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Initiative on outsourcing in Mexico presented by the Federal Executive Branch.

By: Daniela Cervantes Escamilla.

On November 12, 2020, the President, Andrés Manuel López Obrador, announced a draft decree that seeks to modify the Mexican legal system in terms of outsourcing and that will be presented for discussion before the Chamber of Deputies (hereinafter the “Initiative”).

This Initiative implies various modifications in provisions of 6 (six) laws to harmonize the legislation with the proposed changes, which are: (i) Federal Labor Law (hereinafter “LFT”), (ii) Social Security Law (hereinafter “LSS”), (iii) National Institute of Housing Fund for Workers Law (hereinafter “LINFONAVIT”), (iv) Federal Tax Code, (v) Income Tax Law, and (vi) Value-Added Tax Law. The most relevant modifications are listed below:

Regarding the LFT, the Initiative provides the express prohibition of the outsourcing of personnel as stipulated in article 13. According to the Initiative, the contractor may only provide specialized services or the execution of specialized works that do not form part of the corporate purpose or the economic activity of the beneficiary.

The foregoing will also imply the enter into a service provision agreement between the contractor and the beneficiary (hereinafter, the “Agreements”), where the content becomes an object of verification by the labor authorities and the obligation of the contractor to report it quarterly. Additionally, the contractor must request an administrative procedure before the Ministry of Labor and Social Welfare (hereinafter “STPS”), through which, he will be authorized to register in a Specialized Service Providers Registry (hereinafter the “Registry”). This authorization will prove the specialized nature of the services or the works they carry out.

A second effect of the Registry will allow to keep up to date the contractor’s fulfillment of its labor, tax, and social security obligations since he will be required to renew the authorization every 3 (three) years. With this information, the STPS may be empowered to enter into coordination agreements with various authorities (for example, with the Mexican Institute of Social Security or with the National Institute of Housing Fund for Workers) in order to carry out an exchange of information that allows the correct continuity of the proceedings and the full exercise of the acts of authority.

Additionally, it is proposed to modify the figure of intermediary, understanding this as the natural or legal person involved in the hiring of personnel, and may include the processes of recruitment, selection, training, among other aspects. However, the beneficiary of the services will always be considered the employer of the hired personnel, so in no case may the intermediary be considered as such.

A last modification to the LFT is in the matter of employer substitution, through which it is intended that the assets of the company or establishment must be transferred to the substitute employer to carry out and take effect the substitution. Additionally, LINFONAVIT establishes joint and several liabilities in such a way that the substituted employer is liable together with the substitute employer concerning the obligations arising in the period before the date of the replacement and up to the following 6 (six) months.

Regarding the LSS and the LINFONAVIT, the Initiative seeks to promote a competitive business environment through which the social security and housing rights of workers are safeguarded in the present and the future (such as in case of pensions and/or access financing for housing), eradicating the evasion of payment of fees and eliminating bad practices due to the use of outsourcing.

Likewise, it is intended to establish before the workers used in the specialized services or the execution of specialized work a joint and several liabilities between the contractor and the beneficiary for the obligations outlined in said regulations.

On the other hand, the Initiative provides various modifications to the tax provisions, among which are (i) the prohibition to give tax effects (such as deductibility and credit for value-added tax) to the payments for outsourcing personnel; and (ii) qualifying in the commission of tax fraud due to the use of simulated service provision schemes or the execution of specialized works.

The non-compliance of the provisions outlined in the Initiative will result in the imposition of penalties, such as the imposition of fines or the commission of a crime.

Finally, under the transitory articles of the Initiative, the Decree provides for two periods of entry into force, being (i) the day after its publication in the Official Gazette of the Federation; with the exception that (ii) the reforms to the tax provisions will come into effect as of January 1, 2021. However, various deadlines are also ordered to comply with the established provisions:

Within 4 (four) months following the entry into force of the Decree:

a) The STPS shall issue the general provisions to establish the procedures relating to the authorization to provide specialized services or execute specialized works.

Within the following 6 (six) months as of this publication, contractors must obtain the authorization from the STPS for such purposes and register in the Registry.

b) The National Institute of Housing Fund for Workers shall issue the rules that establish the procedures for contractors to provide the information required in article 29 Bis of the LINFONAVIT, as well as to provide every four months the Agreements.

Within 6 (six) months following the entry into force of the Decree:

a) Contractors that provide specialized services or execute specialized works must begin to provide information regarding the authorization of the STPS and the Agreements.

