The dreaded blackouts

When, for some reason, the power is cut off, it generates a number of inconveniences and problems that even the simplest things, such as getting water, making coffee, charging the mobile phone, are impossible.

Every summer, which seems to be getting hotter every day, a portion of Argentine citizens, especially those who live in the AMBA (Buenos Aires metropolitan area), and especially those who are in the concession area of ‘Edesur, suffer from these conditions and beyond the grandiloquent statements by officials, regulatory bodies and also companies, a solution cannot be seen in the short or medium term, even worse, many Argentineans do not want, do not unwilling or unable to assume that part of the problem is the cost of electricity being paid for pales in comparison to other variables in the economy.

The reasons for power cuts can be many: a transformer station that explodes, a transmission line that is cut, or a simple cable that burns. But the problem is much more complex and has many actors who, by not having serious communication between them, added to other problems, make the electrical service of very poor quality, or at least that is so perceived by most users. .

Electrical service is very poor, or at least that’s how most users perceive it

First, there is an autonomous entity, Cammesa, whose function is to manage the Argentinian wholesale electricity market which, as in many other countries, is interconnected. In other words, from the supply of the production companies, both in price and quantity, it detects where the demand is greatest, contracts that “power” which would be the will of the generator to deliver its electrons, and through a company dedicated to transporting these electrons and delivering them to the distributor, for example Edesur, so that they reach every home, business and industry.

At the end of each month, Cammesa, through a simple neighborhood grocery account, had to collect from the distributor what it consumed, pay the carrier and the generator, and so the cycle repeated itself each month. Well, that doesn’t happen.

Cammesa not only manages the electricity market, but also buys and sells natural gas and fuel oil to keep generators running. The generators have their prices in pesos, with late fees, therefore they cannot maintain their installations, therefore 40% of the total generation park is “unavailable”.

A significant number of gas turbines and combined cycles declared unavailable could be active if the remuneration received by the producers were not so late. These are so-called “old generation” power plants in electrical jargon whose remuneration is defined in pesos by the State through a resolution from the Ministry of Energy. This regulation should be updated with inflation, but in recent years the executive has suffered delays which caused the generators to run out of funds to perform preventative maintenance in the factories.

40% of the total production fleet is “unavailable”

Nobody knows for what reason or circumstance the electricity carriers do not update their tariffs and as is already known to all, the AMBA distributors’ tariffs are late despite the increases granted and the elimination of subsidies put in place by the minister Sergio Massa.

The distributor does not pay because he says the tariff is not sufficient; the transporter does not charge because Cammesa does not charge, and the producer charges as he can and in most cases with contributions from the national treasury, that is, what is not paid by the tariff is paid by taxes. Likewise, the generator does not pay for the fuel because it says the tariff is not enough and therefore comes full circle.

Another very important player is the electricity regulatory entity which has interference in both AMBA distributors and carriers throughout the country, currently intervened and which instead of applying Law 24,065 which regulates the system electricity, calculates the tariffs every six months for the entire value chain and plans the work necessary to ensure that the service of the electrical system is of quality and at a fair and reasonable price, acts as a policeman, always rejecting the responsibility on the distribution companies and many why not on the marketing companies by blaming all these for all the problems which arise after the cuts.

The Ministry of Energy, under the supervision of the Ministry of Economy, which should promote energy policy at the level of the country as a whole and promote communication between the various actors, is dedicated only to making announcements of increases, segmenting users to receive subsidies and imposing fines that are rarely paid.

In the specific case of power outages in some neighborhoods last week, the Department of Energy determined:

1. Apply a $1,000 million fine to Edesur for service quality deficiency issues.

2. Reimbursement to users who have been victims of cuts greater than the average established in the contract of the entire invoice for the past month.

3. Activate a claim area for appliance damage.

4. Order the implementation of a surveillance with audit to which we will convene the University of Buenos Aires to examine the value of regulatory assets, compliance with the investment regime, compliance with user response times and quality of the service transmission of the entire Edesur area.

Do these actions solve the problem? Of course not. On Monday February 6, the controller ENRE announced that a resolution will be issued with new tariffs for Edesur (VAD). Once released, financial viability can be assessed so that the business can operate in the quality context that customers require. And after?

How the chain of events unfolded that left up to 200,000 homes without power:

1. February was billed as the hottest in 60 years. Last Friday 10, at 1:45 p.m., Edesur recorded an all-time high energy demand of 4,181 MW. At 1:54 p.m., the high-voltage system operator GBA (Sacme) asked the distributor to cut customers, after reporting that the electricity production for the southern zone of Buenos Aires was insufficient.

February was billed as the hottest in 60 years. Last Friday 10, at 1:45 p.m., Edesur recorded an all-time energy demand record of 4,181 MW

2. Following the Sacme order, preventive power cuts were carried out on some 180,000 customers, equivalent to 250 MW, between 2:00 p.m. and 5:00 p.m. 70% was normalized by 4:00 p.m. After this time, nearly 37,000 customers remained without supplies linked to the damage caused by the heat wave, who gradually recovered their supplies throughout the afternoon/night.

3. During the last week in Buenos Aires, the temperature sensation of 40 degrees has been exceeded, which has led to greater demands on the electricity distribution networks.

4. One of the electricity producers in the southern zone is Central Dock Sud, a company that it manages with other shareholders, and which has a combined cycle of nearly 800 MW (3.2 times the missing power on Friday February 10) but which is currently out of service due to modernization works.

5. Edesur has operated without paying dividends for two decades, with the exception of 13 million USD in 2009. In this context, 100% of the company’s income was directed to the operation, and in 2019 Enel injected 100 million USD to be able to finance the investment plan.

Enel announced the departure of Argentina, which adds both a new and an old discussion, who should administer the electricity service in Argentina, the State or the private ones?

6. Enel announced the departure from Argentina, which adds both a new and an old discussion, who should manage the electricity service in Argentina, the State or the private ones?

While all this is happening, no one in the government is proposing a medium and long-term solution, the opposition is making very good diagnoses, requests for reports due to irregularities in the management of the sector, but so far they have not did not propose a global solution to a problem which, every year, repeats itself inexorably.

The dreaded failures have arrived, the solutions have not.

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