MEXICO CITY - July 20, 2023 - Global law firm Greenberg Traurig’s Administrative and Tax Litigation Group in Mexico City obtained an injunction, halting the implementation of a new rule for calculating the efficiency of electric power generation systems. The new rule, issued by the Energy Regulatory Commission (CRE), impacts a broad segment of the country’s clean energy sector.
On May 26, the CRE issued a directive – Agreement number A/018/2023 – which changed the methodology for calculating electric power cogeneration system efficiency and the criteria used in determining efficient cogeneration. It also changed the criteria and procedure for determining the percentage of fuel-free energy efficiency that was established in previous resolutions (RES/003/2011, RES/206/2014, RES/291/2012 and RES/1838/2016). .For more information, see the GT Alert, Mexico Changes Methodology for Calculating Fuel-Free Energy in Electric Power Cogeneration Systems.
The new directive aims to reduce the efficiency rates cogeneration power plants must meet to be considered efficient, thereby reducing their clean energy output. It also includes combined cycle power plants within the catalog of technologies that can be considered to generate clean energy.
The new regulation impacts various areas of the clean energy sector in Mexico, including:
- Allowing combined cycle or cogeneration plants with lower efficiency rates to receive clean energy certificates, thus obtaining an additional economic benefit from these certificates, and thereby significantly increasing the number of certificates in the market which may reduce their value;
- Releasing certain parties from the obligation to acquire clean energy certificates;
Allowing Mexico to use electric production technologies that’s considered neither efficient nor clean by global environment exports in order for the country to meet clean energy targets set by national policies and international treaties.
Several industry experts and civil associations have filed lawsuits before the district courts to challenge the new directive, requesting that its implementation be halted until these lawsuits are resolved.
The Specialized Courts on Economic Competition, Broadcasting and Telecommunications, located in Mexico City and with jurisdiction throughout the country, granted the temporary injunction, and reinstated the previous rules for determining the efficiency of cogeneration systems and for calculating fuel-free energy.
With this injunction, entities in the energy sector now have judicial protection from the implementation of the new rule. While the Mexican government may challenge the temporary injunction, the current state of the clean energy market and its environmental protections remain in effect.
The Greenberg Traurig team involved in this matter includes Joselino Morales (Shareholder, Mexico, Administrative and Tax Litigation), Pedro Resendez Bocanegra (Counsel, Energy and Natural Resources), Hugo Hernández (Associate, Mexico, Administrative and Tax Litigation), Miguel Saiz (Associate, Mexico, Administrative and Tax Litigation), and Perla Salgado (Associate, Mexico, Administrative and Tax Litigation).