You cannot break the law of gravity in terms of public rates and services

Before the recent changes in economic management, the government published a series of resolutions in relation to the segmentation of subsidies.

The reading of these resolutions leaves the clear feeling that the issue is a “hot potato” that the officials who respond to the different sectors of the ruling coalition try to avoid with subsequent delegations of its implementation.

The new minister said the segmentation continues, but few things are clear in relation to its implementation, but let’s focus the analysis on what we know.

According to government estimates, 10% of users will be “segmented”, meaning they will lose subsidies and then start paying the full cost of energy. This implies that, on average, the energy bills of a “segmented” family in the AMBA would triple and those of the rest of the country would double. These increases will be implemented progressively in the remaining three bimonthly of the year.

However, these increases do not take into account the seasonality of energy consumption. For example, a family in the AMBA in the middle of winter can multiply its energy consumption up to 5 times on average compared to the temperate months, so seasonality will play an important role in the “wind chill” of increases in electricity bills. the families who will lose the subsidy, who will verify in the August / September bills the effect announced for the first months of next year.

If the segmentation progresses, all the families in the country, more than 15 million users, will have to be registered in a register, from which the Secretary of Energy will define on a case-by-case basis who will continue to be subsidized, and with what level of subsidies.

This regime has been in force since June, as expressed in article 1 of decree 332, will we consume energy that we do not know at what price we will pay?

The final implementation is the responsibility of the regulators and distributors, who will send the invoices at the end of the day and who would not have participated in the design of this program.

The segmentation has one goal: to lower the subsidy account, which is likely to exceed $ 15 trillion this year. It will be successful only if it is applied in the electricity sector, which represents ¾ of these subsidies, and for this it will be necessary to enter into agreements with Provinces and Municipalities in charge of provincial distributors and cooperatives. This implies a huge coordination challenge for a government that appears to lack unity of command.

This regime presents more doubts than certainties, which if it existed it would have full fiscal effect only next year. Everything indicates that a good mechanism, conceived and designed in the previous administration, such as the federal social rate, is in the process of being abandoned. The social rate is a tool that can be improved, but it follows international guidelines for identifying the vulnerable, those who cannot pay the full cost of the service and direct benefits there.

Segmentation does not include any mechanism for the rational use of energy, nor incentives for its responsible use, nor a massive information campaign for the user on the changes that this segmentation entails.

And if the idea is to apply georeferencing, it will also be a mistake, only with application in the north corridor of the AMBA. Unfortunately, there remains a high dose of dogmatism in interest rate policy and in the maintenance of generalized subsidies that are impossible to finance.

It is impossible to break the “law of gravity” in terms of tariffs. Invoices should gradually recognize the costs of providing the service and subsidies targeting vulnerable demand.