Mexico: Why Some People Pay Up to 380% More Per Kilowatt of Electricity

BY: QROO PAUL 

When we first moved to Mexico, I was surprised that so many of our fellow expats were obsessed with how much electricity they used. Many of them even told us that they won’t turn on their air conditioners because electricity is so expensive.

I really didn’t understand what all the fuss was about because I didn’t think my electric bill was that high – at least at first. After a short time in our new condo, our bi-monthly electric bill increased dramatically from one billing cycle to the next. Naturally, I thought it was some kind of accounting error because our usage had not increased.

After a bit of investigation, I learned that the electric company, Comisión Federal de Electricidad (CFE), had reclassified us as a high consumption household based on our usage in the previous months. This classification is known as DAC (doméstica de alto consumo).

Once we reached that level, we were billed at a much higher rate per kilowatt-hour. When I say higher – I mean a lot higher.

Prior to the change, our first 250 kilowatt-hours (kWh) of electricity were billed at $0.711 pesos per kWh. After the change, we were charged $3.436 per kWh. That’s an increase of over 380% — ouch!

To make matters worse, they also tack on an additional charge of $183.54 pesos ($9.17 USD) to every bill if you are rated as a high consumption household.

Subsidies

The government provides a subsidy to help cover the cost of electricity, but you can only get it if you keep your usage within the limits set by CFE.  We were getting those subsidies when we first arrived and that saved us quite a bit of money.

The subsidy is based on a tier system and it affects the rate that you pay per kilowatt-hour.

Take a look at the picture below. This was taken from a bill that we received when we were still receiving the government subsidy.

The first 250 kWh (básico) was billed at $.0711 pesos per kWh. The next 200 kWh (intermedio) was billed at a slightly higher rate of $.0839 pesos per kWh. Anything above that level (excedente) was billed at a much higher rate of $2.859 pesos per kWh.

This is only an example. The individual rates will vary by assigned billing zone and time of year. Once you know your billing designation (next section), you’ll be able to find the exact rates on the CFE website.

Usage Limits

CFE determines your usage limits and rates based on the minimum average temperature for your area in the summer. The higher the average minimum temperature, the more electricity you can use before being losing your subsidy.

The following chart shows the minimum average summer temperature thresholds for each classification:

The chart below shows the kilowatt limits per classification. If the average bimonthly electricity usage exceeds the amount shown for the past 12 month period, you’ll lose your government subsidy and fall under DAC billing.

You can determine your billing category by looking at the section marked “tarifa” on your CFE bill.

Akumal is classified as 1B, which means we have to keep our bimonthly average below 800 kilowatt hours if we want to receive the subsidy. That’s difficult to do if you run your air conditioner on a regular basis.

If you’re already paying the higher DAC rates, then “DAC” will appear in that section of the bill. 

If that’s the case, you can always find out your billing classification by either calling CFE or asking one of your neighbors to check his or her bill.

Once you are on DAC billing, every single kilowatt-hour is billed at the same high rate. CFE will also tack on a fixed fees (cargo fijo).

You can get off DAC by consistently reducing your usage below the CFE allotted limit. Once your average for the previous 12 months is below the target number, you’ll start receiving your subsidy again.

Let’s Wrap This Up

In writing this article, I started thinking about how odd it would be if the price of other consumables — such as food and gasoline — was determined by a person’s history of prior consumption.

For example, anyone who bought a lot of junk food would be classified as a high consumer and would be charged 300% more for every bag of Cheetos. If a person drove a long way to work every day, he or she would end up paying 300% for every gallon of gasoline –and so forth.

I’m glad this only applies to electricity or I might have to go back to work just to pay for beer and margaritas.

All joking aside, it definitely pays to watch your electricity use while in Mexico. It comes down to finding a balance between comfort (air conditioning) and staying within your monthly budget.

Qroo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. They later started a blog called Two Expats Mexico (qroo.us) to share their experiences, as well as information about the logistical and legal aspects of retiring south of the border.

Source: Two Expats Mexico

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