Limits Applicable to Public Welfare Entities’ Gas Bills

1. Resolution No. 14

Within the context of the ongoing tariff review process started as from 2016, on September 27, 2018, Argentine Secretariat of Energy Resolution No. 14 was published in the Official Gazette (“Resolution No. 14”).

Among other measures, Resolution No. 14 (i) abrogated the scheme of limits applicable to the increases in the gas bills created Resolution No. 212/2016 of the  former Federal Ministry of Energy and Mining (the “FMEM” after its acronym in Spanish); (ii) eliminated the 10% bonus in the price of natural gas and grid undiluted propane gas for consumers that reduce their consumption by 20% with respect to the same period of the preceding year, which was set by means of FMEM Resolution No. 474/2017 (the “Gas Saving Scheme”); and (iii) amended the bonus scheme corresponding to Social Tariff Beneficiaries.

As explained below, Resolution No. 14 introduced, for Complete Service SGP1 and SGP2 users —i.e. non domestic uses in which the client has entered into a gas distribution or transportation agreement for a minimum contractual amount, which cannot be less than 1,000 m3/day for a term no shorter than a year— which are beneficiaries of the regime set by the Public Welfare Entities Law No. 27,218 (Law No. 27,218 and the “PWE”, respectively), a new scheme of limits to the increases in gas bills applicable to such category and a bonus in the price of the grid natural gas and grid undiluted propane gas.

2. The PWE Category

Law No. 27,218 set the creation of a specific tariff framework for the EWP, to which a differential tariff, equivalent to the maximum tariff corresponding to residential users for each public service, shall be applied. Such differential tariff was incorporated to the tariff chart corresponding to the gas distribution public service by means of ENARGAS Resolution No. 4,092/2016, in accordance to the instructions provided by FMEM Resolution No. 2018/2016.

The application of the differential tariff to the PWE follows said entities’ specific nature, i.e. non-profit, and whose main purpose is common welfare.

Thus, Complete Service SGP1 and SGP2 users which can benefit from the PWE tariff are: (i) non-profit civil associations, simple associations and foundations; and (ii) non-profit community organizations authorized by their corresponding jurisdiction which carry programs related to the protection or promotion of rights, or develop direct social aid activities which are free of charge for their recipients. 

3. Resolution No. 14’s impact on the PWE category

Resolution No. 14, with the purpose of mitigating the increases resulting from the ongoing tariff review process, established for Complete Service SGP1 and SGP2 users which benefit from the PWE regime, a 50% limit for the increase in the gas price corresponding to the bills to be issued as from October 1, 2017.

In order to calculate the applicable limit, the “base value” to be considered is the amount corresponding to the same category and same consumption volume for the same billing term corresponding to the latest approved tariff charts increased by 50%.

On the other hand, and in order to mitigate the abrogation of the Gas Saving Scheme, Resolution No. 14/2018 provided a 10% bonus in the price of grid natural gas and grid undiluted propane gas for Complete Service SGP1 and SGP2 users which benefit from the PWE regime.