Power fees going up in Buenos Aires

The national government is giving the power companies a raise, through an increase in the power fees, that will fall on those who consume more than 650 kWh every two months. The increase will range from 10% to about 30% and, while Minister Julio De Vido says it'll only affect 24% of the population, others claim the middle class will be hit hard. And it seems a further raise is due next February.

The above is the news as reported everywhere in Argentina, and many people are genuinely concerned or outraged for the wrong reasons. Why? Well, despite the big headlines and the alarming newsflashes broadcast by the media, the raise is only for Buenos Aires, its metropolitan area and the city of La Plata only. Granted, that's 40% of the consumer base and Buenos Aires is the center of the universe for the porteño and for the "national" media, but you'd think they should at least qualify their statements.

I didn't say we hinterlanders* shouldn't be concerned or outraged. We have reason to be concerned since the same inflation and the companies' lack of investments that prompted the national government to grant the raise for the Buenos Aires area utility companies is having serious effects on those that supply the provinces; many had adjusted their fees up or were considering raises before this, and now it's only a matter of time before they align themselves with the capital's companies. Our own EPE (the Santa Fe Provincial Power Company) is checking its numbers right now.

* "El interior del país" ("the interior of the country") is what they call everything but Buenos Aires. That's how Argentina was structured to begin with: a colony with a big port to interface with the world, plus a broad expanse of land ripe for primary exploitation. It's customary and it doesn't sound alright. In fact, it reminds me of the ridiculous conception of Bender's robot apartment in Futurama — Bender sleeps standing up in a 1×1-metre room with no furniture, and the place where he lets Fry live is a huge room in itself... which Bender calls "the closet".

The reason for the outrage is, partly, the outrage of the porteños at this raise, because they've been enjoying ridiculously low prices for power, natural gas and public transportation at our expense since... well, ever. Time and time again I've written about the subsidized fuel for buses. As Rosario's city council is about to take the bus ticket to AR$1.60, a bus or subway ticket in Buenos Aires still costs about AR$1.

Well, as it turns out, the average residential power fee in Buenos Aires is vastly lower than the average in the rest of the country. No wonder the system has problems — you can't expect that the power grid won't collapse when you charge the lowest fee in the place with the largest and densest population, the highest per-capita income, and the highest concentration of installed top-notch air conditioners and refrigerators. According to the article in Crítica Digital, in the capital area a home that consumes 1,700 kWh will get a bill for about 88 pesos. Checking EPE's website and doing a quick calculation, we learn that the same amount of power, in Santa Fe, will punish the wasteful ways of the unfortunate consumer with a bill for 194 pesos. (The guy who writes the Crítica article obviously has math issues. He reports that fees in Buenos Aires are "194% cheaper" than in Santa Fe. Things can't be more than 100% less anything, unless you allow for negative values. Back in 2002 journalists noted that the dollar-peso parity had gone from 1 to a rate of almost 4 pesos per dollar, and reported that the peso had therefore "devalued by 400%". I recall only one news source giving the correct figure of 75%.)

Why did the porteños get this lucky all this time? Well, first of all, no-one likes being charged more, and when you have a metropolitan area with 12 million people surrounding the government seat, you don't want to make them angry. Especially when outside the capital proper you have several huge concentric rings of increasingly impoverished areas. If you control the money, you can use it to favour those near you, while the rest of the country gets indebted. Second, if you measure inflation only in the metropolitan area, it's in your best interest (image-wise and in the short term, i.e. the Argentine way) to concentrate your anti-inflation tactics there and leave "the interior" to its own devices. When the system starts to buckle under pressure (because you subsidize the demand but do not force the companies to invest and increase the offer), you deny it for as long as you can. And then you do something. You can imagine how close to the brink we've come if you consider the government is taking this step now, after the president's image has plunged and with a cooling economy on the horizon.

So, porteños and platenses, welcome to the rest of the country. Don't complain; you're still getting lucky.