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News Article

CFE and Iberdrola Lead Mexico’s Power Producing Pack

By Cas Biekmann | Mon, 01/17/2022 - 14:24

State-owned utility CFE generated most of Mexico’s energy during 2021. Ranked second, the Spanish energy giant Iberdrola stands out equally from the pack, though CFE generated the lion’s share.

Government data from the Energy Regulatory Commission (CRE) reports there are 431 companies permitted to generate electricity in Mexico. Nevertheless, from the 931 permits, CFE and Iberdrola have 193 in hand. The state utility generated roughly 239,169GWh, whereas Iberdrola generated 77,869GWh. These figures do not include the country’s 239 self-supply power plants, which cater to many end-users and partners. Under the leadership of President Andres Manuel López Obrador, the government has targeted this legal scheme, which was created before the 2014 Energy Reform and functions differently than those operating in the modern Wholesale Electricity Market (WEM).

Five other major power producers stand out in the list: Mitsui & Co. Power Americas, Saavi, Naturgy, PEMEX and Mitsubishi.

The data, compiled by La Prensa, demonstrates that the power plant that produced the most power was the publicly owned Plutarco Elias Thermoelectric plant, with 15,817Gwh/y. CFE’s nuclear plant, Laguna Verde, and its combined cycle power plants rank highly as well. Natural gas dominates the environment, though coal, fuel oil and hydropower play a minor role as well.

Part of CFE’s market dominance is its monopoly for domestic energy users being charged the basic consumption rate. The state utility covers almost a 100 percent of this market, though it purchases a significant amount of clean energy from private power producers to meet this demand. The president’s proposal for reforms often included mechanisms to ensure the state utility can get out of such contracts, which its Director Manuel Bartlett considers to be suffocating for CFE.

The relationship between private companies and CFE was originally sold as a near-utopian partnership. Through owning the transmission and distribution, CFE could sign competitive contracts to purchase energy. It could then dispatch this energy, while becoming a more competitive project developer and power producer on its own. The current government firmly believes that CFE has been set up to fail in this model, so the president continues its mission to “rescue” it from this situation. “He is not looking for a level playing field. He wants state companies to be treated differently,” said Luis Vera, Managing Partner, Vera & Asociados about López Obrador.

The resulting barriers to private participation in the market have cooled the relationship between public and private sector down to a freezing point. Last year, CFE alleged Iberdrola “bled the company dry” via leonine contracts, signed by corrupt public officials during past administrations. Iberdrola has refrained from making similar strong statements in the media, instead it has quietly pursued litigation against governmental actions that threaten the status legal quo of the 2014 Energy Reform.

The data used in this article was sourced from:  
La Prensa
Cas Biekmann Cas Biekmann Journalist and Industry Analyst