César
Roundtable
César Hernández Ochoa
César Hernández Ochoa
Deputy Minister of Electricity

The electricity market was expected to grow gradually since its inception and it will become increasingly open as it matures. The market is designed to stimulate competition so it operates under a model where cheaper energy is sold first, favoring models and technologies that generate energy at lower costs. In the long term we believe that these models will bring electricity costs down through the incorporation of new technologies and the displacement of older plants. Competitivity will generate incentives to improve services or to lower costs, but this is a market process and thus the determination of costs is not under control of any regulatory entity. It will also cause electricity prices to fluctuate depending on demand during the year. In periods when there is significant demand, prices will rise and vice versa.

As a direct result of the Energy Reform, the Mexican electricity market experienced a transformation that has caused uncertainty among the market
Derek Woodhouse
Roundtable
Derek Woodhouse
Partner
Woodhouse Lorente Ludlow

The short-term auctions are among the big puzzles for next year. The Ministry of Energy already published the capacity market manual, a milestone for the industry, and the next one on our list is the manual for establishing three-year contracts for capacity and electricity, known as short-term auctions. CFE’s subsidiaries are still in the process of putting their structures together but next year they will play an important role in the market. For us, 2016 was a transition year but 2017 will be the actual period where the market is up and running, boosting real competition. We can say without a doubt that next year will be the most interesting period for the Energy Reform. We also expect consultancies and law firms to step up their game, which would make the reform’s implementation more dynamic and faster and would spice up competition.

The Energy Reform has triggered changes across the industry in a short period of time, forcing power companies to react and adapt quickly.
Loïc Le Gall
View from the Top
Loïc Le Gall
Executive Director, Power & Utilities
EY
EY’s Transaction Advisory Services (TAS) provides strategic advice on the procurement, investment, optimization and preservation of capital
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