Electricity Wholesale Prices: Subsidy Reduction

On November 10, 2011, the Official Gazette published Resolution No. 1301/2011 by the Secretariat of Energy ("SE") through which new non-subsidized seasonal electricity prices were approved.

Taking into account the actual cost of electricity supply which, according to the SE, is an average of AR$ 320 MW/h, for the period from November 1, 2011 to April 30, 2012, the SE determined the application of the following seasonal prices from December 1, 2011:

• Peak hours: AR$ 254.49 MWh.
• Remaining hours: AR$ 249.47 MWh
• Non-peak: AR$ 245.18 MWh.

These prices apply to the supply points where the following activities are developed as either primary or secondary activity:

1. Extraction of crude oil, natural gas and minerals.
2. Wholesale banking, retail, investment, financial intermediation, brokerage and credit, foreign exchange, risk assessors, property insurance (except ART) and reinsurance, among other services.
3. Air Navigation services
4. Fluvial transportation services
5. Communications services.
6. Services related to gambling and betting

This resolution envisages the creation of a Registry of Exceptions, which will incorporate those users who are able justify and prove their inability to cope with the seasonal reference prices without subsidies.

The remaining seasonal reference prices are set out in Sections 2 and 3 of Resolution SE No. 666/2009. For the purposes of its pass-through to rates charged by utilities, the price is set out in Annex VII of Resolution No. 666/2009 with an increase of AR$ 143 MWh.

Utilities must notify and identify to CAMMESA in detail, the demand for those non-residential users they supply, according to the "Activity Code" established by General Resolution No. 485 of the Federal Administration of Public Revenue, based on the primary or secondary activity developed at the point of delivery.