On August 31, 2026, Congress approved, in its final consensus version, the Energy Justice Law, which amends the General Electricity Industry Law (Decree 404-2013), institutionally transforms the National Electric Energy Company (ENEE), and repeals the Special Law to Guarantee the Electricity Service as a Public Good of National Security and a Human Right of an Economic and Social Nature (Decree 46-2022). This is the most significant structural reform of the Honduran electricity subsector since 2013. Below is a summary of the points we consider most relevant for our clients in the sector.
- Institutional reorganization of the subsector
- ENEE spin-off: ENEE is transformed into a parent company (ENEE Matriz) with three wholly state-owned single-shareholder subsidiaries: Generation, Transmission, and Distribution. Assets will be allocated without a transfer of ownership and will be declared non-transferable and inalienable; any change to their public nature requires a two-thirds vote of Congress. There is no direct privatization, but there is a meaningful functional opening.
- Electric Energy Regulatory Commission (CREE): its functional, budgetary, and financial independence is strengthened. Its three commissioners will serve six-year terms (renewable once), with narrowly defined grounds for removal and due-process safeguards. It is funded through a 0.25% + 0.25% levy on market agents’ electricity sales and purchases.
- System and Market Operator (OSM): a private, non-profit entity that replaces the current Asociación ODS, with automatic legal succession of its assets, contracts, and personnel. Its Board of Directors (10 members) is composed on an equal basis of transmission companies, generators, commercialization companies, distributors, and qualified consumers.
- Opening of the commercialization segment: Article 29 of the LGIE, which reserved commercialization activity for ENEE, is repealed under Article 19, paragraph c), of the decree, opening the segment to private commercialization companies. Likewise, under Article 11, paragraph b), of the reformed LGIE, these companies may not be corporately affiliated with the distributor serving the client they supply.
- Tariff regime, subsidies, and charges
- Mandatory tenders: distributors must cover their demand through long-term international public tenders supervised by the CREE, except for justified exceptions.
- Subsidies with mandatory fiscal funding: every electricity subsidy will require an Executive Branch decree with a SEFIN opinion and an express budgetary funding source; it may not be passed on to other users or affect distributors’ revenues — correcting the historical practice of unfunded subsidies.
- New regulatory charges: the Social Fund for Electricity Development (FOSODE), funded with 1% of sales to end users, is added to the CREE and OSM charges, all of which are passable through to tariffs.
- Interim capacity price: while the CREE approves the definitive methodology, it is set at USD 8.78/kW-month for all technologies.
- Incentive for residential solar energy: exemption from sales tax (ISV) and tariffs for panels, inverters, and batteries intended for family housing.
- Regulatory sandbox: will allow temporary regulatory exemptions for pilot projects, but the sponsor assumes the entire risk, with no right to state compensation for losses.
- Impact on existing contracts (PPAs)
Power and capacity purchase contracts entered into with ENEE before the Law takes effect will continue until their natural expiration, and their conditions will be respected for dispatch purposes. However, the Law expressly provides that these contracts will not be renewed, meaning that currently contracted plants must migrate to the competitive tender scheme or the spot market. Additionally, ENEE and the generator may amend an existing contract “by mutual agreement” if the new regulatory framework affects its effectiveness, subject to the CREE’s non-objection, a point that warrants special care to document that any renegotiation is genuinely voluntary.
The foregoing is based on the text of the Energy Justice Law in its final consensus version approved by Congress on August 31, 2026. However, the reform will not enter into force and take full legal effect until it is published in the Official Gazette (La Gaceta), at which point the text could incorporate formal adjustments or legislative refinements. We therefore recommend that our clients wait for that official publication before making final decisions, at which point we will be in a position to provide an analysis and comparison against Decree 404-2013 and Decree 46-2022. We will continue monitoring the process and will share an update as soon as the reform is published.