The governors of Arizona and Sonora said Friday they want to overcome the legal and regulatory hurdles that now prevent U.S. energy firms from selling electricity in Mexico.
Gov. Guillermo Padrés Elías told attendees at the Arizona-Mexico commission meeting in Tucson that changes in Mexican law have broken the monopoly the Federal Electricity Commission has had for generating power in his country.
In fact, he said, the electricity commission, known in Mexico as CFE, has an obligation to buy power from smaller companies.
Padrés said that opens the door for CFE to buy power from boutique generators, including solar.
He said that change can create opportunities for generators in Arizona - assuming there's a way of moving the electricity across the border.
That goes beyond the simple question of what happens at the border.
Someone is going to have to build the transmission lines to the border, said Leisa Brug, Gov. Jan Brewer's energy adviser. That has its own hurdles.
"It's difficult to site," she said. "It's also very expensive."
Brug said no one is willing to go through the various regulatory and cost burdens on the mere chance that someone will buy the power at the other end.
"Transmission follows demand," she said. Brug said that only when there is proof of waiting customers will some company take the time and bear the expense.
Padrés suggested he might be able to address some of that. He said the state of Sonora itself uses a lot of power in its own government and school buildings.
"We would guarantee the use of the product from these companies as long as they comply with the new (Mexican) laws," he said.
"It seems to me there are a lot of issues that need to be addressed," said Brewer. She vowed to work with Padrés to form a task force to deal with them.
David Hutchens, president of Tucson Electric Power, said there is excess electric capacity in Arizona, with various companies having set up gas-fired generators. He said TEP itself takes advantage of some of that excess, with its own customer demand exceeding its generating capacity.
"It would be a shame for them to try to develop their whole entire owned system instead of leaning on this great huge machine we have up north of the border," he said of Mexico.
Hutchens acknowledged that opening the market to Mexico would increase demand which, given the general rules of economics, should drive up price. But with the current low price of natural gas, he does not believe the additional demand will make much of a difference.
"There's enough to go around," he said.
Hutchens also said the current excess supply of electricity in Arizona could disappear. He said if the Environmental Protection Agency imposes new pollution standards on coal-fired plants, it might not be economical to retrofit some of them and they could be shut down.
That, he said, would force companies like his to rely more on those natural gas generators.