The Energy Regulation and Markets Review - Stikeman Elliott

Mexico
Energy by filing an assignment application and the decision will be rendered within 10
business days. If the permit to be assigned is for the transportation through pipelines and
the storage or distribution of LP gas, the relevant authority is the CRE, which will render
a decision within 140 days of submission.
In all cases, the Law on Economic Competition will be applicable if the thresholds
set out in such law to notify asset concentrations are surpassed.
In the case of permits for the development of activities related to electricity
generation, natural gas and LP gas, COFECO must also render an opinion on the
assignment of permits, as these areas are considered especially sensitive in terms of
competition and market access matters; such opinion will be considered by the CRE
while analysing the assignment application.
III
TRANSMISSION /TRANSPORTATION and DISTRIBUTION
SERVICES
i Vertical integration and unbundling
In previous years, the most significant changes to the gas industry framework were the
publication in the Official Gazette of Official Mexican Standards, of which the most
recent and relevant is the NOM-001-SECRE-2010; this sets out the specifications to
be met by natural gas-handling systems in transportation, storage and distribution of
natural gas, with consumer safety and environmental protection in mind.
As previously indicated, transportation, storage and supply or distribution of
natural gas is carried out by licensed private parties, but generally jointly with Pemex Gas
y Petroquimica Basica (‘PGPB’), a regulated subsidiary of Pemex, the most important
market participant given that it owns the majority of the transportation network,
together with the CFE.
Although under the current law vertical integration is not permitted in the natural
gas market, since the regulations forbid the same company or individual from holding a
permit for both distribution and transportation of natural gas, Pemex (through PGPB) is
the only entity that can legally be vertically integrated, until the first-hand sale to private
parties.
On the electricity market, the CFE is the only entity entitled to carry out the
transmission and distribution of electricity to final consumers through the SEN, which
is also administered by it.
From a technical standpoint, a private company that holds a permit to produce
electric power under the schemes for self-supply and cogeneration may distribute the
electricity to its shareholders, but in reality the electricity produced is output to the SEN,
which will transmit and distribute the electricity to the shareholders or partners of the
producer company for a distribution fee.
ii Transmission/transportation and distribution access
Concerning natural gas, permit beneficiaries or licensees must allow users open access to
their services on a non-discriminatory basis, subject to availability of capacity, technical
feasibility and the execution of a services agreement. Refusal to do so may be notified
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