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Latin America Policy Journal

Topic / Environment and Energy

Between a rock and a hard place: The energy transition in Mexico as a consumer

In 2022, Naturgy — Mexico City’s natural gas monopoly — left me without service for three weeks. Working in the renewable energy sector, I knew what to do: end the gas contract and get both an electric stove and a water heater. That is the recipe I share in any energy transition report: “electrify” to phase out fossil fuels while promoting clean energy electricity generation. But the reality is far more complex than what we policy wonks write from the comfort of our desks. It turns out that to stop dealing with Naturgy, a private monopoly, I’d have had to deal with a public one: the electricity utility Comisión Federal de Electricidad (CFE). The process of electrifying my apartment proved to be unreasonably complicated, hindering the transition away from gas.

This is my story. In April 2022, just a few weeks before my wife and I moved from the United Arab Emirates to Mexico, where we own an apartment, the concierge reported a gas leak. I immediately contacted Naturgy, who sent a technician. He said, however, that the leak came from the pipe after the meter, releasing the company from any responsibility. He cut the service and left. From abroad, I hired a plumber who repaired the leak that same day. I called Naturgy back. They asked me to make a “re-connection payment,” which I made immediately, and to wait 24 hours for the service to be restored.

Those 24 hours turned into three weeks. With our moving date approaching, I made international calls every day They solved nothing. After having taken cold showers upon our arrival, the service was restored a few days later. But I was still upset. I filed a complaint through their customer service channel hoping to get compensated, but unsurprisingly, this went nowhere. I submitted two complaints with the federal consumer rights agency, PROFECO. As expected, I never heard back from them.

In parallel, I researched how to electrify the apartment. I learned that most electric stoves run on 220 volts (V), but most residential connections in Mexico City are limited to 127V. Additionally, most apartments have a single-phase connection, as they consume around 4 and 5 kilowatts (kW). Each burner of an electric stove, however, consumes around 1.2kW. This means that a stove with four burners would double the consumption and require at least a two-phase connection (between 5 and 10kW). A stove with six burners plus an electric water heater would surely exceed 10kW of consumption, for which CFE requires a three-phase connection.

Either way, electrifying an apartment needs a “load increase permit” from CFE and changing the single-phase connection to a two-phase one, at least. One must also hire an electrician to prepare the connections and rewire the apartment, as well as to estimate the kW consumption that CFE requires on the permit application form. To request and follow up on CFE’s permit, it is common to hire a person who does that for a living. In Mexico, they are called gestores. Households and businesses hire them to avoid wasting their time and energy on wide-spread Mexican red tape.

Facing this complexity, I convinced myself that it’s rational to avoid dealing with CFE and to pray not to have another leak or interaction with Naturgy. After all, not only am I an avid and professional advocate of energy transitions, but I am also a citizen who detests red tape. And I’m not alone. When my parents decided to replace their old stove, I also suggested an electric one. I argued that the whole process would be easier in a house, as compared to an apartment, and with them being consumers of liquefied petroleum (LP) gas instead of natural gas. But when the CFE name came up, they also decided to avoid it. Their new gas stove is beautiful and will surely last about 40 years (like the previous one), which goes against the recipe we have written to achieve net zero emissions by 2050.

Having gone through these two experiences, I thought about the policies that could minimize red tape and accelerate the transition for both citizens who care about climate change (me) and those who don’t (my parents, among many others). I concluded that we must return to and expand the electricity market reform proposed by the previous federal administration.

In a competitive and unbundled market, several retail companies would emerge. Many of them would streamline the entire process described above. I wouldn’t be the only one opting for these new companies. As the CFE retail subsidiary loses customers, it would be forced to improve its services and reduce red tape, while competitors would seek to maintain high service standards to keep attracting and retaining new customers. Everybody, except for the monopolist, wins.

Naturally, critics will argue that this proposal is merely a neoliberal dream. And I agree. Markets rarely find an equilibrium — especially a social one — and it will be a bumpy road for the reforms to work as designed. That said, it is a better proposal than the reality of a highly indebted CFE with poor services. My American wife thought I was being dramatic when I bought surge protectors for all our appliances until an electrical surge broke a blender that wasn’t connected to a protector.

A competitive and unbundled market model that allows customers to choose the electricity retailer that suits them best is a better alternative than the current system: a vertically integrated and politically influenced model, corresponding to the last century. This outdated model is slowing down the energy transition at the residential, commercial, and industrial levels in Mexico.

In 2024, we Mexicans will have the opportunity to vote for a more competitive and clean country. Hopefully, we will also vote for a Mexico with strong institutions and regulators that will one day order Naturgy to compensate me for the three weeks I spent without gas in 2022.

Carlos, an MPAID18, is an international energy policy expert. He specializes in the design and analysis of policies for renewable energy and for just and inclusive energy transitions. He has focused his work on Africa, Asia and Latin America, from international organizations such as the World Bank and the International Renewable Energy Agency (IRENA). His opinion does not necessarily reflect that of the organizations where he has worked.