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

Source: Q-Roo 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 bimonthly 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 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 fixed fee (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 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.

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About the Author

Q-Roo Paul

Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years and retired at the rank of lieutenant in 2015. He moved to Mexico with his wife six days later to enjoy a laid-back, Caribbean lifestyle on a tight budget.

In 2016, Paul started a blog to share information with other people who may be thinking of making the move to Mexico. The blog, Two Expats Living in Mexico (qroo.us), has been viewed over a million times and Paul’s articles appear in periodicals across Mexico.

40 Comments on "Life in Mexico: Why Some People Pay Up to 380% More Per Kilowatt of Electricity"

  1. Just wanted to let you know that we encountered high bills while out of the country. The reality was we were being charged for our neighbor’s usage because the meters were incorrectly assigned!

  2. IN Cozumel, there are evidently cheaper times of day and of the week for electricity usage. So, laundry is cheapest on a Sunday and then there are some evening times that are more expensive than Sunday but cheaper than doing laundry during the day. Do you know if Akumal has similar rate schedules?

    • Not according to CFE

      • Carol – I’ve heard many people make this argument, that rates are lower at night, weekends, etc. I would argue that this is a myth. I checked with CFE, and there is no such thing. Note that your bill does not break out usage by time of day, day of tne week, etc. It just says that you used X number of Kwh, and you cost is Y, based on the tiered pricing for your area.

  3. Excellent article, Paul.
    Saludos,
    Frank

  4. We have heard that once you hit the high zone you stay there for 6 months before you go down again. We rented a place that was already in the high zone account pass renters so we inherited the higher rate.

    • Yes, because you have to be under the level for at least 3 billing cycles (6 months).

    • Yes, once you hit DAC, you’ll have to keep your usage down for at least 3 billing cycles to get your 12 month average below the target number.

  5. On my CFE bill, I have an extra charge of $475.86 MXP for DEPOSITO. Do you know what that’s about?

    • No, I haven’t seen that.

    • I had the same thing on my first bill, I’m guessing it’s a deposit to start services.

      • Yes, your first bill will come with a security deposit. It is refundable once you terminate the contract with CFE, but there is a catch. You must hold on to that bill if you, because if you lose it you can’t claim back your security deposit.

  6. Interesting! Thanks for breaking this down.

  7. This is excellent information…I have a condo in a complex and I going to take a look into how we are charged.

  8. I have booked a trip to Akumal for July. I was wondering why it was so difficult to find inexpensive lodging that is air conditioned. I assume this blog is the answer to my question. We settled for La Hacienda De Tortugas since it at least has AC units in the bedrooms. The Condo is right on the beach and supposedly gets a good breeze from the ocean. That’s what they all say anyway. The condo had overall excellent reviews and very little complaints about not having AC, though there were a couple (Trip Adviser). I don’t plan on spending much time indoors anyway. Thanks for your blogs. I read each and everyone of them, forward them to my wife, and save them for further reference. It’s my dream to retire down there.

  9. It is my understanding that once you are in DAC, ALL your electric usage is billed at the higher rate. It isn’t graduated as in the first part is in the lower rate and only that part that makes up your higher usage is more expensive. Is that correct?

    Also, once in DAC it can take a year of low usage to get you out of it.

    • Once you are on DAC billing, every single kilowatt hour is billed at the maximum rate. 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 will receive the subsidy again.

  10. Great article Paul. Good info. Thanks

  11. Thank you for the exceptionally clear explanation of how electricity pricing in Mexico works.

  12. Hello Paul. What if someone added solar panels or wind generation to their dwelling? It would be assumed that the dwelling is free standing and not a part of a “community” where everyone is taking electricity from the same single point of service. Any thoughts or knowledge of such for Mexico? Subsidies or exemptions? Thanks in advance.

    • Solar panels are an excellent idea and several of our neighbors have escaped the high cost of electricity by installing them. It’s even possible to install them if you’re in a condo or a community as long as you have a spot to place the panels on the roof.

    • Given the high utility rates in Mexico, in my opinion, solar panels are a great investment. We’ve had them for almost 3 years, and have been very pleased with the results. By producing some of your own energy, you can avoid getting on the DAC rate, and it’s higher Kwh charges. The nice thing about Mexico, compared to some states in the US, is that they “net out” your usage to determine charges. In other words, any excess production is directly credited to you before determining what you are charged for. So, this helps keep you off of the DAC rate. You don’t need to produce all of your electricity requirements, but rather, just enough to stay under the DAC limits, and maintain your subsidies.

  13. Thanks, David. Even though the map came from CFE, the information I found is that Cancun to Tulum will all be 1B. I’m going to see if I can find a better map or graphic that shows that and swap it out.

    • Oh, the zones are determined by the average temperature in the area. The hotter the area, the more electricity you’re permitted to use.

  14. Great article Paul! I see you can validate your specific area from your own bill, but do you know if there is a way to look up what tarifa applies to various areas/cities around the Yucatan?

    • The CFE site says to look at the bill to find the zone. They don’t make it very easy to research other areas.

  15. Paul, we live in Orlando now and are in the process of buying a condo in Progreso. The condo building apparently has its own substation and that makes the electricity cheaper – not sure why. We are hoping to retire there in about 4 years. Did you work with Sheriff Grady?

