Federal Courts Declare CRE Resolution to Be Unconstitutional
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Federal Courts Declare CRE Resolution to Be Unconstitutional

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Thu, 12/08/2022 - 12:21

Last week, two federal courts declared RES/1094/2020 unconstitutional. The collegiate courts specialized in economic competition approved amparos for different companies that requested legal protection from CRE’s resolution in 2020 that prohibited private companies from adding new partners to their electricity self-supply permits.

In October 2020, CRE altered the administrative measures to request a modification or transfer of electric energy generation permits or electrical supply, named RES/1094/2020. This change prohibited private enterprises from adding new partners to their electricity self-supply permits. RES/1094/2020 was imposed on companies with pre-energy reform permits to impede them from obtaining CFE’s clients through the resolution RES/390/2017published in 2017, which enabled companies to add new partners as customers to these permits.

RES/390/2017 allowed several power-producing companies to compete with CFE by providing lower electricity prices. According to the 2020 modification, “As a result of RES/390/2017, the commission registered an increase in the number of requests for modification due to changes in the persons authorized as beneficiaries of electric energy (self-supply) and establishments associated with cogeneration, increasing from 71 to 141 requests, a figure that represents an increase of 98 percent compared to the period before the publication of the provisions.”

CRE also argued that the 2017 resolution distorted the purpose of self-supply permits,  causing a distortion in the market and the activities regulated by the Electricity Industry Law (LIE). “If this trend continues, it is making it possible for a greater number of load centers that entered into an electricity supply contract under the LIE to remain in the regime provided for in the Public Electric Power Service Law (LSPEE), creating a parallel market that breaches both schemes.”

Last week, CRE denied Iberdrola’s request to add new partners to its long-standing contracts. The international company wanted to reach a total of 598 partners. As reported by La Jornada, CRE said that approving the request would have affected users in the basic supply service since the move would have cost CFE MX$6.74 billion (US$349.23 million) that the state company would have had to charge to the MEM. “Approving the request for modification of beneficiaries would constitute an act contrary to the efficient development of the market and protection of the interests of users,” said CRE.

Iberdrola was fined by the CRE earlier in 2021, and one of the company’s wind farms was disconnected. While the government continues to allege that the Spanish energy company has been involved in malpractices, these events have led to controversy regarding Mexico’s undermining of renewable energy development.

Industry insiders have criticized the government for favoring state-owned companies over private ones and hampering fair competition. CFE has been slammed for failing to improve its operations despite being favored by government policies, too.

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