Sempra’s Mexico unit says power plan hobbles sector

Bloomberg

Infraestructura Energetica Nova SAB said a draft proposal by Mexico’s energy regulator to modify some transmission permits would make it impossible to supply power to new partners or carry out any expansion plans.
In a letter posted in response to the draft proposal, the Mexican subsidiary of the US’s Sempra classifies it as “high regulatory impact” and argues that it violates policy that’s already in place.
“This modification implies that it will be impossible to deliver energy to new self-supply partners, with consequential costs and losses due to breach of contract, and will make it impossible to carry out expansion plans,” IEnova’s letter says.
Mexico’s President Andres Manuel Lopez Obrador has sought to dial back energy reforms from the previous center-right administration and consolidate power in the hands of Mexico’s state-owned energy companies. The leftist leader has criticised some subsidies for electric power, saying they’ve benefited private companies rather than consumers, and has vowed to review the contracts.
The draft proposal, posted by Mexico’s Regulatory Energy Commission (CRE) would prohibit companies from adding new clients to self-supply contracts that were granted before the electricity reforms of 2013 and 2014.
This will force some companies to migrate to the new model for the wholesale power market and no longer receive incentives that reduced transmission and distribution charges for self-supply contracts, which enable companies to generate electricity for their own businesses.
Industry members fear that this could add financial risk to companies’ operations.