News Article

Bartlett Champions State-Centered Energy Reform in Congress

By Cas Biekmann | Thu, 10/28/2021 - 17:15

In a presentation for the Energy and Infrastructure Commissions of Mexico’s Chamber of Deputies, Manuel Bartlett made his case for the government’s energy reform proposal. The CFE Director General assured representatives that if the constitution is changed, the government will have plenty of instruments at its disposal to keep energy prices modest.

“What are we going to do to reduce electricity rates? We have reduced the rates for three years now; CFE’s objective is to prevent tariffs from rising above the inflation rate. Despite the cost of [private] companies that do not pay, rates have been stable,” said Bartlett, referring to the government’s grievance with private companies in the legacy market that the government considers to be dodging transmission costs. “If the reform is not approved, we will continue to keep costs down, but we do hope the proposal is approved because then we would have more tools to lower tariffs,” the executive continued.

Bartlett mentioned a meaningful example of such a tool: the creation of one single energy tariff for the entire country. “One of the measures we will take is to establish a single rate in the country. As of now we are following CRE’s regulation and we have multiple rate systems that cause problems: in some states we have a low tariff whereas we have a high one in another. This is an obstacle toward the development of the country,” Bartlett emphasized. Mexico currently has 14 different zones, each with its own tariff. By doing away with this system, Bartlett argued that electricity prices would not go up.

The CFE director furthermore promised that the utility would construct 16 new power plants within the next three years, for a total capacity of 8,600MW. The power plants would include a CFE solar farm, which could be the much-discussed plan for a giant 1000MW solar power plant in Sonora, although CFE has investigated other options, too. The projects are to be funded with the relatively new Master Investment Trust in combination with resources obtained from national and international development banks.

Transmission and distribution, an oft-mentioned pain point for the Mexican energy matrix, would also receive further attention. “We have invested MX$3.36 billion (US$165.5 million) in transmission over the course of 2020. For 2021, we will spend another MX$5.46 billion (US$268.5 million),” Bartlett explained.

The reform proposal, which seeks to put the power in the energy sector firmly back in the government’s hands, has attracted a wave of criticism. Private companies, environmental watchdogs and legal experts worry it could be a major setback in the country’s energy transition and would attract near-incessant litigation efforts, among other arguments. Deputies from opposition parties PAN and PRD reportedly received Bartlett with a stuffed dinosaur, criticizing the director’s wealth and linking it to his long-standing prominence within Mexican politics. Bartlett himself addressed the criticism by arguing the reform is merely a tool to ensure reliable and quality electricity for all Mexican citizens. “It is more or less a case of national security,” he said, hinting at President López Obrador’s self-sufficiency policy.

The data used in this article was sourced from:  
El Universal, Forbes
Cas Biekmann Cas Biekmann Journalist and Industry Analyst