Rates: how much water and electricity prices have risen and how it impacts businesses

Last week a new increase in the number of people was reported in Mendoza. water rate as the program to remove subsidies for gas and electricity services advances. These disbursements are running at a faster pace than inflation in general because they were delayed due to regulations and state aid. Although the national government has made progress in removing these benefits, in recent months it has put a stop to this situation for various reasons. However, as announced from the beginning, Javier Milei's presidency aims to completely remove subsidies for public service rates , which impacts citizens' pockets and the competitiveness of companies.

In relation to Mendoza, the increases have been felt strongly because beyond the national line drop, the province has also adjusted its values . On the one hand, the provincial government recently resolved an increase in the water and sewage rate , which will be 25% in February and 6.64% in July. Thus, during 2025, the increase in this service will be 33.3%, a figure close to the inflation estimated for this year. Being provincial, water does not have subsidies except for special cases or retirees.

The bill issued by Aysam had increases above inflation in 2024 and beyond the fact that there may be variations, the registered increases were around 270% and 350%, approximately. In the midst of this, the company has made a significant commitment to water meters and we will have to wait to see the impact of this on the bill, although it will clearly vary in each case. Regarding electricity, subsidies have been removed, which have also impacted the provincial tax component of the bill.

As detailed on the Ministry of Energy of the Nation's website, local taxes within this bill may be of provincial or municipal origin and vary between jurisdictions, amounts and percentages. As reported by the Provincial Electric Regulatory Entity (EPRE) , in 2024 the provincial tax on the electricity bill evolved as follows: In February it was 159%, in May it was not applied, in June the corresponding tax for May was verified in three sections: June 30%, July 5% and August 7%.

In August 2024 – with a more moderate inflation – the tax increase was reflected in the months of September (7%) and October (5%). Meanwhile, in the last quarter, the total increase was 4.5% for the three months (November, December of last year and January 2025). In February, this item rose 3%, so the total annual increase was 220.5%, almost double the inflation of 2024. The EPRE clarified that the Nation established a gradual monthly reduction of the national subsidy starting in February for users categorized in Level 2 (Low Income) and Level 3 (Middle Income) of the order of 1%.

Regarding bills, the economist of the consulting firm Evaluecon, José Vargas , said that rates have increased much more than inflation in Mendoza. In this context, he observed that this situation has strongly impacted companies that come from a 2024 of delicate balance between costs and income. “First, because beyond some specific sectors, economic activity has not been able to fully recover and, second, because the summer months have been very difficult for certain areas,” Vargas said. The professional referred to the low numbers of tourism and commerce with a record of Mendoza residents who vacationed in Chile and a strong update in the prices of rents, water , electricity and gas. “The costs of services are on a different track than the CPI average and this impacts competitiveness,” the economist summarized.

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Along these lines, the president of the Association of Small and Medium-sized Businesses (APYME), Rubén Palau , said that the increase in water prices complicates the productive sectors and something similar happens with the electric energy sectors. An analysis carried out by the UBA-CONICET Observatory of Rates and Subsidies shows the high impact that taxes have on the cost of electricity. In this framework, Mendoza is among the first three provinces where - according to these data collected until May 2024 - taxes take a higher percentage of the total price of the energy bill.

For Daniel Garro, an economist at International Valeu Group , the big differences between the behavior of consumer prices and rates in general have to do with the price readjustment in question. “It is a mistake to compare both items since the services were already in arrears,” he said, adding that this situation will continue for quite some time. Regarding energy, Garro pointed out that on average nationwide – beyond regional differences – this service is paid for between 70% and 75% of the bill. That is, there is still a long way to go to pay the totality of what this service costs today.

“It is likely that the provincial component has recovered a little above the national one, but it is important to reach 100% of the total billing,” observed Garro. In this context, he added that this is a key point for the investment incentive that these sectors need. From his point of view, the tax update by the province facilitated investments in maintenance by the electricity companies, which resulted in a summer with very few power cuts unlike other regions. The readjustment of tariff prices has to occur, for Garro, based on a technical scheme without political interventions.

In this context, the main impact of these increases is that both companies and individuals must adjust to be able to pay what energy really costs. “Private companies must start doing micro work, measure expenses and take care of resources since now they must pay what energy really costs,” observed Garro. He urged companies to adjust their accounts to avoid problems in the future.