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Mexican law had required free competition in the power industry. The president tried to enshrine some of those changes in the constitution, but those failed to get the required two-thirds majority in congress earlier this year. Last year, his allies in Mexico’s congress made legal changes that give preference to the state power utility, requiring it to buy power from its own plants first, while often cleaner energy from private generators would be last in line. López Obrador doesn’t want the Federal Electricity Commission to go bankrupt or lose more market share. López Obrador has made propping up Mexico’s deeply indebted state oil company a top priority, and he has railed against foreign companies that flooded the electricity sector when it was opened to competition. The energy sector is a point of national pride for Mexico's president, who frequently speaks fondly of large state-owned entities. The state-owned utility lost market share and income, but still had to maintain transmission lines.

They received preferential treatment in pricing and purchasing, and didn’t have to pay the Federal Electricity Commission fees for distributing power through government-owned transmission lines. Mexico may have given private and foreign firms too many incentives.

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natural gas, allowed companies to buy electricity from independent generators and gave foreign and private firms incentives to install cleaner wind-power turbines or gas-fired plants. So the government built pipelines to import cleaner U.S. Private companies, mainly from Spain and the United States, invested billions of dollars in Mexico to build wind, solar and gas-fired electricity plants under the terms of a 2013 reform opening the energy sector during the administration that preceded the current one under President Andrés Manuel López Obrador.īefore that overhaul, Mexico faced several problems: high electricity rates, scarce generating capacity and dirty power plants that often burned fuel oil to produce electricity. Mexico has also delayed, rejected or failed to act on private companies’ applications for permits to operate in the energy business and has revoked or suspended existing permits, according to the U.S. also says a 2019 regulation gives only state oil and gas company Petroleos Mexicanos extra time to comply with tougher environmental standards limiting the sulfur allowed in automotive diesel fuel. Mexico says it has received a similar notice from Canada related to its electricity law. and other foreign companies from the Mexican energy sector in violation of the free trade agreement they signed with Canada. government has forced Mexico into negotiations over what Washington considers unfair practices that are effectively excluding U.S.

is demanding talks to resolve the dispute, starting a process Wednesday, July 20, 2022, that could end in trade sanctions against Mexico. The United States is putting pressure on Mexico over energy policies that Washington says unfairly favor Mexico's state-owned electricity and oil companies over American competitors and clean-energy suppliers. Facebook Twitter Email FILE - A newly built power generation plant that is part of a mega-energy project is seen with the Popocatepetl Volcano in the background near Huexca, Morelos state, Mexico, on Feb.

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