New Institutional Framework for the Electricity Sector

‍General framework: the reform and its operational and regulatory impact

The entry into force of the electricity reform on March 19, 2025, with the enactment of The entry into force of the electricity reform on March 19, 2025, with the enactment of the Electricity Sector Act (LSE) and other complementary provisions, has structurally transformed the functioning of the electricity sector in Mexico. The legal effects are observed on multiple fronts: from the replacement of the Energy Regulatory Commission (CRE) by the National Energy Commission (CNE), to the imposition of mixed investment schemes, new rules for self-consumption, and the implementation of binding energy planning.

These modifications introduce legal, contractual and operational risks that must be evaluated by companies with ongoing projects or future planning, as well as by investors with structures protected by international treaties.

New institutional framework: regulatory transition and risks

Replacement of the CRE by the CNE

The National Energy Commission (CNE) is established as the new regulatory body for the electricity sector, acting as a decentralized body of the Ministry of Energy (SENER). Although it formally has technical, operational and management autonomy, its institutional design is more closely aligned with the Federal Executive. Its General Directorate will be appointed by the Presidency and ratified by the Senate, while its Technical Committee will be chaired by the head of SENER.

Among its main attributions are:

• The granting of permits for electrical energy generation and commercialization activities, in accordance with planning criteria defined by SENER.
• The issuance of binding technical regulations applicable to the industry, including operating conditions and compliance standards.
• The oversight of regulatory compliance by market participants, with powers of verification and sanction.
• The definition of the terms under which the private sector may participate in regulated activities, ensuring the prevalence of the State in accordance with the new legal framework.

Suspension of proceedings and immediate consequences

With the entry into force of the CNE Act, all administrative procedures and procedures initiated before the CRE were suspended for a period of 90 calendar days. This measure has immediate implications for project developers and regulated agents, by directly impacting:

• The processing and resolution of requests for permits for the generation, commercialization or modification of facilities.
• The validity and calculation of periods previously established in applicable regulations or in resolutions issued by the CRE.
• The certainty about the technical and administrative criteria under which ongoing procedures or new requests will be evaluated.

During this transitional period, companies must anticipate delays, possible modifications to the applicable requirements and regulatory adjustments resulting from the institutional redesign, while the full operation of the CNE is formalized and the corresponding secondary regulation is issued.

Immediate Legal Considerations

Faced with the creation of the CNE as a new regulator and the suspension of procedures during the transition period, there are legal actions compatible with the authorized framework that can be considered by companies with permits in progress or about to start:

Legal protection against regulatory effects

Companies must identify if the suspension of procedures or the change in regulatory criteria affects acquired rights, previous investments or contractual commitments. In that case, it will be necessary to evaluate legal defense mechanisms that guarantee legal security during the institutional transition process.

Review of legal and contractual structures

If obtaining permits before the CRE is part of contractual obligations or investment plans, the legal exposure resulting from the delay or modification of regulatory conditions must be reviewed, anticipating scenarios of renegotiation or restructuring of contracts.

Regulatory Monitoring and Technical Preparedness

During the issuance of the secondary regulation by the CNE, it will be essential to implement a regulatory monitoring and analysis system that allows projects to be adapted to the new rules, minimizing risks of rejection or inappropriateness.

Conclusion

The creation of the CNE as the new regulator of the electricity sector, together with the temporary suspension of procedures and the redefinition of regulatory powers, implies a profound change in the relationship between the State and private actors. Companies with active or planned projects should reevaluate their legal and regulatory strategies, reinforce their regulatory monitoring mechanisms and anticipate scenarios of uncertainty during the transition period. Proactive adaptation will be key to ensuring the continuity of projects and the legal viability of operations under the new institutional environment.

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