Comision Federal de Electricidad issued the following announcement on Oct. 30.
In the period January-September 2019, the Federal Electricity Commission (CFE) made a profit of 2,121 million pesos, financial results significantly better than those reported during the same period of 2018. While the decrease in the net results of the quarter July-September 2019 compared with the same period of 2018, mainly due to the current stability of electricity tariffs, in contrast to the steady rise in electricity tariffs in 2018.
In the period January-September 2019, the Federal Electricity Commission (CFE) made a profit of 2,121 million pesos, financial results significantly better than those reported during the same period of 2018. While the decrease in the net results of the quarter July-September 2019, compared to the same period of 2018, is mainly due to the current stability of electricity rates, in contrast to the continuous rise in electricity rates in 2018.
It should be noted that the measures implemented by the CFE to have greater control of its costs, mainly of fuel and energy, and lower prices of energy in international markets, were decisive to obtain positive consolidated results, and to mitigate the difference between the third 2019 quarter against the third of 2018, despite the tariff differences.
To provide greater clarity on the evolution of electricity rates and their impact on financial results, the CFE shares a brief summary of the changes registered:
The CRE determines the rates
The current basic supply rates determined by the Energy Regulatory Commission (CRE), began its application in December 2017 and its implementation meant structural changes in customer billing and in some cases represented increases greater than 100% in the payments of these. To minimize the impact of the tariffs, the CRE made several modifications to the tariff scheme especially during the first half of 2018, which included changes in the billing rules and retroactive application of the modifications. Impact on quarterly financial results
The retroactivity of the tariffs affected revenues and cash flow during the first half of 2018, as the CFE was forced to re-invoice millions of services and grant letters of credit in most cases. Thus, in February 2018 the global average price registered its lowest level in the last ten years, 1.20 pesos per kilowatt-hour ($ / KWh). The average price during the first semester was $ 1.49 / kWh. And this impacted - downwards - the financial results of the first and second quarter of 2018.
Rate hike swells quarterly results in 2018
Towards the second semester of the year 2018, the CRE adopted a methodology that was reflected in significant increases in rates in the last months of the year to compensate for the lags of the first semester. However, the billing's own cycles prevented recovering the losses produced during the first semester, but it was reflected in a growth in the global average price, which in September 2018 stood at $ 1.99 / kWh and at the end of December in 2.64 $ / kWh. Similarly, this also impacted - in this case on the rise - the income from energy sales recorded in the financial results of the third and fourth quarter of 2018.
As of January 2019, the CRE defined a methodology that prioritized the stability of tariffs, which were reduced by 15% compared to December 2018. Adjustments throughout the year have also been down due to lower costs of associated generation. These adjustments have been moderate, so that the average price recorded in March was $ 1.95 / kWh, in June, $ 1.86 / kWh, and in September, $ 1.84 / kWh.
Even with a more stable level of rates, higher revenues were recorded for the CFE during the three quarters of the current year, although these were significantly higher in the first quarter and moderate during the second and third quarters.
Despite the continuous rise in prices in 2018 and the relative price stability in 2019, the CFE's financial results show a significant improvement, mainly due to the control of fuel and energy costs.
Original source can be found here.