Policy & Regulation

24 Feb 2021

Mexican Electricity Reform Approved for Final Vote

24 Feb 2021  by Rebecca Conan   

Mexico's lower house approved an electricity reform bill that seeks to strengthen state power company CFE's market position, clearing the way for a final vote in the senate.

The bill was approved with 304 votes in favor and 179 votes against, with votes largely divided across party lines.

In an impassioned and sometimes rowdy debate — legislators traded insults, waved placards and repeatedly tried to disrupt the debate with procedural questions — that lasted more than five hours, Morena party supporters supported the bill they say promises to ensure grid reliability and recover CFE's market position eroded by the 2014 energy reform.

The bill, presented by President Andres Manuel Lopez Obrador on 1 February, seeks to prioritize CFE-generated power dispatch regardless of cost or environmental impact, revoke self-supply permits and review all long-term power purchase agreements (PPAs) between CFE and independent power producers.

Opposition politicians condemned the bill as a return to an inefficient state monopoly that will have environmental and cost implications for the population and likely devastate investor confidence.

The law could affect up to 40,924 MW of private-sector power generation or 48pc of Mexico's total 86,034 MW of installed capacity, with combined-cycle power representing the majority at 24,077 MW.

Industry watchers have questioned CFE's ability to go it alone in maintaining nationwide power supply amid aging electricity generation and transmission infrastructure and restricted budgets.

Mexico was hit with almost a week of power outages from 15 February following gas supply restrictions in storm-battered Texas. A day-long nationwide outage was also reported last December.

The bill will now be referred to a general vote in the senate.

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