The national government yesterday advanced an increase in electricity and gas rates while enabling monthly increases, in line with inflation.
In the latter case, the decision will be made official in the next few hours and will be added to the measures taken yesterday and published in the Official Gazette in which it provides for different increases in electricity and gas rates starting on the 1st.
In parallel, the Secretary of Energy, Eduardo Rodríguez Chirillo, is working on a new invoice model. The idea is that users know what the “real cost” of the public service is and the magnitude of the subsidies they receive from the national State. The objective is to reduce excess consumption and expand the discussion on public spending.
For now, as of last Saturday, residential users will begin to pay more for the electricity and gas they consume according to the resolutions published yesterday by Energía in the Official Gazette, which implies increases of up to 155 percent for certain users.
The rates are made up of four items: taxes, transportation, distribution and the cost of energy. Subsidies are the difference between this last item and what users pay.
With this increase, commercial, industrial and residential users cover 65% of the real cost of electricity.
Until May, coverage reached an average of 45%, according to Energy sources. The official intention is that next year everyone will pay 100% of what the service is worth, but at least in these six months progress will be made in this “transition scheme” that could be extended for six more months.
“It is important that the N2 and N3 contribute to covering the costs of the system. Things are not worth what people can pay, they are worth what they are worth. The subsidies do have to be granted based on purchasing power,” the Government explained.
The impact of the measures
Regarding the scope of the rules made official yesterday, they all have an impact on the bills of different users, although with different scope.
Specifically, they enable a strong increase in electricity and “wholesale” natural gas.
The increase, which seeks to reduce the state contribution in the form of subsidies and contribute to the fiscal surplus, 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.
In any case, EPEC, as well as the cooperatives and Ecogas, evaluated yesterday the specific impact of the measures on residential bills.
Through Resolution 92 of the Ministry of Energy, the so-called PEST (Seasonal Energy Price) was raised 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% of the total, will now pay 44% and 28%, respectively.
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 implies 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 did not have limits to pay for subsidized energy, they 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.
Gas
In parallel, through another resolution, Energy also established the new value of natural gas at the point of entry into the transportation system (PIST) at an average of US$3.29 per million BTU for the May-October period.
That will be the price that high-income residential communities will pay (level 1), 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 “excess consumption” and the full rate will be paid.
