EconomyFinancialAMLO's electrical reform advances among deputies with minimal changes

AMLO's electrical reform advances among deputies with minimal changes

The electricity reform initiative sent by President Andrés Manuel López Obrador has advanced in its process to be voted on with few changes in its wording and without adding any of the points that could give more certainty to those who are part of the electricity market or reduce the power that is sought to be given to the state-owned CFE with the approval of the document.

In the draft opinion, which began to circulate this Monday in Congress to be analyzed among legislators, some of the points requested by the industry were not included, such as suppressing the cancellation of contracts or respecting the autonomy of market regulators . The open parliament forums, which lasted more than a month and a half, are mentioned in the document of more than 250 pages, but none of the proposals of those who are against the reform initiative were adhered to.

The initiative may still be modified, but these changes must be made once it goes to the plenary session for discussion and eventual vote, which could take place as soon as next week.

What are the changes contained in the draft opinion?

A subsection has been added to the document to establish the right to “sufficient access to the supply” of electricity through “a fair social rate”, as part of a proposal made by the PRD. This parliamentary faction, like the PAN and the PRI, has lined up to vote against the document, according to their own statements.

This change had already been announced, like the rest contained in the document. A subsection has also been placed in the initiative that recognizes the existence of distributed generation contracts for up to 0.5 megawatts. This figure allows small-scale electricity production at consumer sites. This point caused a lot of noise after the initiative was sent from the presidency, since its wording opened the possibility that this type of figure could no longer be used and the contracts would be cancelled, like the rest owned by private companies.

In the document circulating in Congress, a subsection on the social impact of electricity generation has also been added. The article mentions that municipalities and non-profit organizations may have self-consumption contracts for up to 1 megawatt “meeting the requirements established by the CFE.” No further details are given on the latter.

The initiative goes on to assert that all private contracts and ongoing applications will be canceled once the reform takes effect. But legislators have sought to make this section a little clearer and have adhered to some of the statements previously made by state officials. The document now ensures that the generation that comes from self-supply plants with permits “granted in contravention of the provisions of the law” and the generation “derived from permits superimposed on the original permit” of the plants of the Independent Power Producers will not be acquired. by the company run by Manuel Bartlett.

While the rest comes from the plants resulting from the long-term auctions , the self-supply plants that they consider to operate within the convenience of the State and the self-supply plants that have been defined “authentic” will continue to produce electricity that would be purchased by the state-owned CFE through from the National Energy Center – which would also lose its independence.

“The CFE will enter into long-term bilateral financial coverage contracts for the acquisition of electricity and capacity generated by the private sector,” says the document.

What stayed the same?

The highest points have not undergone any change. The legislators have left intact the clauses referring to the market share that the CFE and the private companies will have –of at least up to 54% and up to 46%, respectively–, on the end of the structure that the company acquired after the 2013 reform and on the figure of the state company as a decision maker in energy policy. The latter gives it the power to be the only entity responsible for electricity generation, the establishment of rates and payments by private parties, and the design of the electrical system.

The Morena bench had opened the door to make some changes in order to negotiate with their counterparts the vote in favor of the document. The president’s party needs 57 votes in the lower house for the document to be sent to the Senate. The schedule of the Morena bench seems rushed, after the initiative was paralyzed for about six months after it was sent.

The intention is that the document be voted on the following week, before the holidays. The purpose is that it reaches the Senate before the end of the current legislative period, on April 30. But analysts already foresee a difficult vote with little chance that the document will pass smoothly in San Lázaro.

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