MEXICO Law and Practice Contributed by: Bernardo Cortés and Fernando Quesada, Cortés Quesada Abogados, S.C.
On the administrative front, another constitu- tional reform in 2024 resulted in an institutional restructuring that replaced the Energy Regula- tory Commission with the National Energy Com- mission (CNE), which is integrated into the Minis- try of Energy (SENER) and assumes the authority for regulating activities in the power industry. This marks a departure from the previous legal framework, intended to allow for a technical and independent regulatory co-ordinated agency. The main statutes governing the Mexican power industry are: • the Electricity Sector Law (LESE); • the Energy Planning and Transition Law (LPTE); • the Law of CFE (LCFE); and • the Law of the CNE (LCNE). 1.2 Principal State-Owned or Investor- Owned Entities CFE is the main State-owned entity which, after the 2024 constitutional reform, now operates as a vertically integrated monopoly. The reform restructured CFE into a single consolidated enti- ty, reintegrating its generation, transmission and distribution assets, as well as basic (residential) supply; previously, these activities were per- formed by legally and operationally independent State-productive subsidiaries, subject to strict separation rules following the unbundling prin- ciples introduced after the 2013 reform. Despite this consolidation, specific affiliates of CFE have retained independent legal and commercial status. These entities are primarily focused on industrial (qualified) electricity sup- ply, natural gas marketing and representation of legacy assets. They will continue to operate as separate commercial entities, albeit under CFE’s corporate umbrella.
A key development in 2023–2024 was the acqui- sition by the Mexican government of 13 pow- er plants from Iberdrola, with a total installed capacity of 8,539 MW. This acquisition was implemented through Mexico Infrastructure Partners (MIP), an investment management vehi- cle backed by the Mexican government, which will operate these generation assets. As a result, the Mexican State – through CFE and MIP – has control over 54% of the generation capacity in the country (of 93,788 MW). The divestment rep- resented 55% of Iberdrola’s asset base in the country. On the supply side, CFE continues to be the main supplier of electricity, with exclusive rights over basic supply subject to regulated rates. Notwithstanding this exclusivity, industrial con- sumers and large-scale consumers (ie, qualified users) are still able to receive electricity supply from private marketers under competitive, mar- ket-based conditions. 1.3 Foreign Investment Review Process Foreign investors and investments in the Mexi- can power industry are afforded the same rights, obligations and legal protections as their domes- tic peers. The Mexican legal framework does not impose nationality-based restrictions on private investment; limitations apply on equal terms to both foreign and domestic investors, pursuant to applicable constitutional and statutory provi- sions. Key restrictions include: • a cap on private (including foreign) participa- tion in power generation activities, limited to 46% of the national generation market; • priority of the Mexican State in marketing activities; and • the complete exclusion of private (and thus foreign) participation in nuclear power, transmission and distribution activities, which
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