Identifier
Created
Classification
Origin
07MEXICO455
2007-01-30 19:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Mexico
Cable title:  

MEXICAN ELECTRICITY U/S ON LIBERALIZATION,

Tags:  ECON ENRG MX 
pdf how-to read a cable
VZCZCXRO2853
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0455/01 0301920
ZNR UUUUU ZZH
P 301920Z JAN 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5152
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHFR/AMEMBASSY PARIS PRIORITY 0357
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
UNCLAS SECTION 01 OF 02 MEXICO 000455 

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SENSITIVE
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E.O. 12958: N/A
TAGS: ECON ENRG MX
SUBJECT: MEXICAN ELECTRICITY U/S ON LIBERALIZATION,
COOPERATION WITH U.S.

REF: A. 06 MEXICO 7037

B. 06 MEXICO 6049

Sensitive but unclassified.

UNCLAS SECTION 01 OF 02 MEXICO 000455

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ENRG MX
SUBJECT: MEXICAN ELECTRICITY U/S ON LIBERALIZATION,
COOPERATION WITH U.S.

REF: A. 06 MEXICO 7037

B. 06 MEXICO 6049

Sensitive but unclassified.


1. (U) This is an action message, see para 7.


2. (SBU) Summary: Reuben Flores, Mexico's new
Undersecretary for Electricity in the Energy Secretariat
(SENER) supports further trans-border electrical
interconnections between the U.S. and Mexico as long as they
make economic sense. On reform of the Mexican electricity
monopoly, the Federal Electricity Commission (CFE),he
confirmed that the GOM plans to separate CFE into separate
business units, but he stopped short of calling the pending
reorganization a prelude to competition in electrical
transmission or distribution. He also expressed opposition
towards granting the National Electric Reliability
Corporation (NERC) authority over Mexican facilities and
seeks to engage with appropriate U.S. officials on the issue.
See action request in paragraph 7. End Summary.


3. (SBU) Emboffs met January 26 with Ruben Flores Garcia,
the new Undersecretary for Electricity at SENER. Flores told
us that he is interested in improving trans-border
electricity interconnections between the U.S. and Mexico, but
in only those areas where the interconnections make economic
sense. He also did not see a need to make synchronized
connections. Back-to-back connections, which link the two
alternating current systems via a direct current bridge,
would continue to be sufficient. While, for reliabilities
sake, it could be advantageous to connect Mexico directly, at
least to the ERCOT (Texas) grid, he did not see a pressing
economic need to do so.


4. (SBU) Flores confirmed what we heard from Undersecretary
for Energy Planning, Jordy Herrera (ref A) that the Calderon
team would seek to separate CFE from a single entity into
constituent business units -- generation, transmission, and
distribution. Nevertheless, Flores implied that the
regulatory framework necessary for doing so would keep CFE as
a single company, similar to the Pemex model, and not create
distinct companies as a prelude to competition as Herrera had
suggested.


5. (SBU) Flores also rejected the idea of opening the
transmission business to private participation or allowing
the construction of "merchant" transmission lines. On
nuclear power, he agreed with CFE's continuing efforts to
expand the Laguna Verde plant, but he did not go as far as to
support plans for significant new construction of nuclear
plants as foreseen by the previous SENER team (ref B). He
expected that SENER and CFE would keep the nuclear percentage
in the Mexican power portfolio between 8 and 12 percent.


6. (SBU) On the parts of the Mesoamerican Energy Integration
Project, Flores noted that construction of the
Mexico-Guatemala interconnection was well in train and
regardless of the outcome of the rest of the project, it
would continue. As an aside, Flores said that Central
American countries believed the interconnect would give them
a source of cheap electric power, but this would not be the
case. Flores also noted with disappointment that Electricite
de France (EDF) decided recently to divest of its generating
plants (Independent Power Projects (IPPs)) in Mexico to
concentrate more closely on opportunities in Eastern Europe.
He suggested that there would be an opportunity for U.S.
firms to take over their operation.


7. (SBU) In closing, Flores raised the the North American
Electric Reliability Corporation (NERC) which has revised its
Policies into Standards, and now has authority to enforce
those standards on power system entities operating in the
U.S. through significant financial penalties for
noncompliance. He expressed concern over efforts between
NERC and the GOM to obtain comparable authority to enforce
its standards on systems in Baja California. Flores implied
that Mexico was not ready to grant the NERC this authority,
but wanted to discuss the issue with the appropriate USG
officials. Action Request: Given the change of
Administration, we request that U.S. officials connected to
the NERC contact Flores. Post would be pleased to facilitate
a meeting.


8. (U) Flores came to his Undersecretary position after
serving as Commissioner in the Mexican Energy Regulatory
Commission (CRE) under then Director General now Energy
Secretary Georgina Kessel. Flores also held positions at the

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MEXICO 00000455 002 OF 002


Federal Electricity Commission (CFE) and within the Energy
Secretariat. He is also professor of Electrical Engineering

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at (the Technical Institute of Superior Studies of the
Occident) ITESO in Guadalajara.


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