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    CFE's generation cost rises 23%.


    November 16, 2021 - CE Noticias Financieras

     

      So far in the current administration, the generation costs of the Federal Electricity Commission (CFE) have increased 23 percent.

      In January 2019, the average cost in CFE plants per megawatt-hour was 1,508 pesos, while for last September it was 1,852 pesos, reveals an analysis of the calculation memories of the Energy Regulatory Commission (CRE).

      If generation costs are reviewed by technology, combined cycle plants, which are plants that use natural gas to operate, have recorded an increase of 28 percent.

      In the case of thermal power plants, among which are the carboelectric, thermoelectric, internal combustion and turbo gas, the average cost of generation increased 32 percent from January 2019 to September 2021.

      Even the hydroelectric plants that the current Administration intends to privilege in the order of dispatch to increase the generation of clean energy, have registered an increase of 35 percent, despite the fact that the cost of fuel is zero.

      The CRE was consulted about the methodology for determining this increase in cost, but did not respond to a request for information.

      Casiopea Ramirez, managing partner at Fresh Energy Consulting, explained that fuel prices have played an important role in the CFE's price evolution.

      "Fuel prices have been rising, particularly this year we have had record prices for the price of gas, which was normally at $3 per million BTU, and now we see it at $5 or $6, without considering what happened in February.

      "The increase in fossil fuels worldwide is derived from the economic recovery, so you need more fuels, more electricity and you don't have enough production," Ramirez explained.

      Montserrat Ramiro, former commissioner of the CRE, agreed that impacts the rise in fuel prices, but also considered that it is because the CFE has turned on less efficient plants.

      This situation will ultimately be paid by consumers, whatever path CFE chooses, said Ramiro.

      He explained that when it costs more to generate electricity there are two options to pay for it: through subsidies or charging it to consumers.

      With the proposed constitutional reform, the Executive intends that the CFE plants are privileged in the dispatch of energy, but this, according to Ramirez, would generate higher production costs for companies.

      With the presidential promise that the bills of Mexicans will not go up, then the increased cost of generation will be charged to trade, services and industry, who ultimately will have to pass on the costs in products and services, he said.

      EXPENSIVE SPARK

      Generating electricity has become more expensive so far this six-year term and the increase depends on the type of technology used.

      (Average cost per megawatt-hr, in pesos)

      JAN.2019 SEP. 2021%

      Average CFE plants $1,508 $1,852 23% Average CFE plants $1,508 $1,852 23% Combined cycles

      Combined Cycle $1,592 $2,029 28% Thermal* $1,675 $2,205 32% Thermal* $1,675 $2,205 32% Thermal

      Thermal* $1,675 $2,205 32% Hydroelectric* $1,675 $2,205 32% Hydroelectric* $1,675 $2,205 32% Hydroelectric

      Hydroelectric plants $899 $1,211 35% Hydroelectric plants $899 $1,211 35% Hydroelectric plants $899 $1,211 35% Hydroelectric plants

      *Carboelectric, thermoelectric, internal combustion and turbogenerators

      Source: CRE calculation reports

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