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1 Chapter one Domestic electricity market During the period, domestic electric power consumption maintained an average annual growth rate of 3.9% as a result of the dynamics observed mainly in the residential and medium-sized industry sectors. Self-supply has also shown a dynamic behavior of 10.2%. This chapter presents the detailed behavior of economic variables and of domestic electricity consumption, the recent evolution of installed capacity, electric power production, fuel consumption for public service as well as self-supply. 1.1 Domestic electric power consumption Domestic electric power consumption (CNEE for its Spanish acronym) is integrated by two components: i) domestic electric power sales, including the electricity delivered to users with the public sector s production resources, considering independent power producers, and ii) self-supply, including self-supply license-holders, cogeneration, continuous own usage, small-scale production and electric power imports. In 2007 domestic electric power consumption amounted to 203,638 GWh, representing a 3.1-% increase with regard to the previous year, which is a variation similar to that observed during , that is, 3.2% (see chart 1). Likewise, Gross Domestic Product (GDP) growth was 3.2%, while domestic electric power sales increased by 2.9% with respect to 2006, reaching 180,469 GWh. Self-supplied consumption grew by 5.0%, propelled mainly by remote self-supply, reaching a consumption of 23,169 GWh. Chart 1 Domestic electric power consumption,, GWh Concept aagr (%) Domestic consumption 139, , , , , , , , , , , variation (%) Domestic sales 130, , , , , , , , , , , variation (%) Self-supply 8,769 9,079 10,864 11,027 12,066 12,363 16,608 20,463 21,582 22,064 23, variation (%) Source: Sener, CFE and CRE.
2 Usually, the behavior of electric power consumption has a positive correlation with the rhythm of economic activity; whenever GDP increases, electric power consumption increases as well (see graph 1). Notwithstanding the fact that domestic electric power consumption usually increases faster than GDP, there are years when power consumption increases are smaller in magnitude due to diverse factors, such as lower demand by some industry types that are otherwise intensive electric power consumers. In 2007, GDP variation was 3.2%, slightly higher than power consumption increase (3.1%). In the same year, the GDP dynamism was lower than in Specifically, the economic activity areas that reduced their growth were the manufacture industry (from 4.7% to 0.9%) and industries that are intensive power consumers (iron steel, glass and aluminum, among others) that decreased their consumption from an average 8.6% to 2.4%. Graph 1 Historical evolution of GDP and domestic electric power consumption,, (%) 10.0% Gross Domestic Product (annual variation) Domestic electric power consumption (annual variation) 8.0% 6.0% 4.0% 2.0% 0.0% % -4.0% -6.0% -8.0% Source: CFE and INEGI. 2
3 1.1.1 Electric power sales by sector For the analysis of domestic electric power consumption, consumption is separated into five sectors: industrial, residential, commercial, services and agriculture. In order of magnitude, the industrial sector is the main power consumer, due mainly to the large variety of production systems and processes that make intensive use of this energy type on an almost continuous basis. In 2007, aforementioned sector consumed 59.1% of total sales with 106,633 GWh, most of which corresponded to general medium-tension service, including medium-sized industry users, as well as commercial establishments and medium to large-scale services. Due to the diversity of applications in electric power usage within the industrial sector, large part of the electric power supply must be provided in medium, high and very high tension; therefore, sales in this sector are subdivided into large industry and medium businesses. In the case of large industry, the sub-sector includes the consumption of users of HS, HSL, HT and HTL fees, for general high-tension service, constituted mainly by large industrial establishments and by the most important drinking water pumping systems of the country. On the other hand, the residential sector consumed 25.4% of total domestic sales, becoming the second most important electric power consumer, followed by the commercial sector with 7.4%, by agricultural pumping services with 4.3% and finally by the services sector with 3.8% (see graph 2). Graph 2 Domestic sales distribution by sector,, 2007 (%) Total domestic sales 180,469 GWh Commercial 7.4% Services 3.8% Residential 25.4% Industrial 59.1% Large industry 36.4% Medium business63.6 % Agricultural pumping 4.3% Source: CFE. The most dynamic power consuming sector during the last 10 years has been the residential sector, with an average growth of 4.5%, followed by the industrial sector with 3.2%, by the commercial sector with 3.1% 3
