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In Mexico, a New Electricity Law Risks Unplugging Energy Projects

MIN READMar 22, 2021 | 18:41 GMT

Mexican President Andres Manuel Lopez Obrador speaks during a press conference in February 2019.

Mexican President Andres Manuel Lopez Obrador speaks during a press conference in February 2019.

(ALFREDO ESTRELLA/AFP via Getty Images)

A new law that prioritizes Mexico’s state-owned electricity utility over private competitors risks undermining the country’s investment climate and weakening incentives to transition to renewable energy by hiking prices for multinational companies and other large electricity consumers. On March 9, Mexican President Andres Manuel Lopez Obrador signed an amendment to the Electricity Industry Law that favors state-owned energy company Federal Electricity Commission (CFE) over industry competitors by reversing parts of Mexico’s 2013 energy reforms, which permitted foreign and private investment throughout the country’s energy sector for the first time in over 75 years. If enforced, the law would change the order of dispatch from first using the most economical energy per node, which typically favors more cost-effective sources, to requiring that nodes from CFE be prioritized regardless of the cost -- marking the most aggressive tactic yet in Lopez Obrador’s push to limit private energy production and bolster the state...

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