The Terms for the Strict Legal Unbundling
of Federal Electricity Commission (the
Unbundling Rules) were published in the
Federal Newspaper (Diario Oficial de la
Federación) (DOF) on January 11, 2016. The main
purpose of those rules is to set the terms of strict
legal separation required to foster the open access
and the efficient operation of the electric sector,
in such way that Federal Electricity Commission
(CFE) will be allowed to participate in the market
through independent entities to be incorporated
and, hence, create economic value and profitability
to the Mexican State.
Main features stated
in the Unbundling Rules:
1. Legal separation;
independent activities
CFE shall perform, activities independently from
each other, under conditions of strict legal separation,
through Productive Subsidiary Companies
(EPS), such as the Generation, Transmission, Distribution,
Basic Supply, Marketing different from
Basic Supply and Provision of Primary Supplies.
Vertical separation between the activities in
networks (transmission and distribution) and
those activities related to the competitive market
(generation and marketing). This separation assures
that: (I) Generators and Suppliers shall have
open access to the National Transmission Network
and the General Distribution Network, and
(II) Open access is a key condition to eliminate the barriers for the installation of new power plants
and attract investments in the public sector.
Generation
• Through EPS, affiliates or any other type of association
permitted by the CFE Law.[1]
• Except for certain cases, they will be barred
from performing directly or indirectly any activity
relating to Transmission, Distribution, Marketing
or Provision of Primary Supplies.
» Horizontal separation
• Number of generators that assures an efficient
operation, promote economies at scale
and are subject to free competition.
- They may only represent at the Wholesale
Electric Market (WEM) those power plants
which are administered by them.
• They may contract a producer to represent Power
Plants administered by them before the WEM.
Players will create economic
value and profitability
to the Mexican State
» Assignment of Assets
and Contracts for Generation
- Ministry of Energy shall determine the assignment
of Power Plants and Contracts to
each CFE entity to make sure that they participate
at the WEM with no market leverage
either at national or regional levels.
- Provide that each has similar conditions
of financial independence and profitability,
Transmission
» Vertical separation
• Through an EPS. These may form associations
or hire with an EPS, Affiliate and private
parties the financing, installation, maintenance,
administration, operation and expansion
of the National Transmission Network.
» Horizontal Separation
• At least 1 EPS.
Distribution
» Vertical separation
» Through EPS’s created
for Distribution purposes.
» Horizontal Separation
- At least 1 Distribution EPS that shall have
1 Business Unit for each of the 16 regional
divisions of CFE in charge of providing the
Distribution utility service.
Basic supply
• Through one EPS or Affiliates.
• In charge of supplying electric energy to retail
users with a load less than 2 MW starting in 2016.
Marketing different
from Basic Supply
Qualified Supply, Last Resource and Marketing not
associated to Supply.
» Horizontal separation
• If an affiliate performs more than one activity
of marketing, the CRE may establish an accounting
separation.
2. Corporate governance
The Unbundling Rules regulate the appointment,
integration and operation of the different governing
bodies of the EPS and Affiliates to be incorporated,
including qualification requirements,
authority and responsibilities of whoever is appointed
as Director General of each entity.
