Hello! Rick,

Yesterday the Mexican Electric Congress successfully concluded. It was a very good event because we had the opportunity to know the ideas and thoughts from the different
sectors that integrates the electric industry. 

Some of the participants were:
The Secretary and Undersecretary of Energy 
The Programming Sub director of the Federal Electricity Commission or CFE
The General Director of Central Light and Power Company or LFC
Pemex Gas Petroqu?mica B?sica or PGPB
The Chairman of the Energy Regulatory Commission
The Energy Regulatory Commissioner of France
General Electric (technology, Gas and steam turbines)
ICA Fluor Daniel, and Iconsa (Construction companies)
The Chairman of the Mexican Association of Electric Energy or AMEE
ITAM (academic institution)
The Head of the Investment Promotion Unit of the Secretariat of Energy
Specialized Legal Bureaus
Inter-American Development Bank
Under secretary of Planning of the Secretariat of Energy
Wartsila North America Inc.
The General Director of Transalta
The Chairman of Enron 
Protego, Investment and financing bureau.
The Associate Director of the Cambridge Energy Research Associates for LATAM
The Chairman of the Mexican Association of Natural Gas
The participation of the four main political parties of Mexico, PRI, PAN, PRD and the PVEM.


Here are some of the conclusions of the event:

- The structure of the electric industry has to be changed to ensure the supply for the upcoming years. In several presentations the participants mentioned that electricity demand has overcome the economic growth, due to this situation Mexico requires a strong expansion of the electric system, an expansion that needs a lot of investments and where the state companies do not generate sufficient resources to support this expansion and their maintenance.  
- All agreed that rates are unreal and need to be restructured and also review the subsidies structure. 
- Another concern is the availability of the natural gas because almost all the new plants are combined cycle plants that use natural gas and the problem is that Mexico has reserves but not the money to subtract it. Related to this issue Dr. Jaime Alatorre, mentioned that the Congress needs to give open access to the private investment to both markets the natural gas and the electric market. 
- A fundamental reform of the legal system.
- The creation of a competitive electricity market with effective and transparent regulation to incite investment and the determination of prices under the responsibility of the market operator.
- The IPP structure will not satisfy the electricity demand for the next years, Mexico needs other structures to meet demand.
- Current assets will not be privatized.

The final part of the event was very interesting due to the debate between the political parties representatives, because they have different ideas on how to solve the situation and the problem will be to get a resolution between those ideas at the Congress.
PRI - they don?t want to change the structure, because they think Mexico has a good electrical performance and does not have to follow the privatization model or worldwide trends, because privatization does not guarantee the solution of the Mexican electricity problems.
PRD - they recognize that the electric sector has problems that need to be solve giving the state companies the sufficient autonomy. They do not want to modify the legal system.
PVEM - they are open to change the structure of the energy industry. 
PAN - they are open to change the structure of the energy industry. 

Enron, besides the presentation of Dr. Jaime Alatorre, was named in various presentations in relation with the Vitro project in Monterrey. I think it was a good opportunity for us to participate in this kind of events, where we can share our ideas and show the interest of Enron to solve the challenge of the reorganization of the Mexican electric system.  

Regards,

Kikumi