Mexico energy regulator may halt outside power market monitor, hurt transparency

• Sources say independent monitor out of 2021 budget
• Greenpeace wins court battle, administration likely to appeal
• Private sector launches renewables awareness campaign
• CFE to start operations of key plant in central region

HOUSTON (ICIS)–Energy regulator CRE is not expected to hire an independent market monitor to review the activities of Mexico’s power market from 2020, something that would strip away an important layer of accountability and further decrease transparency, sources said.
One of the sources said the move could lead to administrative charges against the CRE board of commissioners for omitting the independent market monitoring activity the law requires of the entity. CRE did not respond to comment on the matter.
“There has never been enough transparency to prove much of the shenanigans that are surely affecting [power market operator] CENACE dispatch, and without the market monitor there will be even less,” said one energy consultant.
The independent market monitor that has been hired by CRE since the opening of the power market has been an outside consultancy that evaluates detailed data from CENACE to complete economic analysis of the market’s development. Its previous annual reports have recorded successes, uncovered anomalies and provided recommendations.
Sources said the CRE plans to do the market monitoring analysis internally, but this was not immediately confirmed. The sources said it was because of austerity measures that have shrunk the entity by nearly half since the start of the current administration. One source said this was an excuse because market participants pay for market monitoring through CENACE, something documented in public budget estimates CENACE publishes.

COURT RULING
The expected change is an example of how the administration continues to implement its state-centric power market vision despite being mired in legal battles over its controversial policy changes. Non-profit Greenpeace Mexico announced it won its case against two of these policy changes, CENACE’s April resolution halting renewables plant testing and energy ministry SENER’s so-called reliability policy fast-tracked in May.
Greenpeace said in a 19 November press release the ruling eliminates obstacles to renewables projects. It said the judge deemed the two policies invalid because CENACE did not have the authority and SENER bypassed the necessary regulatory review process.
The administration has 10 days to appeal the decisions, something it is likely to do as it continues implementing policies it has previously said it sees as leveling the playing field for state utility CFE. Power market sources have previously said renewables investors will continue defending their investments through legal means. The Greenpeace legal victory bolsters those efforts, which include various campaigns to raise public awareness about the economic and social benefits of renewable energy.
One such effort, a web platform called Renovables x Mexico, was launched on 17 November by Mexico’s wind and solar associations (AMDEE and ASOLMEX).

CFE
In what appears to be a follow up to plans to prioritise hydropower dispatch, Mexican president Andres Manuel Lopez Obrador (AMLO) announced 23 November he would issue a decree to ensure hydropower plants are managed to avoid flooding experienced in Mexico’s southeast in recent weeks.
It is unclear if this move would violate the recent court ruling against SENER’s reliability policy, but the desire to manage power dispatch via presidential decree may further reveal the degree to which the administration is willing to disregard established institutional processes.
The president has defended the head of CFE in various press conferences and has focused his energy policy in part on strengthening the state utility.
CFE has made radical changes to its governance and business practices since the start of the administration, in some cases refusing to close inefficient power plants that were scheduled for retirement. CFE’s head has repeatedly said he wants the company to become further dominant in its share of power generation capacity.
Mexico’s national guard assisted CFE in removing protestors from the nearly-complete Huexca power plant in the state of Morelos. The move allows CFE to complete a pipe to transport water to the plant. The company said in a 23 November release the works could take up to 15 days and that the plant would meet 80% of demand in Morelos. The plant would consume 80 million cubic feet (mcf)/ day of natural gas and lower power prices, according to CFE.
Two power market analysts said the coming start of Huexca plant operations was “good” news for the high-demand central region.

Claudia Espinosa