Mexico Fulfills The Dream Of Energy Sovereignty In Consultations

,[México] It will have to commit to a more predictable legal framework. To practically comply with what they offered with energy reform and that everything be more transparent in front of the sector”, says Francisco Franco, a lawyer specializing in dispute resolution at Baker McKenzie.

The main complaints on the US side are a lack of transparency in the changes, that they are not predictable and that their investors are not treated equally as two Mexican state companies, one of the main points being that they violate the trade agreement. . “Mexico is not administering its laws in a consistent, fair and fair manner”, The letter issued by the US government last July said.

controversial issues

The main reason for the consultation is the change made by the Mexican government to the Electricity Industry Law (LIE) in 2021, which was partially invalidated by the Supreme Court of Justice last April and which remains suspended for the time being due to the Hundred General. Suspensions given by judges to companies and environmental organizations. in their letters, Canada and the United States, place as first point of disagreement The new dispatch order that boosts the law to upload electricity generated by CFE plants to the system first. The Court did not declare this change constitutional, but a majority did not reach this point to be struck down by legal order.

Lawyers say this is the first point that should be changed by the Mexican government, in order to continue the order established in the secondary reforms of the 2013 constitutional change, and say power from plants should be prioritized. Moderately variable costs, which turn out to be wind and solar plants, are for the most part related to private parties.

The Mexican government has shown no signs of willingness to revise this point. This amendment is not legally enforceable, but In practice they have barred the entry into operation of already built plants And the use of Mexican state company power plants has increased. “While the decree to reform LIE is currently suspended due to several injunctions issued by Mexican courts, the Mexican government continues to pursue the objectives of increasing CFE’s market share to the detriment of private producers through various administrative measures. Canada says in consultation letter of request.

As part of the agreement, jurists say, the Mexican side will be forced to withdraw from this point. It must have been a law initiative on the part of the same executive to say: ‘Everything that was said about the office now goes backwards,’ says David Enriquez of the firm Goodrich Rikelme y Associados.

The Canadian side also brought a 2019 regulation modifying the way clean energy certificates are issued so that older state-owned CFE plants have access to this mechanism, which is designed to encourage the creation of new renewable was designed. plants. Julia Gonzalez Romero says, “What’s curious about consulting the United States is that it’s protecting its investors, but Canada’s focus is also on protecting the environment and that gives the issue another layer of complexity.” , and will make it more complicated to solve” from the González Calvillo office.

The statements on the direction of the consultation so far have been nil. But the Mexican government, lawyers say, has already shown some signs of coming under pressure from its trading partners, or at least, is seeking reconciliation at some point. Just last Thursday, the electricity market regulator, the Energy Regulatory Commission (CRE), approved 283 projects which they haven’t ruled on even after months.

The United States and Canada added as second points of complaint the actions of the Mexican regulator, the lapse of granting new permits, and approval in favor of CFE and Pemex.

“There is a high probability that Mexico will be given more time, there is some sense of goodwill And it can open the door to having more time. But the claim is very clear, the regulatory part that goes against giving equal treatment to investors should be changed,” explains Enriquez.

The United States also put two other regulatory changes on the table: one promoted by the Ministry of Energy so that the National Center for Natural Gas Control (Cenagas) limits the import of gas that is not purchased from one of the two Mexican states. An extension given by companies and CRE in particular to Pemex to defer their obligation to supply low-sulfur diesel until 2025. The first has been suspended by the decision of certain courts specialized in competition and the court decision in favor of appeals promoted by the Federal Commission for Economic Competition. The second one is still underway and the regulator has shown no signs of change.

“The ideal must be repealed [las regulaciones] Or seek a balance where investors don’t suffer, the norm would have to be repealed”, explains Franco. “There’s nothing left but to give up and that’s what’s going to happen.”

Lawyers in the region already anticipate that Mexico will have to give in at some point, either during the consultation period or by order of the resolution panel – which will be formed if there is no agreement between the partners. When it comes to the latter, experts say the arguments for the United States and Canada are stronger than those on the Mexican side.

World Nation News: Mexico fulfills the dream of energy sovereignty in consultations