Litigation likely as Mexico modifies electricity rules

Private sector companies are within their right to go to tribunals to contest new rules regarding the development of electricity generation projects in Mexico, according to the country’s energy minister, following the government’s introduction of new rules governing the electricity sector.

Energy minister Rocío Nahle (pictured) said the government will respond to the private sector’s demands and is not closing the door to dialogue.

The energy ministry tightened its control over the power industry on May 15, publishing new rules that give the government more control over the approval of new renewable energy projects. The government cited the COVID-19 pandemic as an example of how the country needs to guarantee the reliability of its electricity supply.

The new rules have been met with anger by many industry insiders, who see the changes as a partial rolling back of the energy reform, introduced in 2013 by the previous federal administration, and which threw the energy sector open to private investment and has resulted in the construction of a number of utility-scale solar power facilities and wind farms, part of the then government’s pledge  to ramp up the participation of renewable energy in the country’s energy matrix.

Mexico’s employers’ confederation Coparmex said in a statement that the new rules “will drive away significant investments in the country, while causing interested parties to go to national and international courts to demand that Mexico’s government complies with its obligations.” 

Several companies have signed contracts to develop renewable energy projects in the country after having won bids in the country’s electric power auctions and have already made significant investments.