82. Is It Safe to Invest in Mexican Energy Projects?

Is It Safe to Invest in Mexican Energy Projects? In late 2013, Mexico embarked on a path to transform its energy markets. Then-President Enrique Peña-Nieto oversaw constitutional reforms that ended state-run monopolies, and opened Mexico’s power market to competition and investment from foreign and private companies. By most accounts, the policies were highly effective in spurring investments in renewable energy and efficient natural gas-fired power projects. A great deal of money has been funneled into Mexico by investors from as many as 45 countries since the law was enacted. “The result of that was dramatically successful. I mean, you have millions and millions of dollars that were sunk into the power sector bringing in modern equipment, environmentally friendly, because there were a lot of renewable projects that went online. You see how the percentage of renewables changed in the last 10 years—you can see that it has been successful,” Roberto Aguirre Luzi, a partner with King & Spalding, said as a guest on The POWER Podcast. However, Peña-Nieto is no longer in office, and President Andrés Manuel López Obrador wants state-owned power company Federal Electricity Commission (CFE) to get special treatment in the market. Under the previously enacted reform measures, dispatch priority was based on price, with the lowest-cost generation being delivered first. Earlier this month, Mexican policymakers passed legislation that would change the order in which electricity is dispatched, giving priority to CFE at the expense of private operators. “There were a wave of amparos to challenge this law,” said Fernando Rodriguez-Cortina, senior associate with King & Spalding. An amparo is a protection provided for under Mexico’s constitutional law. It may be filed in federal court by Mexicans and by foreigners in an attempt to guarantee protection of the claimant’s constitutional rights. “The judge granted the amparo with general effects, and now the law is stayed,” said Rodriguez-Cortina. “With general effects” means the st