Two subsidiaries of US companies, InterGen and Sempra, have both constructed natural gas fired electricity generation plants near Mexicali, Mexico, just across the border from El Centro. They intend to sell the power in the California market. Both companies say they got the idea following the 2000/01 California energy crisis. The two plants are the first of some twenty similar plants planned for the Mexican side of the border, with customers on the US side.

But the plants, and other privatized energy concessions, are facing opposition on both sides of the frontier. US critics charge that the plants were built three miles across the border to thwart US environmental laws, but the companies deny this. Sempra says that a more important factor in their decision was the speed of the permitting process. The Mexican government issued the necessary permits in about six months, while they say the process would take about two years in California. InterGen admits that its plants were designed to meet Mexico's environmental standards, but says that's because it was originally intending to sell the electricity only in Mexico, until the California crisis inspired the idea of selling some of the plant's energy in the US.

Sempra claims that their new plant would be one of the cleanest in North America. Sempra executive Octavio Simoes has been quoted as saying that their plant "would pass any environmental test," if the company were to pick it up and "lock, stock, and barrel, move it to California."

As it turns out, the company may have to do just that. Since being nationalized in the 1960s when the then private owners demanded huge rate hikes, electricity, along with petroleum have been symbols of Mexico's independence from the US. The powerful senator Manuel Bartlett from the Mexican political party PRI has decried private concessions of energy that represent "an extension of the United States energy system on our national territory," and the threat it represents to Mexico's national security.

The perception of this threat draws heavily on the California energy crises when purveyors of privatized power engaged in all manner of trickery to create artificial power shortages, allowing them to raise the price astronomically, while the customers, without any alternatives, had no choice but to pay. California's legislature, which led the way toward energy privatization in 1996, has begun to rethink the situation. The state senate's committee on energy proposed on April 10, 2003 to end the privatization of energy and return control to the state.

On June 24, Bartlett, and his counterpart in the Chamber of Deputies (i.e. House of Representatives), Salvador Rocha, delivered a complaint to the federal "Auditor Superior" who is responsible for assessing the legality of private energy concessions. Both men chair committees that oversee constitutional matters and their complaint lists 225 private energy concessions granted during the terms of presidents Zedillo and Fox that they call "flagrant violations of the law." The complaint asks for an investigation of these projects and for administrative remedies and possible criminal penalties to be levied against the officials and companies involved in what Bartlett calls, "the illegal process of clandestine privatization carried out by President Vicente Fox."

Speaking to the international investors in these projects that he says violate Mexico's constitution, Bartlett says they should realize that "sooner or later, your permits are going to be annulled, and therefore you shouldn't keep on investing," in these kinds of projects.

On the US side of the border, Federal Judge Irma Gonzales in Southern California ruled in early May that the Bush administration, through the Dept. of Energy and the Bureau of Land Management violated the National Environmental Policy Act when it granted permits related to Sempra and InterGen's cross border projects. The Judge ruled that the agencies failed to properly complete required Environmental Assessments before granting permits for construction of the transmission lines to bring the power into the US. While US courts have no jurisdiction over the plants themselves, the Judge determined that, as the transmission lines had no use apart from the plants, the plants' environmental impact should be included in any environmental assessment concerning the power lines.

She declined, however, in a ruling on June 4, to halt electricity imports from the two plants while the litigation continued. She wrote that she wasn't convinced "that the continued operation of the transmission lines over the next two to three weeks will irreparably harm the environment."

Environmentalists charge that not only will the plants contribute to air pollution in the border region, which is already unable to meet legally mandated targets for air quality, but that the plants' discharge of highly saline cooling water into the New River will adversely impact the already damaged Salton Sea, an important home to numerous species of birds and other wildlife. The Judge agreed that under these circumstances, the US government's "Finding of No Significant Impact" (FONSI) was "arbitrary and capricious."

The judge's refusal to immediately halt importation of the electricity was seen as a victory for Sempra and InterGen, a joint venture between Bechtel and Royal Dutch/Shell. The Mexican government has issued permits for two other plants for the border region that will sell some or all of their power in the US. Some of these project like the Sempra plant will import all of their natural gas and export all of their energy to the US.

Opponents of these and other privatization schemes range from left to right on the political spectrum. Some, like Bartlett and the electrical workers' union, are politically powerful forces that won't be easily overcome.

Mexico's Constitution mandates that all natural resources, including electricity generation and transmission, are public property. The constitution was revised in 1992 in anticipation of NAFTA, the North American Free Trade Agreement, to allow for private companies to produce electricity for their own use, to sell to the government, for export or to use "co-generation," to produce electricity as part of some other industrial process in which the potential energy would otherwise be wasted.

Bartlett and Rocha, each chairman of committees dealing with constitutional matters have determined that many of the 225 projects listed in their complaint received their permits under false pretenses. In some cases, they say, private companies have said they would be producing energy for their own use when their actual intention was to sell it, or have claimed to be "co-generators," when in fact co-generation was a minor or nonexistent part of their operations. Among the US firms that Bartlett's investigation has implicated in these false operations is the recently defunct Enron and at least one subsidiary of InterGen.

Bartlett says the foreign investors should remember that "collusion in false pretenses in order to conduct sham operations is a serious crime," He said that "private investors should be careful that they don't participate in illegal acts."

Sources: La Jornada 6/24/04 & 6/25/03; Judge Gonzales' decision on the cross border plants at www.earthjustice.org/news/documents/5-03/borderdecision.pdf; David Bacon, "Showdown Coming In Mexico Over Privatization;" www.union-tribune.com, 6/5/03, "Baja plants send energy across border to California," "Environmentalists Win Lawsuit Over Power Lines from Mexico to US," www.earthjustice.org; Elliot Spagat, AP 6/14/03, "Plant in Mexico faces fight in U.S."