Those people have probably already received the bill of the Provincial Energy Company (EPE), corresponding to the third two months of the year, have noticed a new increase in the cost of electrical energy distributed by the Santa Fe state company.

Why another increase? Well, essentially because it was already scheduled: at the end of January of this year, the national government announced a 37% increase in the generation stage, to be executed in two tranches, which meant an impact on the final bill of approximately 6 % in each section; consistent with the general reduction plan subsidies to energy, which registered so many comings and goings last year, due to the implementation of the reductions without prior compliance with public hearings.

But that is not all. The national state has direct interference in the stages of production and transportation of electrical energy. In our province, the stage of distribution corresponds to the Santa Fe company. Therefore, to the above, the adjustment sections authorized by the provincial government must be added: an increase of 15% in January and 19,1% for the month of March. Which places the provincial energy bill as one of the most expensive in relation to the national territory.

Subsidy goes out, pocket goes in. Taxes continue, the deficit falls.

But then why do I have to pay more?

One of the pillars of the new management of the Ministry of Finance is compliance with the fiscal goals program, announced by the current holder of the portfolio, Nicolás Dujovne. In it, an objective of progressive reduction of the primary deficit was established, establishing guidelines of 4,2% of GDP for the current year, a goal of 3,2% for 2018 and another of 2,2% for 2019.

Regarding the latter, on April 27, the quarterly compliance results were presented, showing that a position of 0,4% of the deficit was achieved against the 0,6% that had been planned for the first three months of the year. Basically, the partial goal was exceeded.

Now, if the current management has prioritized a deficit reductionWhat items were affected? The table shown below shows a breakdown of primary current expenditure. As can be seen, 60,81% of it is dedicated to the payment of Social Benefits, followed by Operating Expenses, which covers 20,58%; in which, the majority is dedicated to paying salaries.

In general terms, the mentioned items have been excluded from potential cuts. The same applies to the delicate situation that the central power maintains with the provinces. All of which results in the reduction in spending being exerted on the so-called economic subsidies.

Thus, the graph shown below reflects the application of the subsidy cut policy. The interannual decrease between the accumulated amount from February 2015 to the same month of 2016 shows a drop of 68,46% interannual for the entire energy sector (including not only current transfers, but also capital transfers to companies in the sector).

How is the above reflected on my invoice? The answer is known. The savings that the national state produces in terms of subsidies, with the declared objective of reducing the fiscal deficit, transfers the cost to families or companies, maintaining – approximately and in general terms – the same fiscal pressure.

Of course, the above implies an increase in the total costs of companies and greater pressure on family budgets. In this regard, the following graph shows a simulation of different bimonthly fixed consumption, for a category 1201 residential consumption plan.

To consult the complete tariff table as of April 2017 [click here.].

As can be seen, from the last two months of 2014, to the second two months of the current year, an increase of 400% has been recorded for this type of residential consumption; on which they remain to be carried out new re-compositions until 2019. The above will continue to impact households and SMEs above all, given that the lion of cost has already been transferred to large companies during 2016.

But sir, you don't answer the question.

It is true, so far the argument has shown what are the general guidelines by which such adjustments are made, but not what are the specific problems of the energy sector. What's more, a light reading of this article could suggest that the reduction of energy subsidies occurs due to a sort of discarding of other sectors. Which is completely wrong.

In that sense, from the Observatory we detect that there is a lack of information that could provide an overview. In the report attached to this note, an explanation of the functioning of the electricity market is presented, and the failures that are being recorded in the wholesale market with respect to price formation.

The problems that have arisen with respect to the offer: its evolution, the different sources of energy generation and the associated costs that have led to investment problems in the sector, and the use of more polluting sources than those currently available. Finally, the evolution of the demand at the country level, together with some councils to reduce consumption.  

The province has recently launched the Home Energy Efficiency Labeling pilot program, which aims to know the energy efficiency of the residence of those who register, to know what modifications can be made to save energy [click here.]

With the data provided in the report, we hope that the public can have a simple, but at the same time comprehensive, explanation of the phenomenon, which is not subject only to current issues. We hope you enjoy reading it, and that you send us your comments on our social networks. Enjoy it!