Mexico’s CFE increases Power Tariffs by 4.3%

By Elliot Bullman

The Energy Regulatory Commission has issued new electricity rates, which will affect industrial and commercial power levels, while 90 percent of domestic users will not see changes in their rates.

Mexico's state power utility CFE will increase its retail tariffs for commercial and industrial users by 4.3% that for medium and large consumers, effective immediately.

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Oliver Flores, head of the Electricity Unit of the CRE, explained that the new electricity rates published by the CRE on November 30, reflect the costs of production, transportation and distribution of energy of the Federal Electricity Commission (CFE) However, they will have no effect for domestic users or the agricultural sector, which are subsidized at the discretion of the Ministry of Finance.

"Domestic and agricultural consumption service tariffs are not going to move, they remain at the same previous tariff level. In fact 90 percent of users will not see changes in their rate, the rest, industrial and commercial will," he explained.

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On Monday, the CRE published an agreement in which it ensured that the application of the new tariff would take place gradually between December of this year and March of 2018, with the aim of making it complete as of April.

According to Platts Analytics, natural gas pipeline constraints have increased CFE's reliance on fuel oil and LNG shipments to feed its power plants, increasing electricity prices. CFE has reported fuel expenses make up 80% of the tariff. Other charges in CFE's tariffs are transmission and distribution costs.

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According to the CRE, the new electricity tariff for basic supply is integrated by the charges associated with Transmission, Distribution, Operation and Related Services not included in the Wholesale Electricity Market (MEM), in addition to the cost of energy, power and Certificates of Clean Energies (CEL), among others.

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