Tariffs: what are the official figures to justify the new increases in electricity and gas

After the two public hearings to define the the new gas and electricity tariffs, This Thursday, May 12, the process of segmentation by which the Government seeks to move forward in the abolition of energy subsidies agreed with the International Monetary Fund (IMF). In the midst of the internal battle on the front in power, the team led by the Minister of Economy, Martín Guzmán, showed some of the figures that justify “the political decision” to reduce state spending in this segment .

He did so through a technical report by the Secretary of Energy Planning, in charge of Santiago López Osornio, which Guzmán trusted, in which the inefficient spending of the “pro-rich” regime What do they have widespread subsidies in fares gas and electricity. At the same time, he asserts that the state takes over from:

  • 82% of the cost of electricity;
  • more … than 75% of the cost of gas.

I also read: Alberto Fernández threatens to fire K officials who question the rate increase: “They can’t continue”

At the same time, he points out that the current regime and which defends Kirchnerism hard involves a end state aid be older for sectors with high incomewhen at the discretion of the officials of Guzmán should focus on those with fewer resources.

The Ministry of the Economy criticizes the system of generalized energy subsidies and wishes to modify it. (Photo: Capture TN)

“If we analyze the distribution of subsidies by decile, their behavior is very similar to the behavior of consumption. As consumption per decile increases, the amount allocated to subsidies also increases, although social contribution schemes have an impact that only partially offsets this effect between deciles 1 and 4. This translates into the pro-rich bias of subsidies”notes the report.

By how much will electricity and gas tariffs increase from June 2022

According to the officials who ordered the public hearings on Tuesday and Wednesday, the most vulnerable sector – which benefits from a social rate – will not benefit from additional increases compared to the 20% set last March. .

Meanwhile, the remaining 80% of users will face additional increases to complete an all-2022 increase of 43% (equivalent to 80% of the salary change over the previous year) .

What, they said, represents increases of between 18% and 25% for gas according to the area of ​​the country. So the the average bill for a residential user will become more expensive as following:

  • Center of the country: from $2029 to $2393.
  • North West: $1151 to $1402;
  • On: $2112 to $2651.

In the case of electrical power, surcharges for users of Edenor and Edesur (the rest must be promoted by provincial regulators) will be 16.7%. Thus, the average final bills would become:

  • Since Current $1,610 to $1,876 from June for those who do not have a social rate
  • from $843 to $901 Total monthly fee for beneficiaries of the social tariff.
During this Wednesday's hearing, the increases that will govern by salary variation were exemplified.  (Photo: TN capture)
During this Wednesday’s hearing, the increases that will govern by salary variation were exemplified. (Photo: TN capture)

How is the official energy subsidy removal plan

Perhaps the most interesting point of this Thursday’s public hearing is to know more details on how the universe will be determined to which remove energy subsidies totally.

This Monday, Guzmán said that the change in energy subsidies will open “a new paradigm” for Argentina, where the state will advance so that the 10% of those who earn the most pay energy at full price (without help from the state). as reported NTfor this Energy Planning has advanced in the determination of criteria to define the number of users.

The official plan says they will stop having subsidies and pay full price. They must meet one of the following criteria:

  • Reside in considered geographical areas high paying polygons identified by the National Electricity Regulatory Entity (ENRE) on the basis of the value per square meter. would be certain 500,000 households in CABA and surrounding areas, including countries.
  • To have Income greater than the equivalent of 3.5 Total basic baskets (TCC) for a household of four members. In March, that value rose to $314,000.
  • to be the owner of planes or boats luxury.
  • to be the owner of 3 or more properties registered.
  • To have 3 or more motor vehicles less than five years.

According to the technical report of the Ministry of Energy, the defined income threshold as “the amount of cash-based transfers Can be changed in order to reduce inclusion errors in the less subsidized segments or to increase the scope of this segment”.

The rest of the users, i.e. those below $314,000, considered the middle segment, will see a partial reduction in subsidies, while lower-income sectors will continue with the subsidized rates.

I also read: Rising tariffs: how to calculate how much household appliances consume and not overpay

How many people will no longer have electricity and gas subsidies

According to the Economy proposal, the universe of incumbents who will no longer receive energy subsidies and will pay the full rate in the Buenos Aires metropolitan area will be:

  • 921.778 in electrical energy;
  • 760,600 gas holders through the networks.

Moreover, in economics, it is said that for users to whom the subsidy is removed and consider that it does not correspond to them, they will have “a agile mechanism for complaining, requesting and reconsidering” the situation.

The draft form for users in breach of subsidy to request a review of the decision.  (Photo: TN capture)
The draft form for users in breach of subsidy to request a review of the decision. (Photo: TN capture)

About Rodney Fletcher

Check Also

Sebi’s new ETF rules are a game-changer for investors

On July 1, Sebi’s new rules for ETFs and passive funds come into effect. Having …