Electricity tariffs: increases made official by the government reach up to 300%

The new electricity tariff tables will be provided average increases of up to 300% in the metropolitan area (AMBA) AND $7,500 bills would reach $30,000 per month, a much higher increase than expected. This is due to the impact that the redrafting that occurred in the elections will have on the ballot papers. categories and distribution costs that 5.8 million users have to pay Edesur and Edenor.

The Ministry of Energy estimated last week that the adjustments They would be between 65% and 150%, depending on the category and income level, which today is divided into three (N1, high; N2, low; and N3, medium). But official sources have confirmed in the last few hours that the increases could double these percentages “in some categories”.

Last Friday the Government published the tariff tables of Edenor and Edesur and on Monday it did the same with those of electricity transporters across the country. One of the main innovations is the reduction of residential categories (R) from 9 to 4, a decision that flattened the scale that defines higher tariffs based on the level of consumption.

Until last Thursday, the first step (R1) was the one that consumed up to 150 kWh per month and the last, the one that had a consumption greater than 1,400 kWh per month. Now, R2 and 3 are grouped together and become R2 (between 151 and 400 kWh per month), R4, 5 and 6 are grouped together and become R3 (between 401 and 600 kWh per month) and R6, 7 and 8 become R4 (more than 600 kWh per month).

Therefore, a former R7, which occupied an intermediate position in the ranking, has now moved to the top as R4. “These measures are being implemented gradually, so that residential users classified as N2 and N3 are affected to a lesser extent, pending the hearing for the redistribution of subsidies that will take place this month,” Energía said last week.

The impact at the ballot box, however, could be greater for sectors with lower purchasing power. According to the consultancy firm Economía y Energía, due to the variation in the value of the fixed and variable cost considering a typical consumption, a high-income R4 (formerly R7) would have an increase in the bill of 239% on average; that of the average income, 261%; and low-income, 300%.

“When they cluster, there is a trigger effect between different levels of consumption,” said Patricia Charvay, an economist at Economy and Energy, the consultancy run by Nicolás Arceo, a former official under Axel Kicillof at the Ministry of Energy. ‘Economy. “By consolidating R categories, the impact on bills is amplified,” said another energy sector specialist.

In the Government they argue that in relative percentages (the comparison of current values ​​with those prevailing so far) “It is not possible to indicate a single generalized increase because until now there were different categories of users who paid different prices for the energy and power that distributors purchased in the Wholesale Electricity Market.”

The “rebalancing” within categories has caught the attention of energy experts, who explain that there is a lot of “variability” in the ultimate impact of increases across different consumer segments. “At level 2 (low income), the lowest increase they give us is 90% for a former R3, and the highest for an R7 (now R4) is 300%,” Charvay said.

With these changes, the Government seeks to make end users pay the cost of supply and reduce energy subsidies. Due to soaring inflation and the ongoing fiscal adjustment, this item fell 64% year-on-year in real terms in January. The Minister of Economy, Luis Caputo, has committed to the IMF to reduce energy subsidies by 0.5% of GDP in 2024 (from 1.6 to 1.1%).

The increases made official last week reflect only one component of the tariff, namely distribution, as the price of (wholesale) energy has not yet increased. Nonetheless, it exceeds the calculations of the Fund itself, which predicted “the first increases in electricity tariffs (more than 200%) and gas (more than 150%) starting from February, after the public hearings”.