MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
2.3 Supply Mix of Electricity The NES is heavily reliant on combined-cycle pow- er plants (predominantly controlled by the Mexican State), representing the largest share of electricity injected to the grid. The rest of the generation mix is composed primarily of thermal, hydroelectric, wind, solar, nuclear, coal and other technologies, including cogeneration, geothermal, turbogas, storage-linked facilities and distributed generation. The precise composition of the supply mix continues to evolve as a result of new combined-cycle addi- tions by CFE, the gradual incorporation of renewable generation projects, storage systems and self-con- sumption projects, as well as the operational effects of the State prevalence requirement introduced by the 2024 reform. In particular, hydroelectric rehabilitation projects and new gas-fired generation remain central to CFE’s expansion strategy, while solar, wind and storage projects continue to be the principal areas of private-sector participation. This composition reflects a generation mix still domi- nated by fossil fuels, albeit complemented by a grow- ing share of renewable and alternative energy tech- nologies. The relative dominance of State-owned generation assets – particularly in combined-cycle and hydroelectric and strategic mixed participation projects – underscores the strategic role of the pub- lic sector in shaping energy supply, bolstered by the changes implemented in the 2024 reform and the annual measurement of the 54% State prevalence principle. 2.4 Market Concentration Limits The reform of 2024 and the LSE formalise the predom- inance of State-owned assets over private projects in both the generation and marketing of electricity. On the generation side, this principle is implemented through a mandatory quota, requiring at least 54% of the electricity injected into the NES on an annual basis to originate from State-controlled generation. Under the current regulatory framework, this figure is under- stood to encompass not only electricity generated and delivered directly by CFE (or MIP), but also pro- duction from joint ventures or public-private projects in which CFE holds equity or operational involvement.
The annual measurement of this quota is incorporated into PLADESE and influences dispatch decisions, per- mitting and generation planning. Although the legal framework does not establish an automatic sanction if private generation exceeds the 46% threshold in a given year, the “Load Economic Dispatch” model and binding planning criteria operate as practical tools to preserve the required balance and prioritise State prevalence over time. From an economic competition perspective, rules on market concentration may also apply, pursuant to the LSE and LFCE (although CFE retains constitutional preference and a special legal status as the State public company responsible for strategic electricity activities). Market concentration is not deemed an anti-competi- tive behaviour in and of itself (per se), unless it results in harm to the competitive process from an econom- ic agent with substantial market power engaging in exclusionary conduct. This remains particularly rel- evant for qualified supply activities, fuel-linked gen- eration portfolios, and acquisitions involving strate- gic infrastructure adjacent to transmission or storage operations. As outlined in 1.4 Sale of Power Industry Assets , the Mexican antitrust framework is undergoing significant structural changes due to the removal of COFECE and the creation of a new public entity under the Min- istry of Economy, the CNA, which now has author- ity on economic competition matters. The CNA has assumed full jurisdiction and authority over all eco- nomic competition procedures and investigations (overseeing all markets, including the electricity sec- tor); combined with the new legal framework, this will result in changes to: • investigations into monopolistic practices; • market dominance assessments; • pre-merger control thresholds and procedures; and • the imposition of sanctions. In addition, mixed participation projects involving CFE may be reviewed not only from a competition stand- point, but also from a strategic planning and public policy perspective, particularly where such projects
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