Wednesday, December 1

Clarification letter

In relation to the special report “Electric transition, adrift”, published by El Economista on November 24, 2021, I would like to make the following comments.

The special report tries to inform readers about one of the most important issues for Mexico today, but it does so with a biased perspective where there is only one point of view, that of those who are against the electricity reform.

In the text by Karol García (“Between ideology and indications, the government will fight and the electricity initiative”) it is said that the reform changes “would cause costs of around 85,000 million dollars in potential damages and compensation to private companies, and would affect the macroeconomic perspective of Mexico that would result in the loss of the country’s investment grade, as noted by Citibanamex ”.

The 2013 reform aimed to disintegrate the CFE in an unequal and unfair market. On the other hand, 46% of the generation that will remain in private hands represents a market larger than that of Argentina, Chile, Colombia or Peru, taking into account the number of users. With the reform, private investments will not be lost, since contracts can be made with the CFE derived from competitive processes, in which while ensuring the best conditions for the State, private companies will be able to recover their costs and generate profits. The idea is to start a new model where everyone wins, mainly the end users.

In the infographic that accompanies this text, it is stated that the impact of the reform will be “the disappearance of the electricity self-sufficiency regime.” It is not like this. Self-sufficiency will continue to function: illegal companies are left out to transmit and distribute energy without paying. Later in the same infographic it is mentioned that “the electricity that is dispatched first will no longer necessarily be the cheapest or the cleanest […] which would push up rates ”. The information is incomplete.

Due to the 2013 reform, although the cheapest energies enter the office first, at the end of the day they are paid the same as the last rate: the most expensive. In this scheme, the user is the most affected figure. The electricity reform plans to end this nonsense.

In the text by Octavio Amador (“At risk, changes that oxygenated the CFE”) it is recognized that the 2013 reform took some CFE plants out of the market. We want to add that the market has caused the total generation costs to not be paid to the power plants, which must be available for the safety and reliability of the system. These plants are dispatched when the system needs them and they are not rewarded for the benefits they bring, or the wear and tear to which they are subjected.

The reform caused that – due to dispatch rules – some plants that operate with gas (which, by the way, is not the dirtiest or most expensive energy, as noted) generate below their capacity.

In the text “Renewables, in check for electricity reform”, by Karol García, it is said that the president “maintains his policy of rescuing the Federal Electricity Commission (CFE), establishing its preponderance of 54% of energy generation regardless of the technology used or if the energy transition objectives and international agreements regarding the reduction of greenhouse gas emissions through the production of electricity are postponed ”.

This paragraph summarizes what many media have done: spread false information without any ethics. The reform does not delay the energy transition. The energy transition is not something of a simple will: technological, scientific, social and economic studies are needed to know the best alternatives for Mexico. The CFE is currently conducting these investigations to present a planned proposal that benefits all Mexicans.

In addition, the note does not mention that of the CFE’s 157 power generating plants, 69 are clean energy, which participate with just over 30% of electrical power capacity.

Nor does it describe the plans for the rehabilitation and modernization of 12 hydroelectric plants or the photovoltaic project in Puerto Peñasco, which will directly benefit 4 million people in Sonora and Baja California. The CFE only has three coal-fired plants and no more is planned.

In the note “Border taxes on carbon emissions, a new brake on dirty energy”, by Roberto Morales, it is reiterated that if the reform is approved, “it could reduce the growth of private production of clean energy”. The insistence without sustenance is malicious and misinforms readers: by September 2021, clean energy generation represents 27% of total participation, with only 8% difference to reach 35%. With the rehabilitation of the hydroelectric plants, the Puerto Peñasco photovoltaic plant, the next phase of the Humeros geothermal plant, and the certification of the Salamanca Cogeneration plant as clean energy, we will reach the goal in 2024. Currently 55% of the injection of The country’s clean energy is generated by CFE. Likewise, within 46% of the generation contemplated for private companies there will be a good part of clean energy.

Appealing to the right of reply that constitutionally assists us, I request that you publish this clarifying letter.

Luis Bravo Navarro, CFE Corporate Communication coordinator

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