Mexico’s Attempted Electricity Reform 2021: A Threat to Investors

20 April 2021
Veronica Irastorza and José Antonio Peñuelas

In “Mexico’s Attempted Electricity Reform 2021: A Threat to Investors,” Associate Director Veronica Irastorza and Senior Analyst José Antonio Peñuelas discuss reforms to Mexico’s Electricity Industry Law (Ley de la Industria Eléctrica, or LIE). The reform bill’s main goal is to strengthen the Mexican state-owned utility, Comisión Federal de Electricidad (CFE), and to weaken the 2013 reform made by the previous administration of Enrique Peña Nieto.

The three pages of amendments to LIE, published on 9 March 2021, alter key aspects of the current structure to strengthen CFE, to the detriment of private participants with newer and more competitive plants. These amendments will have major economic and environmental costs for Mexico because they imply burning additional fossil fuels and displacing renewable resources, mainly owned by private companies.

Many of these investors have rights under the US-Mexico-Canada Agreement and other treaties that could bring arbitration claims.