Los cortes de luz han afectado cotidianamente a los usuarios de Edesur y Edenor durante los últimos años, pero ha sido muy poca la información pública disponible sobre el alcance que han tenido los apagones. EconoJournal accedió en exclusiva a estadísticas del Ente Nacional de Regulación de la...
econojournal.com.ar
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I had no less than 1 day without power at my office since 2016/2018 when we have to go to Court after 20 days without electricity.
The article cited is inaccurate and much of its content is misleading. Although the title of the publication is "Econojournal," it is not written by economists...at least not competent ones.
First, as a person who works with numbers, the spreadsheet says to me that a downward trend was established beginning in the year 2012 and that trend stabilized as of 2015. The two increments upward in 2016 and 2017, based on 2015 results, are not meaningful enough to draw a conclusion. Plus, figures for years 2015, 2016 and 2017 follow the same trend in both spreadsheets. Since these are different utilities, an analyst would have to discard external factors before drawing any conclusion.
Second, in Argentina electrical grid reliability is strongly correlated with weather, or temperature to be more specific. The correlation is not perfect, i.e., 1, but it is close, about .75 would be my guess. Any examination of grid reliability would have to control for weather/temperature. The article acknowledges the influence of weather on grid reliability, but it does not control for it. That's like saying "We know that psychopaths commit more crime," and then taking a crime survey in a neighborhood with a mental hospital, but not adjusting for the population of patients in that hospital.
In layman's terms, we must ascertain whether it was hotter or colder in 2016 and 2017 than 2015? If so, by how much? Special attention would have to be paid to the amplitude of the temperature, i.e., how many days did the temperature in Buenos Aires exceed 35 degrees (or some other threshold that tends to result in grid failure). In the US, we use "Heating Degree Days," to perform just such exercises. A heating oil company can't say, "We sold 10% more product this year than last year." They must adjust their results based on "HDDs." When dealing with phenomena that are strongly correlated to weather, such as electric grid reliability, any study that does not control for temperature is useless.
Third, the article clearly states that the statistics do not distinguish between causes for grid failure. That's like saying "California Wildfires Increase Under Trump." Factually, such a statement may be true. But it is a non sequitur - one does not follow from the other. Without knowing the causes of individual grid failures, and separating them out accordingly, conclusions about grid reliability under Cristina/Macri are inconclusive.
Last, the article is misleading in its implication that the removal of subsidies should have produced an increase in grid reliability. There is only one thing that will produce a sustainable enhancement to grid reliability: utility revenue significantly above costs. Discretionary operating income at the utility would allow for infrastructure improvements and/or modernization. The idiocy of the claim that removal of subsidies should have produced better reliability leads me to believe that the authors of the article are strongly partisan.
Let's take an example. An average home might use 1,000 Kwh (kilowatt hours) per month. Let's say that in 2014, the total cost of 1,000 Kwh was $1.000 pesos. In that year, the government paid 50% through subsidies and the consumer paid 50% from their pocket. So each party paid $500 pesos to the ulitity for 1.000 Kwh in a month. In 2016, Macri removes half the subsidy; he takes the government's share from 50% to 25%, so the consumer now pays 75% of cost. Immediately, the consumer's bill rockets from $500 pesos per month to $750 pesos per month.
But what has happened to revenue at the electricity operator? Revenue has stayed the same - $1.000 pesos per month. Macri's removal of the subsidies has been a non-event for utility revenue. If the utilities weren't generating enough cash flow for modernization before, removal of subsidies won't change that.
Now, let's account for inflation. Same example as above: 1.000 Kwh for $1.000 pesos. Macri cuts the subsidy from 50% to 25%. Consumer share goes from 50% to 75%. But the monthly bill for 1.000 Kwh goes from $1.000 pesos per month to $1.400 pesos per month, in the face of 40% inflation. Let's look what happens to the monthly bills. The government's subsidy at 25% goes from $250 pesos per month to $350 per month (up 40%). The consumer's share goes from $750 pesos per month to $1.050 per month (up 40% also)!
Look at it from the consumer side. The consumer was paying $500 pesos per month. Now with the removal of subsidies plus inflation, the consumer pays $1.050 per month. Electricity bills for consumers have more than doubled, but with removal of subsidies and inflation, the electric operator is getting the same revenue. Now, consider this go-nowhere treadmill with 3 years of inflation.
Electricity provision in Argentina will always be unreliable until consumers are willing to pay the cost of production plus an increment for upgrade/modernization. That would likely mean monthly utility bills on par with the western world, say $100US per month.
To conclude: the article cited is not written by economists. I would characterize it as misleading, inaccurate and strongly partisan. I feel the title of the publication, "Econojournal" is deceptive.