The Energy Regulation and Markets Review - Stikeman Elliott

Mexico
The sale price tariffs for energy sale by private parties to the CFE is determined by
the production scheme to which the private parties are subject to. If they are independent
producers, the tariff is determined by the electricity purchase sale agreements they
execute with the CFE. Otherwise, if private parties produce electricity under the
scheme of cogeneration or self-supply, the sales price can be freely determined between
cogeneration or self-supply companies and their shareholders or associates, while the
excess electricity can be sold to the CFE.
iv Security and technology restrictions
In Mexico security aspects have increased in importance, especially since 2007 when the
government initiated a frontline battle against the drugs cartels, and since then special
laws and provisions have been enacted in order to guarantee security and legal compliance.
As a consequence of such security-strengthening policy, protection of the
infrastructure related to the energy sector is granted by the Article 253 of the Federal
Criminal Code to facilities that carry out the production of electricity and storage of gas
and other hydrocarbons, as well as to pipelines that transport such products, stipulating
as a crime the obstruction of production, transmission or transportation, and to the sale
of electricity, natural gas and LP gas.
Another issue to consider is cybersecurity, which must be analysed from an
infrastructure perspective, as the Federal Criminal Code punishes the destruction of
poles, insulators, wire or machines employed for public telecommunications services,
including any component for the production of magnetic or electromagnetic energy or
means of transmission.
As a general rule there are no restrictions for the transfer of technology. Royalty
payments should meet international transfer-price rules from a tax standpoint.
IV
ENERGY MARKETS
i Development of energy markets
At present there is no organised domestic market for the sale of any type of energy.
Concerning electricity, even when there are regions with different tariffs, given
that the only purchaser of energy is CFE, it is difficult to say that there is a real market.
With respect to natural gas, even though the current legal framework sets the basis
for the creation of a market, a resellers’ market has not yet been created given that current
permit beneficiaries may deny access if they support the fact that access is not technically
or economically feasible.
ii Contracts for the sale of energy
Market participants may enter into individual contracts for the sale of natural gas.
Natural gas service providers may stipulate maximum charges, and the parties may freely
agree on a price different from the maximum charge for a determined service, provided
the agreed amount is no lower than the variable cost of providing the service. Charges
made by a permit beneficiary may not be unduly discriminatory or be conditional on the
rendering of other services.
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