Until now, the CRE regulates the participants in the electricity market, including the state-owned CFE and the rest of the private companies that are part of the market before and after the issuance of the 2013 reform. But its functions go beyond those of regulating activities of electricity generation, it also sets the standard in the markets for LP gas, natural gas and service stations for the sale of gasoline and other fuels, from giving and removing permits, to setting prices in the case of LP gas.
Its functions, according to the initiative, would become part of the Ministry of Energy, which with this change would take on the role of regulator among market participants and in charge of the necessary authorizations for any new company to start a new project. . This was already exercised tacitly, since the end of 2019, when Leopoldo Melchi, a man close to the Rocío Nahle secretariat, was appointed as head of the regulator. Then the federal government ordered the commissioners to cease issuing new permits for electricity generation and new gas stations.
Meanwhile, the CNH serves a part of the market that is very foreign to that related to the state-owned CFE. The regulator has become the administrator and supervisor of the contracts that were given in the oil rounds to private companies and the state-owned Pemex.
On the surface, the commission led by Rogelio Hernández has no relation to the electricity market and his proposal for its disappearance could be interpreted as an opportunity to culminate in the process of weakening the regulators of the energy sector, which began a few years ago. But the specialists consulted point out that the proposal to eliminate the CNH is aimed at a series of changes that will follow this reform and that will seek to modify the dynamics of the oil sector.
Both organizations were thought of as technical entities, whose actions were separated from the political task. “What is being done is to disappear that separation that existed in the political cycles and subject the decisions of Sener as regulator of the sector to the will of the government in turn, because finally the Secretary of Energy is a direct appointment of the president”, says Ana Lilia Moreno, researcher from México Evalúa.
Regulators – especially CRE – have been accused throughout the six-year term of favoring private companies and of having authorized hundreds of permits for the state-owned CFE to lose market share, after the reform of the last six-year term. The most critical scene occurred between Guillermo García Alcocer and President López Obrador, after the former criticized the nominations of those who later occupied a position as commissioners, which led to his early departure from the regulator.
The president had asked regulators about a year ago to join in his proposal to strengthen the two state energy companies. In July 2020, he sent them a memorandum asking them to privilege the two state companies, Pemex and CFE, over private initiative, which was endorsed in a couple of meetings at the National Palace. The objective of these meetings was to design a strategy to return the leadership of energy policy to the State and thus avoid the impulse of a constitutional reform. But the latter has already arrived and seeks to put aside the regulatory system that was promoted for more than 20 years.
The constitutional reform thus becomes the most aggressive attempt of the Executive to eliminate the organizations, but its actions had already been weakened for several years. Both regulators have seen their annual budget cut steadily and with it their payroll has slimmed by around 20% since the federal government began. The main positions of the CRE have been filled by former officials related to Pemex and CFE, while the CNH has not completed its quorum of commissioners since the beginning of the six-year term.