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Andrea Calo discusses the Coordination Rules in the Mexico Natural Gas Markets

October 26, 2017 / News & Updates

Andrea Calo, Director of Market Intelligence Mexico, discusses the Coordination Rules in the Mexico Natural Gas markets in an interview with Natural Gas Intelligence.

By: Peter de Montmollin
October 26, 2017

The Mexican government is rethinking harmonization rules it has proposed for the natural gas and power markets, following feedback from the energy industry.

The natural gas sector had especially criticized the regulations, which the Energy Ministry (Sener) released in July as a draft for public comment.

The draft outlines rules and procedures for information sharing among market agents and coordinating gas deliveries to power plants during supply disruptions. Gas-fired generators are the leading producers on the Mexican power grid, and they are expected to increase their share of the supply mix in the coming years.

The proposed rules were drafted as a market manual, similar to a supplemental regulation under the legal framework of the Mexican energy sector. The manual would apply specifically to power plants, the electricity market’s independent system operator (ISO), natural gas pipeline operators and shippers, and local gas distribution companies.

The Asociacion Mexicana de Gas Natural (AMGN), a local industry association, argued that the manual granted the Mexican ISO, the Centro Nacional de Control de Energia (Cenace), powers beyond its legal authority. In particular, the association was concerned that the manual allows Cenace to reassign capacity on pipelines to ensure that power plants receive gas in the event of supply restrictions, according to its comments on the draft.

“One of the main criticisms this document has received is that it’s been written for Cenace and for the benefit of electric market users of natural gas, in detriment of other natural gas users,” Andrea Calo told NGI. She is director of Market Intelligence – Mexico with Customized Energy Solutions Ltd.

“The main challenge, when they finalize the document, will be being able to set forth coordination rules that are aligned with existing rules and regulations and are not discriminatory to other natural gas users,” she added.

AMGN, in its comments, also claimed that the information-sharing mandates would generate excessive regulatory burdens for pipeline operators by requiring that they keep Cenace informed of nominations and scheduling, contract information and maintenance plans, among other information. Under Mexico’s existing gas market rules, pipelines must already post most of this information on their electronic bulletin boards.

After receiving comments and meeting with industry representatives, Sener is now rewriting the market manual. The ministry must resubmit the document to Cofemer, the federal agency in charge of reviewing new regulations. Once submitted, the updated manual will remain open for public comment and, if necessary, further revision until Cofemer issues a final approval.

“We still don’t have a publication date, although we are working to have it ready as soon as possible,” a ministry spokesperson told NGI. “I expect the new version to be uploaded soon and for the manual to receive a final ruling in the next two or three weeks.”

To read the entire interview and what Andrea had to say please click here!