With the freezing of electricity and gas rates, how much does each province pay and what condition is San Juan in?

With the freezing of electricity and gas rates, how much does each province pay and what condition is San Juan in?
With the freezing of electricity and gas rates, how much does each province pay and what condition is San Juan in?

The postponement of the increases in electricity and gas services that the Government defined in May to support the slowdown in inflation left in force the tables that had been sanctioned during the first four months. According to private analysts, the strong increases did not imply a reduction in the subsidies that the State provided in May to cover the part that residential users do not pay of the “real cost” of energy. They are even higher than last year, they said.

The rates are made up of four items: the cost of generating the energy (electricity or gas), transportation, distribution and municipal, provincial and national taxes. The part that the State subsidizes is generation through the transfers made by the Administrative Company of the Wholesale Electricity Market SA (Cammesa) to electricity generators and gas transporters.

Users are divided into three residential categories according to the segmentation scheme in force since 2022. High-income users (N1) were expected to pay the full cost of energy, low-income users (N2) with a social rate and middle-income users (N3) with a cap of subsidized consumption. The latest official data showed that N1 is 5.3 million, N2 is 8 million and N3 is 2.7 million.

The decision of the Minister of Economy Luis Caputo to postpone the increases in electricity and gas services caused the percentage of subsidies that the State provided in May to cover the part that residential users do not pay of the “real cost” of energy exceed the levels of the same period of the previous year (Reuters)
The decision of the Minister of Economy Luis Caputo to postpone the increases in electricity and gas services caused the percentage of subsidies that the State provided in May to cover the part that residential users do not pay of the “real cost” of energy exceed the levels of the same period of the previous year (Reuters)
How were the gas bills?

The Rates and Subsidies Observatory at the Interdisciplinary Institute of Political Economy (IIEP), which depends on the UBA and Conicet, published an analysis in which it details that the country’s average gas bills for a high-income user in the category R2, which with the December rate table paid $4,846, will now pay $21,522 since April.

In turn, the average bill in the country for a user No. 2 jumped from $2,247 to $12,913 while the average bill in the country for a user No. 3 (middle-income households) went from $2,598 to $14,439 in April.

“These increases imply that, on average in the country with the same consumption, a user No. 1 faces an increase of 344% compared to the tariff schedule in force in December 2023. In turn, users No. 2 with low income and No. 3 from Middle incomes face, on average, final bills that are 475% and 456% higher,” detailed the IIEP.

The natural gas service through networks is regulated at the national level, so there is no dispersion to interpret the invoices. However, if there is a difference between subsidies and consumption disparity between regions:

  • For universe N1, According to the IIEP report, since April the most expensive rates have been paid in Tierra del Fuego $58,917 on average. It is followed by Santa Cruz south ($57,713), Chubut south ($33,380), Neuquén mountain range ($33,070) and the Chubut and Río Negro mountain range (33,050 pesos).
  • In the case of N2, The most expensive average gas bills are those of Santa Cruz ($28,231). They are followed by Tierra del Fuego ($25,817); PBA, Chubut and Río Negro ($19,018); PBA sur-PBA ($18,847) and Chubut sur (17,273 pesos).
  • For the N3 The highest bills will come in Santa Cruz ($33,527). They are followed by Tierra del Fuego ($31,630); PBA, Chubut and Río Negro ($21,181); PBA and PBA south ($21,010) and Chubut south (20,140 pesos).

Electric power
The IIEP study recalled that in May Resolution 7/24 of the Ministry of Energy came into effect, setting seasonal prices for the February-April 2024 quarter throughout the national territory. The prices should have been replaced for the winter period (May-October).

“The average country electricity bill is $42,877 for a high-income household (N1), $17,453 for a low-income household (N2) and $18,048 for a middle-income household (N3),” the report detailed.

  • For universe N1, According to the IIEP report, the most expensive rates are paid in Neuquén $65,202 on average. It is followed by Río Negro ($60,209), Mendoza ($57,088), and Salta (54,387 pesos).
  • In the case of N2, The most expensive average tickets are those from Mendoza ($28,231). It is followed by Río Negro ($27,670), Santa Fe ($28,214) and Buenos Aires (27,670 pesos).
  • For the N3 The highest bills will reach Mendoza ($35,980). They are followed by Río Negro ($35,851); Santa Fe ($28,578); Buenos Aires ($28,049) and San Juan (26,210 pesos).

Subsidies grow
The decision of the Minister of Economy Luis Caputo to postpone the increases in electricity and gas services caused the percentage of subsidies that the State provided in May to cover the part that residential users do not pay of the “real cost” of energy exceed the levels of the same period last year. If the freeze continues, the trend will deepen due to greater consumption due to lower temperatures and higher costs.

Although it is expected that in 2024 there will be a cut in energy subsidies compared to the previous year, it will be of a smaller magnitude than expected. “In 2023 you had 2.3% of GDP in subsidies (1.6% Energy and 0.7% Transportation). And the Government committed to taking it to 1.6% (1.1% Energy and 0.5% Transport, a cut of 0.7 points of GDP). We believe that energy will end up at 1.4-1.5% and transportation subsidies will remain at 0.5 percent. This gives you a total cut of 2.3% to 1.9-2% of GDP,” estimated Julián Rojo, economist at the Interdisciplinary Institute of Political Economy, in a scenario in which increases are resumed after the winter period.

The Government’s main crossroads is how to start charging higher rates to the N2 and N3 segments, which represent almost 11 million users or almost 2 thirds of the total. The aspiration of the Secretary of Energy, Eduardo Rodríguez Chirillo, was to resolve this front with the implementation of a new scheme for allocating subsidies from a Basic Energy Basket (CBE). First it was going to be applied in April, it went to May, then to June and for now it is not certain that it will be applied. It is even analyzed in a different scheme for the medium term, although there are no definitions in this regard.

As this media was able to reconstruct from official sources and the energy sector, the delay has to do with the difficulty of cross-referencing the data they need to determine which households will continue with the assistance on their ballots. The Chief of Staff, Nicolás Posse, Caputo and Chirillo are working to find the right harmony. The triad maintains contact every week to calibrate the roadmap.

 
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