Mexico President’s Electricity Bill Fails In Lower House

Mexican President Andres Manuel Lopez Obrador’s plan to increase state control of power generation by granting State-owned electricity company CFE greater say over the country’s energy regulation was defeated in parliament, as opposition parties displayed a rare show of unity in the face of a bill they said would hurt investment and breach international obligations.

The President’s ruling National Regeneration Movement (MORENA) and its allies fell nearly 60 votes short of the two-thirds majority needed in the 500-seat lower house of Congress, mustering just 275 votes after a raucous session that lasted more than 12 hours.

The session, as well as the larger discussion around the now-shelved reform bill, was marked by at times heated rhetoric, underscoring the polarization in Mexican politics that has repeatedly colored the country’s recent legal reforms. Earlier this month, Mexico’s Supreme Court failed to make a binding decision over the constitutional validity of an earlier reform to the country’s electric law that gives state-owned power company CFE priority over private generators.

Seeking to roll back previous constitutional reforms that liberalized the electricity market, Lopez Obrador’s proposed changes would have done away with a requirement that state-owned Comision Federal de Electricidad (CFE) sell the cheapest electricity first, allowing it to sell its own electricity ahead of other power companies.

Under the bill, the CFE would also have been set to generate a minimum of 54% of the country’s total electricity, and energy regulation would have been shifted from independent bodies to state regulators.

The contentious proposals faced much criticism from business groups and the United States, Mexico’s top trade partner as well as other allies who argued it would violate the regional trade deal, the United States-Mexico-Canada Agreement (USMCA). The reform and related laws have also been challenged by the country’s competition regulator, COFECE.

Mexico’s Lopez Obrador had argued the bill would have protected consumers and made the country more energy independent, saying the legislation was vital to his plans to “transform” Mexico.

Although the odds were against his party, he came into the vote seeking to leverage his victory in last weekend’s referendum on his leadership.

Speaking ahead of the vote, Jorge Alvarez Maynez, a lawmaker from the opposition Citizens’ Movement party, said the proposals, if enacted, would damage Mexico.

“There isn’t a specialist, academic, environmentalist or activist with a smidgen of doubt – this bill would increase electricity prices, slow the transition to (clean) energy in our country and violate international agreements,” he added.