Mexican Utility Reform
Powering the future
Since the 1930s, the Federal Commission of Electricity (CFE) has dominated Mexico’s electricity sector by providing generation, transmission and distribution services to the entire country. Recent reforms initiated by President Enrique Peña Nieto and adopted by Mexico’s Congress will liberalize much of the nation’s electricity industry.
Though CFE has made great strides in expanding service and standardizing voltage and frequency, it has remained a vertically integrated monopoly with extremely limited access to capital to invest in the required generation and transmission infrastructure to support the needs of the country. CFE’s current generation fleet has forced them to use more expensive oil, diesel and other fuel sources to power its plants, keeping its generation costs relatively high. The high cost of electricity limits the ability of Mexico’s industries to be competitive, and hurts consumers who would likely use more appliances and devices if the cost were lower. While minor reforms were implemented in the 1990’s to partially open the generation market they have proven to be insufficient. The recently adopted future reforms dwarf those efforts and promise to dramatically reshape the power and utilities sector in Mexico.
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