On January 1, 2022, Resolution RES/550/2021, by which the new General Administrative Provisions issued by the Energy Regulatory Commission (“CRE”) are enacted, containing the criteria for efficiency, quality, reliability, continuity, security and sustainability of the National Electric System: Grid Code” (“New Grid Code”), came into force. The purpose of the New Grid Code is to update and replace the General Administrative Provisions
The most important aspects of the New Grid Code are the following: • Planning criteria are established for the reinforcement and construction works of General Distribution Grids that are considered within the Program for the Expansion and Modernization of General Distribution Grids. The National Energy Control Center (“CENACE”) will be responsible for developing the planning procedure for the reinforcement and construction works of the General Distribution Grids, derived from the proposals of CFE Distribución. • A new Procedure for the Root Cause Analysis of disturbances (mainly blackouts) in the National Electric System (“SEN”) is incorporated, which will establish corrective and preventive actions to assign responsibilities and set coordination measures to avoid impacts on users. The CRE and CENACE will be the authorities in charge of issuing the corresponding reports when such Root Cause Analysis Procedure is activated. • A new Procedure for the Reduction of Generation for Reliability is established. Such procedure consists of reducing electric power generation in a coordinated, orderly, safe and reliable manner, in the event of extraordinary conditions in the SEN. Such procedure provides that the reduction of electric power generation must be carried out considering the following order: o Generation in a testing period regardless of the type of technology. o Dispatchable intermittent generation. o Dispatchable hydroelectric generation. o Thermal generation. o Non-dispatchable hydroelectric generation. o Generation from Legacy Interconnection Contracts. o Geothermal and Nuclear generation. This new order is different from that established in the Old Grid Code, which established the reduction of electric power generation considering the following order: o Hydroelectric generation. o Thermal generation according to its cost. o Non-dispatchable Firm generation. o Intermittent generation. o Legacy generation (self-supply). In this sense, CENACE may, as a result of extraordinary conditions in the SEN, limit first the dispatch of electric power generated from renewable sources (dispatchable intermittent), mainly of private companies, allowing the electric power generated by the plants of the productive subsidiary generation companies of the Federal Electricity Commission (“CFE”), from conventional and clean sources such as thermal and hydroelectric, to be limited last and only in extraordinary cases. • It establishes the obligation for power plants using renewable energy sources to participate in Primary Control at Low Frequency, that is, for the delivery of active power, with the purpose of maintaining the load-generation balance. The foregoing could result in such power plants having to have storage systems in order to comply with such requirement. • As for the obligations to comply with technical requirements for the connection of load centers (Regulatory Manual of Technical Requirements for the Connection of Load Centers), energy consumers retain the same obligations to comply with the technical requirements established in the Old Grid Code for load centers in medium and high voltage; however, the obligation to comply with a power factor between 0.95 lagging and 1.0 at the connection point for load centers in medium voltage is included. Furthermore, it establishes that all load centers must identify when they are in non-compliance with respect to any of the technical requirements established in the New Grid Code, and, where applicable, their holders will have the obligation to submit a Work Plan to the CRE. Such Work Plan must state, among other things, the causes associated with the non-compliance, as well as the actions and estimated timeframes to achieve the respective compliance. As a result of the foregoing, load centers in medium and high voltage must comply at all times with the technical requirements established in the New Grid Code, regardless of whether they had previously submitted a Work Plan to the CRE under the terms of the Old Grid Code. In other words, all those companies with load centers in medium and high voltage that had submitted Work Plans to the CRE and that continue to fail to comply with the applicable technical requirements must update their Work Plans. We do not fail to note that, in accordance with the Electricity Industry Law, any non-compliance with the technical requirements established in the New Grid Code could give rise to the imposition of economic sanctions such as fines of 2% to 10% of the gross income received in the previous year by the holder of the respective load center and/or fines from MXN$4,811,000.00 (USD$235,000.00) up to MXN$19,244,000.00 (USD$938,000.00). For more information, please contact our experts: Edmond Grieger, Partner: +52 (55) 5258-1048 | egrieger@vwys.com.mx Ariel Garfio, Partner: +52 (55) 5258-1048 | agarfio@vwys.com.mx Roberto Flores, Associate: +52 (55) 5258-1048 | rflores@vwys.com.mx
