CRE Denies Another Permit to Next Energy

The Energy Regulatory Commission (CRE) denied Mexico’s Next Energy, a company from Nuevo Leon, permission to generate electricity. The company has faced issues with the governments of Baja California and Monterrey regarding canceled contracts. 

On April 17, 2023, the CRE met to inform about the refusal of another permit for Next Energy. Without offering further details, the commissioners agreed unanimously on the decision. During the session, Walter Jiménez, the newly appointed CRE Commissioner, requested Leopoldo Melchi, President, CRE, to urge the Ministry of Energy (SENER) to issue the corresponding instructions so that state and municipal governments observe the planning criteria that apply to SENER to avoid expectations in the public and social sectors, that could later lead to lawsuits and legal protection procedures.

"Planning faculties belong exclusively to the federation and, when appropriate, to SENER. To this end, SENER is encouraged to communicate with entities and facilitate the planning and installation processes of electrical plants or any other types of energy systems that correspond only to the federation in proper order," Jiménez said.

Since 2022, Next Energy has had contracts removed by federal, state and municipal entities that claimed the company failed to comply with agreements. In March 2022, CRE denied the company permission to produce photovoltaic solar energy in Mexicali, Baja California. This entailed a MX$14 billion (US$774.4 million) contract that the former Governor of the state, Jaime Bonilla, had awarded to Next Energy subsidiary Central Solar BC, to build a 2.5MW solar plant that would supply electricity to state government offices.

Moreover, In May 2022, Next Energy agreed to cancel the construction of a solar plant in the Valley of Mexicali that would supply electricity to the Rio Colorado-Tijuana aqueduct. According to Marina del Pilar Ávila, the Governor of Baja California, the firm agreed to negotiate and terminate the contract that had been signed during the previous administration and which represented a severe blow to the state’s finances. The conclusion of the contract involved the cancellation of a trust previously created by Bonilla without required permits. In this regard, MX$123 million (US$6.8 million) will have to be repaid via the Ministry of Finance and Public Credit (HACIENDA). According to the state government, canceling the project represented an MX$12 billion (US$663.4 million) saving for the state.

In August 2022, Monterrey’s government chose to cancel Next Energy’s contract to provide clean electricity to the municipality. Initially, the contract stated that the company had to supply electricity to the city for 30 years, starting in February 2021. However, after a year and a half of failing to move ahead, Mayor Luis Colosio announced the cancellation of the MX$7.3 billion (US$407.4 million) contract.