Mexico’s lower congressional house in the wee hours of Wednesday morning approved a controversial bill that would upend the rules governing the electric power sector, giving generation assets owned by state-owned Comisión Federal de Electricidad (CFE) priority in the dispatch order over private sector generators.


The chamber approved the bill to modify Mexico’s bedrock electricity law, the Ley de Industria Eléctrica, by a margin of 289 to 152, with one legislator abstaining.

The proposed law would give priority in the dispatch order first to CFE’s hydroelectric plants, then to its fuel-oil, nuclear, geothermal and combined-cycle natural gas-fired plants, regardless of cost, according to a primer on the bill published by EY Mexico analysts. Private sector generators would...