AMLO’s Tomb Court Electricity Reform

Mexico City.- The Supreme Court of Justice declared unconstitutional the March 2021 reform of the Electricity Industry Law (LIE), which sought to favor CFEs over private companies.

The Second Chamber of the Court today granted the first of hundreds of protections promoted by the private sector, establishing that the seven main articles of the reform violate the rules on the generation and wholesale electricity market provided for in the Constitution since 2013.

These articles of the LIE include the article that mandates preferential dispatch to energy generated by CFE plants or private plants working exclusively for it, compared to renewables and other private plants; One that eliminated the obligation to hold auctions to acquire energy, and one that normalized access to clean energy certificates.

Although protection was granted only to six private companies, the Court explained that the practical effect was to stop implementing the reform and force the authorities to work with the previous version of the LIE, because, if it would only benefit the complainants. If so, there will be distortions in the market.

“By virtue of protection, consequences cannot fail to occur in a general way with respect to all economic agents participating (in the wholesale electricity market); in particular, if these collateral consequences of constitutional protection are not recognised. is likely to create a material distortion in that market, because it would in fact place the complaining companies in a privileged position on the level of competition,” the judgment states.

The vote on the amparo was a two-way tie, with Alberto Pérez Dayan and Luis María Aguilar in favor, Yasmin Esquivel and Lenia Batres against, and an excuse raised by Minister Javier Láinez approved by three votes to one. Went.

Pérez Dayan broke ties with his decisive vote as President of the Chamber, invoking Article 56 of the amparo law, which allows a pretext expressed by a minister if it is approved. Esquivel and Batres rejected the use of this figure.

Lainez had listed a project for today that would also have declared the reform unconstitutional.

The Energy Ministry raised its hurdle this Tuesday only in that project, because it had defended the energy reform in the previous six-year term when it was fiscal counsel of the Federation (PFF), but it did not raise it in the others. The case is listed, which Pérez presented to Dayan and it is approved.

LIE violates constitutional norms

Those who approved the project reiterated the criteria presented in April 2022, when the Plenary Court had six or seven votes against these articles. In that case, eight votes were required to invalidate, which is not required to grant an amparo.

“Deciding that dispatch should be made in favor of a certain group of plants distorts the process of competition and free competition in the electrical energy generation sector, hinders the formation of a new market as ordered by the reform power of the Constitution. This, the judgment said, discourages the participation of new agents in that market, and breaks the mandate of neutrality assigned to the National Energy Control Center (CENES).

He added, “Similarly, this system also violates the principle of sustainable development of the energy industry, which is also in accordance with the mandates provided by electricity.”

Highlights that the legitimate objectives of strengthening the CFE and guaranteeing the reliability of the National Electricity System (SEN) cannot prevail over the constitutional mandate of free competition in generation and the transition towards clean energy.

The majority confirmed the sentence handed down by federal judge Rodrigo de la Peza, who, like his colleague Juan Pablo Gómez Fierro, suspended the reform in April 2021, arising from the initiative of President Andrés Manuel López Obrador.

Many of the protections granted by these judges have already reached the Court, some as far as the First Chamber, where four out of five members also voted for unconstitutionality in 2022.

Minister Batres, who did not give an opinion on the issue, presented arguments at the public session to defend the reform of the LIE, saying that free economic competition is a right that accepts proportionate restrictions, which have legitimate objectives, Such as security, reliability and stability of SEN.

The Second Chamber, in 2021, also repealed a senor policy that was the precedent for the reform of LIEs, while in 2023, it abolished a legal reform that removed all the asymmetries imposed on Pemex by the 2013 energy reform. Measures ended.

LIE’s unconstitutional articles

-They establish contracts with a commitment of physical delivery.

-Orders to give priority to the said contracts over clean energy contracts.

-Preferential dispatch for energy from CFE plants.

-Eliminates mandatory SEEN auctions for electricity coverage contracts.

-Assignment and dispatch rules for scenes.

-Allows CFEs to obtain Clean Energy Certificates (CELs) for the loss of new investors.