4 and the services sector with 2.9%. Electric power consumption for agricultural pumping has remained almost invariable during the period (see chart 2 and graph 3). In terms of consumption magnitude, the industrial sector, specifically the medium-sized business sector, is the one that concentrates the largest share of total domestic sales with 37.6%. Chart 2 Domestic electric power sales by sector,, (GWh) Sector aagr (%) Domestic total 130, , , , , , , , , , , Residential 29,644 31,690 33,369 36,127 38,344 39,032 39,861 40,733 42,531 44,452 45, Commercial 9,871 10,496 10,945 11,674 12,167 12,509 12,808 12,908 12,989 13,210 13, Services 5,109 5,192 5,450 5,891 5,973 6,076 6,149 6,288 6,450 6,596 6, Industrial 77,982 82,088 87,234 93,755 93,255 94,942 94,228 96,612 99, , , Medium businesses 42,627 46,264 49,446 53,444 54,720 55,776 56,874 59,148 61,921 65,266 67, Large industry 35,355 35,824 37,788 40,311 38,535 39,166 37,354 37,464 37,799 37,887 38, Agricultural pumping 7,649 7,743 7,997 7,901 7,465 7,644 7,338 6,968 8,067 7,960 7, Source: CFE. 4
5 Graph 3 Domestic electric power sales evolu e volution by sectors,, (GWh) 160,203 Annual average growth rate (%) 180,469 Total domestic , ,254 22,629 26,229 39,032 45,835 Residential ,644 39,166 38,833 Large industry ,355 42,627 55,776 Medium business 67, Medium businesses Large industry Residential Commercial, services and agricultural pumping Domestic total Source: CFE. The behavior of sales to the industrial sector has been greatly fostered by medium-sized businesses, showing the highest degree of dynamism with a growth of 4.7% during the last 10 years, while sales to the large industry have registered smaller growth as a result of their own economic dynamics and of the possibility of choosing self-supply in branches with intensive electric power use, among other factors. In view of its economic relevance and its high share in domestic electric power consumption, the economic performance of the manufacture industry is an important factor in the industrial sector s electric power demand. In recent years, and after a period of three years ( ) with negative rates, the manufacture industry s GDP has grown at average annual rates ranging from 1.0% to 4.7% (see graph 4). Electric power consumption in the industrial sector has maintained an average growth rate of 4.0%. 5
6 Graph 4 Electric power consumption evolution in the industrial sector and the manufacture industry s GDP,, (annual percentage variation tion) 14% 12% GDP manufacture industry Electric power consumption in the industrial sector 10% 8% 6% 4% 2% 0% -2% % -6% Source: CFE and INEGI Domestic electric power sales by region Five statistical regions have been established in Mexico for the analysis of the domestic electricity market (see Map 1). It is important to point out that CFE divides the National Electricity System (SEN for its Spanish acronym) into nine areas, according to their infrastructure and operation. However, for the analysis made in this prospective, with the exception of the topic of gross demand by operative areas and demand behavior by stations, reference will be made only to the five statistical regions. 6
7 Map 1 Statistical regionaliza r egionalization of the domestic electric power market Northwest Baja California Baja California Sur Sinaloa Sonora Northeast Coahuila Chihuahua Durango Nuevo León Tamaulipas Center-West Aguascalientes Colima Guanajuato Jalisco Michoacán Nayarit Querétaro San Luis Potosí Zacatecas Center Distrito Federal Hidalgo Estado de México Morelos Puebla Tlaxcala South- Southeast Campeche Chiapas Guerrero Oaxaca Quintana Roo Tabasco Veracruz Yucatán Source: Sener, based on data from the President s Office. Map 2 shows every region with the respective percentage share of each federal entity in the regions electric power sales. In descending order of magnitude in electric power consumption, entities with the highest share during 2007 were: Estado de México, Nuevo León, Distrito Federal, Jalisco, Veracruz and Sonora. 7
8 Map 2 Domestic sales structure (GWh) by federal entity ty and statistical region,, 2007 (av average percentage share) Northwest Northeast Sonora 38% Baja California 36% Tamaulipas 19% Chihuahua 21% Sinaloa 20% Baja California Sur 6% Nuevo León 34% Coahuila 20% Durango 6% Center-West San Luis Potosí 12% Querétaro 9% Nayarit 3% Michoacán 18% Zacatecas 4% Aguascali entes 5% Jalisco 26% Colima 3% Guanajuat o 20% Morelos 5% Puebla 16% Tlaxcala 5% Distrito Federal 31% South-Southeast Southeast Yucatán 10% Veracruz 37% Campeche 4% Chiapas 9% Guerrero 10% Quintana Roo 12% Tabasco 10% Oaxaca 8% México 36% Hidalgo 7% Center Source: CFE. In 2007, domestic sales -compared to the previous year- grew by 2.9%, fostered mainly by sales in the South-Southeastern region with 4.8%, in the Central-Western region with 3.6% and in the Northwestern region with 3.3%. 8
