Mexico's Supreme Court rules against electricity law favoring state-owned utility over private firms

MEXICO CITY — A panel of Supreme Court justices in Mexico ruled Wednesday against President Andrés Manuel López Obrador’s rules that favored the state-owned electrical power company over private power companies.

The five-judge panel approved a resolution saying the president’s approach violates constitutional guarantees of free competition in the power sector.

Previously, power plants bid to supply electricity based on providing the lowest price. But López Obrador gave the state-owned Federal Electricity Commission priority in selling power into the grid.

That put private, mostly foreign-owned power generators last in line, despite the fact they often produce cleaner power than the commission, which runs many power plants on fuel oil or coal.

The U.S. governmen filed an objection to the law, arguing the U.S.-Mexico-Canada free trade agreement prohibits favoring domestic companies over those from other member states.

López Obrador put private natural gas plants almost last in line — ahead of only government coal-fired plants — for rights to sell electricity into the grid, even though they produce power about 24% more cheaply. The law paractically guaranteed the government electrical utility a majority market share.

It was unclear if Wednesday’s ruling would provide relief only to the companies that filed the appeal, and what that relief would consist of.

López Obrador favors state-owned firms and disliked the openings to private investment enacted under previous administrations that allowed foreign firms to build cleaner gas, wind and solar power plants in Mexico.

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