Cheaper electric power in Mexico is “around the corner”

Category: Central News
Published: 2015-01-15

According to Enrique Ochoa Reza, General Director of the Federal Electricity Commission (CFE),the changes promoted in the energy reform will turn CFE into a world class and competitive company that will offer competitive electric costs in the next few years.

Currently the electric power cost is high for the domestic,business and industrial sectors. A2012 study shows people and firms in Mexico pay more than in the electric power bills. The study shows the higher cost in Mexico versus the U.S. In summary, the industrial sector pays 85% more;in the retail sector the cost is 135% higher and in the residential sector there is 150% difference.

At least 80% of the cost of energy comes from the cost of the fuel used to produce it. If we use expensive fuels, the energy will be expensive. As a result, the electric power tariffs are high in Mexico. Paradoxically, CFE was limited by PEMEX is its use of natural gas, but now, with there form CFE can buy or produce natural gas in the open market.

In Mexico, 21% of the production capability burns oil to generate electric power. Oil is four times more expensive than natural gas and produces 68% more pollution. Therefore, we want to substitute oil for natural gas to produce electricity.

CFE’s forecast to lower the cost of electricity in Mexico is two years from the energy reform approval because it needs to have the new pipelines built, implement the power plants changes and construct the new electric power plants.

To summarize, the first step to have a more efficient and competitive electric power system, CFE needs more gas pipelines. The second step is to turn the oil plants into natural gas electric power plants. The third and final step is to build three new electrical plants using a combined cycle with natural gas as the primary fuel and the latest technology to generate electricity. These new power plants will produce electricity at a lower cost and CFE will gradually replace oil as the main fuel.