Since June consumption, a strong increase in electricity and “wholesale” natural gas is already in force. The novelty was made official this Wednesday with a series of resolutions from the National Energy Secretariat.
The increase, which seeks reduce the state contribution in the form of subsidies and contribute to the fiscal surplus, It is part of a transition path towards a scheme in which all users pay the full price of what it costs to generate, transport and distribute electricity and gas, the ultimate objective of President Javier Milei.
With the new prices, all users, but especially middle-income (Level 3) and low-income (Level 2) residential areas, will suffer increases that, on average and according to official estimates, will be between 99% and 166% in the final invoice price.
Electricity in Córdoba, until now, had increased due to the pass through of wholesale electricity and, basically, due to the increase in the added value of distribution. Gas, meanwhile, due to the impact of the transportation and distribution segment and due to the value of the monthly fixed charge. What will be incorporated now is a very strong increase in the wholesale price of both systems.
How much light increases
Through Resolution 92 of the Secretariat chaired by Eduardo Rodríguez Chirillo, the Milei Government raised the so-called Pest (Seasonal Energy Price) to $71,411 per megawatt hour (mWh) for the winter period (until October 31) .
Of that total, high-income residential users (Tier 1) and businesses and industries will pay $57,214. Level 2 and Level 3, meanwhile, which until April paid only 4% and 3%, will now pay 44% and 28%, respectively. A very strong increase.
Once the subsidy is applied, the value of wholesale energy for Tier 2 households will increase by 440% (from $2,980 to $16,060 per mWh). For Level 3, meanwhile, the wholesale segment will rise 570% (from $3,750 to $25,200). In the first case it will impact, at least, 65% on the final price of the tickets and, in the second, 85%.
In parallel, another resolution modified the monthly consumption limits with subsidy. This means that Level 2 and Level 3 users who exceed these ceilings will also pay more for electricity.
In the case of Level 2 (low income), which until now had no limits to pay for subsidized energy, will now have a ceiling of 350 kWh/month. For cold areas, which include the central and southern departments of Córdoba, the new limit is 700 kWh/month.
For Level 3 residential homes (average income), the new limit of subsidized monthly consumption is 250 kWh/month, 37.5% less than the 400 KWh that applied until now. For cold areas, 500 kWh/month.
How much does the gas increase?
In parallel, through another of the resolutions published this Wednesday, Energy also established the new value of natural gas at the entry point to the transportation system (Pist) at US$3.29 average per million BTU for the period. May-October.
That will be the price that high-income residential areas (Tier 1) will pay, while Level 2 residents will pay 36% and Level 3 residents will pay 45%. For the former it implies an increase of 55% and for those with middle incomes, 64%.
As with electricity, the Government also lowered the subsidized consumption limits for Level 2 and Level 3, unifying them at 41 m3 per month. From that point on, it is considered “surplus consumption” and the US$3.29 will be paid. The most common category in Córdoba consumes between 801 and 1,000 m3 annually.
Question of speeds
José María Rodríguez, professor of Economics at the UNC and UCC, specialist in public service rates, sees an “internal discussion” within the Government, “with [Luis] Caputo who wants to go faster with the tariff adjustments to close the fiscal issue and, on the other hand, the political wing trying to put some cold cloths and try to avoid the impact, because the tariffs go to the center of social discontent, almost 65 % of households”.
For Rodríguez, we are following a “correct line”, in the sense of “having some degree of gradualism by placing greater limits on consumption.” The specialist understands that “surely the path of adjustments will go towards the total elimination of subsidies” with “some social rate scheme for Level 3.” There is also the doubt as to whether the energy basket finally applies, but this “has its implementation problems.”
“From the fiscal point of view, it should go faster, from the implementation and policy point of view, there the Government is managing the issue to avoid the impact on social discontent and also on inflation indicators,” he added in dialogue with The Voice.