We warn that the spirit of the Initiative maintains the need to safeguard the rights of the people who have been affected, mainly in the workplace. However, the business sector seeks to dialogue with Congress so that the full panorama of the Initiative is considered with the interests of all parties involved in labor relations.

We will continue to report on the legislative process of this Initiative and on any changes that may arise.

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Informative Note – Changes in the organic structure of the SCT.

On November 2, 2020, the Ministry of Communications and Transportation (hereinafter, the “Ministry” or “SCT”) published in the Federal Official Gazette (hereinafter, “DOF”) a Delegation Agreement by which some powers in matters of communications and technological development, as well as in matters of the railway and multimodal development competence of the ex- Undersecretariat of Communications and Technological Development were delegated to the heads of the Undersecretariat of Transportation and Infrastructure (hereinafter, the “Agreement”).

The above responds to the presidential decree published in the DOF on April 23, 2020, through which some austerity measures were established and that must be observed by the agencies and entities of the Federal Public Administration, which include, among others, the order to cancel ten undersecretaries of State (hereinafter, the “Decree”).

As a result of the Decree, on August 10, 2020, the Ministry issued the COMMUNICATION-181-2020 through which it was reported the administrative restructuring and elimination of the Undersecretary of Communications and Technological Development, which was in charge of Ing. Salma Jalife Villalón. This measure foresaw the permanence of the ex-undersecretary within the SCT so that she could continue with the projects she was carrying out. However, at the beginning of September of this year, various media announced the resignation of Ing. Jalife from the Secretariat, information that has not been officially confirmed by the SCT to date.

Therefore, the Agreement seeks to materialize the restructuring proposed by the SCT by delegating the exercise of the powers provided in the Federal Telecommunications and Broadcasting Law and other applicable administrative provisions in matters of communications and technological development to the Head of the Undersecretariat of Transportation. In addition, the exercise of the powers provided in the Regulatory Law of the Railway Service and other applicable administrative provisions to the Head of the Undersecretariat of Infrastructure, is delegated.

Likewise, in its attempt to organize the legal sphere applicable to the Ministry, on August 27, 2020, was presented to the National Commission for Regulatory Improvement the Draft of the Internal Regulations of the Ministry of Communications and Transportation. In general terms, the proposal presented defines the competence of public servants, administrative units, decentralized administrative bodies, and coordination with the new organic structure, without creating new obligations or sanctions or restricting any right for individuals.

However, even though the Regulations were approved by the National Commissioner in September of this year, it has not been published in the DOF.

We will continue to inform you about the publication of the Regulation and any modification derived from these changes.

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Acedo Santamarina has been recognized once again by Chambers and Partners (Latin America 2021)

Acedo Santamarina has been recognized once again by Chambers and Partners (Latin America 2021) as one of the best firms in Mexico for the following practice areas: TMT (Telecommunications Media and Technology) Corporate/M&A and Tax.

We also congratulate our partners, Andrés Acedo and Rafael Tena, who were individually recognized as Leading Lawyers in such practices.

More information:
https://chambers.com/law-firm/acedo-santamarina-sc-latin-america-9:222193

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Proposal for amendments in the matter of housing lease agreements

As per the requests of associations and individuals promoters of the right to housing, on July 8, 2020, two deputies of the MORENA Parliamentary Group presented to the Mexico City Congress the “Initiative with the Draft Decree Amending and Adding Various Provisions of the Civil Code for the Federal District, in the Matter of Leasing to Ensure the Right to Housing in the Context of the Pandemic” (the “Initiative”).

The Initiative, according to its Statement of Reasons, is supported by the following:

(i) The health crisis resulting from the COVID-19 virus has caused the failure of housing tenants to comply with their obligations to pay rent, as a consequence of economic and social difficulties such as loss of employment, reduction in wages, and commercial inactivity.

(ii) Non-payment of rent can lead to (a) displacement of families with roots in neighborhoods, villages and colonies, (b) evictions, and (c) several people in a homeless condition.

(iii) The civil legislation of Mexico City in the matter of real estate leases does not provide tenants with the appropriate judicial guarantees, as it contravenes the principles of affordability, bearable costs, and legal security of tenure, all components of the human right to housing.

(iv) It is necessary to balance the relationship between the parties of a lease agreement in order to guarantee the right to adequate housing, which is foreseen in Article 4 of the Federal Constitution and Article 9 of the Political Constitution of Mexico City.

