ICIS survey shows low confidence in Mexico energy authorities

HOUSTON (ICIS)–Power market participants recently surveyed by ICIS appear to be navigating the current market with mixed sentiment and some lack of confidence in autonomous entities.

The survey of market opinions taken in late May and early June shows a majority of respondents have been waiting more than nine months for a response to power permit applications submitted to energy regulator CRE. CRE did not respond to comment on the survey results.

Of a total of 21 respondents to the survey, two said they thought CRE’s performance in the past six months has been “average” while the remainder cited their evaluation of the entity’s recent performance as “poor.”

CRE has had its funding slashed several times in annual budgets issued by Mexico’s federal administration. The regulator has also slashed headcount twice since the start of the current administration.

CRE ACTIVITIES REPORT

In an activities report released on 10 June reviewing CRE’s 2020 performance, the regulator’s president commissioner wrote that CRE went through a period of “transformation” to execute regulatory strategies in line with a new public policy aimed at ordering the development of the energy sector to benefit end users and the “most vulnerable” populations. However, these populations were never identified or mentioned again in the report.

The report said CRE’s 2020 activities were guided by the entity’s non-binding strategic plan, which only outlines goals until 2022. It said this plan is aligned with the national energy policy to “take back sovereignty and national energy security.”

On permits, the CRE report stated the entity granted 20 power generation permits in 2020 while 49 expired. It also issued two qualified supplier permits as three such permits expired last year. Of the permits granted, 25% were for solar or wind projects.

The report also stated that the CRE received a total of 90 applications for permits and authorisations and 220 requests to modify, update or transfer permits and authorisations related to the electricity sector in 2020.

CRE also said it published only seven of 23 press releases from its staff in 2020. The remainder were not authorised for distribution, according to the report.

OBSTACLES

All the ICIS opinion survey participants except one said they had experienced numerous obstacles in Mexico’s power market. Among the obstacles respondents specifically cited were lack of staffing, an insufficient guarantee of revenues and clients’ fears of migrating to the wholesale market (MEM).

When asked about factors affecting the market outlook, respondent input clearly favoured macro-level factors, although specific responses included “slow, inefficient administrative procedures,” the media, as well as a lack of resources at CRE and power market operator CENACE.

CENACE also was viewed by the majority of respondents as only having independence in certain areas or completely lacking independence. CENACE did not respond to comment.

OUTLOOK

Nearly 10% of respondents said they thought it would take between three and six months for them to feel more positive about the outlook for their company or business in Mexico’s power sector. The majority said this could take more than one year. Four respondents specified timelines of either greater than two years, three years, at the end of the current administration’s term and more than three years.