Mexico passes law on energy market liberalization

Mexico passes law on energy market liberalization Mexico City Cathedral, Mexico (source: flickr/ Francisco Diez, creative commons)
Francisco Rojas 24 Jul 2014

The New Energy legislation passed last week in Mexico gives freedom to private energy generators to sell directly to private customers and bypass the CFE as it was customary.

This last Sunday, Mexico’s Senate approved a new piece of legislation, named the “Electricity Industry Act”, that fundamentally changes the way electricity is sold in the country. According to the new law, which is yet to be approved in the Chamber of Deputies, (Mexico’s Parliament lower house) private electricity generators had to sell their production to the Federal Electricity Commission (CFE), a state-owned utility that controls 66% of all the installed capacity. The change is that now these private generators are free to sell their elelctricty directly to users, fostering a true competitive a free market for the energy industry. There are still mechanisms within the new law that stipulate a maximum price for the electricity sold by said private generators.

According to the Deutsche Welle news source, “Sunday’s legislative package also included a Geothermal Energy Act to regulate the development geothermal resources for electricity generation in the country.”

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Source: Deutsche Welle Website