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Client Alert | COFECE’s constitutional action vs Dispatch Policy

On May 15, 2020, the Ministry of Energy (“SENER”) published in the Federal Official Gazette the Policy for the Reliability, Security, Continuity and Quality of the National Electric System (the “Dispatch Policy”), to set general guidelines aimed to guarantee the supply of electricity and the reliability of the National Electric System (“SEN”). As a result, the Dispatch Policy established that the security of the dispatch would take precedence over economic efficiency.

Mexico’s Federal Economic Competition Commission (“COFECE”), filed a constitutional action (controversia constitucional) to contest the Dispatch Policy, arguing that it breached COFECE’s constitutional mandate to protect free competition and efficient markets in the power generation and supply of electricity.

On February 3rd, 2021, the Second Chamber of Mexico´s Supreme Court (“SCJN”) ruled COFECE’s constitutional action, acknowledging SENER´s power to issue the SEN’s public policy, however, under the limitations set forth in the Constitution and the law.  Thus, the SCJN resolved the unconstitutionality of about twenty provisions of the Dispatch Policy. 1

Among the provisions declared null by the SCJN are the discretionary powers granted to the National Center for Electricity Control (“CENACE”) to limit and reject the interconnection of power plants in nodes or areas with power congestion, to issue the criteria that determines requirements of related services for reliability and to discretionally instruct the assignment and dispatch of units out of merit. The ruling also invalidated the participation of the Federal Electricity Commission (“CFE”) in the draft of the reliability guidelines and criteria.

The provisions of the Dispatch Policy that were not declared unconstitutional include CFE´s strategic planning to promote an integral development of the SEN; guarantee the design and expansion of the SEN by optimizing costs and allowing CFE’s proactive role (as transporter and distributor) in the plans to broaden and modernize the transmission lines; the inclusion of several related services not currently contained in the Electric Industry Law;  and intermitent clean energy power plants that cause an increase in the related services requirements shall pay for such increase in their corresponding proportion.

The States of Tamaulipas, Jalisco, and Colima also filed their own constitutional actions against the Dispatch Policy; none of which have been ruled to date.

Notwithstanding COFECE’s constitutional action and its ruling, on November 13th, 2020, a Federal Judge in an amparo ruling declared the entire Dispatch Policy unconstitutional with general effects, because it failed to comply with the regulatory impact appraisal process.  Although the authorities contested such ruling, to this date the Dispatch Policy’s enforceability is suspended.

At Gonzalez Calvillo we are prepared to provide the advice they require in relation these new regulatory provisions. We remain at your disposal for any questions or clarifications regarding the scope of this.

Articles 3.8.4, 5.4, 5.23, 5.7, 5.12, 5.12.1, 5.12.2, 5.12.3, 5.12. 4, 5.12.5, 5.12.6, 5.12.7, 5.12.8, 5.12.9, 5.12.10, 5.12.11, 5.12.12, 5.13, 5.15 in connection with the “inteconnection with CENACE’s opinión on the interconnection feasibility” (“dictamen de viabilidad de interconexión emitido por el CENACE”), 7.1, 8.4 y 10.2

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