Neus Peniche
Former Commissioner
View from the Top

Strengthening the Link Between Conventional and Renewable Energy

Mon, 02/25/2019 - 14:40

Q: What is your primary contribution to CRE’s regulatory activities?
A: Mexico’s regulatory institutions highly value interdisciplinary integration. As a tenure lawyer, I always make a point of going through the entirety of the documents I sign to ensure the content’s regulatory certainty. Within CRE, I always want to ensure that our assessments and suggestions have a positive impact on the operational decisions of each department.
Q: How is CRE coordinating its efforts with other regulators such as COFECE and CNH?
A: As a coordinated regulatory entity, CRE operates under a formal coordination and interaction mechanism with other government agencies: The Energy Sector Coordination Council. This council is under the direction of the Ministry of Energy and includes the President Commissioners of CRE and CNH. It acts as an exchange forum to assess the government’s energy policy and its objectives and to translate them into effective regulation. From a more operational standpoint, it contributes to establishing permanent working sessions between CRE, CNH, COFECE and even PROFECO personnel.
Q: What impact will the new transport modalities approved by CRE for LPG have on the industry?
A: CRE is working on a wide array of LPG-related issues. Together with COFECE, we have identified a series of market entry barriers in certain regions using the framework established by international best practices for LPG distribution. LPG is a basic commodity for Mexican families and is part of a strategy directed at the country’s most disadvantaged population. We want the remainder of the population that still relies on coal and firewood for heat to transition to LPG. A robust and competitive LPG distribution is fundamental in that particular regard. A recurrent complaint is the deteriorated status of gas cylinders provided for residential use and CRE is working to solve this issue.
Q: How is CRE incentivizing a fair and level playing field for market entry in natural gas distribution?
A: Natural gas distribution channels are unevenly developed in Mexico across different regions. Through its regulatory attributions, CRE has promoted open, nondiscriminatory market access and increased pipeline capacity through the design of open seasons, among other mechanisms. The prevailing challenge is dealing with the disparity of infrastructure availability.
Q: Where is the balance between developing infrastructure for natural gas imports and fostering local production?
A: In our regulatory capacity, CRE wants to provide the necessary conditions to foster a diversified energy matrix. More often than not, natural gas imports are seen as negative but from a regulatory standpoint this activity represents an economic opportunity. Imports by themselves do not necessarily infringe on energy security; on the contrary, they provide an additional layer of diversification to guarantee energy security. Infrastructure availability and international price conditions in the US render such an approach technically and economically viable. The equilibrium lies in diversifying our options. When price and interconnection conditions allow it, we can import natural gas. It is also critical to address the infrastructure gap between Mexico’s northern and southern regions.
Q: How does a regulatory body foster a balanced playing field between a productive state enterprise and private players?
A: That is perhaps the most complex task of an industry regulator. Mexico’s energy policy justifies the existence of asymmetric regulation between the productive enterprises of the state and the private sphere, balancing the impact of public policy on CFE’s competitiveness and further unlocking the market to private players. In the short term, CRE is looking to develop an appropriate level of advanced competition conditions to gradually dilute the premises of asymmetric regulation. This would imply that the playing field is level enough for private players to compete against CFE on one hand, and on the other, that CFE has delved deeply into a corporate rather than a policy logic.