Supreme Court Resumes Its Revision of Amparos

Mexico’s Supreme Court (SCJN) will once again revise President López Obrador’s reform to the Industrial Electricity Law (LIE) based on requests for legal protection from 18 companies.

In 2021, the government modified the LIE, changing articles related to dispatch priority, interconnection with the National Electricity System (SEN) and Clean Energy Certificates (CELs), among other issues. The law gave state-owned power utility CFE an advantage over other private electricity companies.

The requests for protection were originally submitted in 2022 but the SCJN dismissed them. Most of the requested injunctions came from renewable energy companies. Last week, the SCJN announced that it will revise the requested amparos, which sought to settle issues like preferential dispatch for CFE’s energy, the elimination of auctions to contract the supply and modification of CELs.

The amparos would try to modify LIE’s third article and its sections referring to power plants, electricity coverage contracts with a physical delivery commitment and legacy contracts for basic supply; Article 53, related to electricity coverage contracts by auctions and Article 108, referring to National Control and Energy Center (CENACE) faculties.

Fitch Ratings recently signaled uncertainty as a factor that fosters a negative outlook for the Mexican energy industry. Among the factors that discourage investment in the sector, Fitch Ratings included the reform to the LIE that favors CFE, the delay in CRE granting permits to private energy players and a possible dispute panel in which Mexico would need to confront the US and Canada under the US-Mexico-Canada Agreement (USMCA) due to Mexico’s alleged violations of the agreement.

Last week, Raquel Buenrostro, the Mexican Minister of Economy, met with Canadian energy companies to review progress made on agreements that had been made to prevent the escalating of a disagreement about Mexico's energy policy. It was agreed that the parties involved would meet again in February to determine what more could be done.

Mexican industrial players have also urged the government to allow more private participation in the energy industry so it could meet their energy needs.