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A new fast-track bill related to the Mexican electricity market has been introduced in Congress, the boldest overhaul in months of attempts to change rules in the sector as per the FT. The move would change the order in which electricity is sent to the national grid, putting private players behind state utility Comisión Federal de Electricidad (CFE). The proposed change would deal a blow to the renewable energy sector in Mexico and can potentially lead to trade-related tensions with US and Canada. Carlos Ramírez at consultancy firm Integralia said, “It’s open war. It’s a sign the government is becoming more radical.” The FT reported a former energy sector official to estimate the impact of this move on private sector investments in electricity generation to be ~$41bn with possible lawsuits. The proposed bill will scrap the use of long-term auctions for power purchases and self-supply contracts that allow companies to generate electricity for their own use. Ramses Pech, an energy consultant said scrapping auctions “left the door open to corruption, since it would just be up to CFE who they contracted”.

CFE’s dollar bonds traded higher on the news with its 4.05% 2050s up 2.45% to 94 cents on the dollar.

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