On March 18, 2025, the President of the Republic published in the Official Gazette of the Federation a decree enacting a package of legislative reforms in the electricity sector. This decree includes the Law of the Electricity Sector (LSE), the Law of the National Energy Commission (CNE), the Law of the State Public Enterprise Comisión Federal de Electricidad (CFE), the Law of Energy Planning and Transition, the Biofuels Law, the Geothermal Law, and amendments to the Organic Law of the Federal Public Administration. These legal reforms entered into force on March 19, 2025.
The primary objective of this reform is to strengthen the role of the State and its public entities in the electricity sector while establishing a new framework for private investment and sector development. While the legislative changes aim to provide greater regulatory predictability and energy planning certainty, they also present significant challenges for companies, investors, and large energy consumers.
This article outlines the key modifications introduced by the reform, as well as their legal implications and the challenges that the sector will face in the coming years.
One of the most significant changes is the creation of the National Energy Commission (CNE) as the new regulatory authority for the sector. The CNE is established as a decentralized body of the Ministry of Energy (SENER), with technical, operational, managerial, and decision-making autonomy. The functions previously assigned to the Energy Regulatory Commission (CRE) are now formally transferred to the CNE, which will be headed by a Director General appointed by the President and ratified by the Senate (except for the first appointee, who does not require Senate confirmation).
The CNE will also have a Technical Committee chaired by the Secretary of Energy and composed of the heads of the Undersecretariats of Electricity and Hydrocarbons within SENER, the heads of the Electricity and Hydrocarbons Units within the CNE, and three experts from the energy sector.
This institutional redesign represents a structural shift in how permits are granted and how regulatory oversight is exercised in the electricity sector. Notably, it also reflects increased political influence in key decision-making processes.
As the new regulator, the CNE will be responsible for:
The transition from the Energy Regulatory Commission (Comisión Reguladora de Energía, “CRE”) to the National Energy Commission (Comisión Nacional de Energía, “CNE”) entails a period of regulatory and administrative adjustments, characterized by heightened uncertainty—particularly with respect to the process for obtaining permits and ensuring compliance with applicable regulations.
For investors and companies, it will be critical to closely monitor the formal implementation of the CNE’s functions and to anticipate potential administrative delays during its operational consolidation phase.
Furthermore, all deadlines and procedural timelines for filings and proceedings initiated before the CRE will be suspended for a period of ninety (90) calendar days following the effective date of the CNE Law.
The Federal Electricity Commission (Comisión Federal de Electricidad, “CFE”) transitions from a "State Productive Enterprise" to a "State Public Enterprise" (Empresa Pública del Estado), a newly created category of parastatal entity. The CFE will be sectorized under the Ministry of Energy (Secretaría de Energía, “SENER”), and will possess its own legal personality, assets, technical and operational independence, and management autonomy. As of the effective date of the new CFE Law, all of its subsidiary entities—including CFE Suministrador de Servicios Básicos, CFE Transmisión, CFE Distribución, and the six entities comprising CFE Generación—will be consolidated into the CFE, which will also assume all rights and obligations thereof. Affiliated entities, such as CFE Calificados, S.A. de C.V. and CFEnergía, S.A. de C.V., will remain in operation.
Among the new powers granted to SENER is the authority to issue binding planning instruments for the electric sector, such as the Electric Sector Development Plan (Plan de Desarrollo del Sector Eléctrico). These instruments must promote the reliability, continuity, and accessibility of public electricity service with a view to social responsibility, national energy sovereignty and security, and providing Mexican consumers with electricity at the lowest possible cost. These tools must also guide the energy transition in an orderly manner, and guarantee the principle of non-prevalence of private parties over the State. For this purpose, “prevalence” is defined as “the State’s preferential status over private actors in the generation and commercialization of electricity, as it is responsible for guaranteeing the reliability, security, continuity, and accessibility of the public electricity service.
The reform introduces key modifications to distributed generation schemes and generation for the wholesale electricity market, and creates a new legal figure: autoconsumption, establishing both opportunities and restrictions for companies and investors operating in the energy sector.
The expansion of the distributed generation threshold constitutes a significant opportunity for companies seeking energy self-sufficiency and reductions in operational costs.
Mixed Investment and Power Generation for Market Sale: Increased State Control
The legal framework maintains the scheme of electricity generation for sale into the Wholesale Electricity Market (Mercado Eléctrico Mayorista, “MEM”). However, the issuance of generation permits by the National Energy Commission (CNE) is now subject to binding energy planning criteria established by the Ministry of Energy (SENER). Likewise, the issuance of interconnection rights by the National Center for Energy Control (CENACE) is contingent upon technical feasibility, the preservation of system reliability (Sistema Eléctrico Nacional, “SEN”), and SENER’s approval.
Regardless of the project’s installed capacity, the Law of the Electric Sector (LSE) introduces new "mixed development" schemes that formalize partnerships between the State and private entities. These include:
The new mixed investment scheme significantly reduces the autonomy of the private sector in the development of energy infrastructure projects. Under the current legal framework, any new project must either align with SENER’s binding energy planning instruments or include majority participation by the Federal Electricity Commission (CFE). This requirement may discourage the entry of new market participants and limit competitiveness in terms of cost efficiency and operational performance.
