Rate increases will affect middle and low-income users. For almost 7 out of 10 households, the subsidized consumption limits will now be lower. They could exceed 200% for the middle class.
The national government made official the details of the removal of subsidies from energy rates that will take effect in June. All users, especially those with medium and low incomes, will pay more for the electricity and gas they use, but they will also have lower subsidized consumption limits.
Residential users could receive increases that, in some cases, will exceed 155% for electricity according to private estimates and official calculations. In the case of gas, the increases are more moderate: up to 30% compared to previous bills.
In any case, no residential, commercial and industrial user will pay the full cost of the energy consumed, so everyone will be subsidized.
Increases in electricity rates
Due to the current segmentation of subsidies, there are three types of households: high-income (N1), low-income (N2) and middle-income (N3). The N2 and N3 cover only a small part of what they consume, which is one of the items on the bills, in addition to the cost of transportation, distribution and national, municipal and provincial taxes.
Resolution 92/2024 of the Ministry of Energy brought the Seasonal Energy Price (PEST) for the May-October period to $71,411 per megawatt hour (MWh). The N1, as well as businesses and industries, will pay $57,214 per MWh. The N2 will have a discount of 71.9% and the N2 a 55.9% on that price on the invoice. These last two segments paid 4% and 3%, respectively, of the value in force until April.
To illustrate the final ballots, the Secretary of Energy of Eduardo Rodríguez Chirillo made an estimate of increases considering average residential consumption of 260 KWh:
- N1 will go from $24,710 to $30,355 (22.8%).
- N3 will go from $6,585 to $16,850 (155.9%).
- N2 will go from $6,295 to $12,545 (99.3%).
New electricity subsidy caps
On the other hand, Resolution 90/2024 published by Energía establishes new consumption limits with subsidies. This implies that N2 and N3 users who exceed these limits will pay more for electricity and the bills could be even heavier.
“For the demand of users categorized in Level 2, the base consumption limit is set at 350 kWh/month,” the standard says. This segment did not have a consumption limit with subsidies with the scheme that had been in effect since 2022 and that the Government modified this Wednesday. For cold areas the limit will be 700 kWh/month.
“For the demand of users categorized in Level 3 (with the exception of users included in Article 2 of this measure and for the period established therein), the base consumption limit is set at 250 kWh/month,” it stated. the resolution. These homes had up to 400 KWh subsidized until this new measure. For cold areas it will be 500 kWh/month.
- Consumption cap for national subsidy of 350 kwh for level 2 (never had a cap) and the surplus pays equal to level 1.
- Modifies the national subsidy consumption cap to 250 KWh for level 3 (previously it was 400 KWh) and the surplus pays the same as level 1.
- Last registration period for RASE is 60 days for all home/room users. If you are registered, you do not need to do it again.
Increase in gas rates
Through Resolution 91/2024, increases in natural gas rates were also established at the Point of Entry to the Transportation System (PIST) to be transferred to the final rates. The PIST is the price of gas consumed by users, whose cost for the May-October period is an average of USD 3.29 per million BTU (British unit of measurement for gas).
N1 (high income) users will pay an average of USD 3.29 per million BTU. However, it is estimated that the price of gas in winter is around USD 5 per million BTU, so they will continue to be subsidized.
N2 users will have a 64% bonus on the price paid by high-income users, that is, they will cover USD 1.18 per million BTU. Until April they paid USD 0.8 per million BTU, so they will pay almost 55% more for gas.
The N3 residential areas will have a 55% bonus on the PIST, so they will only pay almost USD 1.81 per million BTU. Until April they paid USD 1.1 per million BTU, which implies an increase of 64% in that concept.
The resolution unifies the consumption limits for low and medium income users at 41 cubic meters per month: “During the Transition Period, from June 1 to November 30, 2024, for natural gas consumption by network , the consumption limits established for Level 3 users in Resolution No. 686 dated October 5, 2022 of the SECRETARIAT OF ENERGY of the MINISTRY OF ECONOMY (“base consumption”) are extended to users included in Level 2. .
Consumption
Consumption made above the ‘base consumption’ will be considered ‘excess consumption’ for the purposes of the bonus to be applied to the Energy component that will be transferred to the rates.” It is worth remembering that the surplus will be paid without a subsidy, that is, USD 3.29 per million BTU.
To illustrate the final ballots, the Ministry of Energy made an estimate of increases considering average residential consumption:
- N1, with an average consumption of 149 m3, will go from $25,756 to $28,142 (9%)
- N3, with an average consumption of 171 m3, will go from $24,465 to $26,865 (9%)
- N2, with an average consumption of 159 m3, will go from $15,638 to $20,797 (32%)
Registration of access to energy subsidies
Users who registered in the Registry of Access to Energy Subsidies (RASE) to request the subsidy do not need to register again. Those who have not done so, even if they receive assistance, will be excluded within a period of 60 days.
It is important to understand that the strong increases in the first quarter, around 350%, occurred in two components of the bill: energy transportation and distribution. As made official last week through Decree 465/2024, the Ministry of Energy will advance the percentage that users pay for the cost of generation, which for electricity is known as the Seasonal Energy Price (PEST) and for gas natural is the Point of Entry to the Transportation System (PIST).
It is at this last point where the subsidies paid by the Argentine State are channeled on the difference between the “real cost” of energy and what users pay. The Treasury compensates the generators with transfers made through Cammesa, the administrator of the Wholesale Electricity Market.
The Government seeks a fine tune between fiscal balance and supporting the slowdown in inflation, at a time when energy prices are usually higher. That is why they are also preparing a new monthly indexation system for transportation and distribution based on future inflation expectations from the BCRA’s Market Expectations Survey (REM).
With information from Infobae
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