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Mexico Court Limits State Utility From Benefiting Off Renewables

Justin Villamil

(Bloomberg) -- Mexico’s clean energy producers scored a major victory as a judge granted a full suspension of a rule change that critics said would have damaged incentives for renewable projects.

A court in Mexico City approved a request for the suspension from France’s Elecricite de France, according to people familiar with the case who asked not to be identified as the information isn’t public. Clean energy companies including AES Corp and Enel SpA filed for injunctions in courts across Mexico after an Energy Ministry decision to grant old, government-run plants credits that were designed to spur new development.

While a federal court agreed to suspend the rule change for Zuma Energia subsidiary Santa Maria 1 in late November, the latest ruling applies to companies across Mexico and represents a full-scale halt to the proposed changes. Critics of the new rules had worried that giving older projects the credits -- certificates known as CELs -- would have diluted their value.

Hector Lopez Villareal, thermoelectric generation coordinator at state-run utility CFE, said at a press conference before the legal victory was reported that CFE, which also generates some power with clean energy, should have access to the benefit. CFE, and the court, didn’t immediately respond to a request for comment after normal business hours.

The ruling is a blow for President Andres Manuel Lopez Obrador, whose administration is attempting to support the state utility company.

The Energy Ministry could still take its case to a Mexican court of appeals, though the process would likely drag on for months while the suspension of the changes remains in place. The ministry did not respond for requests for comment.

--With assistance from Amy Stillman.

To contact the reporter on this story: Justin Villamil in Mexico City at jvillamil18@bloomberg.net

To contact the editors responsible for this story: Carolina Wilson at cwilson166@bloomberg.net, Dale Quinn, Christopher Anstey

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