The Government has already made official the calls for a public hearing to increase the price of rates during the first four months of the year.
He Government made official calls for public hearings for January to increase the rates for both electricity and gas in the first quarter of the year. The administration of Javier Milei seeks to reduce the subsidy investment to these services and, in turn, update the cost of energy generation, transportation and distributionwhich would lead to advances in the price of tariffs exceed 300% for average incomehe 180% for low income and the 150% for high income earners.
The first public hearing, which will be led by the Gas Regulatory Entity (Energas)will take place on January 8 to define the “transitional adjustment” of the rates of transport and gas distributionwhile at the end of the month it will be the turn of Electrical Energy Regulatory Entity (ENRE) to determine the price of distribution value added (VAD) of the two distributors of the Buenos Aires Metropolitan Area (AMBA): Edesur and Edenor.
The Government’s objective is to reduce the subsidy to 0.7% of the Gross Domestic Product (GDP) this yearwhich in 2023 reached 1.7% in the energy area. Companies will also seek to update and transfer the prices of generation, transportation and distribution to the bills. At the same time, they will try align prices with the last devaluationsince the cost of energy supply is dollarized.
What will be the increase in the electricity rate?
According to the calculations made by the consulting firm Economy and Energy who drives Nicolas Arceo“in a VAD recomposition scenario, and considering the monomic generation cost estimated for the first four months of the year, the increases in average rates for high, medium and low income users would be 151%, 377% and 182 %, respectively”.
Furthermore, the report clarifies that these increases already take into account the estimated price variation until February of this year. “Inflation is contemplated in December 2023 of 25%, in January 2024 of 20% and in February 2024 of 15%. At the same time, an exchange rate of $832 per dollar in February 2024 is considered,” she clarifies.
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Furthermore, the Economy and Energy report anticipates that would require new rate increases throughout the year to maintain the VAD in real terms“as well as to incorporate the higher generation cost associated with the winter consumption peak.”
This way, Electricity subsidies would go from US$5,650 million in 2023 to US$2,450 million in 2024less than half.
What will be the increase in the gas rate?
The public audience to discuss the increase in the price of gas rate It will be next Monday, January 8, and the total removal of subsidies for middle-income users will be considered, which will remain the same as high-income users, and that low-income users will begin to pay 20% of the supply cost.
In that context, the report estimates that rate increases for high-, middle- and low-income users would be 260%, 402% and 253%, respectively, with VAD recomposition and the impact of devaluation.
Thus, National State subsidies for natural gas would go from US$2.6 billion in 2023 to US$1.23 billion in 2024.
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Source: Ambito
