Iberdrola’s Heavy Fine Suspended for Time Being

Spanish multinational energy giant Iberdrola was granted a suspension by a Mexican judge regarding a substantial multimillion dollar fine. This fine amounts to US$444 million and was imposed by CRE.

This May, the country's energy regulator imposed a hefty sanction on Iberdrola’s local subsidiary, finding the company culpable of illegally selling energy through a self-supply permit via its power plant in Dulces Nombres, Nuevo Leon. CRE alleged Iberdrola had sold energy to customers that were not original partners in the self-supply permit. The fine was equivalent to 100 times the general minimum wage of Mexico City for each KW of capacity of the self-supply plant, according to CRE’s initial resolution.

CRE assured that it was proven that Iberdrola illegally sold of electricity to third parties, an action that is not allowed by the Law of the Public Service of Electric Energy (LSPEE). A correct self-supply modality, a scheme created during the Salinas de Gortari administration, is meant for a company to supply itself and its preestablished partners alone.

As soon as the fine was imposed, Oscar Ocampo, Energy Coordinator, the Mexican Institute for Competitiveness (IMCO), called it “disproportionate” and said the energy company would likely be able to protect itself, though the move would still leave a bad taste in the mouth for Mexico’s private-sector energy investors. Following these events, Iberdrola filed for an appeal on the grounds of unconstitutionality on June 17.

“The accusation is mainly supported by invoices, whose constructs do not demonstrate the alleged sale of electricity. In order to be sanctioned, it must be proven beyond any reasonable doubt, interpretation or correlation that the alleged sale of electricity to its consuming partners was committed," Iberdrola argued at the time.

In the meantime, Iberdrola can no longer carry on with its operations at Dulces Nombres due to an expired permit. The action of the Mexican judge, granting Iberdrola's appeal, now gives the company the benefit of the doubt while the case moves to court. There, it will be determined if the multinational electric company will be obliged to pay the second-largest fine in Mexico’s history.