For investors, this regulatory shift entails a structural reconfiguration of financing arrangements applicable to mixed investment projects. Initiatives previously reliant on independent private capital must now transition to joint investment models with the State, potentially altering expected returns and increasing associated risks. Furthermore, the restriction that excess energy can only be sold to CFE limits the financial and operational flexibility of private generators, with a direct impact on project profitability within the sector.
One of the most significant changes introduced by the reform is the consolidation of the basic electricity supply under the exclusive control of the Federal Electricity Commission (CFE). This implies that no private entity will be authorized to offer basic supply services, thereby limiting competition in the electricity commercialization segment and potentially affecting end-user prices in the basic supply category.
Additionally, the new legal framework establishes that the State shall retain a position of prevalence in the commercialization sector. Close monitoring of forthcoming regulatory developments is recommended to understand how this preferential role will be implemented in practice.
Impact on Corporations and Industrial Consumers
For companies with high energy consumption—such as manufacturers, data centers, and industrial conglomerates—this reform introduces new limitations on their ability to negotiate supply conditions. These limitations may result in:
While the centralization of basic supply may enhance long-term planning and stability in electricity availability, the overall limitation of supply options introduces uncertainty in terms of operational efficiency, cost structures, and service quality. In a context where supply reliability is critical, a predominant reliance on CFE restricts the ability of companies to design and implement energy optimization strategies.
The Clean Energy Certificate (CEL) scheme will remain in effect, with a revised validity period of 30 months for issued certificates.
The clean energy targets will be defined by the Ministry of Energy (SENER) based on Mexico’s national commitments in the context of climate change mitigation.
CELs may be granted to clean power plants regardless of their commercial operation date. However, the eligibility for such certificates will be subject to an evaluation that considers the “backup service” required by these facilities—typically intermittent generation units such as solar or wind power—which may rely on conventional generation assets for system reliability.
It will be necessary to closely monitor future regulations in this area, which will determine which power plants qualify for CELs and to what extent. Regulatory definitions and technical criteria are expected to shape the actual scope and applicability of the certificate allocation process.
Strategic Adaptation to the Energy Reform
The 2025 electricity reform introduces a new regulatory framework that reshapes the structure of the energy sector, posing significant challenges for companies involved in the generation, commercialization, and supply of electricity. In this context, it is essential for stakeholders to anticipate risks, reassess strategies, and ensure legal certainty for current and future investments. Below are the key strategic considerations that companies should take into account to effectively adapt to the new legal environment.
Investment Protection and Legal Defense Amid Regulatory Changes
The centralization of the electricity sector and the increased role of the State in power generation and commercialization may give rise to legal disputes. This is particularly relevant in the current context of broader judicial reform. Companies planning to invest in energy projects should consider structuring their investments in a manner that allows them to benefit from the protections afforded under international investment treaties, thereby gaining access to effective legal remedies.
In this regard, it is crucial to implement legal defense strategies that can mitigate regulatory risks—whether through domestic litigation or international arbitration mechanisms—especially in cases where foreign investments may be directly affected. Identifying potential points of conflict and establishing legal safeguards will be key to ensuring legal security for ongoing and future operations.
The increase in the distributed generation threshold from 0.5 MW to 0.7 MW creates new opportunities for companies seeking greater energy independence. However, it will be important to review the newly regulated contractual models to determine the commercial viability of such projects. Investors will need to analyze the economic and legal implications of the revised framework to design operationally sound and legally compliant strategies.
The requirement that generation projects align with binding energy planning instruments will impose limitations on the development of new infrastructure. The granting of permits will depend on whether the projects are implemented in regions where system demand and technical conditions allow for the integration of new capacity.
The mandate that the Federal Electricity Commission (CFE) hold at least a 54% stake in private projects under mixed investment schemes significantly alters the conditions under which new infrastructure can be developed. For investors, this requires exploring legal and corporate structures that meet regulatory obligations without compromising the profitability of the project.
In light of the new regulatory landscape, joint ventures, long-term contracts with CFE, and public-private partnerships are expected to emerge as viable models. Companies must conduct in-depth reviews of the regulatory conditions governing public sector participation in each project to ensure continued feasibility within the national energy planning framework.
Alternative Dispute Resolution Mechanisms in Contracts with CFE
Under the new legal framework, CFE remains authorized to agree to alternative dispute resolution (ADR) mechanisms, including international arbitration, in its contractual arrangements. This presents an opportunity for investors to include provisions that allow for swifter and more effective dispute resolution, thus avoiding lengthy domestic litigation.
When negotiating new agreements with CFE or other regulated entities, it will be critical to incorporate contractual provisions that protect investors’ interests, establish clear criteria for dispute resolution, and ensure enforceability in international fora. The ability to resort to ADR mechanisms enhances legal certainty, particularly for large-scale cross-border operations involving foreign stakeholders.
Successfully navigating the 2025 electricity reform will require companies to proactively identify legal and operational risks, adapt their contractual frameworks, and implement strategies that align with the State's redefined role in the energy sector. While the reform presents considerable challenges, it also opens the door to strategic opportunities that may enable companies to optimize costs, diversify their energy portfolios, and ensure long-term supply reliability.
Specialized legal counsel will be essential in navigating this transition with certainty—minimizing exposure to legal and regulatory risks and ensuring full compliance with the new legal framework. Thorough risk assessment and strategic foresight will enable companies not only to mitigate the impacts of the reform but also to position themselves advantageously within a rapidly evolving energy landscape.
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