International Standards for the Electricity SegmentWed, 02/21/2018 - 08:58
Q: What regulatory aspects of the electricity market can be improved in the short term?
A: CRE is focused on ensuring the reliability of the National Electricity System. On April 8, 2016, we published the Network Code that embodies the rules relative to the efficiency, quality, reliability, continuity, security and sustainability criteria for the system. We started a working group to check the specifications of this code to make it more functional and to ensure it meets its objective of grid reliability — quality, power outages, surcharges — and reduced interconnection costs, avoiding excessive requirements that impact energy costs for final users, diminishing household budgets and the competitiveness of corporations. Grid planning is essential to achieve this goal, providing an adequate balance between service quality and reliability against costs. Working under the premise that everything can be improved is our main priority.
Also, we consider that on-site generation has inherent advantages, especially considering that investment requirements in transmission lines and supply costs are reduced. In this model, energy losses are also mitigated as you avoid transporting energy through thousands of kilometers of transmission lines. On Oct. 27, 2017, we approved the criteria for a clear regulatory framework to operate on-site generation systems. One of the most important outcomes of the Energy Reform was the establishment of Clean Energy Generation Targets for the electricity industry. CELs will help to meet these goals and will be registered through a compliance system, operated and supervised by CRE.
Q: What does an IEA membership mean for Mexico’s energy market?
A: CRE supported the Ministry of Energy’s initiative of becoming a full member of the IEA. IEA’s link to the OECD shows that CRE is adopting the OECD’s best practices for enforcement and inspection. For instance, according to the OECD's best international practices, we follow rules for the supervision and verification of Mexico’s electricity sector compliance with the regulations we publish. It is important not only to draft regulations but also to implement regulatory observance mechanisms to make sure everyone is playing by the rules. Being a member of the IEA will give us a front row seat among the agency's success stories around the world as well as the tools to adapt it to Mexico’s specificities, capitalizing on the agency’s international teams of electricity market specialists. Mexico will also have a say on which practices should be considered benchmarks for countries looking to launch energy transition processes or to inject efficiency and top-tier demand-response technologies into their electricity generation systems. This membership will also be an important boost to develop the country’s fuel storage capacity and attain OECD levels of supply security. The Ministry of Energy issued provisions for petroleum. Other fuels are following suit and CRE will ensure compliance, through elements such as minimum inventory and verifying that the numbers match the empirical reality. The policies adopted in line with the IEA will echo the process in place where the Ministry of Energy is the overseer that defines energy policies and gives them direction, while CRE is the arbiter in the game that leads policies through regulation, verifies compliance and serves corresponding sanctions when compliance is not met.
Q: How is CRE contributing to a stable baseload through its regulatory capacity?
A: Cogeneration has proven to be good for business and for the system. It exploits residual heat in industrial processes that otherwise would be wasted, is exempt of some regulatory fees and enjoys a preferential rate for transmission while generating electricity without emitting GHG. Efficient cogeneration regulations have been in place since 2012. These outline the methodology for measuring this fuel-free energy to receive the same payout as renewable technologies. The philosophy behind conferring sustainability to electric cogeneration and achieving Mexico’s clean energy goals is enshrined in the CEL, while also serving as a second income source for renewable and clean generation processes.