Azucarera Nacional's favorable judgment overruling a decision issued by the National Public Service Authority
Arias, Fábrega & Fábrega representing the interests of Azucarera Nacional, S.A. obtained a judgment from the Third Chamber of the Supreme Court of Justice rendering illegal a decision issued by the National Public Service Authority (ASEP), which had denied the sugar producer its right to renovate its certificate of self generator of energy in the year 2004.
As a self generator, Azucarera Nacional, S.A. generates energy through the use of bagasse, the fibrous residue remaining after sugarcane stalks are grinded to extract their juice. Self generators are allowed to sell their exceeding capacity in the energy market. ASEP had granted Azucarera Nacional, S.A. a self generator certificate in 1999, which allowed the sugar producer to benefit from certain tax advantages granted to energy generators.
When Azucarera Nacional, S.A. requested the renovation of its self generator certificate in 2004, ASEP denied the request on the grounds that Azucarera Nacional, S.A. did not have adequate installations that would allow it to sell excess energy to other agents in the energy market. Azucarera NacionalL, S.A. through ARIFA challenged the decision before the Supreme Court of Justice, as it deemed the decision had breached the Energy Law and Regulations.
The Supreme Court concluded that ASEP's decision had breached applicable Energy Laws and Regulations, as it imposed an obligation on Azucarera Nacional, S.A. to sell its energy to the rest of the market agents, contradicting the purpose of self generation, which is to primarily supply energy to the self generator for its own needs, and afterwards, if the company so decides, to sell energy in the energy market in the same condition as its participating agents.