Judge Awards First Suspension to CFE Transmission Hike

In an ever-widening conflict between the state and private power producers, the CFE announced last week it would hike its transmission fees up to 800 percent. Those affected are private companies on so-called ‘legacy contracts’, which had been signed before the Energy Reform in 2013. Private companies reacted disconcerted and legal action against the measure was once again a matter of time. Last Friday, a judge awarded the first suspension against the transmission hike, reported Expansión.

The entity requesting the suspension is the Tampico Solar photovoltaic park, located in Guanajuato. Earlier, CFE and SENER had argued that the measure was to level the costs that the private plants pay, compared to what those in the post-reform electricity market pay while generating the same types of energies. This statement has been put in question by energy consultant Epscon, reported El Norte. Epscon calculated that with the price hike, those with legacy contracts would actually end up paying 53 percent more than what is common in Mexico’s current Wholesale Electricity Market (WEM). “The costs of transmission now move away from being an incentive for the generation of clean energy, to being a subsidy to CFE,” said Federico Muciño, Director of Epscon. CFE, however, has argued that the measures were not only meant to level the playing field but to stop the machinations of a private black market.

Mexico’s Business Coordinating Council (CCE) had already called the measure illegal and inadmissible, based on an El Economista report. Furthermore, the council argued that the hike would affect large scale energy users in Mexico’s industry, which would eventually trickle down to consumers. The transmission costs were to change as follows: For high tension, fees would increase from MX$0.049 to MX$0.27857, a surge of 469 percent. Medium tension fees would increase from MX$0.049 to MX$0.2586, which represents a 428 percent increment. Finally, low tension fees were hiked over 800 percent, from MX$0.09799 to MX$0.8928.

Now that Tampico Solar has been successful in pleading against CFE’s measure, more suspensions are predicted to follow. This would spell trouble for CENACE, SENER, CRE and CFE, as none of the government bodies have been successful in making their measures stick in court. Earlier, the government’s efforts to reward CELs to older CFE plants instead of just new renewable energy projects were overruled in a federal court. In April, CENACE’s halt to renewable energy tests needed for grid connection was suspended as well. Subsequently, tests were granted to several renewable power plants. SENER’s May 15 policy regarding reliability of the grid, aiming to strengthen CFE compared to renewable private power producers, was successfully challenged in court by the latter group as well.