On December 31, 2021, the “Resolution amending Resolution No. A/049/2017 of the Energy Regulatory Commission, which sets forth the criterion for the interpretation of the concept of ‘own needs’ established in Article 22 of the Electricity Industry Law, and which describes the general aspects applicable to the Isolated Supply activity” (the “Resolution”) was published in the Federal Official Gazette.
Article 22 of the Electricity Industry Law (“LIE”) establishes that Isolated Supply is the generation or importation of electric power for the satisfaction of own needs or for exportation, without transmitting such power through the National Transmission Grid or through the General Distribution Grids. The most relevant aspects of the Resolution are the following: • Elimination of the Local Generation figure, thereby limiting the possibility for private parties to develop an on-site electric power generation-supply option that allowed the delivery of surplus energy to several load centers connected to the same Private Grid. • It restricts the possibility of participation of expert third parties in the financing, installation, maintenance and operation activities of the power plants under the Isolated Supply scheme. • As a result of the foregoing, holders of generation permits under the Isolated Supply scheme will be required to carry out such activities directly. Where applicable, viable legal strategies must be analyzed on a case-by-case basis in order to carry out these activities in compliance with the provisions of the Resolution. • The simultaneous coexistence, for a single load center, of legacy energy supply schemes (self-supply/cogeneration) under the Public Electric Power Service Law and of Isolated Supply under the LIE is prohibited. • The foregoing confirms the current federal administration’s trend of limiting participation in the market by self-supply schemes and, above all, of forcing the migration of such self-supply schemes to schemes regulated under the LIE. • In the case of power plants under Isolated Supply schemes with interconnection to the National Electric System, notwithstanding that they have the infrastructure capable of ensuring that no electric power injection will occur, the representation of such power plant in the Wholesale Electricity Market by a Generator will be required, which translates into an additional regulatory burden for the application of this generation regime. • The capacity of the Power Plants under the Isolated Supply scheme must be equal to or less than the maximum demand of the Load Centers being supplied within the Isolated Supply scheme. • Holders of permits under the Isolated Supply scheme must post financial guarantees both for the interconnection of the power plant and for the connection of the load center. Prior to this Resolution, only the financial guarantee for the greater of the power plant capacity and the load center demand had to be posted. For its part, it is important to note that the Third Transitory Article of the Resolution provides that the amendments established therein shall only apply to those Isolated Supply generation permit applications filed after the publication of the Resolution. Schemes that already have a permit granted by the CRE or that have applied for one will not be affected by the publication of the Resolution. It is important to analyze, on a case-by-case basis, the impacts on their energy generation projects and business schemes, in order to determine the legal defense mechanisms that could be implemented in the event that the Resolution generates any repercussion for a specific project or its activities. At Von Wobeser, we have advised several of our clients in addressing situations of this nature, and therefore we can support you in handling any matter related to the Resolution. For more information, please contact our experts: Edmond Grieger, Partner: +52 (55) 5258-1048 | egrieger@vwys.com.mx Ariel Garfio, Partner: +52 (55) 5258-1048 | agarfio@vwys.com.mx Roberto Flores, Associate: +52 (55) 5258-1048 | rflores@vwys.com.mx
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