Argentine government authorized an increase of 500% in electricity and 170% in gas
Without a public hearing, the Minister of Economy Sergio Massa authorized new increases on residential electricity and gas bills, thus pursuing the fiscal objective implicit in the agreement with the International Monetary Fund (still renegotiating).
Electricity rates for homes will increase by up to 97% only in May and 125% in February (when the previous update took place).
Homes that fall below this threshold will lose subsidies, which in the Government’s eyes, constitute households that had monthly incomes above $390,000 in September 2022 or have not completed the form to access subsidies.
About 4.5 million people in CABA (Autonomous City of Buenos Aires) and the Province of Buenos Aires will have to deal with a 500% year-on-year rate increase, formally as part of the “N1” category defined as “high income” by the Government.
At a national level, it is estimated that up to 33.3% of households will lose subsidies immediately, and more than 34% considering the AMBA.
Likewise, “middle-income” users, designated under the N3 category of the Energy Secretariat, will also suffer significant increases.
However, they will keep a part of the subsidy below a consumption of 400 mWh per month.
The middle class will be impacted by an increase of 700% year-on-year for consumption over the subsidized amount, which implies an increase of 400% year-on-year on the total monthly bill.
The limit set by the Energy Secretariat assumes an average balance of “normal” consumption.
Still, the arrival of winter and low temperatures could force consumption to rise in certain users affected by seasonality.
The national Government is empowered to set tariffs in the AMBA region, while local jurisdictions will be in charge of other regions.
Even with the significant increases, the situation is still critical since tariffs only cover 60% of the energy cost.
The adjustment does not manage to compensate for it, but it does reduce the burden of economic subsidies and the gradual deterioration of services.
On the other hand, the Government confirmed an average increase of 25% for residential gas bills throughout the country, fluctuating between 20% and 37% depending on the different categories of users.
And although gas bills will be less affected by the removal of subsidies for high-income users nominated in the N1 category, the new increase scheduled for this month implies a rise of 170% year-on-year with respect to the same period last year.
Middle-class and low-income users (categories N2 and N3) will not lose subsidies.
Still, they will suffer an important shock on the price of the tariffs with an estimated increase of 120% year-on-year (concerning last year’s May bill).
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