Power factor: CFE gives you a credit and the Grid Code fails you

CFE asks how much, on average. The tariff rule takes the average power factor for the billing period. If it falls below 90 %, CFE charges a penalty; at 90 % or higher, it gives a credit. The percentage applies to the amount of the whole bill, not just the energy charge.

• Penalty (PF below 90 %): 3/5 × (90 / PF − 1) × 100
• Credit (PF of 90 % or higher): 1/4 × (1 − 90 / PF) × 100
• Caps: the penalty does not exceed 120 % and the credit does not exceed 2.5 %.

The Grid Code asks how, all the time. The Regulatory Manual of Technical Requirements for the Connection of Load Centers (Manual Regulatorio de Requerimientos Técnicos para la Conexión de Centros de Carga; RES/550/2021, section 2.4) does not assess an average. It measures the power factor at the point of connection every five minutes and requires it to be within the band at least 95 % of the time in each month. The text published in the Official Gazette (Diario Oficial de la Federación) set two stages:

In practice: a month has about 8,640 five-minute intervals. To comply, no more than about 430 can fall outside the band. Watch for a detail almost nobody mentions: the band runs from 0.97 lagging to 1.0. A leading (capacitive) power factor is also outside it. The official Work Plan form asks you to report precisely the percentage of time spent leading.

The Grid Code power factor requirement applies to:

• medium-voltage load centers with a contracted demand of 1 MW or more, and
• high-voltage load centers (above 35 kV).

A medium-voltage plant with less than 1 MW contracted has no such obligation under the Manual. It is still subject, however, to the CFE rule: its penalty or its credit. The transition periods for plants of 1 MW or more that were already connected expired on December 31, 2023; today the requirement is enforceable.

An example with round numbers (illustrative data):

A plant on the GDMTH tariff, 1.5 MW contracted, a bill of MXN 500,000 a month. Its average power factor for the month is 0.96. For CFE that is a 1.6 % credit: about MXN 8,000 in your favor. The bill looks fine.

Now the same plant, seen in five-minute intervals:

• on the day shift, with the compressors and the large motors running, the power factor is at 0.98;
• on the night shift, with a light load, it drops to 0.91 lagging;
• on the weekend, the fixed capacitor bank stays connected while the plant is almost idle, and the power factor turns leading.

Result: the monthly average is 0.96, but more than a third of the intervals fall outside the 0.97 to 1.0 band. The Code allows at most 5 % outside the band. The plant gets a credit from CFE and, at the same time, does not comply.

The right-hand column is not a mistake: no monthly average tells you whether you comply. Only interval measurement answers that.

The Grid Code refers to the penalties in the law for anyone who fails to observe it in a serious manner, and also orders a mandatory Work Plan with deadlines to correct. Today those penalties are in article 184 of the Electricity Sector Law (Ley del Sector Eléctrico, 2025): for breaches related to system quality and reliability, fines of 128,000 to 514,000 UMA (with the 2026 UMA, roughly MXN 15 to 60 million), and double for repeat offenses.

It has to be said precisely: the authority rates seriousness by the impact on the system, and we found no published penalties against load centers for power factor. The real risk is different: verification now has a mechanism. Since May 2024 there have been Inspection Units authorized to assess operating load centers against this Manual, and the National Energy Commission (Comisión Nacional de Energía, CNE) inherited all of the CRE's powers and regulations. When the review comes, the ruling is made with five-minute records, not with your bill.

1. Measure before you buy. A campaign with a Class A analyzer (NOM-001-CRE/SCFI-2019 or IEC 61000-4-30) at the point of connection, ideally for a full month and for at least seven days covering every shift and the weekend. Without that data nothing can be sized.

2. Check harmonics before installing capacitors. This is the most expensive mistake: a capacitor bank forms, with the grid, a circuit that resonates at a certain frequency. If that frequency matches the harmonics produced by variable speed drives, the bank amplifies them instead of correcting: the capacitors overheat, fuses blow and the harmonic content soars, which the Grid Code also limits.

3. An automatic stepped bank, not a fixed one. A fixed bank only works if the reactive load is steady all day. With shifts and weekends, an automatic bank switches steps in and out according to the actual load and avoids the overcompensation that leads to a leading power factor.

4. A detuning reactor when there are harmonics. If the measurement shows drives and 5th-order harmonics, the bank gets series reactors. A 7 % reactor tunes the assembly to harmonic 3.78, about 227 Hz on a 60 Hz grid, below the 5th harmonic (300 Hz), and moves the resonance out of the danger zone.

5. Compensate at the source when it makes sense. On large motors in continuous operation, compensating at the motor itself also relieves the cables and the internal transformer.

• If your plant is on medium voltage with less than 1 MW contracted, the Code does not require power factor from you: invest only if the CFE penalty or credit pays for the bank.
• If the measurement shows you are already within the band 95 % of the time, a new bank will not pay for itself.
• If the problem is harmonics and not reactive power, what you need is a filter, not more capacitors.

Does it apply to your plant? Get a first estimate or book an initial review: in a short meeting we review your bill with you, on screen, and tell you what is worth measuring.

CFE, supplementary provisions to the tariffs, item 3 “Power factor” (SHCP Agreement, Oct 27, 2000; DOF, note 2062903): formulas, application to the billed amount, caps of 120 % and 2.5 %.

CRE, RES/550/2021, Grid Code, DOF Dec 31, 2021: Regulatory Manual of Technical Requirements for the Connection of Load Centers, Table 1.1.A (scope) and section 2.4 (0.95 until Apr 8, 2026; 0.97 afterwards; 5-minute records; 95 % of monthly time; two-year transition); Chapter B.3 (penalties and Work Plan); Work Plan Annex (reporting of leading time).

CRE, workshop “Código de Red: eficiencia energética y requerimientos para Centros de Carga” (Grid Code: energy efficiency and requirements for Load Centers), Jul 2, 2024 (gob.mx): voltage levels, Class A measurement, completed transition periods, Inspection Units (Agreement A/054/2024).

Electricity Sector Law, DOF Mar 18, 2025: art. 184 (penalties), art. 185 (authority), third transitory article; National Energy Commission Law, DOF Mar 18, 2025, third, seventh and ninth transitory articles (CRE regulations remain in force).

INEGI, 2026 UMA value: MXN 117.31 per day (DOF Jan 9, 2026).

ABB, Technical Application Papers No. 8: Power factor correction and harmonic filtering; Powerside, application note on detuned banks (reactor–tuning harmonic relationship).