Mexico: Criteria For The Non-Burdensome Allocation Of Clean Energy Certificates (CEL) For The Obligation Year 2020
Executive Summary
- Agreement A/001/2023, published by the CRE, establishes the criteria for the assignment of Clean Energy Certificates available in the CRE's account, corresponding to the 2020 obligation year.
- The criteria of the Agreement establish that the LECs that have not been issued or granted will be transferred to the CRE's account, provided that a six-month period has elapsed from the date on which they should have been emitted and given.
- The allocation will not be onerous and will be distributed proportionally to the consumption of all obligated participants at the end of the obligation period and who are up to date with their obligations for previous periods.
On March 27, 2023, the Energy Regulatory Commission ("CRE") published, in the Official Gazette of the Federation ("DOF"), Agreement A/001/2023 ("Agreement") establishing the criteria for the allocation of Clean Energy Certificates ("CELs") available in the CRE's account, corresponding to the 2020 obligation year.
The Agreement is intended to establish the mechanism by which the CRE will carry out the non-burdensome allocation of the Clean Energy Certificates corresponding to the 2020 obligation period.
The assignment corresponds to the CELs that were not issued or granted; these will be transferred to the CRE provided that a period of six months has elapsed from the date on which they should have been assigned in the corresponding account of the Certificate Management System and Compliance with Clean Energy Obligations ("S-CEL").
The allocation will not be onerous and will be distributed proportionally to the consumption of all obligated participants at the end of the obligation period and who are up to date with their obligations for previous periods.
Context and background
On October 31, 2014, the Guidelines that establish the criteria for the granting of CELs and the requirements for their acquisition were published in the DOF to achieve the goals regarding the participation of clean energies in the generation of electric power, with the minimum cost and based on market mechanisms ("Guidelines").
On March 30, 2016, the General Administrative Provisions for the operation of the S-CEL were published in the DOF, issued through Resolution RES/174/2016 ("Resolution S-CEL"), which regulates the S-CEL's operation and the administrative procedure through which CELs will be issued, granted, settled and canceled.
Important aspects of the agreement
The criteria of the Agreement are based on provision 34 of Resolution S-CEL, which establishes that the CELs that have not been issued or granted will be transferred to the CRE's account, provided that a period of six months has elapsed from the date on which they should have been issued and granted.
The criteria of the Agreement correspond to the non-burdensome allocation of the CELs, corresponding to the 2020 obligation year and some remnants of 2019, so the assignment should be made through the S-CEL.
Derived from the above, the criterion for the assignment of available CECs consists of assigning a proportional part of the consumption represented by each Obligated Participant in proportion to the total consumption of the year in question.
In the cases in which the Obligated Participants have not registered in the S-CEL, non-compliance with their Clean Energy Obligations will be configured and therefore, they will not be subject to receive CELs for non-burdensome allocation.
If there are cases of Obligated Participants that are not registered in the S-CEL and therefore, are not eligible to receive CELs on a non-onerous basis, it is foreseeable that the sum of the percentages of consumption represented by each Obligated Participant in the S-CEL does not reach 100% of the electricity consumption of the National Electric System. Consequently, there may be CELs in the CRE's account corresponding to the 2020 obligation year whose non-onerous allocation is not possible.
Thus, the unallocated CECs will remain in the CRE's account and shall be considered in the calculation of the availability of CECs for the following year of obligations referred to in the Agreement.
Determination of the Remaining LEC for the 2019 obligation year
For the calculation of the remainder of the CEL of the non-onerous exchange corresponding to the 2019 obligation year, the CRE used a formula within the Agreement.
The CRE applied the following criteria:
- Regarding the total electricity consumption for 2019, the value submitted by the National Energy Control Center ("CENACE") of 277,757,746.24 MWh was used.
- The criteria for the assignation of available CELs in the CRE account, corresponding to the 2019 obligation year, establish that the balance of CELs is 3,247,055 CELs as of March 2020.
- The total electricity consumption of the 99 Obligated Participants that received non-burdensome CELs for the fiscal year 2019, according to the S-CEL, is 251,508,287.86 MWh.
- The CEL fractions that were not granted will be transferred back to the CRE.
- To determine the remainder of the 2019 non-bonus exchange, the number of allocated CELs must be subtracted from the number of Certificates available in the CRE's account. Based on the above, the remainder was 306,912.
- The remainder in the 2019 non-burdensome exchange is because S-CEL cannot deliver fractions of CEL, and the total consumption of the Obligated Participants that were elected to receive CEL is the lowest reported by CENACE.
Conditions for Granting
All persons who are:
- Obligated Participants under the Guidelines.
- Clean Generators and Suppliers representing Distributed Clean Generation who wish to be granted CELs.
- Voluntary Entities wishing to acquire, sell or voluntarily cancel CEL.
If the Obligated Participants receive energy by isolated supply, as well as the holders of Legacy Interconnection Contracts that include Load Centers, in which the electric energy does not come entirely from a Clean Power Plant, they may receive the available CELs on account of the CRE provided that:
- Are Obligated Participants with active registration in the S-CEL during the grant period.
- Have registered before May 15, 2021.
- Have filed their annual return at 100% for the 2019 obligation year.
- Have filed their annual tax return with a deferral equal to or less than 25% of their obligation for the 2020 period.
- Do not have a default notice for the 2020 obligation year.
- Be current with annual S-CEL account management fees through 2020.
The Agreement entered into force on March 28, 2023.
Link to the Agreement
Authors
Juan Carlos Machorro
Partner
+52 55 5279 5463
jmachorro@s-s.mx
Norma Álvarez
Associate
+52 55 5279 5415
norma.alvarez@s-s.mx
Pablo Ortiz Mena
Associate
+52 55 5279 5499
pablo.ortizmena@s-s.mx