June 12, 2020 / 12:37 AM / in 22 days

Mexican business lobby says power transmission rate hike to hurt renewable energy firms, consumers

MEXICO CITY (Reuters) - An influential Mexican business lobby on Thursday warned a hike in the price that private power producers pay to access the country’s main electricity transmission grid will deal a blow to the green industry and be passed on to the consumer.

Mexico’s Energy Regulation Commision, the power sector regulator that sets rates, last month approved new transmission rates that electricity generation firms must pay the national power utility, Comision Federal de Electricidad (CFE).

This new rate is expected to hammer renewable firms embroiled in a major battle over the changes with the government of President Andres Manuel Lopez Obrador, who is eager to roll back energy reforms put in place by his predecessor.

Mexico’s powerful Business Coordinating Council (CCE) on Thursday estimated the rate hike would see the cost of electricity transmission rise between 500% to 900%.

CCE added that the rate hike was “illegal and inadmissible,” warning that Mexico’s private sector would be hit by job losses and consumers would be saddled with higher energy bills.

The business body also condemned what it called “opacity” in how the new rates were made and said the government “did not follow the process of public consultation and cost-benefit analysis” that Mexican laws require before applying such changes.

While the energy regulator is an independent body, critics say Lopez Obrador’s government exerts more pressure on it than past administrations.

Lopez Obrador, a leftist, is seeking to strengthen the state’s role in the energy sector and rework contracts with the CFE, arguing that past governments handed too much control to private interests.

Critics allege the government’s plans favor CFE plants, including those that burn fossil fuels, mostly natural gas but also highly polluting fuel oil.

About 13% of Mexico’s power comes from renewable sources, mostly wind and solar, according to energy ministry data.

Reporting by Sharay Angulo and Raul Cortes Fernandez; Writing by Drazen Jorgic; Editing by David Alire Garcia and Cynthia Osterman

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