9 Chart 3 Total domestic sales by region,, (GWh) Region aagr (%) Total 130, , , , , , , , , , , variation (%) Northwestern 16,901 17,230 18,505 19,949 20,480 20,354 21,270 22,311 23,195 24,345 25, variation (%) Northeastern 31,658 33,961 36,404 39,236 39,989 40,863 39,235 39,421 41,221 42,843 43, variation (%) Central-Western 28,926 30,763 32,801 35,192 34,909 35,570 36,242 37,451 38,843 40,249 41, variation (%) Central 35,080 36,611 38,239 40,733 40,993 41,280 40,969 41,006 42,111 42,548 43, variation (%) South-Southeastern 17,617 18,574 18,970 20,160 20,744 22,046 22,582 23,227 24,294 25,289 26, variation (%) Small systems Source: CFE Northwestern region In this region, electric power sales increased by 3.3% during Sonora and Baja California states concentrate 74.1% of sales. On the other hand, Baja California Sur registered the largest annual percentage variation in sales, with 9.0%. Though sales in this entity are smaller when compared to other federal entities, during the last 10 years they have grown at an annual average rate of 5.7%, due mainly to the new real estate developments established in the zone for tourism. In Baja California, sales have increased by an average 4.7% during the period as a result of industrial and population growth in cities like Tijuana and Mexicali. It is important to remember that the Northwestern region s principal characteristic is extreme climate with high summer temperatures and intense winter colds, affecting electric power consumption patterns in the region s urban zones, in Mexicali for instance, where power consumption increases noticeably during the summer months (from mid-may through the end of September) due to the intensive use of air-conditioning Northeastern region In 2007, this region registered a variation of 1.9%, representing an increase of smaller magnitude compared to that observed in Durango state showed the highest dynamics in electric power sales with 6.8%, while Chihuahua registered only 2.3% and the rest of the states had growth rates below 2%. Notwithstanding marginal sales increase during 2007, Nuevo León concentrated the highest share of regional sales with 33.7% and with a share of 8.2% in domestic sales. It is publicly known that an important industrial and manufacturing plant is located in this entity, including branches that are intensive electric power consumers, such as the glass, iron steel, cement and chemical industry, among others Central-Western region Similar to 2006, electric power sales in this region increased by 3.6% in the last year. Jalisco, Guanajuato and Michoacán states together represented 63.8% of regional electric power sales; the two former registered 9
10 growth rates above 4.0% during the last 10 years. Notwithstanding its low share in regional sales, Nayarit registered an increase of 6.5% during the period, and of 5.7% during the last year. The Central- Western region is another region with relevant loads corresponding to the variety of intensive industries in zones like Guadalajara, Lázaro Cárdenas, Querétaro and León Central region Sales increased by 1.9% in this region, fostered mainly by Morelos and Puebla states, with 4.3% y 4.1%, respectively. The Federal District registered a growth of 1.3% and its share, together with Estado de México, represent 67.4% of the region s sales and 16.2% of total domestic public service sales. In addition to the industrial facilities that make intensive use of electric power in the region, the Cutzamala pumping system is also a relevant consumer. Due to the area s high population density, medium and high-tension loads 1 represent the largest share in the region s sales South-Southeastern region The South-Southeastern region registered the highest growth in public service sales in 2007, representing 4.8%. During the last 10 years, this region has maintained a constant annual average growth of 4.2%. Quintana Roo state presented the highest annual average growth rate with 8.5% during , and in 2007 its share in regional sales was 12.2%. In the case of Veracruz, though annual average growth was only 0.9%, the entity concentrates 37.0% of regional sales and 5.5% of total domestic public service sales. Iron steel, paper and beer factories in the Veracruz-Orizaba region and in the Papaloapan river basin, as well as refining and petrochemical facilities of Pemex and private companies in the Coatzacoalcos-Minatitlán region constitute important loads in the state and in the region Demand behavior of the National Interconnected System (SIN) by hour and station The production