Mexico's Energy Regulatory Commission (CRE) will start publishing state power utility CFE's monthly retail tariffs using a new methodology, beginning on November 30.
The CRE will, by December 15 and also every month, publish on its website the calculations used to establish the tariff for that month, to provide transparency to the market and help stakeholders' forecasts.
CRE last week approved the methodology to calculate the new retail tariff, known as the basic supply tariff in Mexico, a policy long awaited by market participants.
The new tariff will set the bar for new projects and contracts with large and medium-sized industrial and commercial users eligible to participate in the wholesale electricity market.
Large users like Coca-Cola FEMSA, Walmart, Cemex as well private generators like Acciona and Fisterra have said that the delay in the release of the new retail tariff formula has slowed down the finalizing of potential supply agreements.
Over 30% of Mexico's total power demand comes from more than 7,000 large and medium commercial users who have over 1 MW load and qualify to participate in the wholesale market.
The new methodology accounts for the cost in each segment of the supply chain such as generation, transmission, distribution, and commercialization.
CRE said the new methodology was based on two general principles. First, the efficient recovery of CFE's expenses and second to account for seasonal variations in electricity supply and demand to create an efficient market.
"This new methodology responds to the need to develop an open market," CRE said. "Also, it provides cost transparency to each segment in the value chain of the electricity industry."
CRE expected the new methodology to provide market signals to trigger investment across different segments of the electricity market.
The new methodology will recognize the different costs for each generation source as well apply different tariffs to users, according to their consumption and voltage.
CRE established that the most cost-efficient generation would be supplied to users with the lowest average electricity demand and the lowest interconnection voltage.
Most of CFE's generation costs were determined by Mexico's Energy Secretariat through new contracts for legacy power plants. CRE previously said that generation costs would represent about 60% of the final tariff.
The new tariff will indicate any subsidies that Mexico's Finance Secretariat decide to introduce and to which customers segments.
At the beginning of the year, CFE said the government expected to spend 43 billion pesos ($2.3 billion) in electricity subsidies in 2017.
The former retail tariff was set every month by Mexico's finance ministry and CFE using the fuel costs incurred by the state utility in the previous month.
