Mexican President Andrés Manuel López Obrador said during his daily press conference early Monday he planned to discuss his proposed constitutional electric power reform with U.S. Energy Secretary Jennifer Granholm during a scheduled trip to Mexico City this week.
The dates Granholm was expected to be in the country had not been confirmed late Tuesday. She was also expected to hold meetings with Mexico Energy Minister Rocío Nahle, the president said.
López Obrador, or AMLO, said the Deer Park, TX refinery sale had been authorized, with 20 billion pesos ($980 million) set aside for the purchase. He said he would thank Granholm for U.S. permission to complete the sale. The Texas refinery has been touted as a way for Mexico to reach “energy independence” in gasoline.
“We will talk about all topics,” López Obrador said of Granholm’s visit, “but above all I will provide information on why we need the proposed electric power reform.”
Reform Debate Begins
This week, an open debate in Mexico’s Congress among energy industry professionals and legislators began in the leadup to the vote on the reform.
The proposed constitutional change would upend the electric power sector by eliminating the sector’s principal regulators. It would also provide state utility Comisión Federal de Electricidad with greater market share and the right to dispatch power using criteria from its generation plants.
Addressing Congress, former Commissioner Montserrat Ramiro of Mexico’s Comisión Reguladora de Energía (CRE) said the reform would unfairly impact “the majority of private energy providers that do things right and respect the law.” She added the initiative would cause Mexico to fall behind on competitiveness and impact the environment.
U.S. Senate Objections
Secretary Granholm’s visit comes a week after the Senate Finance Committee sent a letter to U.S. Trade Representative Katherine Tai urging the Biden administration to use enforcement tools in the U.S.-Mexico-Canada Agreement (USMCA) to ensure members abide by their commitments.
The letter sent earlier this month was signed by Oregon Sen. Ron Wyden (D), who chairs the Senate Finance Committee, and the committee’s Ranking Member Mike Crapo (R-ID). The senators said the potential of the USMCA “will not be realized without full implementation and enforcement of the agreement as written.”
In the energy sector, “the Mexican government is actively pursuing policies to give preference to its state-run electricity provider and its state oil company (Petróleos Mexicanos) to the detriment of private competitors that often provide cleaner energy options,” the letter said.
“Mexico has suspended import permits for more than 80 energy companies; has ended permits for energy import facilities, which puts U.S. investment at risk; and is advancing a constitutional reform bill that would dissolve the Mexican power market, eliminate independent regulators, and cancel contracts and permits granted to private companies.
“Mexico’s actions deprive private energy companies, including renewable energy companies, from market access, non-discriminatory treatment, and a level playing field in Mexico’s energy sector.”
This is not the first time U.S. officials have complained about Mexico’s government and about officials meddling in the energy sector.
In October, a bipartisan group of Texas legislators asked the Biden administration to intervene on behalf of U.S. energy companies operating in Mexico. A few months earlier, the American Petroleum Institute (API) told the Biden administration that unfair treatment of U.S. energy companies by Mexico’s government was worsening and likely in violation of the USMCA.
Analysts have suggested that the likelihood of the reform making it through Mexico’s Congress is low. However, they expect some sort of change to the current design of Mexico’s electric power system.
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