"Supreme Court Deems Mexico Power Reform Constitutional, but ‘Endless Litigation’ Feared Ahead", 11 April 2022

...Mexico’s Supreme Court ruled last Thursday that key components of legislation passed in 2021 to overhaul the country’s electric industry law (known by its Spanish initials LIE) do not violate the constitution...

...Multiple legal injunctions halted the law’s implementation shortly after it was passed. 

The reform modifies the electricity dispatch order from a merit-based model in which the cheapest power sources are dispatched first, to one in which generation assets owned by state power company Comisión Federal de Electricidad (CFE) would receive priority. 

CFE’s hydroelectric plants would be called upon first, followed by its nuclear, geothermal, combined cycle and thermoelectric plants, along with independent power producers that supply power to CFE. Next would be privately owned wind and solar assets, followed by privately owned plants including combined cycle and other technologies...

The LIE modification, if implemented, also would eliminate the obligation of CFE – Mexico’s largest power distributor – to purchase electricity via competitive auctions, instead allowing it to negotiate directly with generators. 

...The complaint alleging the law’s unconstitutionality was brought to the court by a group of opposition senators.

The decision leaves the door open for pending challenges to the law on environmental and antitrust grounds to be resolved by lower courts on a case-by-case basis, and by the Supreme Court if necessary, the BBVA team said...

In addition, the legislation would eliminate clean energy certificates, or CELs, a mechanism introduced under the previous government to incentivize clean energy...