Mexican energy reform must not be hindered by weak regulatory governance, Baker Institute expert says

EXPERT ALERT

Jeff Falk
713-348-6775
jfalk@rice.edu

Mexican energy reform must not be hindered by weak regulatory governance, Baker Institute expert says

HOUSTON – (June 16, 2014) – Mexico’s budding energy reform must not be weakened by inadequate or insufficiently autonomous regulatory agencies, according to Miriam Grunstein, a contributing expert and scholar in the Mexico Center at Rice University’s Baker Institute for Public Policy.

MIRIAM GRUNSTEIN

Grunstein outlined her insights in a new issue brief, “Coordinated Regulatory Agencies: New Governance for Mexico’s Energy Sector.” Grunstein, who is also a professor of law at Centro de Investigación y Docencia Económicas (CIDE) in Mexico City, is available to comment on these and other developments related to Mexican energy reform.

In December, Mexico’s Congress approved constitutional reforms to the energy sector that liberalize the entire value chain of the hydrocarbon industry, open a wholesale electricity market and propose a new institutional architecture for energy regulatory agencies. While the constitutional language describing the model to be adopted by the regulatory agencies is rather broad, the recently approved implementing legislation provides a clearer definition of their structure and areas of authority, Grunstein said.

Two “coordinated regulatory agencies” will now regulate Mexico’s energy sector: the already-existing National Hydrocarbons Commission (CNH) for upstream activities and the Energy Regulatory Commission (CRE) for midstream and downstream oil and gas activities.

Grunstein in particular fears the Coordination Council for the Energy Sector, which oversees both agencies and is composed of the Mexican secretary of energy, the undersecretaries of hydrocarbons and electricity and the chairs of the CNH and the CRE, will affect the agencies’ performance.

“The autonomy of these agencies will be severely hampered if the council’s decisions are binding,” Grunstein said. “If the law is approved as currently written, and if the council interferes significantly in the actions of the agencies, then all efforts to confer autonomy to these agencies will be met with unsatisfactory results. Mexico’s new energy sector will begin with a weak institutional structure that may hinder its future effectiveness.”

Grunstein’s teaching and research focus on energy law, public regulation, administrative law and international transactions. Prior to joining the faculty at CIDE, Grunstein practiced energy law in the Mexico City office of an international law firm. Her legal publications include books and articles on energy law, especially related to hydrocarbons. She also has served as a consultant on energy regulation to the Mexican Senate, Pemex and the Comisión Federal de Electricidad.

For more information or to interview Grunstein, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775.

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Related materials:

Grunstein biography: http://bakerinstitute.org/experts/miriam-grunstein.

Baker Institute Mexico Center: http://bakerinstitute.org/mexico-center.

Founded in 1993, Rice University’s Baker Institute ranks among the top 15 university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.