5/6/2024
The Government implements an increase in electricity and gas rates, by applying new wholesale values for gas and electricity. At the same time, it reduced the maximum limits of subsidized consumption for low and medium income users (N2 and N3). The decision could imply, according to private calculations, new increases of more than 100% in the winter bills of those households.
Thus, with four resolutions from the Ministry of Energy, it inaugurated the so-called transition period, which will run from June to November 30, established at the end of May through decree 465, to put aside the generalized subsidy regime and replace it with one “focused on those who require it.”
The new scheme establishes that “the cost of a kilowatt per hour of electrical energy and a cubic meter of natural gas is identical for all, and the assistance that the State provides to users according to their payment capacity and which reaches up to a consumption limit through the recognition of a lower payment (bonus),” Energía said in a statement.
All consumption above these limits, regardless of the user category, will be paid at the “real” cost. In that sense, Energía established new
price for gas at the point of entry into the system (PIST) at US$3.30, per million BTU, 20% more than the current value, but below what was previously scheduled for May.
It also established a 28% increase in the wholesale price of electricity (PEST) until July 31, which goes to $59,298 per Mwh (in the summer it was $46,018).
The final impact of the decision will be according to consumption and the area and will begin to be reflected in the bills that arrive by the end of July, due to billing deadlines. They will be added to the increases already collected, of 500% average. According to private calculations, the new increases can reach 150% for some middle-class users.
The Government still has not applied the increases for transportation and distribution of both gas and electricity, which were to begin in May and which were frozen by decision of the Minister of Economy, Luis Caputo.
Changes in the gas rate and new subsidy limits
With the premise of “a single price for all” and with “bonuses” according to the payment capacity of households, the Government established a new wholesale price for gas (PIST, or the one that enters the transport gas pipeline system and then is distributed to homes, businesses and industries).
Thus, Energy changed the subsidized consumption limit for low-income users (N2) by equating it to those with medium incomes (N3). This subsidized block is variable depending on the area and time of year. For example, in AMBA, the annual block reaches about 390 m3).
Energy stated that middle-income users (N3) will have a bonus of 45% of the wholesale gas price, while N2 will have a subsidy of 64% of that PIST value.
To “guarantee a sustainable and equitable gas supply for all users, avoid shortages and ensure the economic viability of the energy sector, the Government set the new gas production values that will be transferred to users” as follows in June :
N1 residential users (high income) and productive sectors (commerce and industry) will pay US$3.30/MMBTU, according to the distributor.
N3 residential users: base consumption is US$2.34/MMBTU, depending on the distributor. Excess consumption is paid at US$3.30 USD/MMBTU.
N2: base consumption is US$2.14/MMBTU, depending on the distributor. Excess consumption is paid at US$3.30/MMBTU.
“In order to achieve normalization of the electricity sector, a single price is established for all users that will allow residential users to contribute with greater coverage of the supply cost,” emphasized the Secretariat in charge of Eduardo Rodríguez Chirillo.
Energy exemplified, by way of illustration, during June 2024, at the three levels of segmentation, the average value of the final monthly invoices will be the following:
N1, with an average consumption of 149 m3, will go from $25,756 to $28,142
N3, with an average consumption of 171 m3, will go from $24,465 to $26,865
N2, with an average consumption of 159 m3, will go from $15,638 to $20,797.
Change the electricity rate and the new subsidy limits
For electricity, for middle-income (N3) electricity users, the block of subsidized energy is reduced from 400 kw per month to 250 hw per month. Up to that limit, 45% of the wholesale price of electricity will be paid.
As for low-income households (N2), a subsidized consumption limit of 350 kw per month is established. Until now, this segment that has income of up to a basic basket had no limit on subsidized energy, that is, they paid a cheaper rate regardless of their consumption.
With these limits, N3 users will have a 55.94% bonus on the wholesale price. N2 users will have a subsidy of 71.92% on that value.
The Secretary of Energy reported in this regard that the PEST price from June will be transferred to users as follows:
N1 users (high income) and productive sectors (commerce and industry): they will pay between $56,019 and $59,298 Mwh depending on the time zone.
N3 users (average income): base consumption increases to $30,000/kWh, while excess consumption will be paid between $56,019 and $59,298 MWh.
N2 users (low income): base consumption goes to $20,000/MWh, while excess consumption will be paid at the values indicated for the segment without subsidy.
Due to the bonuses (subsidies) of wholesale prices, Energy exemplified with average residential consumption of 260 kwh the average value of the final monthly invoices, according to segmentation level:
N1 users will go from $24,710 to $30,355
N3 will go from $6,585 to $16,850
N2 will go from $6,295 to $12,545.
Source: TN
