Regulators help ensure access to and quality of public utilities, facilitate investment and protect market neutrality. Good internal and external governance of regulators is crucial to ensure that they fulfil these functions and perform effectively. Internal governance includes organisational structures, behaviour, accountability, business processes, reporting and performance management, while external governance entails the roles, relationships and distribution of powers and responsibilities with other government and non-government institutions. The OECD has developed an innovative framework that supports good external and internal governance by helping regulators assess functions, practices and behaviour, and identify drivers of performance.

The National Hydrocarbon Commission (CNH) is a technical regulator overseeing hydrocarbon exploration and extraction in Mexico. Established in 2008, the CNH has substantially broadened its remit since the 2013 energy reform that opened up the hydrocarbon sector to competition. Current responsibilities include administering the auctioning of access to hydrocarbon reserves, as well contracts and entitlements, regulating and supervising activities undertaken by operators and assisting the Ministry of Energy (SENER) with energy policy. As part of the reform, the CNH has also acquired technical, operational and managerial autonomy.

This assessment focuses on the internal governance arrangements of the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos, CNH). It is the result of a review of the agency led in parallel with reviews of Mexico’s Agency for Safety, Energy and Environment (Agencia de Seguridad, Energía y Ambiente, ASEA) and Energy Regulatory Commission (Comisión Reguladora de Energía, CRE). The assessment and recommendations on the external governance of the three agencies are presented in Driving Performance of Mexico’s Energy Regulators (OECD, 2017), which focuses on co-ordination and relations with other federal actors and sector stakeholders. The internal governance reviews of ASEA and CRE are presented separately in other reports.

Measuring regulatory performance is challenging, starting with defining what to measure, dealing with confounding factors, attributing outcomes to interventions and coping with the lack of data and information. This chapter describes the methodology developed by the OECD to help regulators address these challenges through a Performance Assessment Framework for Economic Regulators (PAFER), which informs this review. The chapter first presents some of the work conducted by the OECD on measuring regulatory performance. It then describes the key features of the PAFER and presents a typology of performance indicators to measure input, process, output and outcome. It finally provides an overview of the approach and practical steps undertaken for developing this review.

This chapter describes the main features of Mexico’s Federal institutional set-up and regulatory framework. It provides an overview of the energy sector reform in 2013 and ensuing institutional sector transformations.

The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-outcome-output framework. This chapter applies the framework to the internal governance of Mexico’s National Hydrocarbons Commission (CNH) and reviews the existing features, the opportunities and challenges faced by the regulators in developing an effective performance assessment framework.