ARIZONA & MEXICO

of the largest Latin American producers of renewable energy and boasts the largest potential for solar
energy in the region, with an annual irradiation of 6 kilowatt hours per square meter. 5
BACKGROUND
The reforms promise more than token modifications
to an industry that has remained unchanged
for more than 30 years. Unlike the limited reform of
1992, which opened the door for domestic companies
to generate electricity for their own use or for
sale to the state-run monopoly Comisión Federal de
Electricidad (CFE), these reforms are broader, deeper
and more transformative. Key initiatives for the
electricity sector include:
Government involvement in
power generation has evolved from
an operational to a regulatory focus.
On the transmission and distribution
side, it maintains a focus on both.
1) Reducing public sector involvement over the power sector
2) Increasing private sector participation
3) Reconfiguring CFE’s role as a profitable enterprise of the state
4) Establishing an independent system operator, CENACE (Centro Nacional de Control de Energía)
5) Revising the regulatory framework with CRE (Comisión Reguladora de Energía) to serve as a key
regulator
6) Promoting sustainability
7) Promoting domestic and local supply chains by requiring minimum percentages of national
participation 6
KEY PLAYERS AND ROLES
1) CFE’s monopoly comes to an end on the wholesale side as private sector independent power
producers (IPPs) are allowed to enter and sell to large consumers.
2) Although still state-owned, CFE will be transformed into a “productive state company”, lose
almost all its monopolies and compete against private generators and retailers.
3) In its place, CENACE will be responsible for operating the national electric system and the newly
created electric wholesale market
4) Power generators, retailers and qualified consumers will be able to buy/sell and import/export
electricity and ancillary services, as well as transact in financial transmission rights, clean energy
and pollution certificates.
5) The government, directly or through the CFE and/or subsidiaries, may enter into contracts or
partnerships with private parties for the financing, installation, maintenance, managing,
operation and expansion of needed infrastructure.
6) CFE will continue serving residential customers (termed basic consumers) at regulated tariff rates.
Over time, all customers will be able to choose their generation provider.
5
http://www.pillsburylaw.com/publications/mexico-adopts-major-reforms-restructuring-its-electric-power-sector
6
http://www2.deloitte.com/content/dam/Deloitte/us/Documents/strategy/us-cons-mexico-energy-reform-pandu-
05082014.pdf
APRIL 2016 • ARIZONA TOWN HALL • ARIZONA & MEXICO • 60