Dive Summary:
- Legislators in Mexico are seeking to reform the country's electricity system. On Wednesday, the ruling Institutional Revolutionary Party (PRI) and President Enrique Pena Nieto are expected to unveil a bill that will end the country's state-run monopoly on electricity generation but keep transmission and distribution closed to private competition.
- Last week, the opposition National Action Party (PAN) introduced a competing proposal, which seeks to effectively open all of the electricity system up to competition, including transmission and distribution.
- Prior to the Nieto's unveiling of the bill, an anonymous lawmaker said, "[PRI's bill] will build a secondary electricity market where, without losing state control over transmission and distribution, there are clear rules so it is more efficient. The idea here is you can generate [electricity] regulated by the state [...] and sell it more efficiently."
- If the reform is passed, it could cut electricity rates by as much as half and, in particular, dramatically reduce operating costs for many businesses located in Mexico.
From the article:
Since 1960, Mexico's constitution has established public sector "exclusivity" over electricity. In 1992, a limited reform allowed private companies to generate electricity, but required the power generated to be either used for the company's own consumption or sold to CFE, effectively stifling competition.
In spite of the limitations, private-sector generation accounts for about 30 percent of the county's power, as many companies have sought self-supply arrangements to lower their energy bills.