Electricity and gas rates: October arrives with new increases and a greater reduction in subsidies is being prepared

Natural gas rates would have an average increase of 2.24% in October for residential users throughout the country, according to the calculation presented this Monday before the board of the National Gas and Electricity Regulatory Entity (ENREGE) by the technicians. The estimate assumes that the Government will maintain the Subsidy structure in force in Septemberwhen the average increase had been 1.4%.

For the electricitythe entity reported an adjustment of 2.41% in the distribution component Edenor and of 2.34% in Edesur’s. These percentages still do not represent the final increase in bills: it remains to be known whether the Ministry of Energy, dependent on the Ministry of Economy, will modify the wholesale price of energy. In September, the average increase in the electricity rate in the Buenos Aires Metropolitan Area had been 1.75%.

The calculation for October does not include changes to the Cold Zones subsidy regime approved by Congress. The reform still needs regulation and, as explained in the meeting, the necessary percentages to transfer it to the rates have not yet been defined.

The 2.24% estimate combines several factors. As reported at the meeting, it contemplates a 1% variation in the exchange rate on the price of gas at the Point of Entry to the Transportation System (PIST), an update of the 1.9% calculated with price indices to the consumer and wholesalers for the transportation and distribution components, and the share corresponding to the five-year tariff review.

It also incorporates the second bimonthly update of the Accumulated Daily Differences (DDA). This mechanism allows the difference between the price of gas recognized in the invoices and the cost actually faced by the distributors to be transferred to the rates. This year the Government shortened the adjustment periodicity: while the duration lasts energy emergencythe differences are incorporated each month, instead of doing it every six. This stage includes costs associated with imported liquefied natural gas during the winter.

The reform approved days ago by Congress could modify the bills of some 4.1 million users when it comes into effect. Within that universe, 1.16 million would stop receiving the benefit, according to estimates released about the scope of the law.

The original regime included some 940,000 users in Patagonia, Malargüe and La Puna. Its expansion in 2021 extended the discounts to other regions and increased the number of beneficiaries. The new law preserves the protection of the original areasbut changes the conditions for some of the users incorporated later: access to the benefit will depend on family income and a volume of consumption considered essential. It also concentrates the discount on the cost of gas, without extending it to the transportation and distribution components.

To obtain approval from Congress, the Government negotiated with the northern governors a electricity subsidy for the period between November and April. This subsidy, called Warm Zonesdid not enter the Fías project and must now be promoted by the ruling party.

Without precision regarding when this application would happen, the governors began to distrust. The Chief of Staff, Diego Santilli, referred to this issue this Monday and assured that it will be regulated in October and will come into force on November 1.