Electricity prices drop in Mexico

One of the promises of Mexico's energy reform, the pledge to bring down electricity prices for consumers, appears closer to being achieved, with a 2 percent reduction applied.

Electricity prices in Mexico are around 30 percent higher than in the US, according to the employers' federation Coparmex.

The finance ministry announced a 2 percent cut in prices for domestic consumers on January 1 in anticipation of lower generation costs as a result of an extension of the natural gas pipeline network, according to Business News Americas.

"The energy reform will gradually increase the supply of natural gas for electricity generation, with the construction of new pipelines, which will allow for a consistent reduction in electricity tariffs," the Shcp said in a press release.

"As a result, electricity prices for domestic consumers were lowered by 2 percent on January 1, in comparison with the annual 4 percent increases seen in previous years and 0.33 percent monthly increases."

Electricity prices have long been a source of complaint among consumers — residential, commercial and industrial alike — while state utility CFE has endured a long battle over unpaid bills that swell its debt burden.

In December, the country's agency for information transparency called on CFE to reveal its 100 largest debtors and the amount they owe.

Mexico aims to double its electricity generation capacity over the next 15 years and achieve 100 percent supply, which is expected to create 2.5 million jobs by 2025.

CFE in August announced 16 infrastructure projects valued at nearly $5 billion that include natural gas pipelines, three co-generation plants, the refitting of a thermoelectric plant, three transmission lines and five contracts aimed at upgrading the country's electricity distribution grid.

"Natural gas is the lynchpin of the energy reform," David Goldwyn, a former US state department special envoy for international energy affairs, said in a report by the Atlantic Council in August.

Mexico also plans to boost its renewable energy use, setting goals of 25 percent of power being generated from renewable sources by 2018; 30 percent by 2021; 35 percent by 2024; 45 percent by 2036; and 60 percent by 2050.

Mexico will hold its geothermal 'round zero' this month to determine which projects will be developed by CFE and which will be put out to tender to the private sector.

Mexico's state oil firm Pemex will also play a major role in power generation. The firm's CEO Emilio Lozoya Austin said in November it would become the country's second largest electricity generator once oil-fired plants are converted to natural gas and produce surplus power to be fed to the national grid.

"We will go from being the country's largest electricity consumer to the second largest generator over the next three or four years, with a 10-30 percent participation," he said, via a $1.4 billion investment in cogeneration plants.

Also key to lowering prices will be more efficient management of electricity generation, Eduardo Meraz Ateca, director of the national energy control center (Cenace), said in December. But prices still have a long way to fall to keep customers satisfied.

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