or term ending, cannot be included in self-supply or cogeneration permits. Such load points must receive basic supply or qualified supply under the LIE
  • Removes the possibility of adding, in the expansion plans, individuals or entities different from those already authorized in the corresponding self-supply permit
  • Establishes that partners already approved or included in the expansion plans, which have been merged or divided, must demonstrate being partners or beneficiaries of the electricity generated under the relevant permit, provided that new load points that have entered into a basic supply contract under the LIE cannot be included in the permit

The Resolution establishes that the inclusion of partners and beneficiaries to the self-supply or cogeneration permits that have been authorized by CRE before the effective date of the Resolution will not be affected.

The partners or beneficiaries that have requested their incorporation to the self-supply permit (including the expansion plan) or cogeneration permit, but the same has not been resolved by the CRE, could obtain legal advice regarding this amendment to the regulation.3 

The Resolution will come into effect on October 8, 2020.

 

1 The Resolution could be consulted here: https://www.dof.gob.mx/nota_detalle.php?codigo=5602136&fecha=07/10/2020.
2 Disposiciones administrativas de carácter general que establecen los términos para solicitar la autorización para la modificación o transferencia de permisos de generación de energía eléctrica o suministro eléctrico.
3 The Federal Antitrust Commission issued comments to the draft of Resolution on the website of the National Commission for Regulatory Improvement, in the sense that the Resolution: (i) "leads to uncertainty by reducing incentives to invest and limiting the possibility of competing in the [electricity] market"; (ii) "implies a substantial change in the operating rules of the permits granted under the LSPEE; which, according to the Second and Tenth transitory articles of the LIE, should be respected"; (iii) "restricts the supply options for basic users"; and (iv) "could grant exclusive advantages to CFE Basic Supply". Said Commission recommended submitting the draft of Resolution to a regulatory impact analysis before its publication, which did not occur.

 

Click here to download 'Amendment to the general provisions for requesting modification of generation permits (self-supply and cogeneration)' PDF in Spanish.

 

Gustavo Neyra Lopez, (White & Case, Legal Intern, Mexico City) contributed to the development of this publication.

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