Mexico Moves To Tighten State Control Of Power, Private Generators Push Back
Key Points
- A December 5 draft would keep many legacy private generators selling only to CFE for five years.
- It would also let CFE opt to acquire certain generation assets at no cost, prompting “indirect expropriation” warnings.
- With independent producers supplying about one-fifth of capacity, the proposal could spill into USMCA and treaty disputes.
Mexico has opened a public consultation on draft rules aimed at Independent Power Producers, a legacy category of private plants built to supply the state utility, Comisión Federal de Electricidad (CFE).
Under the prior framework, these generators sold to CFE under long-term contracts and could migrate to Mexico’s wholesale power market when those contracts ended.
The December 5 draft would narrow that exit. It would require Independent Power Producers to sell only to CFE for five additional years.
The sharper conflict is about ownership. The existing scheme recognizes that generators keep their assets. The draft would give CFE an option to acquire certain generation assets without paying for them.
In a public comment letter linked to the consultation, the Asociación Mexicana de Energía said the earlier rules recognized private ownership with no obligation to transfer assets, while the new wording could be structured as an indirect taking.
The draft indicates that companies could try to avoid the general framework by negotiating new permits directly with the government. The story behind the story is Mexico’s effort to harden a state-centered electricity model into enforceable operating rules.
A constitutional reform approved in October 2024 overturned parts of the previous electricity framework. The December guidelines are part of the practical rollout.
Pablo Zárate, a senior managing director at FTI Consulting, has described the process as a test of how Mexico balances state control with investor rights, especially for legacy assets.
International exposure raises the stakes. Independent producers are estimated to represent about one-fifth of Mexico’s operating generation capacity. Companies with permits include AES, Naturgy, Mitsubishi Power, Acciona and Saavi Energía.
Analysts warn the draft, if adopted largely as written, could prompt claims under the USMCA trade pact and other investment treaties. Mexico’s energy ministry declined to comment during the consultation.
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