A New Measure to Favor CFE Hydroelectric Dams

The Mexican government announced a new measure that would favor four hydroelectric power plants owned and operated by CFE that would give priority for electricity dispatch. The measures to be implemented by grid operator CENACE could also sideline private energy production and therefore potentially widen the rift between public and private sectors, reported BNAmericas.

The decree was confirmed on Monday, as President López Obrador visited Ángel Albino Corzo, Chiapas. The president argued that existing policy creates unfair advantages for private energy producers, whereas the CFE dam has no opportunity to release its accumulated water. The measure comes from recent measures aimed to help CFE to gain a bigger foothold in the sector compared to private energy generators that entered Mexico in 2014 when the Energy Reform was enacted. Currently, CENACE’s dispatch is based on the principle that the system should favor power plants with the cheapest operating costs.

López Obrador argues that the measure is not necessarily meant to boost CFE’s power production. Instead, the water flow of the Grijalva River is the problem here. The river supplies four of CFE’s hydroelectric dams. If these hydroelectric dams remain active, the water accumulates and has to be released all at once, which leads to harmful flooding down Grijalva’s stream. Therefore, if the dams are able to release water steadily, floods will no longer occur as commonly. What is more, the four hydroelectric dams could generate 40 percent of Tabasco’s energy demands in a clean manner.

In a growing debate between public and private interests, the measures could further sour investors climate for Mexico’s energy sector, writes The Dialogue. Several quoted industry experts argue that López Obrador’s 17 key points to his energy policy, which the president argued could be implemented without modifying the legal framework, would further damage investors’ trust in Mexico.

Yet, simplifying the debate as public versus private fails to highlight the wider scope of the discussion, argues Laura Carlsen, Director of the Americas Program of the Center for Economic and Policy Research. “The issue is not really foreign investors versus public good or even the specifics of the reforms, but rather the lack of sustainability and the poorly thought out consequences of the sudden change in the rules of the game for investors, primarily investment funds beholden to shareholders. Mexico is not on the path to fulfill its commitment to move to 35 percent renewables by 2024. But pressure for a sustainable energy plan must come from open public debate, not from corporate interests and the international financial community,” she said.