The government has advanced a new removal of subsidies in electricity bills. As part of the segmentation, the Ministry of Energy has eliminated subsidies for the cost of electricity, which end up affecting the final bill. Since Wednesday, customers called N1 -high income, i.e. who want to continue to maintain the ability to access dollar savings- they will pay about an additional 30% on bills. Although the increase is February, the impact will be when they pay in February.
Since the segmentation was implemented, electricity bills have increased between 100% and 120%, depending on the amount of consumption of each customer. A utility bill that averaged $2,000 in March in mid-2022 will cost twice as much. In any case, the recomposition is almost at the same level as the annual inflation in 2022 (94.8%).
Another increase will arrive in the coming weeks which will impact the profit margins of Edenor and Edesur, the Buenos Aires distributors. It is estimated that the increase will be 30%. It is being defined by the regulatory body (Enre). This body announced new fines to Edesur -of 250 million dollars-, the result of service interruptions.
The cost of electricity accounts for more than half of electricity bills. 56% of what is paid corresponds to this concept. Distributors only (Edenor-Edesur). they keep 17% of what they charge in invoices. The rest are taxes.
The distributors have called for an urgent increase in the electricity bill. Both accused the “conceding power” (the nation state) of not compliant with the regulatory framework governing the provision of the electricity service in Buenos Aires. Its executives said they lost money. Edenor has requested an immediate increase in bills of between $1,000 and $1,500 a month so as not to continue to have red in 2023.
A third of households have had increases in electricity bills since October. But that raise doesn’t stay in the hands of the distributors. This increase is such that the nation state subsidizes less the cost of electricity.
The government had subsidized the price of electricity until September. In other words, the families have not paid the cost of this service. The subsidy covered more than half the price of electricity consumed by households.
Electricity bills contain the cost of electricity itself, the distribution margin of the companies that bring it to homes and taxes. The amount of electricity is regulated by the “monomic price”. At the end of 2022, this amount was $11,700 per MWh (industry measure). At midyear, households were paying less than half ($4,600) of that price. Now, that payout will go up to $9,400 for distributor users. And the total cost has been upgraded to $13,000.
In this way, even if less than before, residential customers will continue to be facilitated.
Big customers run out of subsidies. They have to pay $13,000 per MWh.
The lower segments (referred to as N2) will feel almost no increase. Media (referred to as N3) will continue to pay a subsidized price for most of the ticket. But they will pay more for “surpluses” at certain pre-agreed levels of consumption.
The current budget for this year estimates a decline in energy subsidies. The Minister of Economy, Sergio Massa, did not provide precise numbers but percentages: in 2022 they represent 2.3% of GDP, while in 2023 they will bite 1.6% of that cake. Specialist estimates calculate that this means going from the US$15,000 million allocated last year for this purpose to a range between US$11,000 million and US$12,000 million by 2023.
Energy experts are studying the impact of their corrections in order to determine whether or not achieving this goal is feasible. It is estimated that Cammesa, the wholesale operator of the system, should collect more because large customers will already pay for electricity without discounts, for example.
Source: Clarin
