“Higher-than-real operating costs” and “higher profitability for companies”, supports the report approved by the National Auditor General’s Office (AGN) on the Comprehensive Tariff Review (RTI) -performed during the government of Mauricio Macri- and confirms that the Let’s Change management benefited the electricity distributors Edenor and Edesur. According to the AGN report, between January 28, 2016 and February 1, 2018, the National Electricity Regulatory Entity (ENRE) did not fulfill the task of controlling the concessionaires.
The report found that “the Comprehensive Rate Review (by former Minister of Energy and former CEO of Shell Juan José Aranguren) benefited distributors to the detriment of users.” “Higher-than-actual operating costs were approved, which impacted on the final rate paid by users and on higher profitability for companies,” the report indicates.
The overvaluation of company costs It was between 50 and 60 percent, which allowed Edenor and Edesur to pocket just over 2,000 million pesos above the real values.
The survey was approved during a meeting held this Thursday at the AGN headquarters, where the College of Auditors met with the presence of its head, Jesús Rodríguez, and the general auditors María Graciela de la Rosa, Javier Fernández, Juan Ignacio Forlón, Gabriel Mihura Estrada, Miguel Ángel Pichetto and Alejandro Nieva.
After the rates, former president Mauricio Macri was hiding in an alleged improvement of the electricity service in the City of Buenos Aires and the Greater Buenos Aires, which translated into fewer cuts in the times and hours of greatest demand. However, the report notes that the “approved profitability” for the distribution companies was not related “to the degree of efficiency and operational effectiveness.” And it adds that there were “deviations in the investment plans committed” by the beneficiary firms.
The role of the ENRE in the transfer of resources to companies
Regarding the operating costs of the companies approved by the ENRE in the aforementioned period, the AGN detected that they were “higher than the real costs of the distributors, which implied an overestimation of the same and a greater recognition to be included in the Own Cost of Distribution for the calculation of the tariff table “.
One of the components that impacts on the value of the electricity tariff is given by the so-called “own distribution costs”, so the higher these costs, the higher the final tariff paid by the user. Comparing the costs presented by the companies with their financial statements, the audit team determined that “Enre approved 54% higher operating costs for Edenor and 61% higher for Edesur.
These overestimations represented additional amounts for the distributors equivalent to $ 2,193.91 million for Edenor and $ 2,027.21 million for Edesur to be paid by users in their rates, for which it was stated that “these over-costs resulted in a higher final rate For the users”.
The audit maintains that “it could not be verified that the approved rate of return is related to the degree of efficiency and operational effectiveness of the companies as provided for in article 41 of Law 24,065”.
The rate of Change
The report approved by the AGN details that the rates reached increases accumulated up to 2,300% in August 2018, “to the detriment of the users’ pocket and the quality of the service received”, since the greatest demands regarding the reduction of supply cuts occurred only as of 2019.
“The formula to determine the bonuses that should be granted to users for supply cuts harmed them with respect to the previous situation,” the work added.
“Deviations from the investment plans committed by the distributors were also detected, which led to the persistence of supply cuts in the first two years of the five-year period.”