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CFE buys natural gas from Pemex, Iberdrola and Gas de Litoral

The Federal Electricity Commission (CFE) purchases natural gas from Pemex, Iberdrola and Gas de Litoral, among other suppliers.

CFE’s operations require large amounts of fossil fuels (fuel oil, natural gas, coal, and diesel).

At the end of 2019, 75.1% of the installed capacity for generation (including Independent Energy Producers) is derived from plants powered by these fuels.

CFE buys the majority of fuel oil from Pemex at spot prices under a long-term (10-year) fuel supply contract.

It currently buys natural gas from Pemex and other suppliers in Mexico (including Gas de Litoral, IEnova, Grupo Iberdrola and its affiliates, CIC Corporativo Industrial Coahuila and Fuerza y ​​Energía de Tuxpan) at prices indexed under long-term contracts (15 years) awarded in under an international tender process.

CFE and suppliers

In accordance with Mexican legislation, the purpose of the company is to provide the public service of transmission and distribution of electrical energy, for the account and order of the Mexican State.

It can also carry out various activities in the electricity sector, such as generation and marketing of electricity.

Likewise, it is allowed to participate in the fuel market, through activities such as transportation, storage, purchase and sale of these. It has 10 subsidiaries, five subsidiaries and four main business units to carry out these and other activities.

In general, the main activities of the CFE are the generation, transmission, distribution and supply of electrical energy.

For the twelve-month period ended December 31, 2019, fuel oil, diesel and natural gas represented at least 45% of the total amounts spent for electricity generation.

Also at the end of 2019, approximately 9.4% of installed capacity was based on the use of coal that CFE buys under three-year contracts with various domestic and foreign suppliers that it selects through competitive bidding processes.

A small percentage of the generating plants use diesel fuel that is purchased from Pemex at prices regulated by the Federal Government.

To mitigate CFE’s exposure to fuel prices, the electricity rates currently charged by CFE to its high-consumption industrial, commercial and domestic customers, which in 2019 represented 77.7% of its revenue from sales of billed electric energy in detail, they were adjusted monthly according to the methodology issued by the Energy Regulatory Commission (CRE).

 

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