Rubén López
CEO
Orca Energy
/
Insight

Clear Vision, Effective Strategies for Qualified Suppliers

Wed, 02/21/2018 - 13:23

The Energy Reform unlocked the generation, distribution and trading segments of the country’s electricity market and private players are lining up to gain a foothold in each segment. For energy trading, CRE has authorized 19 companies for registry as qualified users in less than two years and the Basic Supply Tariff was published on Nov. 23, 2017. “I believe MEM’s attractiveness will materialize as final users experience the benefits of a dynamic market — better tariffs, better terms and mitigated risk conditions — concentrating on their core business thanks to a market that offers them the best conditions for one of their top inputs,” says Rubén López, CEO of Orca Energy. “In this new market, a key factor in developing a successful business is having a crystal-clear vision of where you want to go, how you want to participate and how you have to structure your strategy to attain your objectives.”

Qualified supply is a business primarily focused on riskanalysis and financing to be in a position where a company can offer adequate rates to clients and be backed by a significant hedge, says López. “For our company, which was conceived as a highly active financial market player, this implies searching for adequate hedges that have a significant risk-management component, guaranteeing our shareholders that all our decisions and commitments are duly analyzed.”

As part of its business strategy, Orca Energy relied on the competitive edge resulting from its partnership with Power Costs (PCI). “It has a platform that prevents the need for us to develop something that is already functioning in other markets: the required software to operate in the market, electric coverage contracts, invoices, liquidations and everything else outlined in the new manuals as market participants,” López says. “PCI anticipated and adapted the Mexican regulation particularities in its systems and software platforms so they could be used in our national market.”

Orca Energy is focused on major consumers. “We want to specialize in a specific customer and be very selective in relation to the types of loads that we are going to represent in the market,” López says. Thoroughness in assessing its financial and risk analysis components is a priority for this qualified supplier. When choosing power producers, López says his company will actively search for energy generators that have the most competitive and reliable offer for those CELs. “We do not have a particular preference for one renewable source of energy over another; we consider ‘renewable’ as the energy capable of generating CELs, and that we are able to acquire and offer to our qualified users.”

The company, established in the wake of the Energy Reform, saw a nationwide business opportunity from the start. “From the outset, either personally or through professional advisers, our team has been continually up to date and fully informed of every regulatory modification and publication issued by the Ministry of Energy, CRE and CENACE,” says López. The process has entailed a learning curve on both ends. “This whole process demands a lot of effort in regulatory and operational comprehension, as well as the internal implementation of a specialized, qualified team trained both by us and through the courses provided by CENACE. You also need specialized systems that provide a safe and reliable communication channel with the market operator,” he adds. Orca Energy has engaged in an extensive and exhaustive dialogue with the market’s regulators and operators. “The formats, manuals and regulation are new, and some parts are still pending publication. That has generated some uncertainty, but the efforts of the authorities have to be recognized, as they strive to adequately support us to become a market participant,” López says. He also knows that ideal market conditions are not attainable overnight. “It requires a significant effort and a considerable amount of preparation with the inherent endeavor of forming a team with a shared vision, facilitating risk mitigation when we initiate operations and providing our clients the assurance of an adequate and reliable electricity supply.”

López says the company wants to make qualified supply its core business. “If done well, it will give us a suitable provisioning volume with our clients.”