The tariff increase due to the subsidy cap will reach 858,000 Edesur and Edenor customers

The government has clarified some aspects of the tariff increase, at least in electricity. According to their figures, there are more than 858,000 customers of Edesur and Edenor They will have to pay increases. They are those who consume over 400 kWh per month, which is the block that will continue to be subsidized for those who have asked to be enrolled in the register of subsidies.

The bill corresponds only to Buenos Aires and the suburbs, the so-called Metropolitan areaand excludes the rest of the country.

The beneficiaries of social rate, that there are more than a million customers in the AMBA, it will continue as before. They have the first consumption block (of 150 KwH) for free and pay a discount for the next.

In the registers managed by the Executive, almost 81% of Edesur and Edenor customers consume less than 400 KwH of electricity per month, which is the limit that will continue to be subsidized. But these users require just over half of the AMBA’s total electricity consumption. Users R1-R2 and R3 (all consumption below 400 KwH, which is the new official ‘landmark’) represent 53% of the demand.

“20% of households with the highest income consume 50% of electricity” Massa said. He appears to have been referring to the Buenos Aires concessions.

The incoming increase for customers has not yet been specified. It’s estimated at 300%, but it’s not a government-approved number.

The 858,000 customers who consume over the official limit are divided into two classes: those who have applied to remain in the grant registerand those who did not subscribe to that guide, or in so doing, were declared “high income” by the Secretary of Energy.

Customers who have not signed up for benefits will forfeit any benefits. All your consumption will be charged at the new price. The Secretariat for Energy is about to define an amount for the Seasonal Price of Electricity (PEST). Distributors will be charged. These, in turn, will bill their customers.

In the case of customers who have subscribed to the subsidy, they will keep the state subsidy for the first 400 KwH consumed. The rest will be invoiced without subsidy.

Electricity consumption in homes is highly dependent on weather conditions. In the warm months, the number of households consuming more than 400 KwH exceeds the average for the rest of the year.

In Massa’s announcement it was not specified what would happen to the social rate. There are more than 1.1 million customers in that condition. And there are 275,000 people who require more than 400 kWh of electricity per month, who could have had the subsidies removed, according to the minister’s words. The government made it clear today that it will not change anything with them.

This means that they will continue to get 150 KwH per month for free and pay the rest at a higher price.. But it will not be the amount of the rest of the customers, as it will continue to be heavily subsidized. According to the Executive Branch, there will be no changes to their rates. It is also likely that they are all on the grant register.

The rate changes will be a relief to the accounts of Edenor, the distributor of Daniel Vila and José Luis Manzano. Both are friends of Sergio Massa. If they can pass the costs on to multiple customers, Your debt to the state will be reduced. Edesur is the other distributor for Buenos Aires and the suburbs.

The government has not yet made it clear what will happen to the gas. There is already an increase in effect there (by over 160%), but the regulator (Enre) has not yet ordered distributors to pass it on to their customers.

In gas, it is being studied that the “subsidized” block is 500 cubic meters per year. The annual measurement is the one that best reflects climatic fluctuations, as much more is consumed in winter than in the rest of the year.

In any case, this figure could be changed depending on the region. Cold zones would have a subsidized block above the national average, according to Massa.

Federico Bernal, who has to implement the changes to the gas tariffs, plays as Secretary of Energy (see separate).

The impact of the removal of subsidies is difficult to measure. With the few items available, several specialists estimate that the tax savings will be around 800 million dollars (more than 112,000 million dollars at the official exchange rate).

As for the impact of subsidies, “it all depends on how the 400 Mwh threshold (the” subsidized “block) is managed, but it can leave a saving of $ 800 million in electricity, while in gas it is very uncertain because the criteria are not known and gas consumption throughout the country is very heterogeneous ”, calculates Fernando Navajas, FIEL’s chief economist.

According to his estimate, the reduction in subsidies is equivalent to 0.6% of GDP. Another expert consulted – who worked in the public service – managed the same number (800 million dollars), but did not want to risk it until he knew the details of the measures.

Consulting firm LCG had a more moderate projection, saving 0.3% of GDP for the rest of the year.