MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
3. Generation Facilities 3.1 Constructing and Operating Generation Facilities The construction and operation of generation facilities are governed mainly by the LSE and the General Law of Environmental Protection and Ecological Equilib- rium (LGEEPA). The LSE and regulations stemming therefrom – such as the RLSE, the WEM Rules, operating provisions and CNE-issued regulations on generation and stor- age permits – specifically regulate the development and operation of generation facilities, and address their social impacts (whether for small, medium or large-scale operations). In addition, all new projects participating in the NES must comply with the binding planning criteria issued by SENER, and their consist- ency with PLADESE may directly affect permit issu- ance. The LSE currently provides three distinct regulatory types for power generation, as follows. • Distributed generation: projects with a capacity of up to 0.7 MW, which do not require a generation permit from the CNE (irrespective of other intercon- nection agreements with CFE). • Self-consumption: generation for the “self needs” of users belonging to the same corporate group, whether or not they are connected to the NES (for back-up purposes). In addition, interconnected self-consumption projects between 0.7 MW and 20 MW are subject to a simplified permitting procedure before the CNE, while isolated self- consumption facilities may benefit from certain regulatory exemptions, including in some cases the exemption from filing a Social Impact Assessment (MISSE). Surplus energy in interconnected self- consumption projects may only be sold to CFE. • Generation for the WEM: this includes participation of the State and private parties, either individu- ally or through public-private (mixed) vehicles. For the latter, two types of public-private participation modalities are provided: long-term production (energy is sold exclusively to CFE) or mixed invest- ment (CFE may participate directly or indirectly through equity participation, in-kind contributions
are designated as priority projects under PLADESE or involve CFE equity participation in generation assets. 2.5 Surveillance to Detect Anti-Competitive Behaviour Following the constitutional reform and the institution- al restructuring of the Mexican competition regime, the CNA is the federal agency tasked with monitor- ing the Mexican power market on antitrust matters, particularly with respect to private economic agents. The LFCE classifies punishable exclusionary conducts in two categories: • absolute monopolistic practices, (including price fixing, bid rigging and unlawful exchanges of infor- mation); and • relative monopolistic practices, which are per- formed by economic agents with substantial market power, aiming to affect the competitive process. In the electricity sector, antitrust scrutiny remains particularly relevant for qualified supply activities, co-ordinated conduct among generators or suppli- ers, fuel-linked vertical arrangements, and strategic transactions involving generation portfolios, stor- age systems or qualified-user supply structures. The existence of CFE’s constitutional preference does not eliminate scrutiny over private participants, particu- larly where exclusionary practices affect access to the WEM or qualified supply conditions. The enforcement of anti-competitive rules usu- ally involves formal investigations, an administra- tive adverse procedure (in the form of a trial) and the imposition of substantial economic fines, potentially amounting to as much as 10% of the annual revenue of the economic agent. In addition, certain absolute monopolistic practices may result in criminal liability for the individuals involved, and pre-merger transac- tions completed without prior clearance may be sub- ject to nullity, unwinding orders and/or administrative sanctions.
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