While the Government adopts sanctions against Edesur Due to the multiple power cuts in the Buenos Aires Metropolitan Area (AMBA), a bill was presented in the Senate bill what do you propose reduce the electric rate for residential and commercial users by means of the VAT reduction and the prohibition of the collection of fees and extra charges, among other changes.
The initiative was presented by the senator from Entre Ríos of the Frente de Todos Edgar Kueiderwho stated that “the objective is to attack the problem of the high cost that the neighbors pay for this service, modifying substantive laws that harm families and commercial, industrial and SME users”.
The project has two central axes. One is the tax part, focused mainly on a cut to more than half of the rate charged on VAT invoices, and the other is the increase in royalties received by energy-producing provinces in order that this increase be used to “reduce the cost of the electricity rate”.
With the same objective, according to Kueider, the project promotes the increase in the price that the Compañía Administradora del Mercado Mayorista Eléctrico Sociedad Anónima (CAMMESA) pays the Salto Grande dam -which is divided between the provinces of Entre Ríos, Corrientes and Misiones- and that the half of the proceeds for this increase is destined “to the decrease in the amount of the final cost of service”.
What does the project say to reduce the electricity rate in homes and businesses?
The project that is in the Senate proposes to reduce from 21 to 5% VAT on the electricity rate for private homes and family consumptionthrough an amendment to the Value Added Tax Law.
The general rate is 21% but that law establishes differential percentages for different sectors and activities. Based on this, the initiative proposes to incorporate into this standard a paragraph that establishes that “the aliquot will be 5% for electricity sales as long as the demand is residential“.
The initiative proposes to reduce VAT to 5% on rates for residential users
On the other hand, the VAT law establishes that the rate is 27% for sales of gas, electricity and water regulated by meter when the benefit is “outside homes intended exclusively for housing”, which includes commercial users with some exceptions.
Kueider’s project also proposes a change in this sense and proposes that the rate be 10.5% in the rates of “commercial, industrial and SME users”by incorporating “sales and provision of electricity services” to the list of sectors affected by the 50% VAT reduction established by law.
Another of the key points with which the project tries to reduce the electricity rate is the prohibition for energy distributors to charge extra charges such as “taxes and contributions” that, according to the senator from Entre Ríos, “make the final price of the electricity bill more expensive.”
Increase in royalties for the provinces: can it influence the cost?
On the other hand, Kueider’s initiative proposes a sharp increase in royalties charged by producing provinces of energy in order, as he pointed out, that this proportion is used to reduce the cost of the rate in those districts.
Currently, the Electric Power Law (15,336) states that the provinces in whose territories the hydroelectric sources are located receive monthly “12% of the amount that results from applying to the energy sold to the consumption centers, the rate corresponding to the block sale”. The bill raises that percentage to 20%.
In addition, it establishes that the royalties “may be received in kind -electrical energy-, at the option of each jurisdiction, and will be fully affected to reduce the cost of the electricity rate to end consumers within the province”.
The initiative prohibits distributors from charging fees and contributions
Differential rates?: the “federalization” of costs and the “K Factor”
Kueider’s project includes a chapter to establish a “differentiated seasonal price” with which he points, as he pointed out, to a “federalization of energy transportation and distribution costs” to “avoid distortions such as Buenos Aires paying less than the rest of the provinces.”
In this regard, the initiative states that the seasonal price that is approved quarterly by the Secretary of Energy at the proposal of CAMMESA and that governs the purchase of energy in the wholesale market from distribution agents will have to be determined “by a Factor K that takes into account the characteristics of the electricity markets in each of the jurisdictions from the country”.
That “K Factor” should be calculated based on a series of variables and parameters such as the “area supplied, number of users, energy consumed, length of power lines and others that are representative of the service provided.”
All these parameters vary from one province to another, especially with regard to the number of users and the length of power lines. For this reason, the project establishes that the “K factor will be determined by jurisdiction” at the same time that “it will affect the seasonal price”.
The conflict with Edesur
Although Kueider’s project is not directly related to the fight that occurs between the Government and the company Edesurhis presentation occurred in a context crossed by the prolonged and multiple cuts in the electricity supply for which various users demand financial compensation and the national Executive tries to support that claim.
In addition to evaluating the company’s intervention, the Government fined the company $1,000 million and announced it will force it to return the entire invoice of the last month to users who have suffered cuts above the average established in the contract.
The project was presented in the Senate by Edgardo Kueider from Entre Ríos
On the other hand, the Ministry of Energy in charge of Flavia Royon informed Edesur of the shipment of overseers by the government to audit compliance with the investment regime and the response time to users, as well as the quality of the service.
Last Thursday, during a press conference at the Casa Rosada, the presidential spokesperson, Gabriela Cerruti, was asked about the possibility of a expropriation of the company and replied that “the Government analyzes all legal variables and possible to take care of Edesur users”, while indicating that “there is no energy crisis in the country because the problem is from a single company”.
