1. Presented by: Bernardo Altamirano Rodríguez Federal Consumer Attorney Consumer Protection Federal Agency (Profeco) STRIKING A BALANCE IN THE MIDST OF CHANGE May 13-16, 2012 Québec City, Québec (Canada)

2. PROBLEM Marketplace Development of energy markets Increased of private investment in supply issues Tendency to reduce subsidies Consumer Strengthening protection via prevention Impact on regulation Social engagement mechanisms for audit

3. Electricity Consumer Protection

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

5. Regulatory Framework  Political Constitution of the United Mexican States Only the 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’s Action  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 Year Internal Sales of Automobile Fuel (Tbd*) 2007760.9 2008792.6 2009792.4 2010802.2 *Tbd: Thousands of Barrels per Day Source: PEMEX Annual Report, 2011 http://www.ri.pemex.com/files/content/pemex%20Anuario _a.pdf 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 monopolized exploitation 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 Year Fine Amount $USD 2007 $631,856.37 2008 $2,330,466.9 2009 $5,627,187.6 2010 $ 1,547866.1 2011 $1,161,071.7

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 Year Number of Plants 20071,319 20081,343 20091,343 20101,353 2011957

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 Year Fines $USD 2007$5,739,953.6 2008$10,821,555 2009$6,672,151.6 2010$2,519,299.8 2011$1,227.990.3

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’s Protection  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. Thank you! @beraltamirano @profeco www.profeco.gob.mx www. Consumidor. gob.mx