Like every summer when temperatures rise, sEdesur’s fuses blow and a crisis erupts where mutual accusations arise. The government claims that the company does not provide its service in the corresponding way and threatens to expropriate or intervene. The company replies that it has no resources, because there is a violation of the regulatory framework: his income doesn’t keep pace with inflation and he has less and less money for more expensive tasks.
In the summer, at a Harvard conference, the CEO of the owner of Edesur said he would leave Argentina because the country “It has the most bizarre rulebook in the world.” The sentence went badly to the ruling party and further deepened a certain bad disposition towards society.
Edesur had its first major crisis in the summer of 1999. There were several days without supply in the neighborhoods, causing businesses to close and homes to lose their appliances. That conflict motivated the previous shareholder – the Spanish Endesa – leave the country and leave the company in the hands of the Chileans.
But in December 2001 there was an episode that changed the rules of the game for all public service concessions: devaluations and weightings, plus the declaration of an “economic emergency”. Under this umbrella, the nation state stopped complying with the regulatory framework for the supply of electricity, gas and water.
The “emergency” was not to last long. But lasted almost 15 years, until the beginning of the government of Mauricio Macri. There, the Executive decided to restore the regulatory frameworks for concessions. Comprehensive fare reviews (RTIs) have been carried out, as required by the service regulation. In 2017 and 2018 the distributors were able to claim that the rules of the game were being followed.
Hand in hand with significant increases, the number of cuts and their duration have decreased. More in Edenor than in Edesur. While the two companies have made investments, the government saw that Edesur had “nodes” in its network that urgently needed improvement. The executive branch paid more money for generation and electricity was available, but distribution lines continued to fail.
The pandemic has taken care of further deepening the problems. The Executive decided that the distributors could not interrupt the service, even if the customers did not pay their bills. In various emergency neighborhoods, the neighbors hooked up to the Edesur network, without asking for permission. Meanwhile, the companies have not been granted any rate hikes. Rejections began to register and the mayors of the southern conurbano raised their cry to heaven, asking for the concession to be cancelled.
“They don’t have teams available, they don’t build substations, there is no planning,” the mayors lashed out (and still lash out). On the other hand, Edesur has repeated it “We have only had a regulatory framework in two of the last 20 years”. This means that the company could not make investments without receiving income.
Electricity distributors collect bills. But more than half of what arrives in the bill – at least in Buenos Aires and the suburbs – goes to pay the cost of electricity. Edenor and Edesur keep less than 12% of what they collect. The rest are taxes. This situation includes Buenos Aires and the periphery (AMBA). Inside there are other rules. In the province you pay up to 8 times more than in AMBA for the same consumption.
The distributors they had income recompositions in 2021 and 2022 which were well below inflation. Furthermore, the regulatory framework that includes them remains suspended. The overall tariff review has been deferred to the next government.
The Secretary of Energy, Flavia Royón, and the Enre controller, Walter Martello, announced an increase of $400 a month from April and $800 a month from June for Edenor and Edesur. The distributors say this announcement has not yet materialized into an official release.
While the abolition of subsidies was advanced, it was aimed at the state that needed to subsidize the cost of the electricity service least. The margins of the distributors did not improve as a result of this provision.
Government debt forgiven for distributors (of Edenor, Edesur and many others) for unpaid bills during the pandemic. Not having collected, the companies could not pay Cammesa, the wholesale administrator of the electrical system. With that measure, he tried to make a clean slate.
Edesur goes through some particularities. Its parent company, the Italian Enel, has put the generation business up for sale (and there are interested parties), and the process of selling Edesur will begin in March. There are fewer marked there, at least so far.
The future buyer of Edesur will have to take charge of the investments in improvements. Laying in Villa Crespo, Almagro, Caballito and neighboring areas presents difficulties that require a considerable outlay. Even the construction of substations requires money that companies will not be able to do without previously they have a rate that justifies it.
Source: Clarin
