Upon taking office, Mexican President Andrés Manuel López Obrador instituted the remarkable republican practice of appearing every morning before the public, news reporters and the media. He does this Monday through Friday, starting at 7:00 a.m., to respond to questions about the progress of his administration, announce projects, hear criticism of government policies and communicate his opinion on the issues present in national politics. The meetings always last more than an hour and begin with a military greeting from a female soldier who exclaims: "Good morning, Mr. President!" Then the president makes his entrance to announce the theme or topic of the day. The president stands during the press conference and is accompanied by officials from his government, who occasionally provide further details and information as to the subject being discussed. It is interesting that prior to holding the morning press conference, the president convenes a meeting in the National Palace, where he now resides, with members of his security cabinet, to discuss the difficult security issues facing the country. Although his opponents consider it unnecessary for the president to spend more than an hour a day, or more, speaking to the gathered press and the media, there is evidence that shows otherwise. This is the case with public opinion, which has generally welcomed the democratic nature of this practice. On the political side, President López Obrador has used his morning press conferences to promote his and his government’s position on numerous policy issues. In many ways, the country's political thermometer now rises and falls on the president's statements and clarifications. By holding daily press conferences, President López Obrador has seemingly created a new way to govern. Sometimes, his positions raise the political temperature of the country, but at times they also serve to cool tempers and reconcile political fractures, whether within his own MORENA party or with opposition political parties.
The United States’ ambassador to Mexico has always played an important role in the bilateral relationship. The recent arrival of the new ambassador, replacing Ambassador Roberta Jacobson, who was thought to have played a positive role during her tenure, was well received. Such appointment formalizes the United States’ official diplomatic representation in Mexico. The new ambassador, Christopher Landau, is a prominent lawyer who is fluent in Spanish and has notable academic, professional and personal credentials. These characteristic are meaningful, because they serve as an indication of the importance of the bilateral relationship. In this case, the new envoy’s attributes are outstanding: Landau is a graduate of Harvard University, where he received a bachelor’s degree in Latin American Studies, as well as Harvard Law School, where he received a law degree with honors. He stood out as a lawyer, both in private practice as a partner at the international law firm Kirkland & Ellis, and working in the U.S. federal judiciary as a law clerk under Judge Clarence Thomas in the D.C. Federal Circuit Court of Appeals. Judge Thomas would later become Justice Thomas, a current member of the United States Supreme Court. Upon his appointment by President Donald Trump, Ambassador Landau identified border security, the fight against drugs and promoting trade as prominent challenges and priorities. He also stated that he would protect the sovereignty of the United States and guarantee enforcement of laws at the U.S.-Mexico border. Finally, he stated that he would promote cooperation with the Mexican people and with Mexican authorities. His initial presentations made a favorable impression, and as was the case with some ambassadors who preceded him, he is not only well-educated and prepared, but also charismatic and personable.
