Rising electricity costs push consumers to solar

Published June 12th, 2022

The Federal Electricity Commission (CFE) lost 40% of its high-consumption residential customers last year as more and more people turned to solar power to avoid paying expensive electric bills.

The state-owned utility lost 110,453 high-consumption (DAC) accounts last year, ending 2021 with a total of just under 168,000. CFE data shows that the company has lost 64% of its DAC customers since 2019.

Luis Plata, the founder of solar panels company Girasolve Energy, told the newspaper Reforma that the high DAC tariff – the CFE’s highest rate – has made the installation of solar panels more attractive. The DAC rate increased 27% in 2021 and has gone up an additional 13% so far this year.

In contrast, the price of solar panels has gone down and people can recover their investment in about two years, Plata said. “The high energy price with … [the DAC] rate, which is up to 7.14 pesos per kilowatt-hour in some areas of the country, has incentivized families to research how to avoid paying it,” he said.

Plata said there are only two ways in which DAC customers can avoid paying the CFE’s highest rate. One way is to reduce electricity use to below the CFE’s high-consumption level and the other is to install solar panels.

Data from the Energy Regulatory Commission indicates that 59,408 homes installed solar panels last year, a figure that accounts for 54% of the DAC customers the CFE lost. The other 46% presumably cut their electricity use and now pay one of the seven lower rates.

Alfredo Beltrán of solar panels company GreenLux said the electricity commission hasn’t been able to add to its DAC customers because a policy implemented in April 2020 due to the onset of the coronavirus pandemic prevented the reclassification of consumers whose power use has increased to high-consumption levels. “There hasn’t been a replacement of customers who have left” the DAC cohort, he said.

CFE data also shows that DAC customers only made up 0.4% of the 41.5 million residential customers the utility had at the end of last year. The cost of losing customers to solar power could easily be offset by collecting bad debts. Electricity customers owed the CFE a record high of almost 71 billion pesos (US $3.6 billion) at the end of 2021, an increase of almost 28% in the space of two years.