The Energy Regulation and Markets Review - Stikeman Elliott

Mexico
The CRE is responsible for regulating all matters related to private energy
production, transportation and first-hand sale to private parties, 2 except for the
exploitation and extraction of hydrocarbons, as well as its shipment and storage, which
falls under the competence of the CNH. Mexican law specifies that refined hydrocarbons
and gas extracted from ground deposits of mineral carbon, as well as the first-hand sales
to private parties, shipment, storage and distribution of basic petrochemicals that can
be used as raw materials for industrial production do not fall within the purview of the
CNH, the CRE thus being the competent regulatory authority.
The CRE is entitled to:
a participate in the determination of the tariff for the distribution, transmission
and delivery of electricity;
b approve and establish the terms and conditions for the first-hand sale to private
parties, shipments, storage and distribution of gas, oil, products obtained from oil
refining, basic petrochemicals and bioenergetics;
c grant and revoke permits and licences to carry out all the activities that are
regulated by the CRE; and
d impose fines to individuals or entities that produce, export or import electricity
without the proper permits or licences.
Since the exploitation and extraction of hydrocarbons are activities reserved to the
Mexican government, the regulatory function of the CNH does not encompass any
activity carried out by private parties. Its functions make it the supervisory and advisory
authority for Mexican public entities in charge of the exploitation and extraction of
hydrocarbons as provided by Article 27 of the Constitution. Its role includes establishing
technical guidelines for the exploration and exploitation of hydrocarbons, reviewing
and opining on hydrocarbon exploitation and exploration projects, and establishing
methodologies to evaluate the efficiency of such exploitation and exploration.
In terms of regulating bioenergetics, there is an interministerial commission,
the Inter-Ministerial Commission for the Development of Bioenergetics, formed by six
State Secretaries. This agency is responsible for defining the policy applicable to the
production, commercialisation and use of bioenergetics.
All bioenergetics permits and licences are granted by the Ministry of Energy,
and in cases when bioenergetics are to be produced from corn as its raw material, and
such corn is cropped in Mexico, an additional licence from the Ministry of Agriculture,
Livestock, Rural Development, Fisheries and Food (‘SAGARPA’) is required.
The current main sources of legislation in the energy sector are the Law Regulating
Constitutional Article 27 on the Oil Sector, the Electric Energy Law, the Law on the
Promotion and Development of Bioenergetics and the Law on the Use of Renewable
2 Through the concept of ‘first-hand sale to private parties’ Mexican law sets a legal shield for
Petroleos Mexicano (‘Pemex’), the state-owned petroleum company, so that it can carry out any
activities of transportation, distribution, storage and production of chemical products derived
from hydrocarbons, subject only to its own laws and regulations but without having to apply
for permits from the CRE, until the first sale of products is made to a private party.
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