GC Alert | Publication of Regulation No. A/024/2021 from the CRE that sets maximum prices for liquefied petroleum gas for sale to end users

On July 29^th, 2021, the Energy Regulatory Commission (“CRE”) published Regulation No.A/024/2021 in the Federal Official Gazette establishing the regulation for maximum prices of liquefied petroleum gas (“LP Gas”) for sale to end users (the “Regulation”), compliant with the Emergency Guidelines for the welfare of consumers of LP Gas, issued by the Ministry of Energy (“SENER”) on July 28^th, 2021 (the “Guidelines”).

The Regulation sets out the following amendments:

1. Permit holders selling to end users must follow maximum prices as established by CRE in compliance with the Regulation.
2. To establish maximum prices, 145 price regions, adjusted to current municipalities, will be used. These were last used only until December 31^st, 2016 when setting maximum prices to the end user.
3. CRE will publish maximum prices to end users by electronic means every Saturday. The effective date will be the Sunday following the publication and until will remain in place until the following Saturday for each of the regions and for each of the municipalities that make up the regions.
4. The Regulation sets out that to determine and enforce maximum prices, these shall be subject to the following general criteria:
   1. Each region will have a maximum price applicable to LP Gas sales to end users;
   2. Maximum price differentiation will be based upon sales costs associated to each region;
   3. Maximum prices will be set out by the formula described in the Regulation;
   4. Maximum prices will be set according to the services associated to the LP Gas distribution activity through a plant, as well as the way these are sold to end users;
   5. The trading price per point of sale will match the sales price reported for each of the regions;
   6. Permit holders must observe maximum prices as set out in the Regulation, without prejudice to their right to negotiate lower prices with other purchasers and end users;
   7. CRE will determine maximum prices applicable to the sale of LP Gas to end users for each region; and
   8. Maximum prices must ensure end users can purchase LP Gas at affordable prices.
5. Failure to comply with the Regulation will be sanctioned by CRE by revoking permits, as set out by article 56, Section III of the Hydrocarbons Statute.
6. The guidelines for maximum prices to end users as per the Regulation is an emergency transitory measure, equally valid as  SENER’s “Emergency Directive for the Welfare of the Liquefied Petroleum Gas Consumer” , as set out by article 71 of the Regulatory Improvement General Statute. This means  it will remain valid for six months at the maximum.

Pursuant to the request made by the Federal Economic Competition Commission (“COFECE“) to CRE, this Regulation is contrary to the mechanism established to regulate LPG prices in the Hydrocarbons Statute. Although COFECE made public the start of an investigation to determine whether or not effective competition conditions exist in this market, to date COFECE has not issued a declaration of absence of competition conditions, which constitutes a required and prior condition for price regulation by CRE.

The Regulation entered into force on the day of its publication in the Federal Official Gazette. Therefore, deadlines for filing indirect constitutional relief claims (amparos) and constitutional controversies began to run on July 30^th, 2021.

At González Calvillo we are prepared to provide any advice required in connection with the contents of the Regulation. We remain at your disposal for any questions or clarification regarding the scope of this document.

Click here to read the PDF version.

About Gonzalez Calvillo

For over 30 years, Gonzalez Calvillo has been at the forefront of the legal market in Mexico as a full-service leading law firm due to its transactional core and expertise in a wide range of practice areas. The firm is recognized for its ability to build cross-disciplinary teams for the most complex legal challenges and long track record of successfully providing groundbreaking business and regulatory advice to high profile domestic and international companies. Often described as a pioneer of the Mexican legal services industry, the firm is known for its commitment to do things differently, bespoke solutions, and creating transformational legal changes that enable clients achieving their objectives.