Mexico high court strikes down President's energy reforms

MEXICO CITY: Mexico’s Supreme Court on Wednesday ruled against President Andres Manuel Lopez Obrador’s signature electricity industry reforms, saying they violated principles of free competition by prioritizing the state-owned utility over private business.

The modification of the Electricity Industry Law had been a key part of Lopez Obrador’s crusade to retake state control of the energy sector and roll back the effects of his predecessor’s liberalization initiatives.

But the move alarmed the United States and Canada — prompting claims Mexico was in violation of its free-trade commitments — and strained relations with Spain.

Critics say the reforms unfairly favor state-run firms dependent on fossil fuels over private electricity producers that have invested in renewable energy.

The court ruling said the reform, approved in March 2021, “violates the principles of competition, free competition and sustainable development” of the industry established in the constitution since 2013, under an initiative of then-president Enrique Pena Nieto.

The verdict came in response to a series of appeals filed by several of the companies affected.

Lopez Obrador last April announced the purchase of 13 electricity generation plants from the Spanish giant Iberdrola for $6 billion, a deal that the president celebrated as “a new nationalization” of the sector.

With the acquisition, the state utility plans to increase its production from 39 percent to 55 percent of the total electricity generated in the country.