Electricity legislation should not aim at nationalization: CEESP

At the start of the legislative forums for the electricity reform, the business sector called for an adequate and flexible regulation that strengthens independent regulatory bodies and not a "nationalization".

The Center for Economic Studies of the Private Sector (CEESP) warns that the approval of the constitutional reform on electricity would be a strong step backwards towards a situation similar to that of the 1960s. "It would increase the cost of electricity, open a hole in public finances, cancel the transition to clean energy and violate the precepts of the trade agreement between Mexico, the United States and Canada (T-MEC). The blow to confidence in the country would be disastrous".

The organization agglutinated in the Business Coordinating Council (CCE) alerts legislators, governors, and society, if the electricity reform is approved, the Federal Electricity Commission (CFE) would face difficulties in finding sufficient resources for the maintenance and expansion required by the transmission and distribution networks, which is inherently a State responsibility.

"Under these circumstances, it is highly likely that service failures associated with network saturation, such as blackouts, interruptions and voltage irregularities, would severely damage economic growth, employment and social welfare," say private sector analysts.

Through its weekly executive analysis, the CEESP assures that the electricity system in Mexico, under the current law, works well in favor of the country. Therefore, it states that low investment is an evident risk that could manifest itself in accidents, blackouts and lack of service in several geographic areas.

"It is necessary to consider that the CFE has failed to invest what is necessary to maintain the electric transmission and distribution networks, despite the fact that this is its main task under the current system," laments the private organization.

From the perspective of the Private Initiative, the constitutional reform proposed by the executive branch regarding electric energy is "unnecessary, wrong and unacceptable".

With its discussion and rejection or approval postponed for this year, said the CEESP, it is pertinent to continue analyzing some of its most relevant features, since the reform would imply that the Federal Electricity Commission (CFE) would centralize the most neuralgic functions of the national electricity system, putting an end to the electricity market and becoming practically the only producer, buyer and seller in the sector.

What is worrisome is that the CFE's total investment has been below what was planned. According to figures from the Ministry of Finance and Public Credit (SHCP), as of November 2021, the CFE's physical investment totaled 29.7 billion pesos, far from the 52.5 billion pesos approved for the entire year.

In recent years, investment in transmission and distribution tasks "has been insufficient, which brings with it a significant risk for the country that, if it were to materialize, would halt economic activity in important parts of the national territory".

lilia.gonzalez@eleconomista.mx