Electricity Rates Become Key Issue Ahead of Upcoming Congressional, Gubernatorial Elections

SourceMex Economic News & Analysis on Mexico, April 23, 2003 | Go to article overview

Electricity Rates Become Key Issue Ahead of Upcoming Congressional, Gubernatorial Elections


Electrical power rates have become a tool to influence the upcoming July 6 gubernatorial and congressional elections. The elections are expected to be extremely competitive, with public-opinion polls indicating the possibility of close elections between Fox's center-right Partido Accion Nacional (PAN) and the former governing Partido Revolucionario Institucional (PRI). The center-left Partido de la Revolucion Democratica (PRD) is also expected to make some gains.

A recent poll by the Mexico City daily newspaper Reforma showed 40% of the likely voters supporting the PAN, 36% the PRI, and 17% the PRD. The poll was conducted nationally on April 12-14.

An earlier public-opinion survey by the polling organization Mitofsky in March showed the PRI with an advantage over the PAN, but a higher percentage of respondents were undecided.

Senate approves bill to reduce power rates

In what is seen as political posturing ahead of the elections, the opposition parties in the Senate approved an initiative that would reduce electricity rates throughout Mexico. The measure, passed in early April, reverses three decrees enacted by President Vicente Fox in February 2002, which phased out some government subsidies for electricity (see SourceMex, 2002-02-06).

Senators from the PRI, PRD, and the Partido Verde Ecologista Mexicano (PVEM) approved a plan to substitute the decrees enacted by Fox with a scheme that would set rates for electrical power based on the climatic conditions in a particular region and the time of year.

PAN senators opposed the changes but abstained rather than vote against the measure. PAN Sen. Juan Jose Rodriguez Prats warned that the changes proposed by the PRI-PRD-PVEM initiative could be very costly to the two state-run electrical power utilities, the Comision Federal de Electricidad (CFE) and the Compania Luz y Fuerza del Centro (CLFC).

"This initiative had a clear electoral motive," said Rodriguez Prats, who chairs the Senate energy committee (Comision de Energeticos).

PRI Sen. Oscar Luebbert disputed Rodriguez's charges, saying that Fox was the one who had acted to influence the elections. For example, said Luebbert, the president unilaterally reduced electricity rates in Sonora and Baja California states in January. At that time, Fox said he was merely responding to the demands from Sonora state residents that the government cut excessively high power rates.

"The president was the first to make electrical rates a political issue by reducing rates in states where gubernatorial elections are occurring this year," said PRD Sen. Demetrio Sodi de la Tijera.

Luebbert said the Congress appealed to Fox to reduce electricity rates in the north and other regions in late 2002, but that request was ignored by the president.

Sonora, which is governed by the PRI, is one of a handful of states that will be holding a gubernatorial election in addition to congressional races.

The Senate measure to reduce rates has encountered mixed reactions among PRI members in the Chamber of Deputies, which has yet to pass similar legislation. Among the skeptics is Deputy David Penchyna Grub, who worried that the reduction could derail a deeper reform to the electricity sector.

The PRI and the PRD have managed to block the Fox administration's proposals to bring private investment into the electricity sector, including a proposal the president sent to Congress in late 2002 (see SourceMex, 2002-09-25). The administration has continued a policy implemented by his PRI predecessors to construct and manage some private power plants, but also huge projects like El Cajon in Nayarit state. The government recently awarded a contract to construct El Cajon to Mexican engineering company Grupo ICA.

The two opposition parties have deferred any vote on reforms to the electrical sector until at least the end of 2003 because of the upcoming elections (see SourceMex, 2003- 03-05). …

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Electricity Rates Become Key Issue Ahead of Upcoming Congressional, Gubernatorial Elections
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