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Highlights


CFE's Fuel Cost Index up 3.6% from October

Fuel oil, imported coal bigger parts of energy mix than a year ago

Mexico's state power utility CFE increased its retail tariffs for commercial and industrial users for November.

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Industrial users will see an increase of 2.6% to 3.5% in November compared with October, CFE said in a statement late Tuesday.

Commercial users will see an increase of 1.5% to 2.4% during the same period, CFE said.

CFE's database shows base power prices for industrial users increased 14.33% year on year.



According to Platts Analytics, natural gas pipeline constraints have increased CFE's reliance on fuel oil and LNG shipments to feed its power plants, increasing electricity prices.

Electricity prices for residential customers with high consumption levels, known as DAC users for its Spanish acronym, will rise 1.5% in November compared with October. CFE had increased its tariffs for these groups during the previous four months.

Electricity prices for regular residential customers will see no increases. Bills for regular residential customers haven't increased in 35 months. This market segment contains 99% of Mexican households, close to 36.5 million clients.

"These tariffs reflect the behavior of fuel prices used to generate electricity registered in October of 2017 compared with September of 2017," CFE said.

CFE's fuel prices are used by Mexico's Finance Secretariat to set electricity tariffs across the country.

CFE has reported fuel expenses make up 80% of the tariff. Other charges in CFE's tariffs are transmission and distribution costs.

Related: Find more content about Mexico's commodity landscape in our news and analysis feature. Additionally, read our special report, Mexico's energy transformation takes hold.


FUEL OIL, COAL, NATURAL GAS COSTS RISE


According to the archives of Mexico's Federal Gazette, CFE's index reflects a weighted sum of the five fuels it uses for fuel generation -- fuel oil, natural gas, imported coal, domestic coal, and diesel.

The monthly change in the index is considered by Mexico's Finance Secretariat to set CFE's monthly retail tariffs.

CFE's Fuel Cost Index grew 3.6% to 728.54 points in October compared with September, and was up 15.2% year on year.

The yearly increase is primarily due to CFE paying higher prices for fuel oil and imported coal for power generation.

Compared with last year, the share of fuel oil in CFE's fuel index rose to 22.5% from 18.38%, and the share of imported coal rose to 8.4% from 7.1%.

According to CFE's database, the average price the state utility paid for fuel oil in October compared with September rose 3.29% to Peso 4,485/cu m ($234/cu m).

During the same period, the price CFE paid for imported coal rose 10% to Peso 311.86/Gigacalorie ($15.60/Gigacalorie), and the price it paid for gas rose 3.18% to Peso 298.57/Gigacalorie ($3.93/MMBtu).

Year on year, the price of the fuel oil it consumed increased 40.8% and for imported coal 34.8%, while the price of the gas it consumed increased 5%.

In mid-October, CFE's IV generation division did an auction to purchase 2.6 million tons of coal to decrease its generation cost. CFE paid $243.7 million, saving 8.95% from its original budget.

--Daniel Rodriguez, newsdesk@spglobal.com

--Edited by Jason Lindquist, jason.lindquist@spglobal.com