MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
• five with the US (three connecting with Texas and two with California). Market rules allow cross-border transactions for commercial purposes and for emergency or reliability support. Notably, export and import activities are not subject to capacity reservation requirements (except for reliability/emergency transactions, which are given certain preference), so each foreign trade transaction is scheduled and confirmed based on market rules. In addition, power plants located abroad but exclusively interconnected to the NES may inject power output to the grid based on certain specific rules applicable to interconnection and dispatch. 2.3 Supply Mix of Electricity The NES is heavily reliant on combined-cycle power plants (predominantly controlled by the Mexican State), representing over 58.46% of the energy delivered to the grid. The rest of the gen- eration mix is composed as follows: • thermal: 8.63%; • wind: 5.89%; • hydro: 5.86%; • solar: 5.16%; • coal: 4.05%; • nuclear: 3.42%; and • others (turbogas, cogeneration, geothermal, distributed generation): 8.53%. This composition reflects a generation mix still dominated by fossil fuels, albeit complemented by a growing share of renewable and alterna- tive energy technologies. The relative dominance of State-owned generation assets – particularly in combined-cycle and hydroelectric plants – underscores the strategic role of the public sec-
tor in shaping energy supply, bolstered by the changes implemented in the 2024 reform. 2.4 Market Concentration Limits The reform of 2024 and the LESE formalise the predominance of State-owned assets over pri- vate projects in both the generation and market- ing of electricity. On the generation side, this principle is imple- mented through a mandatory quota, requiring at least 54% of the electricity injected into the NES on an annual basis to originate from State-con- trolled generation. Subject to upcoming regula- tions to be issued, this figure is understood to encompass not only electricity generated and delivered directly by CFE (or MIP), but also pro- duction from joint ventures or public-private pro- jects in which CFE holds equity or operational involvement. Notably, however, the LESE does not provide a consequence if electricity delivered by pri- vate generation companies exceeds the 46% cap. The pending Regulations to the LESE and other administrative instruments to be enacted as a result of the 2024 energy reform are antici- pated to further elaborate on how the quota is expected to be monitored and enforced, as well as how to construe the State’s predominance in marketing activities. From an economic competition perspective, rules on market concentration may also apply, pursuant to the LESE and LFCE (but they will not apply to CFE, as a constitutional authorised monopoly). Market concentration is not deemed an anti- competitive behaviour in and of itself (per se), unless it results in harm to the competitive pro-
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