The Policy of Reliability, Safety, Continuity, and Quality in the National Electricity System (the "Policy") published on May 15, 2020 in the Federal Official Gazette (Diario Oficial de la Federación) was subject to several judicial proceedings due to its controversial content.
The Policy, based on the current health emergency, slowed the dispatch of renewable electric energy to the National Electricity System indefinitely due to its supposed lack of reliability, granting priority to CFE's electricity generation despite the fact that it implies greater pollution and a higher cost to the end user.
The Federal Commission of Economic Competition (Comisión Federal de Competencia Económica) filed constitutional controversy docket 89/2020, which resulted in the Court's decision to suspend, with general effects, the application of the Policy since June 2020.
The President –through the Executive Power Legal Counsel- filed an appeal against such decision.
Notwithstanding the foregoing, the Court determined unanimously that the complaint filed by the Executive Power was unfounded and on October 21, 2020, the Supreme Court of Justice confirmed the decision to suspend the Policy. We estimate that the definitive resolution of this procedure could take up to one year.
On the other hand, in November 2020 the final judgement of the amparo trial filed by EGP Magdalena Solar –one of several renewable energy companies that challenged the Policy-was published and it was the first judgment that analyzed the merits of the case. The judge considered that the Policy affects free competition and violates regulatory requirements; therefore, the Policy was suspended with general effects.
As a consequence of the foregoing, the Policy will not be part of the legal framework of the power industry and the relevant players of the sector may continue operations as if the Policy had never been issued. This may be further altered if SENER appeals such decision.
Originally Published by Mayer Brown, November 2020
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