The electricity tariffs for homes paying the high-consumption domestic rate (DAC) in Mexico City and the state of México have risen by 20.9% in annual terms, according to data from the Federal Electricity Commission (CFE), and are likely to continue to rise.

The DAC applies to households which exceed a monthly average of 250 kilowatt-hours (kWh) over a year.

This month the DAC price per kWh was set at 5.50 pesos, which marks an increase of 20.9% in annual terms, the highest annual increase recorded since data became available in 2007.

The regular fixed tariff for electricity also increased, rising 6.9% to 120.9 pesos.

A consultant at energy company Becquerel Power, Ulises Rivera Pérez, said the increase in tariffs results from a rise in gas prices in the United States last February, as natural gas is one of the primary energy sources used to generate electricity.

He added that rates are likely to continue increasing gradually for the rest of the year.

Extreme cold temperatures in Texas last winter caused a huge spike in natural gas prices as, by some estimates, nearly half of the state’s production came to a halt. In February 2020, the monthly average price of natural gas recorded at the Houston Ship Channel was US $1.87 per million British Thermal Units (BTU). The price shot up to $56.34 per million BTUs in February 2021, and hit its peak at $400 per million BTUs on February 17.

Price fluctuations in U.S. natural gas can have drastic knock-on effects for the import reliant Mexican market. About 95% of the gas consumed in the country is imported from the United States.

CFE finance director Edmundo Sánchez said the shortage of natural gas due to the Texas freeze cost the state-owned company 65 billion pesos. It left some northern states, and almost 5 million people, without power.

With reports from Reforma