Comisión Federal de Electricidad

The Comisión Federal de Electricidad (English: Federal Electricity Commission) is the state-owned electric utility of Mexico, widely known as CFE. It is the country's dominant electric company, and the country's second most powerful state-owned company after Pemex. The Mexican constitution states that the government is responsible for the control and development of the national electric industry, and CFE carries out this mission. The company's slogan is "Una empresa de clase mundial" ("A World-Class Company").

Comisión Federal de Electricidad
TypeGovernment-owned corporation
IndustryElectric utility
FoundedAugust 14, 1937 (1937-08-14)
HeadquartersMexico City, Mexico
Key people
Manuel Bartlett (CEO)
ProductsElectricity generation, transmission and distribution
RevenueUS$20.6 billion
US$682.5 million
Number of employees
80,127
Websitewww.cfe.gob.mx

Affiliations
The CFE building in Mexico City

CFE is not a part of the North American Electric Reliability Corporation, though its transmission system in northern Baja California is part of the Western Electricity Coordinating Council through its interconnection with San Diego Gas & Electric via the Miguel-Tijuana and the LaRosita-Imperial Valley Lines and the Path 45 corridor; it also has a few other interconnections across the border with local utilities in the United States.

On August 2, 2019, the federal government announced it will provide Internet access throughout the country through the establishment of a subsidiary of the Comisión Federal de Electricidad called CFE Telecomunicaciones e Internet para Todos (CFE Telecommunications and Internet for All).[1]

Takeover of Luz y Fuerza del Centro
Logo of Luz y Fuerza del Centro

On 12 October 2009, President Felipe Calderón issued a decree dissolving Luz y Fuerza del Centro (LFC, also rendered on logo as "LyF"), the state-owned power company serving most of central Mexico—including Mexico City, most of the State of Mexico and some communities in the states of Morelos, Hidalgo and Puebla. The government claimed that spending had outpaced sales due in part to massive featherbedding, and it no longer made sense for the company to stay afloat.[2] According to the government, spending at the company was increasingly outpacing sales [3] CFE went on to control the national electric system and expand its operations nationwide, while the smaller LFC kept a low profile, maintaining its operations in the central region of Mexico.

LFC provided electricity to several states where, by virtue of a federal law, CFE had no operations (a 1985 agreement between CFE and LFC increased the areas served by the former). As of March 2010, LFC's operations have been fully absorbed by CFE.

Nickname

Since the CFE is the dominant electric company in Mexico, most customers refer to it as "la comisión" (e.g. "The commission"). While there are other Mexican government commissions, the term is almost exclusively applied to the CFE.

Controversies

Two corruption scandals in the US cite payments of bribes to officials at the CFE in return for contracts.

2010

In September 2010, ABB, a Swiss corporation, admitted that ABB Network Management, paid bribes to officials at CFE from 1997 to 2004, totaling approximately $1.9 million.[4] In exchange for the bribe payments, according to court documents, ABB received contracts worth more than $81 million in revenue.

The matter was resolved in September 2010 in a US court.[5]

2011
CFE building in Matehuala, San Luis Potosí.

In May 2011, Lindsey Manufacturing Company of the US was convicted by a US federal jury under the Foreign Corrupt Practices Act (FCPA) for their alleged roles in a scheme to pay bribes to officials at the CFE.

The bribes were paid through an intermediary, who allegedly had a corrupt relationship with a senior CFE official.[6] Lindsey Manufacturing allegedly received more than $19 million in CFE business over the course of seven years as a result of working through the intermediary.[6]

According to evidence presented at trial, the intermediary bought a CFE official a $297,500 Ferrari Spyder and a $1.8 million yacht, as well as paying more than $170,000 towards the official's credit card bills.[7] In December 2011, a US District Court dismissed the indictments against Lindsey Manufacturing, citing misconduct by the prosecution. The US Department of Justice (DOJ) said it planned to appeal the dismissal,[7] but in May 2012 the government withdrew its appeal.[8]

Enrique Ochoa Reza settlement agreement scandal
A panoramic picture of the El Cajón dam, in the state of Nayarit, Mexico.

In September 2016, it was reported by Pablo Gomez from Aristegui Noticias, that Enrique Ochoa Reza, who had stepped down two months earlier as head of the commission after being selected leader of his party, had received $1,206,000.00 pesos as a settlement agreement, despite voluntarily resigning his position. Furthermore, Ochoa Reza stayed on the commission's top job for only two years and 155 days, while the "Manual de Trabajo de Servidores Publicos de Mando la CFE" (the regulation concerning high-ranking positions in the CFE) clearly stipulates that settlements can only apply after a minimum three years on the job, and only to those individuals whose retirement is not voluntary. The payment probably constituted a violation of the Mexican Constitution's Article 127 as well, which prohibits settlements of this nature in favour of state-owned corporations' employees (with few exceptions).[9] Despite the media and popular backlash, Ochoa maintained the settlement agreement was legal. Two months later, in response to the 2016 San Pablito Market fireworks explosion that occurred in Tultepec on December 20, 2016, Ochoa announced he had given the 1.2 million pesos to the UNAM Foundation and the Michou and Mau Foundation, which specializes in the rehabilitation of children with severe burns.[10]

