Criteria for the non-onerous allocation of Clean Energy Certificates (CEL) for the year of obligation 2020

Executive Summary:

• Agreement A/001/2023 published by the CRE establishes the criteria for the allocation of Clean Energy Certificates available in the CRE account, corresponding to the year of obligation 2020.
• The Agreement's criteria establish that CELs that have not been issued or granted will be transferred to the CRE account, provided that a period of six months has elapsed from the date on which they should have been issued and granted. 
• The allocation will be non-onerous and will be distributed proportionally to the consumption of all obligated participants at the end of the obligation period, and who are current with their obligations from 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 (“CEL”) available in the CRE account, corresponding to the year of obligation 2020.

The purpose of this Agreement is to establish the mechanism by which the CRE will carry out the non-onerous allocation of Clean Energy Certificates corresponding to the 2020 obligation period.

The allocation 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 Clean Energy Certificate and Compliance Obligations Management System (“S-CEL”).

The allocation will be non-onerous and will be distributed proportionally to the consumption of all obligated participants at the end of the obligation period, and who are current with their obligations from previous periods. 

Background

On October 31, 2014, the DOF published the Guidelines that establish the criteria for granting CELs and the requirements for their acquisition, with the purpose of achieving the goals regarding the participation of clean energy in the generation of electric energy, 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 (“S-CEL Resolution”), which regulate the operation of the S-CEL and the administrative procedure through which the CELs will be issued, granted, liquidated and cancelled.

Important Aspects of the Agreement

The criteria of the Agreement are based on provision 34 of Resolution S-CEL, which establishes that CELs that have not been issued or granted will be transferred to the CRE 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-onerous allocation of the CELs, corresponding to the year of obligation 2020 and some remnants of 2019, so the allocation must be made through the S-CEL. 

Derived from the above, the criterion for the allocation of available CEL consists of allocating a proportional part of the consumption that each Obligated Participant represents in proportion to the total consumption of the year in question.

In cases where Obligated Participants have not registered in the S-CEL, this will constitute a breach of their Clean Energy Obligations, and they will therefore not be eligible to receive CEL as a non-onerous allocation.

In the event that there are cases of Obligated Participants who are not registered in the S-CEL and who, therefore, are not eligible to receive CEL 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 will not reach 100% of the electricity consumption of the National Electric System. Consequently, it is possible that there are CELs in the CRE account corresponding to the obligation year 2020 whose non-onerous allocation cannot be made.

Thus, any CELs that are not assigned will remain in the CRE account and will be considered in the calculation of the availability of CELs for the following year of obligations referred to in the Agreement.

Determination of the CEL Remaining for the year of obligation 2019

To calculate the remaining CEL of the non-onerous pool corresponding to the year of obligation 2019, the CRE used a formula within the Agreement.

The CRE applied the following criteria:

• Regarding the total electricity consumption in 2019, the value sent by the National Energy Control Center ("CENACE") of 277,757,746.24 MWh was used.
• The criteria for the allocation of CEL available in the CRE account, corresponding to the year of obligations 2019, establishes that the CEL balance is 3,247,055 CEL as of March 2020.
• The total electricity consumption of the 99 Obligated Participants who received non-onerous CELs for the year 2019, in accordance with the S-CEL, is 251,508,287.86 MWh.
• The CEL fractions that were not awarded will be transferred back to the CRE. 
• To determine the remaining amount of the non-onerous fund for 2019, the number of CELs assigned must be subtracted from the number of Certificates available in the CRE account. Based on the above, the remaining amount was 306,912.
• The remaining amount in the non-onerous pool for 2019 is due to the fact that the S-CEL cannot deliver fractions of CEL, and that the total consumption of the Obligated Participants who were chosen to receive CEL is the lowest reported by CENACE. 

Conditions for Granting

All persons who are: 

• Obligated Participants in accordance with the Guidelines. 
• Clean Generators and Suppliers representing Distributed Clean Generation who wish to be granted CEL.
• Voluntary entities that wish to voluntarily acquire, sell or cancel CEL. 

In the event that the Obligated Participants receive energy from isolated supply, as well as the holders of the 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 CELs available on behalf of the CRE provided that: 

• They are Obligated Participants with active registration in the S-CEL during the grant period. 
• Have registered before May 15, 2021.
• Have submitted their annual return at 100% for the year of obligation 2019.
• Have filed their annual return with a deferral equal to or less than 25% of their obligation for the 2020 period. 
• Do not have a non-compliance notice for the year of obligation 2020. 
• Stay up to date with your annual payments for S-CEL account administration until 2020.

The Agreement entered into force on 28 March 2023. 

Link to the Agreement

• https://dof.gob.mx/nota_detalle.php?codigo=5683881&fecha=27/03/2023#gsc.tab=0