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Mexico Rescinds Power Cost Hike

February 8, 2002

MEXICO CITY (AP) _ Following widespread protests, the Mexican government said Thursday it will raise residential electricity rates by less than what it had originally planned.

The changes follow widespread protests after the announcement last week that the government would cut retail electricity subsidies by one-quarter this year.

In a press release, the Finance Ministry said that by restoring some of the cuts in subsidies, 75 percent of residential users with the least consumption _ below 140 kilowatt hours per month _ would continue to pay current subsidized prices. However, even with the measure, power rates here are higher than those paid by most customers in the United States and Canada.

The next 20 percent of users, who consume up to 250 kilowatts a month, would see a reduction in the subsidy, while the top 5 percent of consumers, who use more than 250 kilowatts a month, will receive no subsidy at all.

The partial restoration of the subsidies will cut in half the $10 billion per year that would have been saved under the original plan.

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