Electricity sector

Electricity policy
The government's electricity policy is based on four main strategies:

Structural reform of the sector, in order to promote competitiveness and the diversification of primary energy sources; Modernization of public utilities to improve efficiency in operation, a results-oriented administration that guarantees profitability over the long-term and new technologies; Environmental Protection through a fuel policy that ensures a long term sustainable energy supply, compatible with Mexican environmental protection regulations, and Conservation through the implementation of programmes that promote the rational and efficient use of energy.

Specific actions that have been implemented to achieve this include: the production of less polluting fuels, like unleaded gasoline and sulphur free diesel; and the diversification of primary energy sources, as the country relies too heavily on hydrocarbons.

Diversification has been promoted especially in the electricity sector, with the inclusion of geothermal energy, nuclear energy, some solar energy in rural areas isolated from the electrical grid and recently with the addition of some wind energy.

Electricity Economy
National consumption of electricity in Mexico grew 4% in 2005 in relation to the previous year. This number shows an average of 4.5% of yearly growth since 1995 to this day.The number of end users of electricity grew during the same period by 3.5% according to the Federal Electricity Commission (CFE), which now serves 29 million of users. The domestic sale of electricity have also grown by 4.1%, mainly thanks to the impulse of the industrial sector.

 In 2005, the national installed capacity of electricity reached 53,858 MW, showing a light increase of 0.6% vis-á-vis the previous year. Of this capacity, the CFE manages 69.5%, independent producers 15.3%, and Light and Power of the Center 1.6%; while the final 13.6% is distributed among the current different electricity generation modalities.

Likewise, the brute generation capacity of the country grew 5% from its 2005 level, reaching 218,971 GWh. Combined cycled centrals contributed with 33.5% of this energy, while thermoelectrical and hydroelectrical sources contributed with 30.7% and 12.6% respectively. This means that natural gas increased its participation in the generation of electricity, since it passed from 16.6% in 1995 to 43.2% of the total public service generation in 2005.

 The tariffs for the distribution and sale of electricity are classified according to the level of energy consumption, voltage and category of end- users as follows: domestic, public services, agricultural, temporary, generals of various voltage and interruptible services.

 All of the electrical tariffs are subject to monthly adjustments, with the exception of the agricultural ones, which are adjusted annually. Residential tariffs as well as public services are adjusted through fixed factors. The rest are adjusted via an automatic adjustment formula that incorporates variations to fuel prices and inflation.

 Among the end-users, the commercial sector has the highest rates, which also have been increasing since 2002. The industrial and residential sectors have experienced the same trend, but since 2003 the average price has varied only slightly in the residential sector. The agricultural tariff is the lowest and the one that has presented the least variations.

Mexico’s foreign trade of electrical energy is carried out through nine interconnections or grid systems with the USA, and one with Belize.