How to fit tariffs for the electricity distribution system within a global economic and social environment which suffers from serious deterioration conditions. The Argentine case

Situations of crisis alter the rules by which the electrical market works. Being a utility, the possibilities of managing to render a normal supply, even at enormous costs and by resigning efficiency, fall short. Argentina is ruled by an organization of the electrical industry based on the opening up of markets and on a major participation of the private sector in this activity, the path which developed and developing countries have chosen. Devaluation and some political interventions have altered the rules by which the electrical market used to work and, therefore, the economic equation of companies which render this utility — distribution and transmission are regulated — and even of generating companies, a deregulated activity. This has led to internal debts accumulated in the industry and to the need of getting funds from the national state- which is external to the industry. The consequences of the lack of adequacy in the earnings of the industry in the short, medium and long term; the transference of resources from the energy industry to the rest of the economic activity of the country and the effect of measures taken by national authorities, which hinge on the current political scenario, make up a very special situation. This generates difficulties, in cases in which there are prior concession contracts, to reestablish initial contractual conditions which will allow tariffs to be adjusted as needed in order to ensure that the service be sustained in the long term, together with the new socioeconomic conditions. Electrical energy distribution companies, after a profound social and economic crisis which the country went through at the end of the year 2001, must necessarily face an adjustment of tariffs. In this unavoidable adjustment of tariffs, the growing level of poverty recorded over the last years will have to be borne in mind, by implementing a system of Social Tariffs, not considered in regulations currently in force. The authors, in thei- proposal, include a description of the basic principles which this social tariff should feature.