of electric power required to satisfy domestic consumption (domestic sales and selfsupply), taking into account usage by production centrals, as well as own usage and losses in transformation, transmission and distribution stages, among other factors, constitutes total production or gross energy. Since electric power cannot be stored, in order to determine the production capacity required to satisfy added demand, temporary variations must be considered (by station, weekly, daily and hourly) and maximum annual demand, that is, the maximum value of demand presented in each area at different times during a year, must be determined for each operative area. As to the operation and planning of the National Electricity System, CFE divides the system into nine areas 2. Hence, interconnected operative areas may share capacity resources, and the system s functioning as a whole becomes more economic and reliable. 1 Basically the residential, commercial and services sectors. 2 Northwestern, Northern, Northeastern, Western, Central, Eastern and Peninsular areas, Baja California and Baja California Sur. With the exception of the two latter, these regions form the SI; the Northwestern region was interconnected in March
11 Though there have been links from the Northwestern region to the Northern and Western regions for years, for stability reasons the Northwestern area had been operating separately. In March 2005, the Northwestern area became permanently interconnected to the rest of the system. This important step has allowed for great savings in electric power generation, as well as local benefits to avoid affecting loads in the Northwest and North. On the other hand, studies have been carried out to assess the feasibility of interconnecting the Baja California area to SIN, which would allow for the sharing of the system s production resources to attend to peak demand in the area, as well as power and energy transactions between SIN and the Western Electricity Coordinating Council, WECC, in the California area Maximum coincidental demand Maximum coincidental demand is the maximum value of the sum of hourly demand registered in each operative area of SIN at the same moment or time interval; this demand is lower than the sum of maximum annual demands of each area, since they occur at different times. Unlike between 2002 and 2004, when maximum coincidental demand was reached in May, in 2005 it was registered in September, while in 2006 and 2007 it was registered during June, increasing by 3.3% this last year (see chart 4). Given the interconnection of the Northwestern area in 2005, the values reported in the chart for 1996 through 2004 do not include aforementioned area, which fact explains the higher values of maximum coincidental demand as of that year. Chart 4 Interconnected System: maximum coincidental demand, (MW) Period January 19,848 20,961 21,746 23,191 24,329 24,943 24,789 25,566 28,110 29,070 30,292 February 19,991 21,168 22,467 23,833 24,620 24,696 25,652 25,980 28,488 29,554 30,187 March 20,230 21,565 22,509 24,500 24,670 25,403 26,403 26,543 29,019 30,151 31,524 April 19,608 21,760 22,697 23,674 25,254 25,738 25,815 26,265 29,273 30,533 31,024 May 19,881 22,028 23,191 24,511 24,885 26,152 27,433 27,282 30,380 31,116 31,686 June 20,331 22,205 23,321 23,162 24,729 25,633 26,325 26,742 30,919 31,547 32,577 July 19,837 21,620 22,485 24,276 24,347 24,852 25,602 26,016 29,736 31,040 31,217 August 20,575 21,773 22,828 24,494 24,946 25,882 25,748 26,717 30,318 31,130 32,156 September 21,002 21,837 23,421 25,207 25,267 25,403 25,530 26,402 31,268 31,057 32,218 October 20,843 21,697 22,778 24,487 25,660 25,450 25,439 27,275 30,278 31,015 32,021 November 20,846 21,776 23,189 24,378 25,092 25,151 25,840 26,682 29,652 30,422 31,202 December 21,367 21,987 23,596 25,075 25,598 25,582 25,998 27,197 29,867 30,366 31,232 Maximum annual 21,367 22,205 23,596 25,207 25,660 26,152 27,433 27,282 31,268 31,547 32,577 Increase (%) Load factor (%) Source: CFE. As to the load factor, indicating the behavior of average electric power demand with respect to the maximum demand registered in the same time interval, in 2007 this factor was maintained at levels similar to 11
12 those of 2006, reflecting certain degree of uniformity in load behavior. A load factor close to the unit means more intensive and continuous use of power-consuming systems and equipment connected to the grid Gross demand by operative area Gross demand analysis 3 by operative area allows for the identification of minimum, intermediate and maximum consumption in SIN, registered during specific periods. Hence the relevance of the magnitude of maximum demands in each operative region 4 and of maximum coincidental demand. In 2007, the SIN area with the largest increase with respect to the previous year in maximum demand has been the Northwestern region with 4.9%. Between 1997 and 2007, the Peninsular and Northern regions presented the largest annual average growth rates with 5.6% and 4.9%, respectively. Maximum demands were registered in the Central, Western and Northeastern regions due to the urban and industrial concentration in these areas (see chart 5). 3 Together with load curve analysis. 4 Regardless of the instant they occur. 12