The Statement of Reasons of the Initiative refers to the Guidelines on the implementation of the right to adequate housing, issued during April 2020 by the former United Nations Special Rapporteur, which mention the need to take measures to guarantee the right to housing of individuals, such as (i) the cancellation, reduction and/or deferment of rents, and (ii) the implementation of supports and soft loans for homeowners.

In addition, the Initiative highlights the figure of mediation provided in the Alternative Justice Act of the Federal District Superior Court of Justice, as an effective instrument for resolving disputes arising from housing leases.

Specifically, the Initiative proposes to modify the Civil Code for Mexico City, in accordance with the following

  • Amendment to Article 2398.
  1. The housing lease is defined as “that which contributes to the fulfillment of the human right to housing of the lessee in exchange for a certain price in favor of the lessor“.
  2. The housing lease agreement must be subject to a mandatory term of three years, except as provided by the lessee.
  • Addition of two paragraphs to Article 2406.
  1. The vacancy legal proceeding shall be inappropriate if the landlord does not submit a written lease of housing agreement, even if the proceeding is based on failure to pay rent.
  2. The landlord will lose the right to keep the deposit in case of anticipated termination of the housing lease agreement, or an equivalent amount in the case of the termination of the agreement.
  • Addition of Articles 2406 BIS, 2425 BIS, and 2431 BIS.
  1. In the absence of a written agreement, the tenancy shall be presumed to exist if it is demonstrated that a party has consented the occupation of its own property by the other party in return for the payment of a certain price.
  2. In order to exercise any action derived from the breach of the essential clauses of the agreement, it will be sufficient to make a statement under oath in the sense that a lease relationship exists, in the understanding that the parties still may prove their claims to the court.
  • The following rights are provided for tenants (a) not to request more than one month’s advance payment; (b) not to demand bail or any real estate guarantee; (c) not to be subject to “arbitrary, illegal and/or forced evictions”; (d) to notify the court order to vacate two months in advance of the date of the eviction; (e) to have staff from specialized institutions present at the eviction so that they can provide assistance to vulnerable persons such as children, women victims of violence, indigenous people, immigrants, etc; (f) access to measures to avoid leaving people homeless, such as temporary shelters and incorporation into housing programs; and (g) should fortuitous cases arise, access to mediation for the modification of the terms of the agreement.
  1. In cases of national emergency, natural disasters, declarations of environmental, natural or health emergencies, or any other situation of force majeure that paralyzes economic activities and prevents the lessee from complying with the agreement, the lessee may request the temporary or definitive renegotiation of the lease agreement, in accordance with the provisions of Article 1796 of the Civil Code.

The Initiative has been strongly criticized for considering that, if approved in its terms, it would violate contractual freedom, allow housing tenants to stop paying rent, and violate the rights of landlords, such as the right to property, thus discouraging investment in the real estate sector. Activists involved in the drafting of the Initiative, for their part, have stressed out the need to encourage written leases to provide legal certainty for tenants.

We hope that the discussion of the Initiative in the Mexico City Congress will be carried out through a deep, measured, and unbiased debate. Furthermore, that it contemplates the participation of litigants and judges and other sectors, in order to avoid deficiencies that could negatively impact the effective implementation of the legal provisions. Finally, we propose to be incorporated into the discussion, the feasibility of implementing supports such as those referred to by the United Nations Special Rapporteur, both for homeowners and tenants.

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The Mexican Federal Judicial Power confirmed both the legality and constitutionality of the public bid process known as “Red Compartida”

Authors: Rafael Tena y Alfonso Pagaza

As a result of a constitutional amendment, published on June 2013, the Ministry of Communications and Transports of the Mexican Government had the obligation to ensure the implementation of a Public Shared Network (“Red Compartida”) that uses the spectrum released by the transition to digital television.

Acedo Santamarina, S.C., was hired to provide its advice on the public bid process that awarded the Public Private Partnership contract to operate this network. The bid process ended with the signature of the Public Private Partnership contract on January 2017.

After more than three years of litigation, on June 28th, 2020, the Second Collegiate Court on Administrative Matters, Specialized in Antitrust, Broadcasting and Telecommunications, with residence in Mexico City and jurisdiction throughout the Republic, confirmed both the legality and constitutionality of the public bid process.

The judges decided unanimously that the Ministry of Communications and Transports of the Mexican Government acted in a legal and constitutional way during the public bid process that awarded the Public Private Partnership contract to operate this network to Altán Redes.

