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Mexico vows to press ahead to favor state-owned utility

FILE - In this Feb. 22, 2020 file photo, a newly built power generation plant that is part of a mega-energy project including a natural gas pipeline traversing three states is seen with the Popocatepetl Volcano in the background near Huexca, Morelos state, Mexico. Mexico vowed on Feb. 4, 2021, to continue with attempts to limit private power generation after the Supreme Court ruled against President Andrs Manuel Lpez Obradors attempt to block permits for renewable power plants and give priority to older, more polluting, state-owned power plants. (AP Photo/Eduardo Verdugo, File)
FILE - In this Feb. 22, 2020 file photo, a newly built power generation plant that is part of a mega-energy project including a natural gas pipeline traversing three states is seen with the Popocatepetl Volcano in the background near Huexca, Morelos state, Mexico. Mexico vowed on Feb. 4, 2021, to continue with attempts to limit private power generation after the Supreme Court ruled against President Andrs Manuel Lpez Obradors attempt to block permits for renewable power plants and give priority to older, more polluting, state-owned power plants. (AP Photo/Eduardo Verdugo, File) (Copyright 2019 The Associated Press. All rights reserved)

MEXICO CITY – Mexico vowed Thursday to continue with attempts to limit private power generation after the Supreme Court ruled against President Andrés Manuel López Obrador’s attempt to block permits for renewable power plants.

Interior Secretary Olga Sánchez Cordero said the court ruling applied only to a 2020 executive order, and said the administration would wage a new court battle over another bill the president sent to Congress this month.

The new bill would give priority in electricity purchases to older, more polluting, state-owned power plants. It is the latest chapter in a battle over private and renewable energy plants that were encouraged by López Obrador’s predecessors.

“This ruling involved the constitutionality of an (executive) order, and that is very different from a law,” Sánchez Cordero said. “So I think we have enough ammunition in common and constitutional law to go ahead, because I insist, we are not rejecting private investment in the energy field.”

With electricity use down during the pandemic, Mexico’s state-owned power company, the Federal Electricity Commission, faces declining revenue and increasing stocks of fuel oil it has to burn in power plants; the dirty fuel has lost customers worldwide. It has also come under pressure to buy coal from domestic mines.

López Obrador sought in an executive order in 2020 to shore up the government company by limiting permits to bring online other plants, including some wind and solar facilities that are already built, in some cases with foreign investment. The president claims that green-energy incentives give those plants an unfair advantage over the state utility.

But on Wednesday, the Supreme Court ruled that many of the provisions of the executive order would unfairly affect competition in the sector. Some of the rules had been put on hold previously. The case was brought by the government's own anti-monopoly commission.

The first bill López Obrador sent to Congress this year would mandate that the first power to be used on national grids would have to be from government plants, many of which burn coal or fuel oil. Privately run natural gas and renewable energy would be the last in line.