13 Chart 5 SEN 5 : gross demand by operative area,, (MW) Area Load aagr (%) P 1,937 2,163 2,231 2,421 2,516 2,660 2,720 2,853 2,997 3,113 3, North M 1,407 1,520 1,597 1,723 1,806 1,859 1,896 1,963 2,083 2,140 2, B 1,290 1,378 1,457 1,569 1,649 1,682 1,715 1,667 1,782 1,831 1, P 4,307 4,662 4,759 5,245 5,558 5,676 5,688 6,148 6,068 6,319 6, Northeast M 3,128 3,351 3,615 3,874 3,933 4,062 4,106 4,256 4,410 4,590 4, B 2,867 3,061 3,363 3,571 3,574 3,706 3,756 3,797 3,936 4,090 4, P 5,209 5,472 5,702 6,062 6,157 6,345 6,632 6,523 7,047 7,106 7, Western M 3,916 4,164 4,435 4,732 4,701 4,827 4,999 5,157 5,449 5,621 5, B 3,631 3,875 4,155 4,438 4,379 4,491 4,638 4,364 4,618 4,775 5, P 6,447 6,884 7,181 7,439 7,700 7,737 7,874 8,047 8,287 8,419 8, Central M 4,202 4,406 4,616 4,885 5,048 5,141 5,252 5,394 5,608 5,767 5, B 3,706 3,859 4,050 4,321 4,462 4,567 4,672 4,049 4,262 4,371 4, P 4,528 4,797 4,954 5,058 5,291 5,373 5,434 5,425 5,684 5,882 5, Eastern M 3,125 3,330 3,444 3,633 3,657 3,801 3,891 3,954 4,133 4,275 4, B 2,815 3,006 3,111 3,318 3,296 3,453 3,550 3,430 3,615 3,703 3, P ,043 1,087 1,174 1,268 1, Peninsular M B P 2,182 2,195 2,217 2,365 2,496 2,457 2,491 2,606 2,872 2,916 3, Northwest M 1,392 1,415 1,464 1,526 1,575 1,534 1,596 1,668 1,770 1,823 1, B 1,217 1,243 1,298 1,340 1,371 1,331 1,399 1,417 1,515 1,540 1, P 1,329 1,393 1,491 1,695 1,698 1,699 1,823 1,856 1,909 2,095 2, Baja California M ,048 1,087 1,081 1,211 1,170 1,195 1,266 1, B , ,039 1, P Baja California Sur M B P Small systems M B P= peak load M= mean load B= base load (average of minimum daily demand). Source: CFE Demand behavior by hour and station A system s global load is constituted by a large number of individual loads of different classes (industrial, residential, commercial, etc.). The respective instants of connection and disconnection of these loads are random, but the power required within a given period by the set of loads follows a certain pattern that depends on the rhythm of activities in the regions served by the electricity system. The introduction of hourly fees for industrial customers and the summer time system have lead to changes in consumption, reflected in the reduction of loads during peak demand hours, with the resulting benefit of an improved use of capacities. 5 Does not include local self-supply and export. 13
14 Graph 5 shows typical load curves in the country s north and south areas, corresponding to working and non-working days, for the winter and summer of They show the relative magnitude of hourly loads with respect to the maximum annual electric power demand. It is evident that load profiles depend on the geographic region, time of the year and type of day. Graph 5 Typical hourly load curves with respect to maximum demand Operative areas of the North,, 2007 (average of the Northern, Northwestern and Northeastern areas) Maximum demand 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Winter Holiday Workday hours Maximum demand 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Summer Holiday Workday hours Typical hourly load curves with respect to maximum demand Operative areas of the South outh,, 2007 (average of the Western, Eastern, Central and Peninsular areas) Winter Summer Maximum demand 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Holiday Workday hours Maximum demand 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Holiday Workday hours Source: CFE. 14
15 1.1.4 Fee structure and subsidy policy Fees for electric power supply and sale are classified according to their use and tension level into the following categories: Domestic: 1, 1A, 1B, 1C, 1D, 1E, 1F and High-Consumption Domestic (DAC for its Spanish acronym) Public services: 5, 5-A and 6 Agriculture: 9, 9M, 9-CU and 9-N Temporary: 7 General low-tension: 2 and 3 General medium-tension: O-M, H-M and H-MC General high-tension: HS, HS-L, HT and HT-L Medium-tension backup: HM-R, HM-RF and HM-RM High-tension backup: HS-R, HS-RF, HS-RM, HT-R, HT-RF and HT-RM Interruptible service: I-15 and I-30 Electricity fees are subject to monthly adjustments, with the exception of agricultural fees 9-CU and 9-N, which are adjusted on an annual basis. General usage medium-tension (MT) and high-tension (AT) fees, backup service fees and interruptible service fees, as well as the domestic high-consumption fee DAC and the