Electricity Sector Reform: Impact of Changes in the 2025 RLSE

(In collaboration with co-authors Sergio Nahum Luja Acosta,and Alec Folino Haendler)

On Oct. 3, 2025, Mexico published a new version of the Regulation of the Electric Industry Law (RLSE), introducing significant changes to the country’s regulatory framework for electricity generation, transmission, distribution, and storage. The reform aims to enhance state participation, streamline project implementation, and clarify roles between regulatory authorities and market participants. This paper analyzes the key provisions introduced by the RLSE and their implications for both public and private sector stakeholders.

Introduction

Mexico’s electricity sector has undergone continuous transformation since the 2013 energy reform. The most recent regulatory milestone — the updated RLSE published in October — represents a decisive shift toward reinforcing state oversight and strategic planning, while maintaining a degree of openness for private participation. The revised regulation seeks to strike a balance between national energy sovereignty and the need for efficient infrastructure development.

Key Changes

1. State Prevalence and CFE’s Strategic Role

A central tenet of the new RLSE is the reaffirmation of state prevalence in electricity generation. This is now measured by the proportion of generation capacity owned by state-owned facilities. If private generation surpasses this threshold, the Ministry of Energy (SENER) is mandated to instruct the Federal Electricity Commission (CFE) to develop additional projects to restore the balance. Importantly, this measure does not alter the principles of economic dispatch, preserving cost-efficient grid operation under current rules. This measure is not expected to affect privately-owned generation.

2. Binding Nature of the Electric Sector Development Plan

The Electric Sector Development Plan (PLADESE) is now binding for both public and private actors. This represents a significant regulatory shift, as the private sector must align project development with the strategic priorities set forth in the PLADESE. Nonetheless, the regulation provides a consultative mechanism, allowing the private sector to submit generation and transmission proposals for potential inclusion. Projects outside the PLADESE may still be developed, provided they do not conflict with the broader planning objectives.

3. Clarification of Institutional Responsibilities

The revised RLSE provides greater clarity regarding institutional roles:

• The National Energy Commission (CNE) is now responsible for issuing generation and storage permits.

• SENER retains authority over import and export authorizations.

• CENACE operates the National Electric System (SEN) and the Wholesale Electricity Market (MEM) in accordance with technical criteria and operating protocols issued by the CNE, and in coordination with SENER.

• All permit and authorization requests must be resolved within 60 business days. Denials may occur for reasons of technical risk, regulatory non-compliance, or provision of false information.

4. Strategic Project Designation and Expedited Processing

SENER is empowered to designate strategic projects that qualify for expedited permitting and administrative processes. This mechanism is designed to fast-track initiatives that are deemed essential to national energy goals, such as grid modernization, clean energy integration, or regional electrification. This provision enhances the government's ability to respond swiftly to critical infrastructure needs.

5. Social Impact Requirements

Before commencing construction, excluding distributed generation projects, developers must obtain final authorization of the Social Impact Statement (EIS). This requirement underscores the government’s emphasis on social responsibility and community engagement, ensuring that energy projects are developed in a socially sustainable manner.

6. Infrastructure Access and Cost Responsibilities

The regulation reinforces open access principles, mandating that CFE guarantee non-discriminatory access to the transmission and distribution networks. Where grid expansion or reinforcement is required, CFE must carry out the necessary works, provided they are technically feasible. Importantly, project developers are responsible for covering the associated costs, creating a cost-reflective environment that encourages efficient project planning.

7. Self-Supply Schemes

The RLSE clarifies the operation of self-supply arrangements, recognizing Self-Supply Groups as legitimate consumers of electricity generated by plants under this regime. This supports the continued use of tailored supply structures, particularly for industrial and commercial users whose energy needs have not been met by CFE.

8. Energy Storage Provisions

One of the most forward-looking aspects of the new regulation is the formal inclusion of energy storage systems, which can operate associated to generation plants, isolated, or behind-the-meter for qualified consumers:

• Isolated storage systems will now require a dedicated storage permit, issued by the CNE.

• SENER must update the relevant storage regulations within 180 business days, developing complete operating manuals.

• CENACE, the grid operator, is authorized to contract storage services directly, allowing it to leverage storage for grid stability and peak load management.

9. Financing of Transmission

The regulation allows CFE to establish financing agreements with third parties to support transmission infrastructure development. However, state ownership of the assets must be maintained. This approach opens the door to accelerating investment while preserving public control over strategic assets.

Conclusion

The 2025 update to Mexico’s RLSE reflects a strategic pivot toward greater state involvement in the electricity sector, coupled with selective opportunities for private sector participation. By introducing clear planning tools, streamlined permitting, and enhanced social and technical safeguards, the regulation sets the stage for more coordinated and sustainable infrastructure development.

For private investors, the RLSE presents opportunities. Compliance with national planning instruments and social standards will be essential, while new mechanisms -such as storage permits and strategic project designation- offer potential advantages for well-positioned developers.

As implementation unfolds, the sector will need to adapt to the new regulatory environment, and stakeholders will play a critical role in shaping its evolution through continuous dialogue, innovation, and adherence to the rule of law.