rating Fitch ratings warned that the changes Electricity industry law promoted by the President Andrés Manuel López Obrador It could adversely affect private thermal and renewable power plants, as well as independent power producers or producers who have been granted bilateral energy purchase agreements, inherited from the Federal Electricity Commission (CFE).
Fitch Ratings added that the 1992 Electricity Utility Act could also be affected.
He explained that projects with strong capital structures exposed to exposure, reduction or commercial risks are particularly vulnerable to income pressures.
He therefore said that the bill could be expected to “face legal challenges in accordance with Mexican constitutional and legal principles, such as antitrust laws, legal certainty and non-retroactivity of law and the protection of international treaties.”
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“Lawsuits can prevent the bill from coming into force,” Fitch Ratings said.
He considered that the new invoice “It simply came to our notice then energy market and further weakens the reliability of the network, giving priority to shipment to older, more expensive and less efficient CFE power plants than newer power plants operated by the private sector.
In a statement, the rating agency said that although regulations still need to be codified, spot price volatility will intensify as CFE plants exceeds the supply of the system, allocating their marginal costs outside the economic merit curve, probably changing the demand curve and exerting downward pressure on spot prices.
That is, he added, the incremental operating costs of the state-owned electric company should be covered by additional system fees, “tariff increases for end users or by forcing the federal government to subsidize CFE deficit rates.”
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He also stressed that due to its location in a very crowded region, the new law would aggravate the existing reduction risk for wind farm Oaxaca Dos, CE Oaxaca Cuatro.
Projects are also exposed to a possible renegotiation or termination of the contract, especially since contract prices bilateral agreements purchase prices are well above current spot prices.
Renegotiating the contract would require the consent of the bondholder, “otherwise, it would result in a technical event of default and a possible acceleration of the debt. The forced termination of the contract is less likely, as the CFE should pay the plants the current value of all future revenue, which is expected to be sufficient to pay the outstanding debt. “
He indicated that there are contracts to buy electricity with buyers that were awarded after Energy reform, such as the FEL Energy VI project (Tierra Mojada), for which they are exposed to a possible renegotiation of the contract.
Some of these projects are located in areas where they exist energy deficit, making them less likely to be affected by the risk of reduction.
pipe / lsm