Alarm over Energy Counter-Reform in Mexico

Energy attorneys Carlos Ochoa, Alberto Esenaro and Aldo González were quoted in a Power Finance & Risk article analyzing proposed reform to Mexico's electricity market. The proposed amendments would alter dispatch rules that govern the national grid to favor state-owned companies and their power plants over privately owned power plants and renewable energy projects.

Mr. González outlined some of the concerns from private investors and how the bill could impact the country's energy sector.

"This bill generates a scenario of volatility for investors. Coupled with the pandemic and the change of administration in the U.S., the law change comes at a terrible moment for the sector," he said.

Mr. Ochoa added that although he does not expect investors to leave, they will have to re-evaluate their projects if the changes are approved. In addition, should that happen, he said he anticipates a "wave of lawsuits and developers looking for legal reprieves."

Mr. Esenaro commented that investors should closely follow the legislative process on the bill and start preparing legal strategies in response to it.

"It's important that investors keep monitoring changes in the law," he said. "Changes won't happen immediately. They will be implemented gradually in the everyday operation of the electricity market and face legal challenges."

READ: Alarm over Energy Counter-Reform in Mexico (Subscription required)