UNCLAS MONTERREY 000029

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ENRG EPET ECIN ECON PGOV MX
SUBJECT: ENERGY COUNCIL VISIT PROMOTES COOPERATION ON ENERGY ISSUES


1. (U) The U.S. Energy Council came to Monterrey on
January 21 to meet private sector contacts and Nuevo Leon state
officials to promote information sharing on energy issues
ranging from alternative energy, ways to increase energy
production and global warming. The Energy Council is a
non-partisan group of state legislators from 11 U.S. states and
5 Canadian provinces (covering 80% of U.S. oil production and
almost all of Canada's). The Council does not advocate
particular solutions, but holds conferences and provides
networking opportunities. The Energy Council has been trying to
recruit Mexican states as members, focusing on Nuevo Leon and
Chihuahua. We last met Energy Council members at the October
2007 Border Energy Forum in Monterrey. .




2. (U) The Energy Council made its presentation to the
Consulate's regular Business Roundtable (consisting of some of
our best private sector contacts), the Monterrey Chapter of the
American Chamber of Commerce, and the energy committee of the
Nuevo Leon state legislature. The Energy Council presentation
was led by its President, Alabama state representative Mike
Hill, and the head of its private sector committee, Mississippi
state senator Tommy Moffatt. Following the meetings, several
local companies expressed interest in joining the private sector
arm of the Energy Council. Others pledged to work with the
state of Nuevo Leon in pushing for Nuevo Leon membership (once
the next gubernatorial administration takes office during the
fall).




3. (SBU) The most interesting discussion concerned
alternative energy. Javier Trevino, Senior Vice President for
Public Affairs for the multinational cement giant Cemex,
described Cemex's massive wind farm project in Oaxaca. Oaxaca
has a great potential for wind energy, and Trevino stated that
Cemex and a Spanish company, Acciona Energia, will invest $550
million to build a wind farm that will produce 250 megawatts of
energy, enough to power a city of 500,000 people or provide 25%
of Cemex's net energy consumption. Trevino said that the most
difficult issues had been negotiating to rent the land from the
local community, which required numerous meetings with the
community, and resolving the regulatory hurdles surrounding the
transmission of the energy. Cemex negotiated a lower rate for
electricity transmission with the state monopoly CFE, permitting
Cemex to supply electricity Mexican grid with power and to draw
power off the grid at its production facilities. Cemex also
agreed to build transmission lines to link the wind farm to the
nationwide grid. Several other companies present at the event
expressed interest in this project. Energy Council President
Hill pointed out that the profitability of alternative energy
projects depends on energy prices, although in general the
Energy Council projects that energy prices will increase in the
future. Meanwhile, Chairman of the Nuevo Leon state Energy
Council Alejandro Lambreton noted that the 2007 Mexican federal
energy reform also includes targets for Mexican production of
alternative energy.




4. (SBU) Comment. As the Mexican national debate on
energy issues is all too often simply framed as whether to
privatize Pemex, the Energy Council's message of sharing
information at the grass-roots level is a welcome addition to
the dialogue here. With luck, Mexico's 2007 energy reform will
open space for state and private development of energy
alternatives such as Cemex's wind farm. And hopefully Cemex's
ability to negotiate electricity transmission rates with CFE
will encourage other, medium sized private sector companies to
seek to do the same for similar projects. End Comment.

WILLIAMSON