Mexico’s lower house of congress approved a controversial electricity bill that prioritizes the state utility above private renewable companies in the latest nationalist move for the country’s energy market.
The bill, proposed by President Andres Manuel Lopez Obrador, was approved without any changes in the early morning on Wednesday, with 289 votes in favor, 152 opposed and one abstention. It will now be taken up by the senate, where the ruling Morena party and its allies have a majority.
If approved as expected, the initiative would determine what plants have priority in distributing power, starting with hydroelectric plants belonging to the state-owned Federal Electricity Commission, known as CFE, followed by other government facilities.
Only after that, private solar and wind farms would be allowed to supply the network with their power production. It also removes CFE’s obligation to buy electricity through competitive auctions and calls on Mexico’s energy regulator to revoke self-supply permits that don’t meet certain conditions.
The bill is yet another step in the president’s ambitious push to reverse Mexico’s energy opening to foreign investors, a historic step taken in 2014 that ended more than 75 years of state monopoly. Since taking power in late 2018, Lopez Obrador, who’s known as AMLO, has vowed to prioritize the country’s embattled state-run companies at the expense of private operators.
“We need to strengthen these companies to be independent and guarantee that the electricity price doesn’t go up, as I promised,” AMLO said after the approval. “Mexico is not land to be conquered. Go steal somewhere else.”
The president also said that he’ll defend the bill if private companies challenge it in the courts. Some similar changes to Mexico’s power regulations proposed by the Energy Ministry were rejected by the Supreme Court earlier this month.
A blackout caused by natural gas shortages in Texas left almost 5 million users in Mexico without power last week, giving further ammunition to AMLO’s agenda. Prices for imported gas the country uses to generate power spiked 5,000% amid the crisis, demonstrating the importance of energy independence, the president said then.
Mexico’s antitrust watchdog Cofece called on congress to reject the proposal, saying it would hurt competition in power generation. The bill discourages clean power projects and would affect supply conditions and the price of electricity, hurting Mexican companies and households as a result, Cofece said earlier this month.
The Global Wind Energy Council and the Global Solar Council issued a joint statement on Wednesday claiming that if approved, the bill will set Mexico back on its clean energy transition. The proposal is “essentially regressing the market back to its monopolistic past,” the statement said.
Source: El Financiero