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News Article

Mexico’s Proposed Electric Reform Angers US Congressmen

By Antonio Trujillo | Thu, 10/21/2021 - 11:52

Texas congressmen complained about the Mexican government’s attempts to limit competition in the electric sector by way of the electric reform.

Through a letter sent to the US Ambassador to Mexico Ken Salazar, signed by over 20 Texas congressmen and senators and delivered by Republican representative August Pfluger, complaints were brought forward against the changes to “restrict the market share of private power generators and favor Mexico’s state-owned utility company,” proposed by President López Obrador, a reform that is currently being discussed in Mexico´s congress. Interested parties added that news of the reform “discriminate against American energy producers.”

Congressmen said that although President López Obrador “is pushing to restrict private wind and solar projects,” the Mexican government boldly claims it is leading a transition to more renewable energy. Complaints highlighted that the bill would “cancel contracts under which 34 private plants sell power into the national grid,” and that the plan declares it illegal for an additional 239 private plants to sell energy directly to corporate clients in Mexico. Those plants, they reassured, are renewable or powered by natural gas. Furthermore, the reform would also cancel long-term energy supply contracts and clean-energy preferential buying programs, “affecting foreign companies.”

Private natural gas plants, many of them built by US or Spanish companies, “will be put almost last in line, ahead of only government coal-fired plants for rights to sell electricity into the grid,” power plants, they say, that produce 24 percent cheaper energy. And those government plants that “burn dirty fuel oil,” will have preference over any and all private initiatives, even if their power is wind or solar.

Furthermore, their criticism turned to rulings stipulated in the USMCA, which the proposed reform would directly challenge, since Mexico, and the other two countries, agreed to prohibit it to favor local or government business. “The Mexican government’s proposed constitutional reforms would increase state control of the electricity industry and severely limit private investment. These steps, among others, harm our critical trading partnership with Mexico and potentially violate key tenets of the USMCA,” the letter details.

On its part, the Mexican government released a statement Tuesday, following a visit by climate envoy John Kerry, saying it was “seeking to cooperate with the United States Son renewable energy. Cooperating closely with the United States to accelerate the roll-out of renewable energy in Mexico, including wind, solar, geothermal, and hydroelectric.”

Hydroelectric power is one of few renewable sources the Mexican government under President López Obrador has actually promised to invest in, according to industry leaders, though it remains unclear how much more hydropower can be produced given the state of Mexico’s dams. They also state that the President’s policies “could endanger Mexico’s compliance with existing carbon reduction commitments,” and that his compromise with hydroelectric power is his way of allowing Mexico to meet those goals.

The data used in this article was sourced from:  
Star Tribune
Photo by:   Kyle Glenn, Unsplash
Antonio Trujillo Antonio Trujillo Junior Journalist & Industry Analyst