Mexico - Electric Industry Law

Mexico - Electric Industry Law

On 29 January 2021, the President of Mexico sent a Bill to the Chamber of Representatives on preferential processing ('Bill') to change the Law on Electrical Industry ('LIE') with its acronym in Spanish.

The Bill seeks to amend the LIE to cancel the energy policy introduced by the end of 2013.

Amendments to the LIE:

The following is a description of the proposed changes to the LIE:

• Adjustment of the dispatch conditions for plants related to the national electrical system ('SEN' for its acronym in Spanish);
• Licenses should be given in compliance with the planning requirements of the SEN provided by the Ministry of Energy ('SENER' for its Spanish acronym)
• Requires the awarding of Renewable Energy Certificates ("CELs" in Spanish for its acronym) to power plants, independent of the date of commercial operation;
• Reduces the requirement to enter into electricity supply arrangements solely by public auctions as currently applicable to CFE Provider of Essential Services (CFE Basic Services Supplier)
• The Energy Regulatory Commission ('CRE') is obliged, for its acronym in Spanish, to revoke grandfathered self-supply permits issued by means of fraudulent acts, and
• Incorporation of the Legality and Profitability Review for the Federal Government of the Energy Contribution and Electric Power Procurement Arrangements reached by the CFE and the Independent Power Generators according to the Legislation on Public Electricity Supplies.

Legal ramifications 

The Bill poses significant threats of unconstitutionality in the fields of free competition, unequal treatment, legality, legal certainty, retroactivity, sustainability and environmental security and reverence for fundamental rights, among others.

In addition, the right of the Mexican State to change its legal structure is constrained by the commitments assumed in many treaties concluded and ratified by our government. In this way, the adoption and execution of the Bill could explicitly breach international agreements and treaties, including the United States-Mexico-Canada Agreement (USMCA), the Free Trade Agreement between Mexico and the European Union (FTAEU) and the Comprehensive and Progressive Agreements (CPTPP).