The electricity bill of a Mexican industrial plant can contain between 12 and 18 different charge lines, organized in such a way that the real average peso-per-kWh is obtained only after decomposing everything in a spreadsheet. This structural complexity is what explains why many companies feel their bill is high without managing to identify exactly why.
Before evaluating migration to the Wholesale Electricity Market (MEM), it's worth making sure you are paying the right tariff and properly managing its three main components. In medium-sized operations, optimizing CFE tariff can release between 5% and 12% of savings without moving a single piece of equipment. This article explains the active industrial tariffs, their components, how they are calculated, and concrete levers to lower them.
CFE industrial tariffs (HM, GDMTH, GDMTO)
The Federal Electricity Commission (CFE) offers several tariffs for industrial users under Basic Supply, depending on voltage level and consumption pattern. The three most relevant:
- HM (Hourly Medium-Voltage Demand) — for load centers connected at medium voltage (typically from 13.8 kV) that don't exceed certain thresholds and operate with moderate hourly variation.
- GDMTH (Large Hourly Medium-Voltage Demand) — for large medium-voltage load centers with relevant demand. It is the most-used industrial tariff in medium-to-large plants.
- GDMTO (Large Ordinary Medium-Voltage Demand) — version without hourly tariff for profiles where differentiation between peak, mid, and base hours adds no value.
Additional tariffs exist (GDBT at low voltage, DIST and DIT at high voltage) applying by specific connection. For depth on which tariff applies to your operation and how to choose it, a technical review with your bill in hand is appropriate.
Bill components
Regardless of the tariff, the Mexican industrial bill decomposes into five main components:
- Energy charge (kWh) — how much energy you consumed during the billing period.
- Demand charge (kW) — the maximum power peak you registered, generally measured in 15-minute intervals.
- Power-factor charge or bonus — penalty if PF falls below 0.9 or bonus if it exceeds certain thresholds.
- Capacity and transmission charges — additional components allocated to each user based on their contribution to the system.
- VAT on the subtotal.
To this are added charges for excess demand when you exceed nominal contracted demand, and special charges for Grid Code (Código de Red) non-compliance.
How each component is calculated
An operational explanation, without heavy formulas:
Energy charge
Calculated by multiplying kWh consumed in each hourly block by the price of the corresponding block. In hourly tariffs (HM, GDMTH), prices change among base, mid, and peak hours. In GDMTO, the price is uniform.
Simplified example: a plant consumes 250,000 kWh/month distributed as: 120,000 kWh in base, 100,000 in mid, 30,000 in peak. If prices are $1.20, $2.00, and $3.50 per kWh respectively, the energy charge is $674,000.
Demand charge
Calculated by multiplying the maximum demand peak in the period by the unit price of the demand charge. It's where most companies lose money without noticing: a single poorly coordinated startup at peak time can set a peak that gets billed for the whole month.
Example: if your monthly peak was 1,800 kW and the charge is $300 per kW, the demand charge is $540,000. Reducing that peak to 1,500 kW (without affecting production) would lower the charge to $450,000.
Power factor charge or bonus
When the monthly power factor falls below 0.9, CFE applies a growing percentage penalty over the subtotal. When the factor exceeds 0.9, a bonus is applied. The difference between operating at PF 0.85 vs 0.95 can be 3% to 5% of total invoiced, recurring.
Difference between base, mid, peak hours
The concept behind the hourly tariff is to translate to your bill the real system cost at each hour of the day:
- Base hours — early morning, weekend, low-demand periods where the system has spare capacity and marginal cost is low.
- Mid hours — most of the workday, average costs.
- Peak hours — typically late afternoon to evening, where the system is most stressed and more expensive plants are dispatched. In summer, the peak shifts due to air conditioning.
An operation with shift flexibility can move electricity-intensive production from peak to base hours and significantly reduce average peso-per-kWh without touching total consumption volume.
Strategies to lower each component
Lower consumption (kWh)
- Technical efficiency: premium motors, LED lighting, optimized compressed-air systems, heat recovery in thermal processes.
- Critical-equipment maintenance program with energy KPIs.
- Monitoring system by line or shift that identifies anomalous consumption.
For a complete view of the efficiency side, review Industrial Energy Optimization.
Lower demand (kW)
- Coordination of high-power equipment startups to avoid coincidences in the same 15-minute interval.
- Scheduling intensive production outside peak hours when operations allow.
- Automated demand-management system that sheds non-critical loads when peak approaches threshold.
- Rigorous review of contracted vs. actual demand to avoid paying for unused capacity or, conversely, paying excess-demand charges.
Improve power factor
- Capacitor bank correctly sized from real power-quality measurement.
- Distributed compensation near large reactive loads instead of a single centralized bank.
- Preventive maintenance of installed capacitors to avoid silent degradation.
To go deeper into the PF component, it's appropriate to first execute a rigorous power-quality measurement under the Grid Code for Large Consumers framework.
When changing CFE tariff is worth it
You are not always on the optimal tariff. Four scenarios where a tariff change releases immediate savings:
- From HM to GDMTH when demand grows beyond HM's application range and the new tariff offers better structure.
- From GDMTH to GDMTO when your load profile is very flat (load factor above 80%) and hourly differentiation no longer adds value.
- From GDMTO to GDMTH when you gain shift flexibility and can move consumption to base hours.
- From low to medium voltage when demand growth justifies investing in your own substation that significantly reduces average cost.
Each change requires quantitative analysis with last-12-months data. Changing tariff without modeling can worsen the bill.
When migrating to MEM beats further tariff optimization
CFE tariff optimization has a ceiling: typically 8% to 15% over a poorly managed baseline. If your operation meets eligibility criteria —demand equal to or greater than 1 MW, load factor above 40%, relevant annual electricity cost— migration to MEM frequently delivers an additional 10% to 20% savings over the optimized CFE tariff.
The practical rule we apply: optimize tariff first, evaluate MEM later. Migrating to MEM with an operation showing low power factor, poorly managed demand, and consumption inflated by inefficiencies is transferring all those problems to a more complex contract.
To go deeper into when MEM migration has a business case, review Savings in the Wholesale Electricity Market and the pillar guide When and Why Your Industry Needs Energy Consulting.
Next step
If your operation has relevant industrial demand and you have not done a rigorous review of tariff, power factor, and demand structure in the last 24 months, there is a high probability you are paying 5% to 12% above what your own operation permits —before touching the electricity contract—.
For a specific bill evaluation and identification of concrete levers, request a free evaluation or learn the scope of our Energy Procurement and tariff-optimization service.
