High tensions as government fines power company

Edesur is owned by an Italian holding and has a 95-year exclusive contract to distribute electricity in the south of Buenos Aires

Following days of power cuts that affected hundreds of thousands in the Metropolitan Area of Buenos Aires, the government announced that it will fine electricity distributor Edesur AR$1 billion and will impose an external audit of the company. The announcements followed multiple protests and heightened media attention.

“We’re talking about people who are connected to ventilators, to oxygen concentrators, sometimes these devices don’t have autonomy,” said Marcela Gómez, secretary of an association of people who depend on electricity for medical purposes. She told the Herald that Edesur put lives at risk.

Some users reported that they had gone without electricity for four consecutive days. People from the Villa Lugano neighborhood in Buenos Aires protested on the Dellepiane highway and were moved by City Police on Wednesday, using rubber bullets. According to the ENRE, out of the 16,672 users experiencing power cuts at the time, 6,552 of them were in the deprived Lugano-Soldati area.

The take-over that never was: the government’s actions

The Economy Ministry told the National Electricity Regulator Entity (ENRE) and the Energy Secretariat to impose the AR$1 billion fine and audit the company together with Buenos Aires University. The audit will investigate the regulatory asset value, investment regime compliance, user-response time compliance, and quality of the transmission service.

The Energy Secretariat confirmed to the Buenos Aires Herald that auditors will be present in every area of the company.

Edesur will have to give back the total amount of the last month’s bills to the users that were victims of power cuts that were above the contract-agreed average limit. They will also enable a complaint channel to claim for appliances that were damaged during the cuts.

In a press release, the company explained that “record-breaking demand of 4,181 megawatts” caused the power cuts because February was “the hottest month of the last sixty years.” However, ENRE’s acting head Walter Martello said in interviews that the power cuts started when temperatures “had not even reached 23°C.”

Last Sunday, Energy Secretary Flavia Royón tweeted that the government wouldn’t hesitate if it had to end Edesur’s license. Official sources confirmed that the government evaluated — and ultimately ruled out — the possibility of a state take-over of the company’s administration, without affecting its capital.

Yesterday, Edesur and Enel’s authorities met with Economy Minister Sergio Massa, Royón, and other government officials. In a press release, Claudio Cunha, Country Manager of the Enel Argentina holding, said that Massa told Edesur the government would not intervene in the company’s operation. The press release also demanded more money for the energy sector and ended with an apology from Cunha to the affected users.

Edesur has had the exclusive concession to distribute electricity in the south of Buenos Aires since 1992 — a 95-year contract that expires in 2087. The company is part of the Italian holding Enel, which owns several companies related to the Argentine electricity system.


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