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Consumer empowerment: the consumer´s role in energy markets May 15, 2012

STRIKING A BALANCE IN THE MIDST OF CHANGE May 13-16, 2012 Québec City, Québec (Canada). Consumer empowerment: the consumer´s role in energy markets May 15, 2012. Presented by: Bernardo Altamirano Rodríguez Federal Consumer Attorney Consumer Protection Federal Agency ( Profeco ).

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Consumer empowerment: the consumer´s role in energy markets May 15, 2012

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  1. STRIKING A BALANCE IN THE MIDST OF CHANGE May 13-16, 2012 Québec City, Québec (Canada) Consumer empowerment: the consumer´s role in energy markets May 15, 2012 Presented by: Bernardo Altamirano Rodríguez Federal Consumer Attorney Consumer Protection Federal Agency (Profeco)

  2. PROBLEM

  3. Electricity ConsumerProtection

  4. Marketplace Context • There are 28.6 millions of homes around Mexico. 98.2% have electric services.

  5. Regulatory Framework • Political Constitution of the United Mexican States • Onlythe Nation carries out the activities to generate, conduct, transform, distribute and supply electricity. There are no concessions to private stakeholders. • Electricity Public Service Law • The State supplies electric services through the Federal Electricity Commission (CFE). • Mexican Official Standard (NOM’S) • Safety of electrical installations, efficiency in energy system.

  6. Consumer Protection • Economic Effects of Regulation • State monopolized service. • There is no competition between particulars. • Limited protection of consumer´s rights. • Consumer Protection Scope • Submission of complaints and denunciations before Profeco • Continuity of service during the complaint process at Profeco.

  7. Profeco’sAction • On 2011, there were 14,000 complaints. It means that 5 out of 10,000 homes had irregularities in the electric service. • The last year were settled 8 out of 10 cases in favor of consumers.

  8. Prospective • Spread of information about electric consumption in the Consumer Website. • Alliance with the service supplier (CFE) to quickly handle complaints. • Preventive protection scheme through adhesion contract registration.

  9. Gasoline Consumer Protection

  10. Marketplace Context *Tbd: Thousands of Barrels per Day Source: PEMEX Annual Report, 2011 http://www.ri.pemex.com/files/content/pemex%20Anuario_a.pdf

  11. Marco Regulatorio • Political Constitution of the United Mexican States • Only the Nation can exploit natural resources, such as oil and its derivatives, without franchising. • Regulatory Law for the 27th constitutional article about Oil Sector • Private capital investment for fuel distribution (Gas Stations) • Mexican Official Standard (NOM’S) • Specifications for measurement instruments aimed at the proper sale.

  12. Consumer Protection • Economic Effects of Regulation • State monopolizedexploitation through the state-owned company PEMEX. • Private capital investment for distribution through franchises schemes. • Administrative verification of distributors. • Complex consumer protection. • Consumer Protection Scope • Verification of Gas stations and calibration of dispensers • Submission of denunciations before Profeco and Gas station Traffic Light. • Fines application, suspensions and closures.

  13. Consumer Protection

  14. Prospective • Transparency in the verification activities and outcomes. • Information mechanisms as the Traffic Light and its mobile application (app). • Promotion of the denunciation culture against suppliers. • Technical standard that incorporates cutting edge technology for dispensers.

  15. Liquefied Petroleum Gas Consumer Protection

  16. Marketplace Context

  17. Regulatory Framework • Political Constitution of the United Mexican States • The Nation has the domain of all natural resources such as fossil fuels (solid, liquid, gas). • LP Gas Regulation • Regulation of the licenses for transportation, storage and distribution of LP Gas; first-hand sales and final-users sales. • Mexican Official Standard (NOM’S) • Technical and safety specifications for containers, test methods for net content of cylinders and measurement instruments.

  18. Consumer Protection • Economic Effects of Regulation • Licenses for LP Gas storage, transportation and distribution, granted by the Ministry of Energy. • Concurrent competences. • Regulation through contracts for «Fist-hand sales» by Pemex and state-regulated prices. • Preventive consumer protection through plants and vehicles' verifications. • Consumer Protection Scope • Verification of LP Gas plants and transports. • Submission of complaints and denunciations before Profeco • LP Gas meter calibration • Penalty administrative proceedings and fines application

  19. Profeco’s Action

  20. Prospective • Transparency in verification functions • Spread of verification outcomes through the Consumer Website • Promotion of a smart consumption and denunciation culture • Revision and strengthening of the technical standards to be fulfilled by suppliers

  21. Natural Gas Consumer Protection

  22. Marco Regulatorio • Political Constitution of the United Mexican States • The Nation has the domain of all the natural resources such as fossil fuels (solid, liquid, gas). • Natural Gas Regulation • First-hand sales and activities that are not part of the petroleum industry on natural gas matter, to assure its efficient supply. • Mexican Official Standard (NOM’S) • Safety requirements for the exploitation and distribution facilities through pipelines.

  23. Consumer’sProtection • Economic Effects of Regulation • Trunk distribution by Pemex – Local distribution concession, upon demand. • Competence among distributors to end users. • Consumer protection through the reception of complaints, settlement and advice. • Consumer Protection Scope • Advice on hiring and contract terms • Spread of information about businesses behavior • Submission of complaints and settlement procedure before Profeco • Penalty administrative proceedings and fines application

  24. Prospective • Spread of information on complaints and proceedings at the Consumer Website • MoU with the Energy Regulatory Commission (CRE) in order to generate information to foster a smart consumption. • Service providers bond to a scheme for an expeditious attention to consumer complaints through the on-line alternative dispute resolution (Concilianet)

  25. Conclusions Consumer Protection

  26. Consumer Protection in Regulated Markets • Consumer protection schemes differ from the changes in the competence structure of the marketplace. • Profeco acts via “prevention” through verification activities for the fulfillment of the Mexican Official Standards regarding the energy sector. • It also attends users through receiving complaints against suppliers and carrying out settlement procedures. • Profeco bets for providing consumers with information through the Consumer Website and smartphones applications (apps).

  27. Thankyou! @beraltamirano @profeco www.profeco.gob.mx www. Consumidor. gob.mx

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