CENACE: who runs the grid, and what the law tells it to do

On 1 May 2026 Mexico’s National Energy Control Center (CENACE) changed its director general. Ricardo Mota Palomino, in charge since August 2021, went back to teaching at the IPN, and the post passed to Mauricio Cuéllar Ahumada, until then head of Operations and Planning and a CENACE engineer since 1998. The news barely travelled outside the sector. That is understandable: very few people know exactly what CENACE does.

For anyone investing in energy, though, it is the institution that matters most day to day. It generates no electricity, owns no line and sends no one a bill. But it decides which plant turns on and which turns off, calculates the price of energy at every node in the country, and determines what works a project needs before it can connect to the grid. This piece explains how it works and what the law now requires of it.

What it is, and what it is not

CENACE is a decentralised public body of the federal administration, with its own legal personality and assets, under the Ministry of Energy (SENER). It is not part of CFE and it is not the regulator. Article 123 of the Electricity Sector Law (Official Gazette, 18 March 2025) gives it three jobs:

1. Operational Control of the National Electricity System: keeping generation and consumption in balance, second by second.
2. Operating the Wholesale Electricity Market (MEM): receiving offers, calculating prices and settling transactions.
3. Access to the National Transmission Grid and the General Distribution Networks: defining what each plant or load needs in order to connect.

The institution is older than the market. After the 1960 nationalisation, CFE had to coordinate dozens of systems that had previously run separately. In 1962 it set up the National Systems Operation Office; in 1976, the National Load Dispatch; and in 1977 the latter was renamed the National Energy Control Center, still inside CFE. The 2013–2014 reform took it out: the Electricity Industry Law was published on 11 August 2014 and the decree creating CENACE as an independent body on 28 August that year. CFE transferred to it the human, material and financial resources it needed to operate. The market went live in January 2016: Baja California on the 27th, the National Interconnected System (SIN) on the 29th and Baja California Sur on 23 March.

It helps to be clear on what it does not do. It does not grant generation permits or set regulated tariffs: that is the job of the National Energy Commission (CNE), which replaced the CRE in 2025. It does not build or maintain the grid: CFE Transmisión and CFE Distribución do that, on SENER’s instruction. And it does not decide alone which grid gets built: it proposes the expansion programmes and SENER approves them.

How it works, in one day

CENACE runs from a national centre and nine regional control offices, seven in the SIN and two on the Baja California peninsula. Its day has three stages.

The day before. Market participants submit sale and purchase offers for every hour of the following day. The window closes at 10:00. With those offers, the demand forecast and the state of the grid, CENACE solves the Day-Ahead Market: it decides which units start up (commitment) and how much each one produces (dispatch), at the lowest total cost that respects the system’s physical limits. The law is explicit that this decision is made “regardless of the ownership or representation” of the plants (art. 117). A CFE plant and a private plant compete under the same rule.

In real time. Demand and generation never turn out exactly as scheduled. CENACE re-dispatches every few minutes in the Real-Time Market, and its instructions are binding on every member of the sector (art. 15). When operating reserves fall below security margins it declares alert or emergency operating states, which can end in controlled load shedding. That happened on 7 May 2024: with demand at 48,472 MW in the middle of a heatwave, the system entered emergency at 17:04 and returned to normal at 17:52.

Afterwards. CENACE invoices, collects and pays. Each participant receives a statement of account; CENACE requires collateral and can suspend anyone who defaults (art. 118). Payments between CENACE and participants must balance: the body neither profits nor loses from the market, and it is funded through a regulated tariff for the operation service.

The most visible output of all this is the Local Marginal Price (PML): an hourly price at each of the country’s more than 2,500 nodes. Each PML breaks down into three parts: the cost of energy, losses and congestion. When a line saturates, cheap energy cannot reach where it is needed and the price at that node rises. Consumers do not buy at a node but in a load zone that averages several; generators are paid at the node where they inject. The congestion risk between the two points is hedged with Financial Transmission Rights, which CENACE itself allocates and administers.

What changed in 2025

The Electricity Sector Law replaced the 2014 law on 18 March 2025. The article listing CENACE’s obligations (formerly 108, now 124) keeps most of its clauses. The changes come down to a few words, and they are the ones that matter:

Topic	Electricity Industry Law (2014)	Electricity Sector Law (2025)
Grid access	“Open and not unduly discriminatory access”	Access “when technically feasible”
Market objective	Competition, efficiency and no undue discrimination	Competition, efficiency and guaranteeing Reliability
Who regulates reliability	The CRE	SENER
Long-term auctions	Run by CENACE	“Competitive mechanisms”, subject to SENER authorisation
What it dispatches	Plants, controllable demand, imports and exports	Energy storage systems added
New powers	—	Pilot projects (connection, storage, new ancillary services) to propose to SENER

Three readings:

Access stopped being a general right and became a technical assessment. Transmitters are still required to connect “on terms that are not unduly discriminatory” (art. 48), but under the same condition: when technically feasible. On a congested grid, that shifts the burden of proof onto the project.

Reliability moved from a regulator to the ministry. SENER now oversees the actions CENACE orders to keep the system secure, authorises its procurement mechanisms and approves the grid expansion programmes. CENACE operates; SENER sets the policy it operates under.

Economic dispatch survived. The law requires the State to keep at least 54% of the energy injected into the grid, as an annual average, but the same clause (art. 12, section VI) specifies that this prevalence “must be achieved within a framework of Wholesale Electricity Market operation based on Economic Load Dispatch”. CENACE has no mandate to dispatch CFE ahead of the merit order. The 54% is met by investing in state-owned generation, not by altering dispatch.

What it means for investors

First: the gateway is the interconnection study, not the permit. CENACE defines the infrastructure each plant or load requires, sets the priority order of applications and can study them jointly when they affect the same region (art. 49). The law states that a generation permit does not count towards priority. Anyone who wants to move without waiting for the expansion programme can build the works themselves or pay the contributions CENACE calculates.

Second: the price that matters is the nodal one. Two plants in the same state can pay different prices if they sit behind different grid links. Congestion, more than the price level, is the signal CENACE publishes every day and almost nobody reads when choosing a site.

Third: under “technically feasible”, available grid capacity is part of a project’s value. A project with a clear connection route is worth more than one with a better solar resource but no capacity at the substation. That information comes from CENACE’s studies and publications.

Fourth: technical continuity, with public evaluation. The new director general is a career operator trained in dispatch; the reasonable expectation is continuity in operations, not a turn. The law gives the Directorate General autonomy in management, requires at least one third of the board to be independent, and mandates an evaluation committee, with one representative of each type of market participant, that must publish a report on CENACE’s performance at least once a year (arts. 126–128). That report is the one worth following.

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Sources: Electricity Sector Law, Official Gazette 18-03-2025 (Chamber of Deputies) · CENACE General Organisation Manual, Official Gazette 25-09-2018 (history and text of LIE arts. 107–108) · Decree creating CENACE, Official Gazette 28-08-2014 · Independent Market Monitor — 2016 Annual MEM Report · Energía Hoy — Transition at CENACE’s Directorate General (1-May-2026) · El Financiero — national grid enters emergency state (7-May-2024)