temporary fee are adjusted through an automatic monthly adjustment procedure reflecting fuel price variations and inflation. The remaining fees (domestic, public services and agricultural) are adjusted using fix factors. Fix factors are authorized through specific agreements and are related to the estimates of expected inflation evolution. Monthly variations in the inflation component are estimated using a weighted average of Producer Price Indexes from seven indexes selected from the Producer Price System of the Bank of Mexico. These indexes correspond to six divisions of the manufacture industry 6 and to the large construction division. According to the type of tension supplied, the commercial sector is constituted by customers paying general low-tension fees and fee 7, and the industrial sector is integrated by customers paying general and backup service fees, both medium and high-tension. As seen in graph 6, with the exception of the agricultural fee, average electricity prices in all sectors tend to increase as a result of fuel price increases and inflation, reflected in the automatic monthly adjustment of fees subject to this regime. 6 Wood and related products industry, chemical substances, oil, rubber and plastic, non-metallic mineral products, basic metal industries, metallic products, machinery and equipment, as well as other manufacture industries. 15
16 In this sense, the highest mean prices are observed in the commercial sector, showing an ascending tendency since 2002 (see graph 6). Likewise, mean prices in the industrial sector (large industry and medium businesses) have been increasing in a sustained manner as of that year. Mean prices in the residential sector in turn have shown slight variations as of Mean prices in the agricultural sector are the lowest and this sector has registered less variations with respect to the other sectors. On the other hand, electricity fee subsidies are defined as the difference between the price of electricity paid by consumers and the average cost of supply. Subsidies to CFE fees are financed through accounting transfers using resources obtained from utilization. In this way, the Federal Government reimburses to the company the subsidies transferred to its consumers through utilization that CFE is bound to pay to the government. However, since 2002, the amount of subsidies has been higher than utilization, hence there is insufficient utilization with respect to subsidies, which affects the organisms patrimony. In the case of LFC, the government performs direct transfers to the company to cover its operation deficit and the subsidies granted to consumers. According to the legal framework that regulates electricity fees, such fees should cover costs and promote efficient consumption. However, currently only a small portion of residential users pay the marginal cost of electricity services, thus the current fee system does not allow for cost recovery. As a result of the application of the fee policy in force, in 2008 the amount of subsidies granted by the Federal Government to final CFE consumers through electricity fees is expected to reach 86,834 million pesos, a figure that is 29.4% higher in real terms than the 2007 figure. For 2008, subsidies granted to final LFC consumers are estimated at 46,397 million pesos, a figure that is 11.5% higher than the 2007 figure. 16
17 Graph 6 Mean electric power prices by user type,, (pesos of 2007/kWh) Residential Real Pesos of 2007 / kwh Commercial Services Agricultural pumping Medium businesses Large industry Source: CFE Electric power interconnections and foreign trade The National Electricity System (SEN) is interconnected with the exterior through permanently operated interconnections and interconnections used only in emergencies. The reason for the existence of the latter is that it is technically impossible to join large systems with small lines, as there is a risk of system instability from one or another country. Electric power foreign trade takes place through nine interconnections between the USA and Mexico and one interconnection between Mexico and Belize. Their capacity and operating tension varies. Five of them operate in emergencies, that is, when supply is affected by distortions or disturbances, as well as in circumstances that require the restoration of systems in cases of blackouts on both side of the Mexico-US border. Electric power for import or export comes from public service, without considering foreign trade undertaken by permit-holders. 17
OCTOBER Major Infrastructure Projects in Mexico. Prepared under contract by:
2 Prepared under contract by: The Seneca Group LLC 500 New Jersey Avenue NW, Fourth Floor Washington, DC 20001 Tel. +1 (202) 783-5861 www.seneca- llc.com OCTOBER 2014 This report was funded by the U.S.