It is worth noting that in the case at hand the First Chamber of the Mexican Supreme Court of Justice denied the constitutional protection (“juicio de amparo”) against Articles 51, 52 y 53 of the Law of Public Private Partnership, as well as Article 84, Section I of its Regulations.

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COFECE files constitutional controversy

On June 22, 2020, the Federal Economic Competition Commission (“COFECE” as per initials in Spanish) issued a statement informing that COFECE filed before the Supreme Court of Justice of the Nation (“SCJN” as per initials in Spanish), a constitutional controversy against the Agreement the Policy of Reliability, Security, Continuity and Quality in the National Electric System, issued by the Ministry of Energy, which was published in the Federal Official Gazette on May 15, 2020 (“SENER Agreement“).

The foregoing, for considering that it undermines the fundamental principles of competition and free market access ordered in the Political Constitution of the United Mexican States, affecting its constitutional mandate and braching its sphere of competence.

COFECE considers that the aforementioned policy is contrary to the content of articles 16, 28 and 133 of the Constitution, as well as to the applicable laws on electricity, which together establish a competition regime in the generation and supply of electricity. Likewise, COFECE expressly states:

The instrument published in the DOF seriously affects the economic structure of the electricity sector, as it eliminates any possibility of its operating in conditions of competition and efficiency, as well as under the terms set forth in the current national regulatory framework for this sector. Hence, the contested Policy compromises both the open and non-discriminatory access to transmission and distribution networks (an essential input in this industry), as well as the economic dispatch criterion that governs the operation of the wholesale electricity market; furthermore, it grants advantages in favor of certain participants while reducing the ability of others to compete, forefits efficiency and establishes barriers to entry in electricity generation.”

It remains to wait for the SCJN to rule on the constitutional controversy filed by COFECE. Particularly, regarding the scope of the SENER AGREEMENT, issued by such government agency, apparently in excess of its powers and invading the powers of COFECE itself, to the detriment of consumers.

It should be clarified that, from the legal point of view, a constitutional dispute is a constitutional control mechanism, in the form of a trial, to settle disputes. In this case, between an autonomous constitutional body and the Executive Branch, having effects the resolution issued by the SCJN only between SENER and COFECE.

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Required notice to RFC of partners and shareholders

According to Article 27 of the Federal Tax Code (Código Fiscal de la Federación, “FTC”), legal entities with a tax address in Mexico are required to file a notice in the Federal Taxpayer Registry (Registro Federal de Contribuyentes, “RFC”) providing the name and RFC code of the partners or shareholders every time any modification is made in the capital stock of the company.

The foregoing seeks that the Mexican Tax Administration (Servicio de Administración Tributaria, “SAT”) obtains information to know in real time the shareholding structure of legal entities, with the data of their partners or shareholders.  Mainly, if they are registered in the RFC and, subsequently, to know the modifications and additions of those, so that it has updated such information.

In accordance with Miscellaneous Tax Resolution 2.4.19, in force for fiscal year 2020, the notice must be presented within 30 business days of the capital stock being modified and be made through the electronic portal of the SAT, in accordance with procedure 295/CFF.

In accordance with transitory article Forty-Six of the Miscellaneous Tax Resolution, in force for the fiscal year 2020, legal entities that currently have out-of-date information on partners or shareholders in the RFC must file the aforementioned notice on or prior to June 30, 2020, providing current information as of that date.

In accordance to the FTC, failure to file the notice of capital update or to file it late, unless it is filed spontaneously, is sanctioned with a fine.  It could also lead to other negative tax consequences.

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Legislative proposal to create INMECOB

By: Mauricio Arciniega

Last Wednesday, June 10th of this year, Senator Ricardo Monreal, member and leader of the Morena Parliamentary Group, presented before the Permanent Commission of the Congress of the Union a legislative proposal to amend articles 27 and 28 of the Political Constitution of the United Mexican States. With this proposal it is envisaged to create the National Institute of Markets and Competition for Well-Being “INMECOB” by its initials in Spanish, as an autonomous constitutional body with legal personality, technical, operational and management autonomy. The legislative proposal aims to reduce public expenditure.

With the creation of the INMECOB, the Federal Telecommunications Institute (“IFT”), the Federal Anti-Trust Commission (“COFECE”) and the Energy Regulatory Commission (“CRE”) would become extinct, with the aspiration of integrating these regulatory bodies and thus establishing the only one in the area of Anti-Trust and in the Telecommunications, Broadcasting and Energy sectors, without the CRE’s hydrocarbon faculties becoming part of the INMECOB.

