EconomyFinancialThe CRE opens to private companies without new permits...

The CRE opens to private companies without new permits in the electricity market

The electricity and oil market regulator has begun to show signs of opening up to the private sector.

A couple of meetings between the Energy Regulatory Commission (CRE), the electricity and oil market regulator, and a fraction of the permit holders came in mid-September, after two years of continuous silence and almost total paralysis in the granting of new permits. “The message was: don’t despair, we are working, we are going a little slower because they cut our budget and there is little staff, but your paperwork is going to come out,” says a permit holder who attended one of the meetings.

Two weeks later, the regulator approved 150 new applications for new gas stations, in a session with some disagreements among commissioners. The number of authorizations related to new stations granted in a single session is close to the total number of permits granted during the past year (175) and higher than those of 2020 (114). “What does this mean? That there is progress for the fuel market, all the stations were already mostly finished, but that they lacked a permit number to be able to have a supply of fuel and be able to sell it”, says Marcial Díaz, the president of the Association of Regulated of the Energy Sector.

The organization led by Díaz has accounted for at least another 300 permits for new stations pending. Leopoldo Melchi, the commissioner president of the regulator, acknowledged in early September, at an event in Veracruz, that the regulator had 940 permits pending resolution.

The paralysis in the Commission began at the beginning of the six-year term, but was perpetuated with the start of the pandemic. The regulator suspended all its deadlines under the argument of the health contingency and has not resumed its regular course. A senior CRE official acknowledged, on condition of anonymity, that during the last two years the regulator followed the executive’s orders to analyze the market, the permits given up to that moment and give priority to the two state companies . “The order had already been given, but [the pandemic] fell like a glove,” he said in an interview. The slogan included, said the source, approving only new service stations related to the Pemex brand, but this, he assured, has already been modified to give authorizations to other companies as well.

The commission has returned some of the procedures related to the modification of permits in the oil market to the CRE’s hydrocarbons unit, which has speeded up their approval, the official explained.

But while the regulator has begun to approve some permits in the oil product market, authorizations in the electricity generation sector continue to be held up. In recent sessions, the CRE has approved 14 migrations of plants that operate under the self-supply format to now operate under a single generation permit. It has also denied this process to some others, such as some owned by the Spanish Iberdrola, without the full regulator having given details of the decisions.

The plenary session has also approved some modifications for electricity market permit holders, but no new generation permit has arrived for private companies. The CRE, the source explained, continues to operate under the slogan that the permits granted for electricity generation already exceed the demand that has existed up to now.

The regulator, according to two sources consulted by Expansión , does not have plans to give any new power generation permits in the short term to private participants , nor do they have on the next agenda to modify the permits of some private plants that have already been built, but that are not yet operational. The modification is necessary for these plants to begin commercial operations.

Until now, the CRE has granted new generation permits only to the state-owned CFE and Pemex – the latter for the operation of the Dos Bocas refinery – and to the Secretary of National Defense for the Felipe Ángeles International Airport.

“Yes, there is already movement, especially compared to the paralysis of recent years, but it is neither close to a normalization nor a strong sign of opening,” says the representative of an organization in the sector who has asked not to be quoted.

Within the private sector and market participants, the approval of new permits has been interpreted as a “wink” from the federal government towards the administrations of “We read this more as winks and a kind of flirtation from the administration in the midst of consultations” says the representative of the sector.

The reversal of the paralysis in the plenary session of the regulator has taken place in the midst of the consultations on energy policy that Canada and the United States have initiated against Mexico, whose first deadline was fulfilled last Monday, but of which few details are known. Mexico’s two main trading partners have included within their claims a paralysis in the regulatory bodies, especially in relation to new oil product sales stations, a market that the country opened to new brands other than Pemex after the 2013 reform.

Sources within the CRE assure that they have not received orders from the Ministry of Economy and the federal government to unblock the paralysis in order to seek conciliation in the consultation process. Rather, this movement is rather related to Melchi’s next term of office at the head of the regulator, which ends next December.

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