Mexico-based companies in industries ranging from food to automotive are paying more for electricity after the government hiked transmission costs for plants operated under self-supply contracts.
"We are being attacked in terms of transmission costs," said a source at a large manufacturing company in Mexico that has a legacy self-supply contract.
State power utility CFE last year increased transmission costs by eightfold and abolished a fixed transmission tariff system for natural gas and renewable power plants built prior to the 2014 energy reform.
Some companies have avoided paying the higher costs through legal action, but others have been hit by the increases as judges have denied their injunctions, said Ruth Guevara of Mexico City-based Zumma Energy Consulting.
"There has been a lot of protection from the injunctions, but some have won and some have lost," she said.
A recently passed reform of Mexico's electricity law also calls for self-supply contracts to be revoked, although legal action against it has so far protected those contracts.
"We have had to resort to injunctions," the source said.
If the government eventually succeeds at revoking self-supply contracts under the reform, "there would be years of litigation," Guevara said.
The government has specifically targeted self-supply projects that sell power to third parties, "user clubs" that comprise some 80pc of the self-supply market, while it has been less concerned with companies that generate power for their own use only, the source said.
Companies that buy power through self-supply contracts span multiple industries including the auto sector (Ford and Bridgestone), the food and beverage industry (Bimbo, Heineken and Hershey's) and manufacturing (Alfa and Ternium), according to Zumma.
Many of Mexico's largest retailers, such as Walmart and Oxxo, also buy power through these contracts, as do firms in the chemicals, cement and paper industries.
The combined-cycle, wind and solar plants under the self-supply contracts are operated by companies including Iberdrola, Saavi, IEnova and Mitsubishi, as well as a few large firms in the steel, cement and food industries.
It has also become increasingly difficult for companies with self-supply permits to obtain government approval to modify their permits.
"It is very difficult to modify permits," the source said. "It is a problem. We have to lobby a lot."
There are more than 430 permit holders and over 4,400 end users associated with self-supply permits, which represent around 16pc of Mexico's 91 GW of installed capacity.