  16. Great article again Paul. To put things in perspective though, even under DAC your rate works out to around 7.5 cents per KwH, a rate many in the US would find low (though not everyone as there is great variability in utility rates across the country). 10.41 cents is the average across the US with Washington State the lowest at 7.4 cents. So, even the lowest in the US is approximately equal to the highest DAC rate and the average US cost is 33% more! My bill for December here in Virginia worked out to 10.06 cents per KwH, with a 1250 KwH monthly average, so, I do have a question. How do you lower your consumption and what active steps do you take to monitor and keep it lower?

    • We live in Playa del Carmen and it took us ten years to learn how CFE rates work. To keep our condo bills low we bought a first floor unit at the back of a courtyard jungle, installed screens and invited the cool event breeze inside. Made Translucent curtains to cut the light coming in while preserving the view, turn the AC to 1 degree higher than usual and off when gone. Wish we had the Portuguese system where you’re door key/card turns the mains on and off and room lights are motion sensitive. our efforts have little effect on our rates as renters who occupy our home when we are elsewhere turn down the AC, leave windows and curtain open..

  17. JAVIER MACIAS AMAYA | January 23, 2017 at 5:04 pm | Reply

    Just for the record, my wife´s father was the CFE´s Director for the “Central-South” (Puebla, Tlaxcala) Division of CFE in the mid 90´s and until around 2012. He before was involved highly in the development of the huge electric stations in the 80´s that generate up to 40% the electricity of the country from the huge dam systems in Chiapas. It is always amusing and entertaining to hear his stories. Just like the “Gasoline” issue, electricity is also a huge issue on the federal budget and the reality is that the country can´t generate all the electricity it needs. As historically, the government has tried to help the most vulnerable popullation subsiding the electricity, the fact is that generation of electricity is a lose to lose deal in the Federal Budget, that´s why it´s been a goal the government has, to opening the generation industry to private corporations. My in law says electricity is generally still cheaper in Mexico than in the US, as in the US there is no subsidy, and Bernie just has answered my doubt about wether that was truth or not. As it´s a headache for the government supplying enough electricity, especially at peak hours and days (mainly to the large industries, which according to my in law, simply 10,000 industries consume up to 80% the electricity is generated, 100,000,000 people consume the other 20%) the government incentivates large industries to generate their own electricity to reduce their huge costs, that´s why industries or homes having their solar pannels or substations can “save” DAC rated costs (supposedly “real costs”) by earning back their subsidies as they are “saving” the government the delivery of the rest of the electricity they need. Right now many corporations are selling solar panels as they can have a return of their investment in a few years, and from then on, literally generate their electricity for free. Not unusually, my in law is now hired by large industries as an independent external counsultant on saving electricity strategies, and simply by changing working shifts to nights, not operating huge machines during the day, solar panels, LED lights and some others, the savings can be huge (I can recall of a large private hospital in Michoacán that hired him and managed to change from $600,000 pesos (yes you read right) every two months to $425,000). In Mexico city, as the weather is usually kind, as long as you stay smart, electricity bills can be kind too. I installed 42 9 watt LED lights at home, have 2 LED TVs and use the computer on a regular basis and have managed to pay during the last 5 bimesters $250 – $400 pesos every two months. The problem here is that buildings are cold, they´re built of bricks and concrete and during winter, usually outside the weather is 40-50°F at night, but using a heating system is just as expensive as for people in the Yucatan Peninsula to use an AC. The time my son was a baby and used the heaters at night during winter about a year ago, the bill came close to $2000 pesos. I fixed that by buying thicker pijamas for them and a good Sam´s Club extra snuggy blanket for our bed. Hope not to bore you!!

  18. Wow, even the high rates are not that bad compared to San Diego, we also have the tiered rates here but in the winter we get 374kwh on the low rates, at about .19 per kwh and for anything above that we pay about .39 per kwh, previously we had 4 tiers and it got progressively more expensive.

  19. I just ran the numbers, and at 22:1 pesos to the dollar, rates without the subsidy in PDC are about double the rates in Tampa.

    One thing I’m curious about – we see split A/C units almost exclusively for home and small store use in PDC, which would seem to allow greater control, at some loss in overall efficiency compared to central air. I wonder if the cost of energy is the motivation? I makes sense to only cool the rooms you’re using at any given time. I would also assume cooking and clothes dryers use propane for the same reason?

  20. Jill Korowin | March 2, 2017 at 7:57 pm | Reply

    I live in Playacar and we call it the GFR (Gringo Face Rate).. I have mini splits in my two bedrooms which we rarely use because I didn’t come here to live in air conditioning, but A/C bill is still high. It’s also the reason I don’t rent my house when I’m not here because people leave the A/C on and the windows and doors open.. I did change the name on my bill from my husband to mine, and it lowered for a short period to time and then went back up.. I still don’t understand how some of the stores on 5th Ave. can open their doors and leave the A/C on all the time… Based on my bill, I certainly wouldn’t want to pay theirs, but they probably don’t pay the GFR…

  21. Mary Spierling | April 3, 2017 at 10:52 am | Reply

    Thank you SO MUCH for your website. Way too many of these so-called Mexico expat websites focus on the 10 per centers of expats (esp. American/Canadian) who have good pension plans and seem to throw money around just because of the exchange rate and consequently makes things more difficult for the 90 percenters of us living in Mexico with limited budgets, i.e., living on Social Security. The information you provide is one of the very very few expat sites that provides useful info on living in Mexico rather than focusing on high-rent areas such as Baja Norte, San Miguel de Allende, etc.

  22. Can a CFE bill be viewed online?

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