Sarah DeVries
Federal Electricity Commission chief Manuel Bartlett and President Andrés Manuel López Obrador. Federal Electricity Commission chief Manuel Bartlett and President López Obrador.

AMLO’s energy goals unnecessarily demonize private competition

Mexican power companies generate 46% of the nation's electricity and at cheaper rates

In school science classes as a teenager, I could never summon the energy to pay attention to anything related to physics.

The teacher would start talking about how electricity was generated (or, worse, we’d take turns reading about it out loud from the textbook – way to glamorize science!), and my eyes would glaze over as my mind wandered to pretty much anything else: mostly boys, sometimes swimming, sometimes whether or not I could go skating with my best friend that weekend.

Nevertheless, I’m glad that other people have dedicated their lives to the alchemy of harnessing energy and then getting it to where it needs to go.

I appreciate being able to flip a switch and have light, a refrigerator that runs, electronics and Wi-Fi that work, in the same way that I appreciate the mostly invisible presence of any other complex service or infrastructure that’s an essential part of my daily life. I like running water and flushing toilets. I like paved roads. I like that there are hospitals.

I’ll be the first to admit that, even after hours of reading, I do not have the best grasp of how the energy sector works in Mexico, or in any other country for that matter. I get my bill from CFE (the Federal Electricity Commission), I pay it, I have power (most of the time).

But after reading with increasing alarm about President López Obrador’s animosity toward all non-CFE energy producers, I’m suddenly paying a lot of attention. What on earth is going on here?

In 2014, President Enrique Peña Nieto signed into law reform that opened up Mexico’s energy sector to private competition, both national and international, much of it renewable. According to President López Obrador, this has allowed a “pillaging” of the sector.

Call me crazy, but I think it requires just as much a stretch of the imagination for most to think of either CFE or Mexico’s oil company, Pemex, as helpless victims being bullied by a few tiny new guys as it does to imagine that the national telecommunications company Telmex was a victim when other competitors were allowed to come onto the scene.

So what’s the deal with opposing competition?

If you’re going to have a capitalist economy, you can’t refuse to allow it. Sure, you can regulate the game; it should be regulated to protect everyone from falling by the wayside in the rapid pursuit of cash. But allowing competition and wanting to protect the already entrenched sole provider are fundamentally incompatible positions and make little sense: it’s like holding a race and telling most of the participants that they aren’t allowed to use their legs.

Those of you who read my column regularly know that I’m no champion of pure free-market capitalism. But I’m also no fan of monopolies, especially after 20 years of experiencing them here in Mexico. From where I’m sitting, these gigantic state-run organizations want to have it both ways: they want all the benefits of being at the top of the heap as if they’d competed to get there with none of the actual competition.

In this case, whether they’re state-run or private makes little difference: corruption, stagnation, and little motivation to improve their practices are simply hallmarks of monopolies. And this is what AMLO is fighting to hold on to as intensely as he would fight for his own life, it seems.

But why?

First, he says he wants to protect Mexico’s sovereignty and move toward energy independence. Great! Self-sufficiency is an admirable goal. But why, then, is he behaving as if even national private companies are a threat to that goal? And why don’t private Mexican firms form a part (in his mind) of the Mexican effort at self-sufficiency? Is it only truly Mexican if it’s state-run?

Also, can the quality of the jobs that CFE and Pemex are doing please be part of this conversation?

CFE currently imports much of its raw material in order to provide power, much of it coming from the United States; this was made especially clear during the winter storm last month that knocked out the power for Mexicans along with their Texan counterparts (Mexico gets 60% of its energy from natural gas, 95% of which comes from the United States). Pushing out the competition would not change this.

One option for decreasing our dependence on imported natural gas is to use surplus fuel oil that can’t otherwise be sold from Pemex. This is exactly what was decided after CFE chief Manuel Bartlett complained about the high cost of imported coal.

Why, how convenient for Pemex!

While the cost of purchasing fuel oil is no doubt less, the cost of turning it into energy is actually much higher. Never mind here too that fuel oil is much dirtier than coal.

Dirtier than coal, people.

Coal is hardly a beacon of clean energy. So now we’ve got “in-house” energy production, but the trade-off is higher prices and dirtier air.

And those aren’t the only tradeoffs: we can also include the impossibility of meeting our own clean energy goals (which AMLO doesn’t seem to care about anyway), not to mention the goals set forth in environmental treaties that we’ve signed. Throw in the fact that pretty much no one will want to invest in Mexico again anytime soon (what with a leader who has no qualms about suddenly changing the rules on anyone and all), and it seems we’ll have won the prize for the most hostile place to do business, on top of our soon-to-be-gigantic pollution problems.

AMLO claims that private energy sources do nothing for us. However, private energy companies generate 46% of the nation’s electricity, according to the federal government’s own Energy Regulatory Commission (CRE), and they do so at a cost up to 85% less than the CFE.

So what gives? Whatever our president’s vision was for making Mexico an earthy utopia in the 1970s is officially hopelessly outdated. It’s time to accept the possibility that some new ideas might be good for us.

CFE isn’t up for the job, nor is Pemex. Ya siéntense, señores (Sit down, gentlemen.).

Sarah DeVries is a writer and translator based in Xalapa, Veracruz. She can be reached through her website, sdevrieswritingandtranslating.com.

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