(Adds quotes, details on CFE generation minimum)

By David Alire Garcia

MEXICO CITY, May 22 (Reuters) – Private renewable energy
firms in Mexico should pay for part of the baseload power
underpinning the flow of electricity on the grid, the head of
the state power company said on Friday, as a dispute on the
future of the local industry roils the market.

Manuel Bartlett, director of the Comision Federal de
Electricidad (CFE) and staunch defender of the state, told
Reuters he favors more clean energy and wants to reduce Mexico’s
use of fuel oil as a major source of power generation.

But he said renewable operators had not been pulling their
weight in contributing to the infrastructure that sustains them.

“Wind and photovoltaic (plants) don’t pay the CFE for the
backup,” said Bartlett, referring to the cost of power
generation from fossil fuels, mostly natural gas, to guarantee
uninterrupted flow.

“Do you think it’s fair for the CFE to subsidize these
companies that don’t produce power all day?” he asked.

The firms should also start helping to pay transmission
costs, he said.

“That’s not a free market, it’s theft,” said Bartlett, a
close ally of President Andres Manuel Lopez Obrador, who has
pledged to hold down electricity rates.

Renewable companies argue they can produce more efficiently
than the CFE and help Mexico reduce its emissions.

Last month, Mexico’s power grid regulator CENACE issued a
ruling supported by Bartlett that prevented several dozen new
renewable energy plants from connecting to the network.

CENACE cited the coronavirus pandemic as a justification,
arguing that intermittent wind and solar power is not consistent
with ensuring constant electricity supply.

Business associations said the move put more than $6 billion
in renewable power plants scheduled to begin operating this year
or next in limbo.

In a provisional ruling this week, a judge ordered CENACE to
back down and allow the renewable firms to continue for now with
tests needed to bring plants online.

Bartlett, an 84-year-old former interior minister who has
been a force in Mexican politics for decades, said he is not
seeking to restore CFE’s decades-long monopoly that was ended by
the previous government.

But he said Lopez Obrador has instructed him to ensure the
CFE generates at least 54% of power output, its current level.

“I accept that there’s going to be private investment.”

Last Friday, the energy ministry moved aggressively to give
the government more control over power supplies by seeking
fast-tracked regulatory approval for a ruling designed to give
the state more say over who can generate electricity and how
much, again citing the pandemic as a rationale.

The move promoted the head of a government regulatory
commission to abruptly resign.

Bartlett described the notion that the government is
resisting more renewable energy as a “lie.”

“We are not troglodytes, we’re serious people,” he said,
adding that he favors cleaner-burning natural gas.

Nevertheless, the government last year canceled a planned
auction to purchase renewable energy via long-term contracts,
another policy promoted by the last government.

It also sought to disincentivize a clean-energy certificate
scheme, arguing it put the CFE at a disadvantage.
(Reporting by David Alire Garcia; Additional reporting by
Adriana Barrera
Editing by Marguerita Choy and Sonya Hepinstall)