MEXICO CITY — Mexico’s Congress is set to vote on a constitutional reform promoted by President Andrés Manuel López Obrador that would undo much of the market opening in electrical power carried out by his predecessor.
Prior the 2013 energy reform, Mexico faced several problems: high electricity rates, scarce generating capacity and dirty power plants that often burned fuel oil to produce electricity.
Mexico may have given private and foreign firms too many incentives.
The state-owned utility lost market share and income, but still had to maintain transmission lines.
López Obrador likes state-owned companies and doesn’t want the Federal Electricity Commission to go bankrupt or lose more market share.
Private companies, mainly from Spain and the United States, invested billions of dollars in Mexico to build wind, solar and gas-fired plants under the terms of the 2013 reform.
And companies with plants, factories and stores in Mexico need to plan how much their energy costs will be and how green the energy will be, so they often signed long-term power supply contracts with private generators.
government may file a USMCA complaint, which could eventually result in compensatory tariffs on Mexican products.
López Obrador has already passed a law giving the state utility more discretion in deciding whose electricity to buy, but it remains stalled by court challenges.
López Obrador also included a clause declaring lithium — a key component of batteries for electric cars and other devices — a strategic mineral that only the government can mine.