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Companies Attain Suspension Against Renewables Block

By Cas Biekmann | Tue, 05/19/2020 - 17:02

In a series of developments, CENACE’s policy of indefinitely suspending tests allowing new intermittent renewable energy to be connected to the grid has been paused provisionally by a district judge after private companies asked to stall the measure to test it for proportionality. This could establish a precedent to be invoked by other companies in different parts of the sector.

SENER published its controversial measure, titled the ‘Policy for Reliability, Safety, Continuity and Quality in the National Electric System’ on Friday, May 15 in the official state gazette. César Hernández Ochoa, former commissioner of the National Commission for Regulatory Improvement (CONAMER), presented his resignation after he tried to block the policy, reported both Energía a Debate and Bloomberg. CONAMER attempted to put a pause to the process to request further regulatory impact studies in terms of costs for company compliance.

SENER and CENACE argue that the measure is necessary to guarantee the stability of the grid and protect Mexico’s energy independence. Mexico is suffering from the COVID-19 pandemic, which has severely affected energy demand, and the intermittent nature of renewable energy threatens the grid, which cannot fail in times of crisis. CFE subscribes to this measure. The government’s technical arm responded, stressing that measures are only temporary and that they remain a partner to the private sector. The private sector responded dismayed, arguing that the decision places billions of dollars in investment at risk and would hurt competition in favor of strengthening CFE.

President López Obrador, however, opted for a less appeasing tone and instead sounded much more combative, reported El Financiero. López Obrador emphasized that the state is in charge of its own national development and chastises the private energy sector for establishing contracts bordering on exploitation, while giving nothing back to society. He assessed that the private sector exceeded their boundaries and were merely angry at not being able to continue with their practices, which include not paying taxes. Furthermore, the president suggested that private companies were working together to push PEMEX and CFE out of their respective markets. If the private sector wished to rely on legal actions, they were free to do so, just like the state would rely on such measures if needed.

The private sector did just that. El Financiero reported that last Friday, a court granted FV Mexsolar XI and two anonymous companies a provisional suspension against the effects of this agreement, meaning that the measure for now is stalled in Veracruz. The court stated in its decision that the government is now required to justify its policy. Seventeen cases across the country are currently pending, meaning that there is a chance of a legal precedent being established, stated El Financiero by citing an unnamed expert.

Nonetheless, the cases are pending in district courts, which were presented to judges specialized in competition law, among others. There are quite a number of higher legal levels up ahead. With the president’s combative rhetoric and the private sector’s promise to all the way up to international courts, it seems likely that the issue will continue.

The data used in this article was sourced from:  
El Financiero, Energia a Debate
Photo by:   Pixabay
Cas Biekmann Cas Biekmann Journalist and Industry Analyst