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Mexico's antitrust body to confront AMLO'S Energy Ministry on renewables

Alejandro Cegarra/Bloomberg

AMLO Renewables Move Faces Court Test From Antitrust Body

- Measures limit new clean energy projects, impose tests
- Regulator launched a complaint saying move is anti-competitive

By Amy Stillman, Michael O'Boyle/Bloomberg

Petroleumworld 06 23 2020

Mexican President Andres Manuel Lopez Obrador's move to limit new clean energy projects is facing a court battle from the country's antitrust watchdog.

The Federal Commission of Economic Competition, known as Cofece, said in a statement Monday that it's taking Lopez Obrador's Energy Ministry to the Supreme Court over the new rules. Cofece's complaint is the latest effort by regulators to fight measures they see as weakening their autonomy.

The new rules limiting renewables pit Mexico's energy regulators and private sector against the Lopez Obrador-led government. The president's policies have sought to strengthen the state-owned energy companies Comision Federal de Electricidad and Petroleos Mexicanos , and chip away at the liberalizing reforms of his predecessor.

Under the new administration, Mexico has suspended oil and gas bid rounds and long-term power auctions. Lopez Obrador has also said that the energy regulatory bodies created by reforms six years ago may be merged.

The rules that were approved in May -- over regulators' objections -- raise transmission costs for the private sector, and impose a number of limitations and tests on new clean energy projects before they can operate. The measures are aimed at strengthening the state utility CFE and protecting Mexico's energy supply amid the fast-spreading Covid-19 pandemic, the government has said.

Click here for more on AMLO's renewable-energy moves

“The reliability and security of the national electricity system is above any public or private economic interest and is considered strategic,” Energy Minister Rocio Nahle said in a tweet Monday. “In the government of Mexico, we work to guarantee the basic service of access to electricity for the entire population.”

Less than 15 minutes later, Alejandra Palacios, the president of Cofece, sent her own tweet . She said while the reliability of the electricity system is necessary, her agency is asking the court to decide if the Energy Ministry can issue rules that “completely ignore competition.”

“The law says that private companies can participate in the electricity sector, and this policy does everything to keep private players from participating,“ Palacios said in a telephone interview.

Palacios said the Energy Ministry had not backed up its argument that private companies were causing instability in the national grid. “We think you can have competition, distinct energy sources and stability. They are putting it like its one thing or the other, but international experience tells you that you can have all three at once,” she said.

A spokesman for the Energy Ministry declined to comment.

Lopez Obrador said earlier this month that he would fight recent decisions by judges to roll back measures aimed at limiting the the growth of Mexico's private electricity generators, including Iberdrola SA, which he accused of becoming a monopoly.

At the same time, Senate Majority Leader Ricardo Monreal proposed a bill seeking to merge Mexico's energy, antitrust and telecommunications regulators into a single entity, an idea that AMLO initially supported as a way to save money. The proposal was postponed until at least the start of the next legislative session in September. Critics complained that it was a power grab by the president to put his own commissioners into one of the few places where some checks and balances remain in Mexico.

Story by Amy Stillman, Michael O'Boyle from Bloomberg News.
06 22 2020



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