At the end of January of this year, Mexico’s National Energy Control Center (“CENACE” for its acronym in Spanish) decided to cancel the fourth long-term auction that would have allowed CFE Basic Services Suppliers and other interested suppliers to acquire electricity, capacity and clean energy certificates ("CEL," for its acronym in Spanish) at the wholesale level. This decision hit the national energy sector, particularly those companies that develop power plants, like a bucket of cold water.The decision was directed by the Secretary of Energy and motivated by the current prevailing ideological rejection by the new Mexican federal administration of the generation of electricity by private companies, particularly foreign companies. It did not matter that the Electric Industry Law explicitly provides that auctions organized by CENACE are the only means by which basic suppliers may enter into electricity hedge contracts. Nor did it seem to matter that lower prices were obtained in each of the three prior auctions, owing primarily to fierce competition. This was particularly true in the third auction, in which an average unit price of $20.57 dollars was achieved for the package of electricity and CEL, with a minimum of $17.70 dollars, which broke the prior world record low price. The government also ignored the fact that the more than 60 power plants with assigned contracts will create up to 200,000 direct and indirect jobs and approximately $60 billion dollars in investments over the next 15 years.In the midst of this landscape, and after a few perplexing months of uncertainty, the electricity industry has reacted with creativity and optimism. The fact that the Mexican government has sought not to organize the electricity auctions, which it is obligated to hold, has not prevented other players from organizing similar competitive processes. Demand will continue to grow as the economy grows, and generation companies are still eager to meet such demand, despite all that has taken place recently.For example, consultants from Bravos Energía, who are the talented former public servants who designed the wholesale electricity market during the prior administration, have put on the table a long-term electricity "contest" so that various load serving entities can acquire electricity, capacity and CEL by means of contracts for 5, 10 or 15 years. Their proposal features the participation of a clearinghouse, as well as interesting ideas to address the risks of congestion and deviations in renewable generation. The contest was announced in June, at an event where more than 200 people attended. Organizers and stakeholders agree that one of the challenges will be to convince a significant number of qualified end users to take advantage of the supply that results from this contest.In recent years, energy trading giant Vitol has shown interest in becoming a major player in the Mexican electricity market through its active participation in organizations such as the Energy Traders Association (“ACE,” by its Spanish acronym) and by recruiting high-level local talent. Earlier this month, Vitol held an event to present its long-term “private procurement process,” with the support of the EY consulting firm. Expectations are that the confidence inspired by this large company’s actions will encourage developers to try to sell their products by means of this new mechanism, and that Vitol, as a non-supply marketer, will consolidate itself as a major supply aggregator that brings liquidity to the market and uses contracts with independent qualified suppliers to serve end users.Additionally, despite enormous challenges in achieving agreements negotiated directly and freely between generators and suppliers, there have already been several instances of successful negotiations. Undoubtedly, the struggle is to balance the generators’ and the suppliers’ needs for long-term contracts, with the end users’ preference not to commit for a long time period, as well as mitigating credit risks of all parties involved. Finally, several companies are exploring the opportunities of isolated supply and its sister figure, local generation, to develop projects that can, based on their scale, continue to meet their desired returns, without having to go through the market. These “behind-the-fence” or "behind-the-meter" solutions result in what could be compared to a marriage between the generator and the end user, with the advantages and disadvantages that such a relationship involves.One hopes that the government will soon reconsider and understand that no corruption has occurred in prior electricity auctions and that if some projects resulting from such procedures have not been able to materialize, the rules can be perfected so that only the most serious and advanced projects win. CFE cannot afford to discard an instrument that allows it to achieve cheap and clean energy, which is exactly what the people of Mexico desire. Meanwhile, as you can see from the discussion above, life goes on after the auctions, especially for those parties who in good faith desire to invest in Mexico’s growing electricity sector.
On July 2nd, 2019 Mexico’s Federal Labor Law (the “FLL”) and Social Security Law (the “SSL”) were amended to include provisions designed to protect domestic employees working in Mexico. The most relevant aspects of the amendments are summarized below:
Guidelines to enroll domestic employees with the Mexican Social Security Institute are expected to be released soon. In the meantime, if domestic employees are not enrolled in such agency, employers will remain liable for medical expenses, paid leave and other services provided by the Social Security Institute.
The Ninth Collegiate Tribunal of the First Circuit for Labor Matters recently published opinion number I.9o.T.67 L (10th), entitled: “Overtime. Time which an employee, on his/her own initiative, spends preparing to perform work, commuting to the workplace, or performing any other activity in order to be able to render services, shall not be considered overtime, unless such has been agreed to by the employer.” In its opinion, the Court concluded that the time spent by an employee "in preparing to perform work, commuting to the workplace, or performing any other activity in order to be able to render services," without the employee being subject to the employer’s control, may not be considered overtime under Mexican labor law, and that to insist otherwise would mean that an employee could decide on his/her own to accumulate overtime without being subject to the employer's control, when in fact overtime is the extension of normal working hours in which the employee continues to be subject to the employer’s control. Accordingly, all employers should verify the employment conditions they have agreed to with their employees to determine on a case by case basis whether overtime applies.