CFE Updates Its Electricity Rates for 2023
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CFE Updates Its Electricity Rates for 2023

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Perla Velasco By Perla Velasco | Journalist and Industry Analyst - Fri, 02/03/2023 - 11:39

CFE said it will implement its annual price adjustments for basic and intermediate consumption in Mexico City and the State of Mexico. In January 2023, electricity tariffs for CFE’s basic supply saw an average increase of 0.61 percent compared to December 2022. Throughout 2023, rates will rise by 7.1%. This increase is part of the annual adjustment to service prices in line with inflation rates.

The cost of electricity bills for businesses on the Low Voltage Small Demand Tariff (PDBT), whose maximum consumption is 25kW/m, will vary based on the location of the business. Among Mexico City’s suburbs that will see a 15.1% increase in their fixed charge and 5.1% in their varying charge in rates are Alvaro Obregon, Azcapotzalco, Benito Juarez, Cuajimalpa, Cuauhtemoc, Gustavo A. Madero, Iztacalco, Iztapalapa, Miguel Hidalgo and Venustiano Carranza.

President López Obrador has pledged to keep energy prices, including electricity, LP gas, and gasoline, below the inflation rate. The administration has maintained low prices through subsidies, which have risen 62% since 2019. Subsidies for energy tariffs reached MX$48.9 billion (US$2.5 billion) from January to September 2019, MX$71.5 billion (US$3.6 billion) in 2020, and MX$75.8 billion (US$3.9 billion) in 2021. CFE has announced that the High Consumption Tariff, one without subsidies, will have a fixed charge of MX$131.14/kWh (US$6.76/kWh) and an energy consumption charge of MX$6.74/kWh (US$347.59/kWh) starting in 2023, with annual increase in the cost of 4% and 7.4%, respectively.

Experts warned that to keep costs down for power production, CFE has partially relied on PEMEX’s fuel oil to generate cheaper but more polluting energy. According to Climate Transparency, fossil fuel subsidies make renewable power less competitive, and Mexico is fourth among G20 countries where such subsidies are granted.

These subsidies also hamper the competitiveness of renewable energy and discourage investment in the technology needed to achieve net zero emissions. The report also criticized Mexico’s actions toward strengthening its fossil fuel industry instead of boosting the clean energy transition. “The administration has not yet developed an adequate energy transition policy. The Program for the Development of the National Electric System (PRODESEN) does not include the dismantling of fossil fuels in the short term and programs that diversify the economy are almost non-existent,” reported Climate Transparency.

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