MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
Migration Guidelines are expressly exempt from the binding planning criteria otherwise applicable to new generation projects, facilitating their incorporation into the current market framework. CENACE also operates an annual Balancing Capac- ity Market, in which Load Serving Entities (suppliers) must procure capacity through transactions with gen- erators to cover the consumption of the loads they represent during the “100 critical hours” of the NES – ie, the most stressed periods of the year for genera- tion reserves. In addition, the current framework con- templates the use of long-term reliability contracts for electricity storage systems, particularly where storage assets support system reliability and reserve obliga- tions. The Rules of the WEM also consider the operation of the CELs market, which requires Load Serving Entities to credit CELs (which evidence production from clean sources) before the CNE in proportion to the electricity consumed by their loads (currently at 13.9%). Gen- erators can earn one CEL per MWh of power output stemming from clean sources. Self-consumption pro- jects may also be eligible to receive CELs under the updated regulatory framework, while associated load centres remain subject to clean energy compliance obligations. To hedge against potential price volatility, market participants may enter into Electric Hedging Agree- ments (EHAs) for energy products. Those EHAs may also consider bilateral financial transactions in order to assign the receivables or accounts payable from WEM operations. However, unlike the previous market model, long-term auctions are no longer mandatory for CFE procurement, and bilateral structures, mixed participation schemes and self-consumption arrange- ments have become increasingly relevant alternatives for long-term offtake. CFE’s regulated services (including basic supply, transmission and distribution) continue to be subject to regulated rates, determined annually by the CNE under the rules established in the previous regime. High-load consumers are still eligible to act as “quali- fied users” – a status that allows off-takers to receive
electricity supply from “qualified suppliers” (public or private) under free-market conditions. Qualified suppliers must meet rigorous compliance, reporting and risk management requirements before CENACE, including posting financial guarantees and minimum hedging obligations. In some cases, major consumers may also register as market participants and transact directly in the WEM, including executing EHAs with generation companies to optimise procurement strategies and manage risk exposure. This remains particularly relevant for indus- trial users associated with nearshoring projects, man- ufacturing hubs and data centre developments, where supply reliability and long-term energy price visibility Cross-border transactions of electricity are permit- ted under the LSE, subject to prior authorisation from SENER for imports and exports of power. Such authorisations are assessed not only from a commer- cial standpoint, but also considering reliability, sys- tem security, binding planning criteria and consistency with the strategic objectives of the NES. The NES currently has seven interconnection ties for cross-border transactions, with three neighbouring countries: • one with Belize; • one with Guatemala; and • five with the US (three connecting with Texas and two with California). are critical commercial considerations. 2.2 Electricity Imports and Exports 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 exclu- sively interconnected to the NES may inject power output to the grid based on certain specific rules applicable to interconnection and dispatch.
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