Mexican Electrical Reforms Will Spur Development

Mexican President Enrique Pena Nieto approved a series of secondary laws Aug. 11 as part of Mexico's energy reform, including legislation covering the electrical sector. The electricity law will open all parts of the electrical sector to private investors, who under current law can only invest in power generation. It will be nearly a year, however, before the law is fully implemented.

Mexico does not currently face an electricity shortfall, so the reforms were likely crafted with an eye on future economic development. A reliable electricity supply is crucial to Mexico's continued economic growth. More than half of the electricity billed in Mexico in 2011 was sold to medium and large industrial players, which remain major sources of foreign direct investment and export revenue. The potential efficiency gained from private investment into the grid and the prospective competition among firms could lower electricity prices, thereby making future economic investments attractive.