However, Senator Monreal announced last Sunday on social media that he will postpone the legislative process of this proposal in order to start a process of evaluation and discussion of it. It is important to point out that, if the Legislative proposal is approved in the current terms, there would be a budget and personnel reduction, affecting the technical and specialized functions developed by the IFT, the COFECE and the CRE, natural monopolies indispensable to the economy. Furthermore, it would not be in line with the Chapter 18 requirement of the USMCA, which is to have an independent telecommunications regulatory body, so, among other reasons, the Legislative proposal could be expected to have a direct impact on investment in our country.

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Measures announced by the SCJN for its activities from june 1 to 30

In accordance with General Agreements 3/2020, 6/2020 and 7/2020 issued during March and April 2020, the Plenary of the Supreme Court of Justice (“SCJN”), decided to announce certain measures for mitigating risks related to the COVID-19 disease, including the declaration as non-working days from March 18 to May 31, 2020.

On May 26, 2020, the Plenary of the SCJN issued General Agreement 10/2020, which extends the suspension of jurisdictional activities until June 30, 2020, in the understanding that during such period terms will not elapse, however, the days and hours that may be necessary for the development of the activities with the purposes mentioned below, will be enabled electronically or remotely:

a) Provide on the suspensions requested in urgent constitutional controversies and the judicial actions necessary for the effectiveness of such measures.

b) To present the initial writs within the competence of the SCJN only electronically, using the FIREL or e.firma, and to generate the corresponding electronic files.

c) Continue with the electronic processing of matters regulated in the Amparo Act, constitutional controversies, unconstitutional actions in which laws of annual validity or, electoral regulations, have been challenged, and the appeals filed in those means of constitutional control settled before the SCJN, or the appeals filed against urgent constitutional controversies presented since March 18, 2020, that go beyond the matter of suspension, through the use of FIREL or e.firma.

d) To digitize the documentation and to integrate the electronic files for the matters mentioned in subsection c) above, to continue its processing electronically.

e) Provide through electronic means the matters mentioned in sub-sections b) to d), and for notifications to be effected by writing or electronic list, as appropriate, as well as electronically.

f) To effect the service of process ordered in the proceedings initiated electronically since June 1st, 2020, and by writing to the respective authorities the orders that admit “amparo under review” remedies filed before or after the date herein mentioned.

g) To hold remote hearings and appearances.

h) To provide on the matters listed or that may be listed for the sessions the Plenary or Chambers of the SCJN may hold remotely; to announce the decisions taken in those sessions by writing or electronic means; to sign electronically the relevant additions and votes; and to make available the drafts of the resolutions through electronic means.

i) To notify the legislative bodies, the judgments issued by the Plenary of the SCJN, in unconstitutional actions or constitutional controversies, should the effects of the declaration of invalidity are subject to such notification.

j) To conclude the completion of the matters decided before March 18, 2020, by the Plenary and Chambers of the SCJN, to sign them electronically and to notify them by writing or through electronic sign.

The deadlines for submission of requirements ordered during the month of June 2020, and for filling appeals electronically against such requirements, will restart or begin only for the party that files his submission electronically. In the case of orders admitting “amparo under review” remedies, the period for its challenge will start from the date of the effectiveness of the notification made by writing or electronic list.

The measures above mentioned intend that the SCJN carry out its activities during June with the necessary precautions to face the SARS CoV-2 (COVID-19) pandemic.

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Senes publishes the agreement to guarantee the efficiency, quality, reliability, continuity and security of the national electric system

On April 29, 2020, the National Energy Control Center (for its initials in Spanish “CENACE”), issued the Agreement to guarantee the Efficiency, Quality, Reliability, Continuity and Security of the National Electric System (“Agreement”), on the occasion of the recognition of the epidemic of disease due to the SARS-COv2 virus (COVID-19).

As a consequence of the foregoing, the Plenum of the Federal Commission on Economic Competition (for its initials in Spanish “COFECE”), through a session dated May 6, 2020, issued Opinion No. OPN-006-2020, from whose analysis and recommendations were made known through this media.

