50% cut in Power Rates ... Only in Mexico!

By Andres R. Martinez

Nov. 27 (Bloomberg) -- Mexican President Felipe Calderon, concerned that high energy costs may limit economic growth, said the state-controlled electricity utility will cut rates for businesses during peak periods by as much as 50 percent.

Power prices will be reduced starting Jan. 1 for about 44,200 industrial companies and 3.3 million retailers, Calderon said today during a speech in Monterrey, Mexico, according to a transcript his office e-mailed to Bloomberg.

Mexico implemented different rates for peak hours more than 15 years ago when the country faced power shortages. The state electricity company now has 40 percent excess capacity, eliminating the need for peak rates, Ismael Plascencia, president of an industrial umbrella group of 108 trade organizations, said last week.

``We have made the decision to reduce electricity rates for peak hours to help improve competition in the productive apparatus,'' Calderon said.

Mexican companies can only buy electricity from a government monopoly, and attempts to open the energy and electricity markets to private investors have been blocked by the Congress. Calderon said he would not wait for the lawmakers to act.