OIES – Mexico’s Electricity Sector: Re-Centralization and Its Implications

The report by OIES "Mexico’s Electricity Sector: Re-Centralization and Its Implications" explores the impact of Mexico's new Electricity Sector Law (LESE) on energy governance and market dynamics. Mexico’s LESE marks a shift from the 2013 market liberalization, re-establishing state control over the electricity sector. The law aims to restore energy sovereignty by prioritizing the Federal Electricity Commission (CFE) over private firms, guaranteeing CFE a dominant position. This re-centralization raises concerns about market efficiency, electricity costs, and investment stability. The report discusses the distinction between energy sovereignty and security, highlighting the economic and operational trade-offs. Key provisions include market prevalence and priority dispatch for CFE, elimination of competitive auctions, and restrictions on private participation, posing risks to long-term energy stability and investment.