Mexican governors kick off 'open discussion' on electric power reform

The debate has resumed on Mexico’s controversial constitutional reform to the electric energy sector with a panel of governors and state officials kicking off what is being called an “open discussion” on power reform, with forums running through February 15. 

The gathering of the governors (pictured) on Monday marks the start of President Andrés Manuel López Obrador's second push to pass the legislation, after he failed to win needed support from the opposition in the previous congressional session.

Given that changes to the constitution are included in the proposal, majority party Morena must secure the support of two-thirds of members present during a vote in both houses of congress to pass the reform. With a full lower house, the ruling coalition would need the support of 333 legislators. 

AMLO’s Morena party, together with minor party allies, currently has only 279 seats. But in Mexican politics, anything is possible. 

“Despite the numbers, there is no doubt that a reform can take place, and even more so, there are many things in the current model that can be perfected and improved,” Valeria Vázquez, partner and energy and resources industry leader at Deloitte, told BNamericas recently. 

Vásquez, however, said the reform as it is currently proposed will be “very difficult to negotiate.”

The current proposal, among other things, cancels all current private power generation and sales contracts, which would ostensibly be up for renegotiation at a later date. 

It also makes state-owned utility CFE the sole official offtaker, the universal buyer of electricity in any form and it does away with existing regulators, with their duties divided between the energy ministry (Sener) and the CFE itself.

“It’s black or white,” she said. “The text has no nuances and most of it would have to be redone.”

While the forums ensure debate will take place this session, lawmakers in the three major opposition parties – PAN, PRI and PRD – are warning they will seek to delay any vote until after June 5 elections to select six governorships. 

“It is very likely that it will not be until the ordinary period of September when we enter the discussion of the electrical reform in the senate," senate PAN coordinator, Julen Rementería, was quoted as saying by daily La Crónica de Hoy.

The forums in the next weeks will be broken up into five central themes, as well as a number of side discussions.

WHAT'S ON THE AGENDA

The first forum will analyze the electric power market before and after the 2013 energy reforms, with sessions running in parallel to discuss specific topics such as electrical networks, self-supply companies, independent energy producers, long-term auctions, generation projects after the 2013 reform and legacy contracts, among others.

The second forum will look at the role of the state in Mexico’s electricity industry, the third will compare the results of the 2013 reform with its objectives, the fourth will consider the constitutionality and legality of the reform proposal and the last will discuss issues like climate change and the energy transition as they pertain to the reform initiative.

Meanwhile, AMLO will be promoting the initiative to the nation's chief trading partner, announcing on Monday that US energy secretary Jennifer Granholm will travel to Mexico City this week to discuss energy policy with the president and officials.

Granholm’s visit comes roughly one week after US legislators called on US trade representative Katherine Tai to press Mexico on its attempts to uneven the playing field in favor of CFE and national oil company Pemex.

It also comes amid the low rumble of possible legal action over Mexican energy policy and alleged infringement of the USMCA free trade agreement as well.