Business chambers against AMLO´s electricity reform warn electricity costs will increase in Mexico

Solar panels and wind turbines (Photo: El Debate)

Goodbye private solar panels with AMLO’s electric reform proposal

MEXICO, (October 06, 2021).- The business sector made a new call to Congress to consider the implications of the electricity reform initiative, proposed by President Andrés Manuel López Obrador.

This reform aims to limit the participation of private companies under rules that are not yet clear, as well as includes the cancellation of contracts with generators other than the Federal Electricity Commission (CFE), in addition, the latter does not guarantee to cover the demand, and it falls short on the investments that are required, said the business sector.

Something that has entrepreneurs concerned is the cancellation of contracts with private generators that is determined in the president’s initiative because for the industry it means losing competitiveness by being forced to buy only from the CFE since it represents 55% of electricity consumption and does not get subsidies.

During a press conference, different leaders of business organizations showed their discontent and concern about López Obrador’s initiative, which although it talks about leaving 46% of the generation to private, there are no clear rules of how it will be this participation.

The president of the Business Coordinating Council (CCE), Carlos Salazar Lomelín, said that 44,000 million dollars of investment that private companies have made for generation are at stake.

Régulo Salinas Garza, president of the Energy Commission of the Confederation of Industrial Chambers of the United Mexican States (Concamin), pointed out that CFE’s generation cost last year was 1,403 pesos per megawatt/hour, that of private generators of renewables and combined cycles was 406 pesos and 800 pesos, respectively.

On the other hand, Salazar Lomelín commented that the CFE is not enough to cover the investment needs that the growth of the country’s electricity demand implies.

There are 87,000 million pesos that Mexico needs per year for the growing demand for electricity, which is around an annual increase of 3% and the CFE receives an average budget for investment of 45,000 million pesos per year, half of what is needed for the generation.

But in addition, CFE’s investments are not only destined for generation, it also involves transmission and distribution projects, but he also added.

Enoch Castellano, president of the National Chamber of the Transformation Industry (Canacintra), in his speech, said that it is key that the national electricity sector opens up to private investment to complement the lack of money that the Government should have spent through public companies.

“In the electricity reform proposal, it is necessary to pass a capacity reserve of between 15 and 20% that, given the service factors that the Federal Electricity Commission plants have, would put us real risks of blackouts, that is, we would need around 30 % of safety margin for this to be avoided and we have already seen situations in the peninsulas of both Yucatan and Baja California, where there have been problems ”.

While the president of the Employers’ Confederation of the Mexican Republic (Coparmex), José Medina Mora, pointed out that private investments in clean energy must be respected, what the Executive proposes is not the appropriate way to strengthen the CFE.

The proposed constitutional reform to the electricity market will negatively impact solar panel users.

Cuánto cuesta instalar paneles solares para ahorrar luz y gas

The initiative for constitutional reform to the electricity market sent by the president, Andrés Manuel López Obrador, to the Chamber of Representatives would make solar panels in homes and companies illegal.

Solar panels produce energy from the sun, which is sent to the National Electric System through the cables that go to the electricity pole, for this a power purchase agreement is needed between the user and the Federal Electricity Commission (CFE ).

The proposal sent by President López Obrador establishes the cancellation of contracts for the sale of electricity between private parties and the state production company.

“In accordance with the provisions of constitutional articles 25, 27 and 28 of this Decree, the State is made responsible for the National Electric System, so that on the same day of entry into force of this Decree, said system is installed in the following terms:

  1. The electricity generation permits granted and the electricity purchase and sale contracts with the private sector are canceled, as well as the pending applications ”.

The second transitory article of the executive’s initiative establishes that the CFE would terminate commercial relations with the users of solar panels.

Users of solar panels in companies and homes sign electricity purchase contracts with the CFE.

“Throughout history, it has been proven that what strengthens companies is competition, if we want to strengthen the Federal Electricity Commission, the way is not to remove competition, it is to help them be efficient, to invest in the generation of clean energy in instead of continuing with the production of energy from fossil fuels ”, he considered.

Given this, the businessmen asked Congress to reconsider and make an analysis of the impacts of the electrical, economic, social, environmental, and legal reform that the AMLO initiative implies.

Source: Mexico Daily Post

The Yucatan Times Newsroom



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