The Supreme Court Pronounces On Natural Gas Prices And Tariffs

The Supreme Court of Justice ruled that the Ministry of Energy and Mining's resolutions which increased natural gas prices and transportation and distribution tariffs were invalid.

On August 18, 2016, the Argentine Supreme Court ("CSJN" after its Spanish acronym) ruled in the "Centro de Estudios para la Promoción de la Igualdad y la Solidaridad y otros c/ Ministerio de Energía y Minería s/ amparo colectivo" case that Resolutions N° 28/2016 and N° 31/2016 issued by the Argentine Ministry of Energy and Mining ("MINEM" after its Spanish acronym), are invalid.

1. The MINEM's Resolutions

   Through Resolution No. 28/2016, the MINEM set new prices for natural gas delivered at the entry point to the transport system and for propane gas to be distributed through the undiluted propane gas distribution system.

   Resolution No. 28/2016 also revoked certain rate charges that had been established to finance transport infrastructure and gas imports.

   Through Resolution No. 31/2016, the MINEM instructed ENARGAS to carry forward the integral review process for natural gas transportation and distribution tariffs provided by the licenses' renegotiation agreements reached between the utilities and the government, to restore the economic equilibrium of their licenses affected by the emergency measures taken within the framework of the Emergency Law 25,561 of 2002. This review process needs to be implemented by a public hearing process.

   ENARGAS was further instructed to temporarily adjust current tariffs for natural gas transport and distribution public services, to enable the licensees to comply with their investment programs for this year, afford their operation, maintenance, management and marketing costs and maintain the payment chain, to ensure the regular provision of public services until the definitive rate charts are approved. The MINEM also instructed ENARGAS to set a social tariff for vulnerable consumers.

   Following these instructions, ENARGAS approved new temporary tariffs for natural gas transportation and distribution services. Distribution tariffs for residential customers also include the new prices for natural gas approved by the MINEM.

2. Suits brought against the new tariffs

   Several court proceedings against the new tariffs approved by the ENARGAS were brought before federal courts across the country. A consumers' association (CEPIS) brought a class action suit against the Federal Government before a federal court of the city of La Plata. The...