In follow-up to the foregoing, it was made known the Agreement by which the Policy of Reliability, Safety, Continuity and Quality in the National Electric System, issued by the Ministry of Energy, which was published in the Official Gazette of the Federation on May 15, 2020 (“SENER Agreement”). Of the recitals, the following is highlighted:

“That this policy contemplates in a more orderly manner the penetration of Power Plants with Intermittent Clean Energy, photovoltaic and wind power, anticipating that the Alert and Emergency Operating States will be reduced to a minimum according to international experiences, reducing as far as possible the forced exits associated with generation are particularly dangerous on the ramps of sunrise and sunset, as well as at critical hours of the National Electric System and that expose financial damage to the National Electric System, as well as to End Users. Said strengthening will be carried out through the optimization of the elements that make up the National Electric System as a whole, and

The Third Transitory Article of the SENER Agreement, for its part, establishes:

Third.- In accordance with this policy of Reliability, Safety, Continuity and Quality in the National Electric System, the Energy Regulatory Commission and the National Center for Energy Control, within the scope of their powers and competences, shall carry out the corresponding adjustments to the Market Rules and the “General Administrative Provisions that contain the Criteria of efficiency, Quality, Continuity, security and sustainability in the National Electric System; Network Code, as provided in article 12, section XXXVII of the Electricity Industry Law ”and those that may be necessary in terms of efficiency, quality, reliability, safety and sustainability in the National Electric System.

As long as the adaptations indicated in the previous paragraph for the application of the Reliability, Safety, Continuity and Quality Policy in the National Electric System are not carried out, those in force before the entry into force of this Agreement will apply, as long as it is not oppose the provisions of this Policy, being in charge of the Ministry of Energy to resolve any questions regarding the applicable provision that arises in the event of conflict. “

For its part, Chapter V of General Provisions of the SENER Agreement, in item 2. Scope, point 2.2., establishes the following:

“2.2 The Bases of the Electricity Market and General Administrative Provisions (DACG) and other regulations issued by CRE; the Market Operational Provisions that govern the MEM issued by CENACE; as well as the regulation for the incorporation of the Distributed Generation to the SEN and the other operations carried out by the Carriers or Distributors; that are related to activities derived from this Policy, must comply with the principles, guidelines and provisions of this instrument. ”

Chapter VI of Dimensions of the Policy of Reliability, Safety, Continuity and Quality in the National Electric System, in item 6 of Sufficiency, point 6.2 Primary Regulation, point 6.2.3, indicates:

6.2.3. All the Power Plant units connected and delivering active power to the SEN must operate participating in the Primary Regulation (in free mode). The Power Plant units, participating in the primary Regulation, must adjust their production following the changes in the frequency of the System and in the action times established by CENACE. For those Wind, Photovoltaic and Efficient Cogeneration Power Plants with a date of entry into operation, that have an Interconnection contract without being in operation and with a study of Installations delivered prior to the publication of the Network Code of April 08, 2016 in the DOF, they will apply after 18 months of publication of this Policy. ”

In the same Chapter VI., Item 7 of Dispatch Security, point 7.1.2, the SENER Agreement indicates that CENACE will determine the necessary actions to maintain Dispatch Security in compliance with the objectives of Security, Quality and Continuity of the Policy and the provisions that the CRE issues in the matter, pointing out some of them to that effect.

On the other hand, point 8 of the SENER Agreement, related to New Related Services, establishes new services linked to the operation of the SEN, such as the Coverage of the Variability of Power Plants with Intermittent Clean Energy, photovoltaic and wind power and Load Centers Specials. Likewise, it indicates that CRE will issue the regulation and rates applicable to Related Services.

Point 10 of the SENER Agreement, regarding the Incorporation of Intermittent Clean Energies, states:

“10.1 The integration of Installed Capacity of Power Plants with Intermittent Clean Energy in the SEN will be maintained for all Power Plants that have reached the Interconnection Contract one day before the publication of this Policy in the DOF. If for any Power Plant with Intermittent Clean Energy, wind or photovoltaic, it is canceled if the Interconnection Contract or Generation Permit, CENACE will evaluate the requests so that, depending on the position of entry and advancement in its platform called “SIASIC”, from the Interconnection point of the Request and the capacity of intermittent Clean Generation regional accommodation considering the Reliability of the System, the viability of accepting the Study request and continuing the process of it will be determined.

10.8 Regarding the Market in the Balance of Power, the Power Plants with intermittent Clean Energy sources do not provide a firm amount of Power, therefore, they do not contribute to the Reliability of the Electric System.”

In Chapter VII, Final Provisions of the SENER Agreement, point 13.1, establishes the following:

“13. The interpretation that CENACE and CRE make, within the scope of their powers and competences, must be carried out in accordance with the present Policy of Reliability, Safety, Continuity and Quality in the National Electric System, so that, in the event of conflict due to the Market Rules and this Policy, must be interpreted in accordance with the latter.”

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