The Mexican Institute for Competitiveness AC (Imco) condemned the SCJN resolution on the Electricity Industry Law (LIE) and warned that this will have a negative impact on Mexico's economic conditions, as they expect a negative environment for foreign investment in the sector.
This Thursday, April 7, it transpired that the Supreme Court of Justice of the Nation (SCJN) endorsed, with the minimum minimum required expressions, the constitutionality of the LIE Law, which in 2021 was amended so that the energy dispatch favors the Federal Electricity Commission (CFE), disrupting the interests of private producers.
The fact is that a qualified majority (at least eight magistrates) was required to declare this law unconstitutional; however, they remained one vote against in order to materialize this result. In favor were Ministers Zaldivar Lelo de Larrea, Loretta Ortiz Ahlf, Yasmin Esquivel Mossa and Alfredo Gutiérrez Ortiz Mena; Luis María Aguilar Morales, Jorge Mario Pardo Rebolledo, Alberto Pérez Dayán, Javier Laynez Potisek, Norma Lucia Piña Hernández, Juan Luis González Alcántara Carranca voted against and Ana Margarita Rios Farjat.
What was defined this Thursday in the Court responds to a complaint filed by members of the Senate of the Republic, but two more constitutional disputes have also been filed: one submitted by the Federal Commission for Economic Competition (Cofece) and another by the State of Colima, which are pending resolution. These decisions are independent of the amparos pending in the courts, who remain free to resolve them in the sense they decide.
In this regard, the institute published an official statement in which it expresses its opinion and numbers four observations on the 2021 reform, which, according to IMCO, violate legal certainty for private capital to settle in Mexico to do business with electricity.
As reported by IMCO, “the main losers of the reform are renewable and clean energy plants”, since the order of dispatch stipulated by the reform gives priority to new electricity coverage contracts with a commitment to physical delivery, which in fact benefits the power plants in the first place CFE, which, according to the A.C., “operate from fossil fuels.”
And although it is true that part of the CFE generating plants operate on fossil fuels, it must be pointed out that the Commission is the producer of electricity with the greatest contribution from renewable resources.
It should be recalled that private producers produce 56% of Mexico's carbon monoxide and 82% of its electricity with gas, which represents 55% of the market's supply. In addition, only 7% of their energy contributions are made from renewable sources such as wind and photovoltaic, which is intermittent.
IMCO further condemned the removal of incentives for CFE Basic Supply to “buy energy at the lowest possible prices, by dismissing the obligation of the supply subsidiary to purchase its energy through auctions.” In addition to this, he condemned “legal uncertainty for permit holders”, something that could have an impact on the economy.
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