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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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    References listed on IDEAS

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    Cited by:

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    2. Rafael Peña Gallardo & Adalberto Ospino Castro & Juan Segundo Ramírez & Aurelio Hernández Rodriguez & Eliana Noriega Angarita & Yecid Muñoz 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.
    3. 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.
    4. 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, Open Access Journal, vol. 11(19), pages 1-19, September.
    5. 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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