Editor’s Note: NGI’s Mexico Gas Price Index, a leader tracking Mexico natural gas market reform, is offering the following column by Eduardo Prud’homme as part of a regular series on understanding this process.


Energy sector regulation is often unintelligible to the layman. Regulatory accounting, the rate of return on equity or the efficiency factor are concepts far removed from the daily concerns of energy consumers. This distancing between the language of experts and that of the common citizen is theoretically a consequence of the technical nature of those who design, implement and monitor compliance of regulation. But it makes it no less important to understand.

In the case of the energy sector, given its intensity in capital requirements and operational risks, rules...