Political and regulatory uncertainty: Mexico gas, power, and renewables long-term outlook H1 2019

Entering 2019, political and regulatory uncertainty remains a major question going forward. Major backbone pipeline expansions, originating in southern and western Texas, have faced double-digit months-long delays. At various times, AMLO’s administration has expressed renewed interest in domestic coal generation, revitalizing hydropower, a ban on domestic oil and gas fracking, a redefinition of Certificados de Energias Limpias (CEL) to include CFE’s legacy hydro and nuclear plants, all while cancelling the fourth long-term power generation auction (the primary mechanism for bundling CELs). This Mexico power long-term case represents a continuation of codified market reforms, but today's political reality poses a material risk to the forecast.