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Energy reform in Mexico: Imperfect unbundling in the electricity sector

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  • Ibarra-Yunez, Alejandro

Abstract

Mexico is in the midst of enacting new energy market reform. After one year of presidential proposals, 21 laws were enacted in August, 2014. The analysis shows inconsistencies and lacunae in defining an open electricity market. According to the proposed reform, incumbent Comisión Federal de Electricidad (CFE) will keep transmission and distribution vertically integrated with newly created subsidiaries subject to third-party subcontracting, while private generation participants will compete in a wholesale market operated by Centro Nacional de Control de Energía (CENACE). Following an institutional economics approach and a framework to account for transition and coordination issues, the problem of misaligned incentives is analyzed along two governance dimensions: regulatory failure and market foreclosure. The research predicts negative effects of energy reform on grid investments and government coordination in Mexico.

Suggested Citation

  • Ibarra-Yunez, Alejandro, 2015. "Energy reform in Mexico: Imperfect unbundling in the electricity sector," Utilities Policy, Elsevier, vol. 35(C), pages 19-27.
    • Handle: RePEc:eee:juipol:v:35:y:2015:i:c:p:19-27
    DOI: 10.1016/j.jup.2015.06.009
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    Cited by:

    1. Juan C. Percino-Picazo & Armando R. Llamas-Terres & Federico A. Viramontes-Brown, 2021. "Analysis of Restructuring the Mexican Electricity Sector to Operate in a Wholesale Energy Market," Energies, MDPI, vol. 14(11), pages 1-26, June.
    2. González-Bravo, Ramón & Fuentes-Cortés, Luis Fabián & Ponce-Ortega, José María, 2017. "Defining priorities in the design of power and water distribution networks," Energy, Elsevier, vol. 137(C), pages 1026-1040.
    3. Rafael Pe a Gallardo & Adalberto Ospino Castro & Juan Segundo Ram rez & Aurelio Hern ndez Rodriguez & Eliana Noriega Angarita & Yecid Mu oz Maldonado, 2020. "Economic and Energy Analysis of Small Capacity Grid-connected Hybrid Photovoltaic-wind Systems in Mexico," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 7-17.
    4. Valenzuela, Jose Maria, 2023. "State ownership in liberal economic governance? De-risking private investment in the electricity sector in Mexico," World Development Perspectives, Elsevier, vol. 31(C).
    5. Khan, Muhammad T. & Thopil, George Alex & Lalk, Jorg, 2016. "Review of proposals for practical power sector restructuring and reforms in a dynamic electricity supply industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 326-335.
    6. Bowen Tang & Yuanzhang Sun & Nan Zhou & Bo Shen, 2019. "Sustainable Development of Power Retailers and Industrial Parks in China’s Belt and Road Initiative," Sustainability, MDPI, vol. 11(19), pages 1-19, September.
    7. Blagrave, Patrick & Furceri, Davide, 2021. "The macroeconomic effects of electricity-sector privatization," Energy Economics, Elsevier, vol. 100(C).
    8. David Hall & Tue Anh Nguyen, 2017. "Electricity Liberalisation in Developing Countries," Progress in Development Studies, , vol. 17(2), pages 99-115, April.
    9. Alpizar–Castro, Israel & Rodríguez–Monroy, Carlos, 2016. "Review of Mexico׳s energy reform in 2013: Background, analysis of the reform and reactions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 725-736.

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    More about this item

    Keywords

    Electricity sector reform; Unbundling; Regulation; Transmission investment; Independent system operator;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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