Mexico energy privatization occurring at ‘astonishing’ pace

The president of Mexico’s regulatory commission for energy told the National Association of Regulatory Utility Regulatory Commissioners (NARUC) that the privatization of Mexico’s energy industry is occurring at an “astonishing” pace.

Francisco Salazar, the president of Mexico’s Comision Reguladora de Energia (CRE) made his comments Feb. 16 in Washington, D.C. The presentation came during NARUC’s annual winter meeting.

 The overhaul for Mexico’s energy industry, both oil and gas development as well as electric power, was approved at “constitutional” level in 2013. This past summer the Mexican congress approved the implementing legislation for the privatization, Salazar said.

A draft would electricity market rules could be out for public review within days. “We are moving at a very fast speed,” Salazar said.

Work on the regulatory framework for electricity is being developed now, he noted. Mexico has traditionally had a vertically integrated monopoly in electricity, Salazar said.

Mexico’s Federal Electricity Commission (CFE) has traditionally overseen electric issues as the country’s state-owned utility.

“In generation we will have competition in supply,” Salazar said. Mexico has set up an independent system operator (ISO). The ISO is government-owned but independent of CFE, Salazar said.

There will still be a lot of government involvement in planning on transmission and distribution fronts, Salazar said. Overall though Mexico’s electric industry is going to look far more like traditional private enterprise, he added.

When asked by a questioner, Salazar said he believes that privatization in Mexico will result in cross-border energy trading between his country and the United States.

In fact, the CRE just days ago approved the import of up to 540 MW of electricity into Mexico from a Frontera combined-cycle power plant in Texas.  Frontera filed its application with the U.S. Department of Energy (DOE) last fall, records indicate.

Salazar also said that he expects Mexico to continue working closely with NARUC as it privatizes its electricity grid.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.