Greenpeace case said to be best shot to kill Mexico's 2021 power reforms

Constitutionality lawsuits aimed at overturning last year’s power sector reforms in Mexico face an uphill battle when the supreme court rules next month, Gonzalo Monroy, managing director at energy consultancy GMEC, tells BNamericas.

The supreme court has set April 5 as the date to assess a series of complaints filed by different actors. These include an unconstitutionality complaint by senators of the opposition PAN party and constitutional claims filed by competition watchdog Cofece and by Colima state authorities.

“Given the current dynamics of the court and the well-founded suspicions about the influence of the executive over the judiciary,” the most likely outcome is “six or seven votes against” the constitutionality of the reforms, says Monroy.

“It’s not enough to declare it unconstitutional.” 

Such cases require eight of 11 judges to side with those arguing to overturn the law, as Mexican legislation prescribes a two-thirds majority of votes to strike down laws on questions of constitutionality. 

The arguments to be heard next month are expected to center on the heart of the electric power industry law reforms, including the notion of priority dispatch, which gives state-owned utility CFE priority dispatch over all private generation, regardless of price.

It also makes state-owned utility CFE's thermo generation a higher priority than all solar and wind private generation in a system that Cofece and opposition lawmakers see as eliminating competition in the market entirely. 

Regardless of the outcome, a separate “amparo” lawsuit, similar to an injunction, has been brought by Greenpeace, arguing “for the human right to a healthy and clean environment.”

The Greenpeace suit, Monroy says, has a chance to succeed “and overturn the entire reform,” as it only requires six judges to agree with the arguments under Mexican law.

While the first round of cases might be seen as a “victory for private individuals,” the second round on human rights would be seen as “a triumph for society as a whole,” he adds. 

CONSTITUTIONAL REFORMS

Legislators led by majority party Morena, founded by Mexican President Andrés Manuel López Obrador, are attempting to circumvent any supreme court rulings by changing the constitution to include everything in the March 2021 reforms. 

The constitutional reforms include even more extreme measures, such as eliminating sector regulator CRE and grid operator Cenace and handing their duties to CFE and the energy ministry (Sener), but supporters have yet to win over the opposition votes needed to reach a two-thirds majority in the lower house. 

Fitch Ratings said last week that it now sees any vote on the constitutional reforms not coming until late 2022.

It remains unclear when the supreme court will take on the Greenpeace case, although it is expected to be resolved this year.