Mexico Competition Watchdog Advises On New Energy Regulations

Mexico’s competition regulator COFECE issued an opinion on controversial draft regulations energy regulator CRE published via the website of regulatory reform agency CONAMER, adding to objections mostly from natural gas market participants submitted since August.

A document published on the draft regulation page on the CONAMER site shows CONAMER received COFECE’s opinion on October 18th, in which the company supports a clearer separation of its responsibilities from those of the CRE.

COFECE says that the draft regulation invades its responsibility to evaluate competition matters in part because it attempts to establish a methodology to analyse the effects of cross participation on the market.

Related: Mexico Competition Commission Warns Of Higher Electricity Rates

Cross participation in most markets in Mexico is usually first evaluated by COFECE. In addition, open access under the country’s 2014 hydrocarbons law requires private pipelines to have strict separation between capacity holder and transporter roles. This requirement means that if a company owns a pipeline, it would not be able to directly control capacity in that pipeline, although other options, such as joint ventures, have been attempted to get around these limitations.

COFECE’s opinion also points out that the draft regulation assigns to CRE the responsibility of evaluating the effects of cross participation on competition and market efficiency. COFECE warns that CRE is attempting to replicate the competition analysis it normally undertakes based on its responsibilities outlined in Mexico’s legal and regulatory framework.

COFECE also says the CRE’s draft regulation does not recognize its specialisation, which is outlined in article 83 of Mexico’s hydrocarbons law. COFECE’s opinion states that the draft regulation attempts to give CRE some of COFECE’s responsibilities, which may cause uncertainty for entities that may apply for authorisation. COFECE also points out various other elements of the draft regulation that if implemented would involve CRE violating existing sections of Mexico’s law and regulations to the detriment of COFECE.