Natural gas and electricity rates registered an increase that had a greater impact on lower-income users. Compared June of this year with June 2023, in gas, higher-income residential users (N1) had increases of 406%, those with low income (N2), 745% and the intermediate group (N3), 544%. While in light, it was 228% for N1; 465% for N2 and 378% for N3.
Compared to April, when the Nation defined the last increase, natural gas increased 6% for N1; 19% for N2 and 9% for N3. For the data, information provided by Metrogas was taken as a parameter. While the increase in the electricity rate, compared to February, when the Nation established the last increase, had an impact of 18% for N1, 94% for N2 and 73% for N3 in Buenos Aires.
In both cases, the segment that recorded the greatest hit to the pocketbook is the one with the lowest income. This is because Distribution Value Added (VAD) had a greater delay for this grouplike the PIST, which is defined as the price of gas itself as a product that is paid to the producing companies.
The impact of the gas price increase on the PIST is more significant for low-income users, since a subsidized consumption limit was defined, a measure that did not apply to these users. Any consumption above the limit must be paid at the value of N1, without subsidies.
The modification and update of the tariff scheme for both services could have a joint impact on the Consumer Price Index (CPI) June of between 0.7 pp. and 0.9 pp. The information comes from a report by the sector’s specialized consulting firm, Economy and Energy (E&E)led by Nicolás Arceo.
«The decrease in real salaries over recent years determines that, although rates are below the values reached at the end of the last decade, Its incidence in relation to family income is very high«, reads the writing.
Rate increases: changes in natural gas
A week ago, the Ministry of Energy published resolution 93/2024 in the Official Gazette, where they published the prices of natural gas in the PIST, which is around 3.3 US$/MBTU since June 2024. Prices for N1 users would increase by around 15%with respect to the tariff tables in force as of May 31.
The consumption limits were also modified: Starting in June, low-income users will have the same maximum monthly consumption limit as level 3 users.. Surplus consumption will be calculated without subsidies. This limit is defined according to consumption range, distributor and rate subzone.
The modification of the value of natural gas in the PIST reflects increases of 57% over the base block of Level 2 users and 30% on the N3 consumption limit. In the case of level 2 users who have surplus consumption, the increase in the price of gas will reach 327%.
However, it is worth noting that The latest increase in the price of gas in the PIST maintains subsidies for all residential demand. “Regarding the prices implemented in April, moderate increases are observed in the price of level 1 and the base consumption blocks of level 2 and 3,” the report states.
Compared to last year, natural gas rates register increases higher than inflation last year at all income levels. «Although natural gas rates are experiencing a significant recomposition with respect to the values prevailing last year, continue to be below the values at the end of the last decade« reads the document
Rate increases: modifications to the electricity rate tables
The same day that the price of natural gas was updated, The new seasonal prices were applied to pay for the demand for electrical energy between June and October 2024 in Resolution 92/2024. The price of energy paid by N1 and the rest of the non-residential users increased by 29%: from $44,401/MWh to $57,214/MWh.
Compared to February 2024, The price of energy was subsidized by 20% again in June of high-income users and commercial and industrial users.
In the electricity rate, a new subsidized consumption limit was also defined at N3 from 400 KWh/month to 250 KWh/month. At once, Low-income users (N2) will have a maximum subsidizable consumption limit 350 kWh/month. Excess consumption pays the same as N1.
The price of energy for N2 and N3 users «became defined as a discount on the price of level 1, it being established that level 2 will pay 28% of the price of level 1 and level 3 56%. This results in increases of 439% and 571% respectively on the base consumption block of both levels,” the consulting firm points out.
The price of energy for N2 users has not increased since June 2022, while for N3 users it has remained fixed since February 2023. “Although Level 2 and Level 3 users had a significant increase in the seasonal price of electricity from June 2024, will pay only 36% and 44% respectively of the generation cost«, reads the document.
The consumption ceilings established in the new tariff tables for N2 and N3 households and the cost of excess consumption without subsidies “will determine that, during periods of high consumption, such as winter and summer, Electricity rates for lower-income households will see an even more significant increase«, they expressed.
