VZCZCXRO2853
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0455/01 0301920
ZNR UUUUU ZZH
P 301920Z JAN 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 5152
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHFR/AMEMBASSY PARIS PRIORITY 0357
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 000455 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG MX
SUBJECT: MEXICAN ELECTRICITY U/S ON LIBERALIZATION, 
COOPERATION WITH U.S. 
 
REF: A. 06 MEXICO 7037 
     ¶B. 06 MEXICO 6049 
 
Sensitive but unclassified. 
 
¶1.  (U) This is an action message, see para 7. 
 
¶2.  (SBU) Summary:  Reuben Flores, Mexico's new 
Undersecretary for Electricity in the Energy Secretariat 
(SENER) supports further trans-border electrical 
interconnections between the U.S. and Mexico as long as they 
make economic sense.  On reform of the Mexican electricity 
monopoly, the Federal Electricity Commission (CFE), he 
confirmed that the GOM plans to separate CFE into separate 
business units, but he stopped short of calling the pending 
reorganization a prelude to competition in electrical 
transmission or distribution.  He also expressed opposition 
towards granting the National Electric Reliability 
Corporation (NERC) authority over Mexican facilities and 
seeks to engage with appropriate U.S. officials on the issue. 
 See action request in paragraph 7.  End Summary. 
 
¶3.  (SBU) Emboffs met January 26 with Ruben Flores Garcia, 
the new Undersecretary for Electricity at SENER.  Flores told 
us that he is interested in improving trans-border 
electricity interconnections between the U.S. and Mexico, but 
in only those areas where the interconnections make economic 
sense.  He also did not see a need to make synchronized 
connections.  Back-to-back connections, which link the two 
alternating current systems via a direct current bridge, 
would continue to be sufficient.  While, for reliabilities 
sake, it could be advantageous to connect Mexico directly, at 
least to the ERCOT (Texas) grid, he did not see a pressing 
economic need to do so. 
 
¶4.  (SBU) Flores confirmed what we heard from Undersecretary 
for Energy Planning, Jordy Herrera (ref A) that the Calderon 
team would seek to separate CFE from a single entity into 
constituent business units -- generation, transmission, and 
distribution.  Nevertheless, Flores implied that the 
regulatory framework necessary for doing so would keep CFE as 
a single company, similar to the Pemex model, and not create 
distinct companies as a prelude to competition as Herrera had 
suggested. 
 
¶5.  (SBU) Flores also rejected the idea of opening the 
transmission business to private participation or allowing 
the construction of "merchant" transmission lines.  On 
nuclear power, he agreed with CFE's continuing efforts to 
expand the Laguna Verde plant, but he did not go as far as to 
support plans for significant new construction of nuclear 
plants as foreseen by the previous SENER team (ref B).  He 
expected that SENER and CFE would keep the nuclear percentage 
in the Mexican power portfolio between 8 and 12 percent. 
 
¶6.  (SBU) On the parts of the Mesoamerican Energy Integration 
Project, Flores noted that construction of the 
Mexico-Guatemala interconnection was well in train and 
regardless of the outcome of the rest of the project, it 
would continue.  As an aside, Flores said that Central 
American countries believed the interconnect would give them 
a source of cheap electric power, but this would not be the 
case.  Flores also noted with disappointment that Electricite 
de France (EDF) decided recently to divest of its generating 
plants (Independent Power Projects (IPPs)) in Mexico to 
concentrate more closely on opportunities in Eastern Europe. 
He suggested that there would be an opportunity for U.S. 
firms to take over their operation. 
 
¶7.  (SBU) In closing, Flores raised the the North American 
Electric Reliability Corporation (NERC) which has revised its 
Policies into Standards, and now has authority to enforce 
those standards on power system entities operating in the 
U.S. through significant financial penalties for 
noncompliance.   He expressed concern over efforts between 
NERC and the GOM to obtain comparable authority to enforce 
its standards on systems in Baja California.  Flores implied 
that Mexico was not ready to grant the NERC this authority, 
but wanted to discuss the issue with the appropriate USG 
officials.  Action Request:  Given the change of 
Administration, we request that U.S. officials connected to 
the NERC contact Flores.  Post would be pleased to facilitate 
a meeting. 
 
¶8.  (U) Flores came to his Undersecretary position after 
serving as Commissioner in the Mexican Energy Regulatory 
Commission (CRE) under then Director General now Energy 
Secretary Georgina Kessel.  Flores also held positions at the 
 
SIPDIS 
 
MEXICO 00000455  002 OF 002 
 
 
Federal Electricity Commission (CFE) and within the Energy 
Secretariat.  He is also professor of Electrical Engineering 
 
SIPDIS 
at (the Technical Institute of Superior Studies of the 
Occident) ITESO in Guadalajara. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
GARZA