AME Wins Amparo Preventing CFE Power Generation

Once again, a court has limited the government’s efforts to strengthen CFE through administrative changes. A federal judge granted a definitive suspension, which prevents the enforcement of CRE’s provisions that gave electricity dispatch priority to CFE power plants over those of private producers.

Juan Pablo Gómez Fierro, a federal judge who specializes in economic competition, granted the definitive suspension to the Mexican Energy Association (AME) against resolution RES/550/2021, published in December 2021. In the resolution, CRE reiterated a 2020 policy implemented by the Ministry of Energy that tried to establish a priority in the dispatch for CFE.

Judge Gómez argued that the discretionary powers CRE granted to grid operator CENACE may put renewable energy-producing companies at a disadvantage. The resolution allowed CENACE to make decisions regarding the connection and uncoupling of power plants to the National Electric System (SEN).

"CRE's actions could lead to a future decrease in the production of electricity through renewable energy, which contribute to the protection of a healthy environment and a high level of well-being. The increase in the generation of green energy is essential for the population’s access to a healthy life and environment," reads Judge Gómez's ruling. 

The ruling also mentions the commitment Mexico made in the Paris Agreement to combat climate change by reducing greenhouse gas emissions. By 2024, Mexico must generate 35 percent of its energy through renewables. By 2030, this should be 43 percent. Therefore, measures that discourage renewable energy generation, such as the one taken by CRE, go against these commitments. 

In May 2020, the Ministry of Energy published a modification to the Reliability and Security Policy of the National Electric System, which gave priority to conventional power plants fired by fossil fuels and owned by CFE under the argument that renewable energy caused too much intermittency, harming the national grid by destabilizing it. This provision was one of the earlier steps taken by the federal government to return control of the electricity sector to CFE, which was shortly after suspended by the Mexican Supreme Court.

Since 2020, the Mexican government has continually sought to strengthen CFE's electricity generation, to the detriment of competition with private companies. The latest definitive suspension has a general effect, so all actors in the energy sector must comply. AME and other private generators have appealed to amparos to fight the government’s regulatory changes. However, President López Obrador now seeks to reform the constitution to avoid further lost battles in court regarding his protectionist policies.

The suspension entails that CENACE must comply with its previously economics-based dispatch model, prioritizing cheap and sustainable electricity generation above CFE’s stable but more polluting power production. The reform, which partly aims to stop further amparos, is still under debate at Congress and is expected to be voted on in April.