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Saturday, March 25, 2023

Electric companies ask for a 260% increase (Government will reject it)

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The company Edenor stated at said hearing that: in the last four years, Edenor received increases of only 31%, while, by they had an increase of between 370 and 562%. This clearly reflects the delay in updating Edenor’s revenues over the last four years. And this whole situation occurs despite the fact that the policy announced by the government that rates should be below wages would allow Edenor’s income to be adjusted by up to 300%.

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For this reason, the request for funds made to the ENRE consists of a total of $205,760 million, necessary to cover the deficit for the year 2023 and to allow the improvement of the service to continue. Translating this need for funds to the tariff table implies that 290% in some segments of residential users.

Edesur stated in turn, in a public hearingOnly the impact of inflation on Edesur’s remuneration is covered, and it is not the conclusion of a definitive rate review process. The income must be sufficient and timely to cover the operating costs of capital and taxes, whether they come from tariffs and/or subsidies. Less energy subsidies make it possible to order fiscal accounts and therefore collaborate with macroeconomic stability in the medium and long term. Which would imply an increase of 224%, in some residential users.

The companies proposal


In his projection, Edesur It does not include the expected cash at the beginning of 2023, which should be taken into account for the purpose of calculating the expected deficit at the end of that year.

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And likewise, it clarifies that it did not include the disbursements to carry out the commissioning of the new MITRE substation and its associated links given the magnitude of said disbursements and their multi-annual condition.




In his projection, Edenor does not include the expected cash at the beginning of 2023, which should be taken into account for the purpose of calculating the expected deficit at the end of that year, nor the need for “technical cash” at closing to cover your temporary working capital needs for the following month and calculate the effect of “Profitability” that the rate should recognize, which you value at $75,015MM.

Since August 2019, due to the “Tariff Chart Maintenance Agreement” signed with the National State, and later due to the rates remained frozen and, therefore, the Margin (VAD) of Edenor and Edesur.

This VAD freeze continued until 5/1/21, when an average increase of 9% was approved in Edesur’s rate schedule, which translated into an increase in its VAD of approx. 21.8%.

The next, and last, VAD adjustment occurred on 3/1/22 when the regulations came into effect, which increased the VADs of Edesur and Edenor by only 8%, respectively.

Otherwise, from April 2021 the rate adjustments were resumed, but only as a transfer of the seasonal programming of the Wholesale Electricity Market, the elimination of subsidies to GUDI users, or the rate adjustments of the Transportation companies, which increased Revenues of the Distributors but without improving their VAD.

In contrast to these increases, the inflation (CPI) expected for this same period (Aug-19 to Dec-22) would reach 373%.

Now, this starting graph shows the evolution of electricity rates in the AMBA.

The green portion is what they obtained to date with respect to the 2017 rate: 134% increase, and what they would have obtained (light blue portion). The blue triangles were the expected semi-annual increases in the RTI update mechanism.


In response to that request, Edenor and Edesur presented, among other issues, the following financial projections for 2023 with the current rates and price of energy costs.

Source: Ambito

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