The CEO of Mexico’s state utility Comisión Federal de Electricidad (CFE), Manuel Bartlett, reiterated his opposition to the 2014 constitutional reform that opened the energy industry to private competition in an address to members of congress on Oct. 10 that lasted nearly six hours.
In his presentation before 29 congressional members from the chamber’s energy and infrastructure committees -- in which he fielded and responded to a series of questions -- Bartlett stayed on message, reiterating that the decision by the previous government to divide the CFE into several subsidiaries and affiliates will need to be undone to strengthen the company and improve its financial health. Bartlett became CEO of the CFE on Dec. 1, when President Andrés Manuel López Obrador took office.
“President López Obrador gave us very simple instructions: He ordered me and my teammates to rescue the CFE, telling us that ‘CFE has to generate energy,’” Bartlett said in his opening comments. “CFE was becoming a buyer of energy, not a generator of energy, which is a contradiction…The first thing the president told us was that ‘it’s necessary that CFE generates electricity, return it to that position.’”
Bartlett said that, to do so, the company will need to slowly reverse elements of the energy reform approved in the previous administration of Enrique Peña Nieto. He indicated interest in rolling back the constitutional amendment that permitted the opening of the industry and the fragmentation of the company, but said that won’t be considered until the halfway point of López Obrador’s six-year term.
“We are respecting the legal framework established by the energy reform, given that the president made the decision that he would not initiate a reform in the first half of his six-year term,” Bartlett said. He added that the goal of the company is to continue to generate a minimum of 54% of the country’s electricity which, if unable to be maintained, could trigger an effort to push for a constitutional amendment to change energy reform legislation.
“The constitution will remain as it is while there is no decision to change the laws by the president,” Bartlett said. “He explained openly to business leaders and the private sector that he could, given that he has the majority in the senate and congress, get rid of the laws that are obstructing us. But he is going to comply with his word until the midpoint of his six-year term.”
Texas Natural Gas
Enrique Ochoa, CFE CEO from 2014-2016 and part of the congressional energy committee as a member of the Institutional Revolutionary Party, or PRI, asked Bartlett to explain the CFE’s plans to continue to access low-cost natural gas from Texas. “As we all know, Texas produces the cheapest gas in the world and, for several reasons, Mexico doesn’t produce sufficient natural gas to meet national demand,” Ochoa said. He then asked: “How is the CFE going to take advantage of that gas to sell it to the biggest users at a national level?”
In his response, Bartlett recapped the natural gas pipeline contract renegotiations, which, after months of talks between the CFE and private companies, were resolved in late August. He emphasized that the terms signed in the previous administration were unfavorable for Mexico, and added that “we no longer speak of unfair contracts, because now they are our partners.”
He then addressed Ochoa’s question.
“We are going to sell gas and we have an important amount of gas that is going to allow us to finance our plants and have the resources…to generate the electricity needed,” Bartlett said. “We have the resources and now we have more. Now we have more gas to assure lower electricity rates.”
Several members of the congressional committees asked Bartlett about the CFE’s plan to hold future electricity auctions that would allow for more solar, wind and alternative energy generation in the country. Some criticized the CFE for a diminished interest in developing alternative sources for electricity generation and reminded him that Mexico has a goal to produce 35 percent of its power with renewable sources by 2024.
Bartlett responded to the questions by explaining that solar and wind generation is expensive.
“The problem that we have with those sources of energy, and maybe this will answer some of the questions you have asked me, reminds me that I said that wind and solar energy are expensive. And it is expensive,” Bartlett said. He explained that it is a myth that solar and wind energy are inexpensive sources of energy generation.
“If there’s no wind, there’s no electricity. If there’s no sun and it’s cloudy, well, there’s no electricity,” he said.
He said that the push for more clean power in Mexico must understand that these sources are pricey. The company is actively looking to generate more hydroelectric power in the short-term, he said.
“We aren’t against clean energy, we’re totally for it,” Bartlett said, stating that the company wants Mexico to reach the 35% renewable generation goal by 2024. “But it’s a big myth that clean energies easily generate electricity and that they’re very cheap. That’s a lie.”