Mexican Supreme Court decision on 2021 power sector changes expected by end of day

Mexico's Supreme Court will make a final decision April 7 on whether modifications benefiting state utility CFE made in 2021 by the administration of President Andres Manuel Lopez Obrador to the law governing the power sector are constitutional.

The modifications to the power sector law, known as LIE, mainly change the order used by the grid operator to dispatch energy from generators to benefit CFE; eliminate restrictions for CFE hydroelectric power plants from participating in the market of renewable energy certificates; and eliminate parts of the legal framework that allow companies to generate their own electricity.

The modifications were challenged in court by numerous market participants, environmental organizations and government institutions, like federal antitrust watchdog Cofece, and were blocked shortly after being issued.

On April 7, the court's 11 justices will discuss and vote on a motion presented by Justice Loretta Ortiz Ahlf that declares that those modifications lawful. The discussion began April 5, but the justices did not finish. They only voted on one main consideration used by Ortiz Ahlf in her motion, which is to consider electricity a human right. All justices voted against this, although it is not clear what that will mean for the rest of the motion.

Six votes

The modifications to LIE were challenged using three legal procedures, but the court will not need to solve them all April 7, said Julia Gonzalez Romero, counsel at law firm Gonzalez Calvillo specializing in constitutional law. Just one is enough to invalidate the modifications completely, as the claim is that the modifications are not in line with the Mexican Constitution, she said.

To get her motion approved and declare that the 2021 modifications are in agreement with the Constitution, there need to be six votes total, so justice Ortiz Ahlf only needs five other justices to vote in favor, Gonzales Romero said during a webinar April 5 about the issue.

In contrast, to completely declare the modifications unconstitutional, eight justices will have to vote against it, said Sergio Pimentel Vargas, a partner at Mexico City-based consultancy Agon.

So far, only two justices have expressed their opinion, and one, Javier Laynez Potise, has openly expressed his opposition to the motion, as he said the project does not consider all the grounds used by Congress to pass the 2013 reform, which is affected by the modifications. The discussion at the Supreme Court is expected to be long and might conclude at the end of the day.

Parallel process

The Supreme Court vote comes as Congress prepares to vote on a proposed constitutional reform that will grant CFE limitless power over the sector and that the president proposed after the modifications to the power sector law were blocked in court.

If the reform were to be passed, the vote at the Supreme Court would be irrelevant. However, the result of the vote is uncertain, as the president's Morena Party and its allies do not have the necessary numbers to pass the reform, and PRI, the nation's second-largest opposition party, has stated it will vote against the reform, while it had previously been thought it could switch to Morena's side.

The congressional vote is expected before month's end, according to the president.