U.S. Congressmen apply pressure
on Mexico new energy reform
There are disturbing implications for the private sector.
By Kevin Crowley / AP
Petroleumworld 10 20 2021
Texas congressmen complained Tuesday about the Mexican government’s attempts to limit competition in the electrical power sector.
In a letter to U.S. Ambassador Ken Salzar, about 20 Texas congressmen and senators criticized changes proposed by President Andrés Manuel López Obrador to restrict the market share of private power generators and favor Mexico’s state-owned utility company.
The letter circulated by Republican Rep. August Pfluger said the new rules would “discriminate against American energy producers.”
The complaint came on the same day the Mexican government claimed it is leading a transition to more renewable energy, even though López Obrador is pushing to restrict private wind and solar projects.
López Obrador submitted a bill earlier this month that would cancel contracts under which 34 private plants sell power into the national grid. The plan declares “illegal” another 239 private plants that sell energy directly to corporate clients in Mexico. Almost all of those plants are renewable or natural-gas fired.
It puts private natural gas plants almost last in line — ahead of only government coal-fired plants — for rights to sell electricity into the grid, despite the fact they produce power about 24% more cheaply. Government-run plants that burn dirty fuel oil would have preference over private wind and solar plants.
The plan guarantees the government electrical utility a market share of “at least” 54%, even though U.S.-Mexico Canada free trade pact prohibits favoring local or government businesses.
The letter from the U.S. lawmakers from Texas said that “the (Mexican) government’s proposed constitutional reforms would increase state control of the electricity industry and severely limit private investment. These steps, among others, harm our critical trading partnership with Mexico and potentially violate key tenets of the USMCA.”
The Mexican government released a statement Tuesday saying it was seeking to cooperate with the United States on renewable energy. Yet many of the wind and solar electrical plants that López Obrador wants to limit were built by U.S. or Spanish firms.
Released after a visit by U.S. climate envoy John Kerry, the statement touted “cooperating closely with the United States to accelerate the roll-out of renewable energy in Mexico, including wind, solar, geothermal and hydroelectric.”
Hydroelectric power is one of the few renewable sources that López Obrador’s administration has promised to invest in. But because Mexico’s dams are used for several purposes — storing water for human use, flood control and generating power — the conflicting demands and increasingly uncertain rains make it unclear how much more hydropower can be produced.
López Obrador, a native of the oil-producing Gulf coast state of Tabasco, has made his main push in promoting fossil fuels. His administration is focused on building or acquiring new oil refinery capacity.
Experts say López Obrador’s polices could endanger Mexico’s compliance with existing carbon reduction commitments. The president contends that increased hydroelectric capacity will allow Mexico to meet those goals.
The statement came ahead of a United Nations climate conference in Glasgow, Scotland, at the end of the month.