Mexico power policy unconstitutional: Supreme court

Mexico's supreme court declared parts of the government's new electricity policy unconstitutional today in a blow to President Andres Manuel Lopez Obrador's attempts to unwind the market opening ushered in by the 2014 energy reform.

The policy "gives exclusive and unfair advantage" to state power company CFE," the judges stated in a four-to-one ruling against aspects of the policy.

The energy ministry pushed through sweeping changes to Mexico's electricity regime on 15 May that sought to re-establish the predominance of state-power company CFE, a decision referred to the supreme court by competition regulator Cofece in June.

The new policy sought to amend grid dispatch rules that favor fuel oil-fired generation and restrict the participation of private-sector developers, particularly in renewable energy.

The policy "contravenes constitutional rights to competition and a free electricity generation and supply market, particularly in intermittent clean energy," the court said.

President Andres Manuel Lopez Obrador has pledged to restore the dominance of state-owned companies CFE and Pemex. His government has pushed through a series of regulatory changes since December 2019 that have tested the limits of the 2014 energy reform that dismantled state-owned monopolies.

More than 20 clauses of the policy were declared unconstitutional today but the court did not strike down all clauses. Aspects of the policy not set aside remain suspended pending resolution of a series of private sector injunctions launched since last May.

The energy ministry has jurisdiction to define energy policy but only in accordance with the constitution and the existing legal framework enshrined in the 2014 energy reform, the court said.

The court ruling sets up a tussle between the judicial and executive branch in the months ahead, as Lopez Obrador submitted an electricity reform — more far-reaching and aggressive than the energy ministry's policy document — to congress on 1 February.

The courts have largely found in favor of companies seeking suspension of regulatory changes over the last year.

Lopez Obrador has said he will pursue constitutional reform if his policy aims can not be met within the current framework.

By Rebecca Conan