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The Government of Javier Milei made official this Wednesday the details of the removal of subsidies from energy rates that will take effect in June as part of the transition to a new assistance scheme. All users, but especially middle- and low-income residential users, will pay more for the electricity and gas they use and will have new lower subsidized consumption limits.
That is why residential users could receive increases that, in some cases, will exceed 150%. As consumption usually skyrockets in winter, some sectors will have much larger jumps in their bills.
light increases
It is important to highlight that 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 the costs of the energy 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 $57,214 per megawatt hour (MWh) for all residential users. The N1, as well as businesses and industries, will pay 100% of the cost of electricity, which will result in a final increase of approximately 20%. 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% of the current value until April.
Estimation 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%).
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 THREE HUNDRED AND FIFTY (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 TWO HUNDRED AND FIFTY (250) kWh/ month,” stated the resolution. These homes had up to 400 KWh subsidized until this new measure. For cold areas it will be 500 kWh/month.
Through Resolution 91/2024, the price of natural gas at the Point of Entry to the Transportation System (PIST) was also established to be transferred to the final rates. The PIST is the price of gas consumed by users, whose cost for the period May-October is USD 4 per million BTU (British unit of measurement for gas).
N1 (high income) users will continue to pay USD 4 per million BTU because they do not receive subsidies.
N2 users will have a 64% bonus on the price paid by high-income users, that is, they will cover USD 1.6 per million BTU. Until April they paid USD 0.8 per million BTU, so they will pay almost 100% more for gas.
The N3 residential areas will have a 55% bonus on the PIST, so they will only pay almost USD 2 per million BTU. Until April they paid USD 1.1 per million BTU, which implies an increase of 81% in that concept.
