Watchdog files supreme court complaint against Mexico's electricity law reforms

Mexico’s competition watchdog Cofece has filed a constitutional complaint with the supreme court over recent modifications to the national electricity industry law (LIE) that give preference to state-owned utility CFE. 

The filing, announced by Cofece in a statement Thursday, says changes to the LIE breach articles 25, 27 and 28 of the constitution, which require a fair and open competition regime in the electricity generation and supply markets.

“Under the current constitutional scheme, it is essential that there are certain requirements so that the generation and supply markets can operate under competitive conditions,” wrote Cofece. 

The agency said those conditions are:

1. The possibility of open and not unduly discriminatory access for any generator to the electricity distribution and transmission networks;  

2. that energy dispatch is governed by objective and efficiency criteria; and

3. that the grid operator Cenace and the regulator CRE operate independently and impartially, without favoring or granting undue advantages to any one participant. 

Cofece has already won a major legal case in the supreme court this year, when judges struck down an energy ministry policy last year that would allow authorities to halt connection permits to wind and solar generation projects on the grounds of unreliability. 

President Andrés Manuel López Obrador’s (AMLO) decision to push through the LIE reforms was widely seen as a means of circumventing that lawsuit and other similar legal challenges to regulatory actions taken by the administration.

AMLO has signaled he could attempt to change the constitution if the reforms are overruled.

Cofece added that the reforms it is challenging violate the rule of open and non-discriminatory access to distribution and transmission networks, reducing the ability of certain generators and electricity vendors to compete. 

According to Cofece, the changes eliminate the equal-access dispatch criteria for power generators, granting what the agency sees as undue advantages to CFE and nullifying the private sector’s ability to compete with the state-owned company.  

The changes allow basic service providers, specifically CFE, to acquire energy through non-competitive methods, indefinitely expanding the legacy regime, which was originally transitory, it added. 

The watchdog said the elimination of competition in the power market would ultimately “translate into a disturbance in the supply conditions of electricity, as well as in damage to the consumer and the economy in general.”