US business chamber slams Mexico electrical power law

U.S. Chamber of Commerce said Friday that Mexico’s attempts to limit private electricity generation would violate U.S.-Mexico-Canada trade agreement, kwn as USMCA.

business group urged withdrawal of a bill by Mexican President Andrés Manuel López Obrador to give priority in electricity purchases to older, more polluting, state-owned power plants. It said bill would “would directly contravene Mexico's commitments” under USMCA.

Neil Herrington, chamber’s Senior Vice President of Americas, said in a statement that bill could re-instate a government mopoly, adding “se changes would significantly raise cost of electricity and limit access to clean energy for Mexico’s citizens.”

“Unfortunately, this move is latest in a pattern of troubling decisions taken by Government of Mexico that have undermined confidence of foreign investors in country," Herrington wrote.

Mexico vowed Thursday to forge ahead with bill, even after Mexico's Supreme Court ruled against López Obrador’s previous attempt to block permits for renewable power plants.

Interior Secretary Olga Sánchez Cordero said court ruling applied only to a 2020 executive order, and suggested administration would w a new court battle over ar bill president sent to Congress early this month.

new bill would put cleaner, natural gas and renewable private plants — many built with foreign investment — last in line for electricity purchases. It is latest chapter in a battle over private and renewable energy plants that were encourd by López Obrador’s predecessors in order to reduce carbon emissions.

“This ruling involved constitutionality of an (executive) order, and that is very different from a law,” Sánchez Cordero said. “So I think we have eugh ammunition in common and constitutional law to go ahead, because I insist, we are t rejecting private investment in energy field.”

With electricity use down during pandemic, Mexico’s state-owned power company, Federal Electricity Commission, faces declining revenue and increasing stocks of fuel oil it has to burn in power plants; dirty fuel has lost customers worldwide. It has also come under pressure to buy coal from domestic mines.

López Obrador sought in an executive order in 2020 to shore up government company by limiting permits to bring online or plants, including some wind and solar facilities, many of which are already built. president claims that green-energy incentives give those plants an unfair advant over state utility.

But on Wednesday, Supreme Court ruled that many of provisions of 2020 executive order would unfairly affect competition in sector. Some of rules had been put on hold previously. case was brought by government’s own anti-mopoly commission.

first bill López Obrador sent to Congress this year would mandate that first power to be used on national grids — which commission oversees — would have to be from government plants, many of which burn coal or fuel oil.

Mexican business groups also say proposed law would hurt investors, force Mexicans to buy more expensive electrical power, endanger Mexico’s commitments to reduce carbon emissions, and possibly cause disputes with foreign investors under USMCA.

Sánchez Cordero defended proposal, saying “a sector like electricity that is so strategic, involving national security, has to be under government stewardship. That does t mean that private firms cant participate, within certain limits and rules.”

López Obrador is trying to fast-track bill through Congress in 30 days. president is kwn for his love of oil industry and state-owned firms, and he has had a testy relationship with private sector in his first two years in office.

Mexican industries have long been hobbled by country’s relatively expensive and unreliable electricity supply. A 2013 legal overhaul opened way for private companies, many of m foreign, to invest more heavily in sector.

Im: AP