EconomyFinancialThe reform to the LIE: what follows in the...

The reform to the LIE: what follows in the electricity market after the resolution of the Supreme Court?

The reform to the Electricity Industry Law (LIE) promoted by President Andrés Manuel López Obrador at the beginning of last year did not pass the test to be declared constitutional in the Supreme Court , as established in the project of Minister Loretta Ortiz . But the opposite did not happen either and the votes were not enough for it to be stopped.

The legislation may be put into motion, but there are still some legal challenges pending that could prevent an effect on the companies.

The vote of seven members of the Court against the project was not enough – a qualified majority of eight was needed – to declare that the secondary reform goes against what is said in the Constitution, which would have forced the federal government to respect the rules of the market and wait for the approval of its constitutional reform to change the dynamic marked by the 2013 reform . The Court’s decision was not involved in determining how good or bad the reform and its content were, but rather had the purpose of defining whether it did not conflict with the principles of the Constitution.

The jurists agree that the discussion of the reform to the LIE has only left market participants confused, since the vote has not made the direction of the electricity dynamic clear and they explain that it will be necessary to wait for the size of the Court –the document containing the resolution – to determine what the effects of the decision will be. “We are almost in the same scenario that we were in before the bill was voted on,” says Bernardo Cortés, a lawyer in the sector.

A rain of protection

The next step will be in the specialized competition courts and collegiate courts. These will make the decision to grant the amparos to decide to whom the rules that mark this change to the legislation approved by Congress last year, but until now held in court, will be applied or not.

Companies participating in the market filed injunctions after Congress approved the reform. Most obtained provisional or definitive suspensions, which temporarily stopped the entry into force of the changes, but the substantive decisions have not been made. The lawyers explain that while before the suspensions were granted in a general way, now a process has been entered in which the cases will be resolved in a very particular way and taking into account the uniqueness of each one of those who have asked to be declared as affected. .

The collegiate courts awaited the Court’s ruling to continue with the process and issue a final resolution. A declaration of unconstitutionality on the reform would have derived in a favorable result towards the companies, which would have had a resolution in their favor in these amparos. Since the decision of the Court should have been replicated in the rest of the processes.

But now, the cases must be resolved individually and the judges and courts will only take what happened yesterday in court as a guide on where to lead their final decision, but they will still enjoy freedom of jurisdiction. “Finally, there is no qualified vote for one side or the other and, therefore, there is no Court criterion that requires amparos to be resolved in one way or another,” explains Cortés.

The industry has already lost count of the number of injunctions initiated by private companies. There are some others presented by civil society organizations, such as the environmentalist Greenpeace, who appealed to the right to a healthy environment. Lawyers do not dare to mention what will happen with these processes. The courts and collegiate will also have the last word.

Possible scenarios, one more optimistic than another

There are opposing positions between what will happen to the content of the reform. Analysts are divided between those who assure that the law will be tried to be executed and those who believe that there is still a long way to go to start with this. “There are already sentences that favor certain companies, those criteria could not be applied to them. The LIE is still suspended and will not cease to be until the last suspension is revoked”, explains Julia González Calvillo, senior associate at the Gonzalez Calvillo firm.

But on the pessimistic side, the lawyers already expect upcoming changes to the regulations, changes to the bases of the electricity market and the revocation of some generation permits.

The reform, sent from the presidency in the first months of last year, wants, among other things, to modify the way in which electricity is dispatched to put hydroelectric plants at the beginning of the queue and intends to review the contracts granted to private companies. during past administrations, under the figures of self-supply or Independent Energy Producers. These two sections, considered the most critical parts of the reform to the LIE, were the ones that achieved the highest number of votes against.

Also giving him the power to use the plants that were already listed to go out.

The lawyers say that due to the large number of amparos, a court room could attract one of these cases and set a mandatory precedent for the rest of the cases.

The process is still long and the constitutional reform could have the greatest weight on this. If the initiative, which is about to be voted on the following week, manages to be approved in both Chambers, the protections of the organizations and the private initiative would be discarded and there would no longer be a legal instrument that would stop the changes promoted by the federal government.

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