Constitutional Reforms Advance to Plenary Vote

On Thursday, the Constitutional Points Commission of the Chamber of Deputies approved a ruling amending Art. 25, 27, and 28 of the Constitution. This ruling places the responsibility for the energy transition, internet service, and lithium exploitation under the control of the state, specifically under CFE. The ruling also specifies that CFE and PEMEX will cease to be state productive enterprises (EPEs) and will instead become "public state agencies." So far, 14 Plan C proposals have been approved by Chamber of Deputies Commissions and are ready to be voted by Congress in September. 

According to the ruling approved, CFE will be responsible for the planning and control of the National Electricity System. The objectives will be to ensure electricity service across its entire value chain, maintain the nation's energy security and self-sufficiency, and provide electricity to the public at the lowest possible price, avoiding profit motives to safeguard national security and sovereignty through the state-owned public enterprise.

Gerardo Pérez, President, AMDEE, talked about this during the presentation of Mexico Wind Power. He mentioned that the association has no problem regarding the control of CFE of the planning and of the 54% control on control over privates. However, privates are looking forward to further participation of private entities in public projects. 

Thursday’s ruling states that subsequent laws derived from this reform will determine how private entities can participate in other activities within the electricity industry, but it clarifies that they will never take precedence over CFE, whose mission is to ensure the continuity and accessibility of the electricity service. 

Regarding the energy transition, the ruling places this responsibility on the state, which will use all available energy sources sustainably to reduce greenhouse gas emissions and other environmental impacts. The ruling, stemming from various reform proposals presented by President Andrés Manuel López Obrador on Feb. 5 of this year, was approved, in general, with 21 votes in favor and 18 against, and, in particular, with 21 in favor and 16 against.

Deputy Miguel Rodarte of the PAN party found the strengthening of CFE understandable but advocated for opening up to private investment to improve electricity service for the Mexican people. He suggested that an analysis be made of how CFE has functioned over the past six years and criticized the decision to classify public internet service as a strategic area.

S&P Global Commodity Insights, earlier this month, warned that proposed reforms to the Mexican judicial system and cuts to government regulators could negatively impact Foreign Direct Investment (FDI) in the country's energy sector. Concerns about these reforms have grown in energy forums, industry webinars, and private meetings. “Since their creation, independent regulators have made decisions based on technical criteria. If the government takes on these responsibilities and participates in the sector through its state-owned companies, impartiality could be compromised," an energy executive told S&P.

PAN Deputy Héctor Téllez predicted that the change from a productive to public enterprise would result in reduced autonomy for CFE, subjecting it to government controls and regulations, state funding, fostering a state monopoly, and potentially manipulating prices and tariffs while discouraging competitiveness, efficiency, and modernization.

PRI Deputy Rubén Moreira highlighted CFE's multi-billion losses and its current inability to generate sufficient green electricity. Consequently, he opposed the ruling, considering it insufficient, and announced that he would present reservations to include the human right to electricity supply in the initiative and ensure affordable electricity rates for micro, small, and medium-sized farmers and businesses.