2020 blackout

Millions of people in Mexico City, State of Mexico, Nuevo León, Hidalgo, Jalisco, Sinaloa, Yucatán, Tamaulipas, Coahuila, Guanajuato, San Luis Potosí, Oaxaca, Veracruz, and other states were left without electricity for several hours during a blackout that began at 2:29 p.m. CST on December 28, 2020; restoration of service began twenty-three minutes later and was completely restored by 4:12 p.m. The Centro Nacional de Control de Energía ("National Center for Energy Control, CENACE) said the blackout was due to an “imbalance in the National Interconnected System between the load and the power generation causing a loss of approximately 7,500 MW” and that automatic protection schemes were activated in order to avoid a greater risk due to the incident in the system.[11] Manuel Bartlett, director of CFE, and Carlos Meléndez, general director of CENACE, said that there was no damage to the national electricity system, nor there was any economic loss due to the blackout.[12]

CFE reported on December 30 that the blackout was caused by a fire in 30 hectares (74 acres) of grasslands in the municipality of Padilla, Tamaulipas.[13] However, the Tamaulipas State Civil Protection Coordination rejected the document presented by the CFE, saying the document was falsified,[14] and the state announced on January 3, 2021, that it planned to sue the CFE. Meanwhile, President Andrés Manuel López Obrador reiterated his support for Manuel Bartlett and promised that a similar blackout would not occur again.[15]

After the state of Tamaulipas threatened to sue, Bartlett admitted the accusation of grassfires had been falsified and suggested the blackout was caused by renewable energy sources.[16]

Proposed reforms 2021

On February 1, 2021, President Andrés Manuel López Obrador (AMLO) sent an initiative to reform the Electricity Industry Law to the Congress of the Union. The proposal, which must be approved in 30 days, would reverse the energy reform approved under former president Enrique Peña Nieto. There are four priorities: 1) hydroelectric energy, 2) other energy produced by CFE (nuclear, geothermal, thermoelectric, and combined cycle gas turbines), 3) wind and solar energy produced by individuals, and 4) other. AMLO insists that previous reforms were made with the intention of privatizing the energy sector and will require either massive subsidies or huge price increases for consumers.[17]

See also

References
  1. "Publican acuerdo para la creación de CFE Telecomunicaciones e Internet para Todos" [A agreement for the creation of CFE Telecommunications and Internet for All is published]. El Informador (in Spanish). Guadalajara. August 2, 2019. Retrieved August 2, 2019.
  2. Mexico Power Takeover Creates Sparks
  3. Mexico shuts down troubled energy firm
  4. Office of Public Affairs (29 September 2010). "ABB Ltd and Two Subsidiaries Resolve Foreign Corrupt Practices Act Investigation and Will Pay $19 Million in Criminal Penalties". US Department of Justice.
  5. Foreign Corrupt Practices Act Unit (29 September 2010). "SEC Charges ABB For Bribery Schemes in Mexico and Iraq". US Securities and Exchange Commission.
  6. Office of Public Affairs (10 May 2011). "California Company, Its Two Executives and Intermediary Convicted by Federal Jury in Los Angeles on All Counts for Their Involvement in Scheme to Bribe Officials at State-Owned Electrical Utility in Mexico". US Department of Justice.
  7. Angela Gomez (12 December 2011). "DOJ Tosses Aguilar's Conviction, Pending Appeal". The FCPA Blog.
  8. http://www.fcpaprofessor.com/lindsey-manufacturing-case-officially-over
  9. http://aristeguinoticias.com/2909/mexico/enrique-ochoa-reza-pri-y-la-cfe-violaron-la-constitucion-articulo-de-pablo-gomez/
  10. https://www.animalpolitico.com/2016/12/ochoa-liquidacion-cfe-donacion//
  11. "Apagón masivo: CDMX, Morelos, Edomex y otras entidades reportaron fallas en el suministro de energía eléctrica". infobae (in Spanish). Infobae. December 28, 2020. Retrieved January 4, 2021.
  12. "CFE: ¿Qué fue lo que provocó el apagón nacional?". MARCA Claro México (in Spanish). 29 December 2020. Retrieved January 4, 2021.
  13. Cruz Vargas, Juan Carlos (December 30, 2020). "CFE: Apagón masivo fue por incendio de pastizales en Tamaulipas". proceso.com.mx (in Spanish). Proceso. Retrieved January 4, 2021.
  14. "Tamaulipas revira versión de CFE por mega apagón y advierte sobre firma falsa". proceso.com.mx (in Spanish). Proceso. December 30, 2020. Retrieved January 4, 2021.
  15. Tourliere, Mathieu (January 3, 2021). "Tamaulipas presenta denuncia contra CFE por falsificación de documentos para justificar apagón". proceso.com.mx (in Spanish). Proceso. Retrieved January 4, 2021.
  16. "Bartlett responsabiliza del apagón a energías renovables". proceso.com.mx (in Spanish). Proceso. January 5, 2021. Retrieved January 5, 2021.
  17. Méndez, Enrique (February 1, 2021). "Envía AMLO iniciativa que da prioridad a CFE en despacho eléctrico". jornada.com.mx (in Spanish). La Jornada. Retrieved February 1, 2021.
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