On April 11 2002 a group of senators from the Democratic Revolutionary Party (Partido de la Revolución Democrática, or PRD) submitted an electricity reform proposal to Congress. A previous proposal, submitted on February 13 2002, was not considered the 'real' proposal.

The 'new' proposal continues to rely on five principles:

  • to preserve the principle of public service in order to guarantee supply to all consumers on a non-discriminatory basis;

  • to retain mid and long-term planning for the sector under state jurisdiction;

  • to maintain vertically integrated state owned entities while preserving existing generation, transmission and distribution assets under state jurisdiction;

  • to grant increased autonomy to electric public utilities by subjecting them to a less invasive taxation framework; and

  • to establish a new subsidization policy with better orientation that is still not tied to operational performance (this would eliminate the existing general subsidization policy currently in place).

The new PRD proposal spells out the role of the private sector. Under the proposal private-sector participation will be maintained through the existing mechanisms (eg, self-supply, independent production, imports and exports). The proposal establishes that these activities would require an Energy Regulatory Commission permit. The PRD proposal allows for transmission and distribution of energy by the private sector related to self-supply. This provision would basically authorize permit holders to use the transmission grid for wheeling their power under these schemes, an important aspect from the perspective of private sector participants.

For further information in this topic please contact Rogelio López-Velarde at Lopez Velarde, Heftye, Abogados by telephone (+52 55 50 81 1424) or by fax (+52 55 50 81 1425) or by email ([email protected]).