Mexico City — The multi-million-dollar fine with which Mexico has sanctioned Spanish company Iberdrola over its illegal sale of energy will not be resolved until 2024 and 2025, sources with knowledge of the matter who requested anonymity told Bloomberg Línea.
On May 27, 2022, the country’s Energy Regulatory Commission (CRE) fined the Spanish electricity company 9.14 billion pesos (around $513 million) for allegedly generating and delivering electricity to its consumer partners in exchange for a benefit, an operation that constitutes a sale and is prohibited under Mexico’s public electricity service law.
One of the sources told Bloomberg Línea that the ruling will be presented during the first half of 2024, while another said the ruling may drag on for another two years, although the judicial authority may issue its final decision during a hearing likely to occur in mid-November 2023, after Iberdrola obtained a definitive suspension from a federal court to prevent Mexico from collecting the monetary penalty, a decision that sets a precedent in favor of Iberdrola, according to the source.
The CRE or Iberdrola may disagree with the decision and appeal to a second instance in the Mexican courts.
If the disagreement persists, the dispute may be taken to the Supreme Court, which would finally resolve the future of the fine.
The judiciary has faced public scrutiny for the injunctions it has granted to private companies against the Mexican government headed by President Andrés Manuel López Obrador regarding energy matters, but which have also favored the current administration after an action of unconstitutionality on a reform to the electricity law was dismissed in April 2022.
One of the people with knowledge of the fine said that all members of the CRE’s governing body agree that the sanction proceedings should continue, despite the differences observed among commissioners regarding the issuance of energy permits.
Bloomberg Línea did not receive a response on the matter from either the CRE or Iberdrola.
Fine will not interfere with power station sale
One of the sources also commented that the process and resolution of the fine against Iberdrola will not interfere with the sale of 12 power plants worth $6 billion to the Mexican government in a mixed public-private financing and investment scheme.
Iberdrola’s chairman, Ignacio Sánchez Galán, said that most of the regulatory problems with the Mexican government are associated with the assets that it will sell to the private fund Mexico Infrastructure Partners and which will be partially financed by the Mexican government’s National Infrastructure Fund.
“We can say that we are almost free of any problems with the Mexican government,” the executive said during a call with analysts on April 5 this year.
A source previously told Bloomberg Línea that the deal would close this year. Otherwise, Mexico will have to pay annual interest of 3.6% to Iberdrola until the sale is concluded.