Photo via Datamarca

The Supreme Court today unanimously decided to halt the increase on gas prices put forward by the Energy Ministry under Juan José Aranguren, for residential consumers, or homes. In addition, Judges Ricardo Lorenzetti, Carlos Maqueda, Elena Highton de Nolasco and Horacio Rosatti stipulated that policy changes of this nature (such as service hikes) must first be presented to the people through public hearings before being implemented. This is in accordance with Article 42 of the Constitution.

“The ruling puts an end to the uncertainty generated over these past four months and confirms the former prices. As a result of this, we will issue an order to gas companies to abide by the ruling. What we lived this week, with [Energy Minister Juan José] Aranguren’s briefing before a special committee in the Lower House and the ruling, makes it clear that institutions are working. Our job is to abide by the ruling, not to question it,” said Cabinet Chief Marcos Peña in a press conference shortly after the ruling was made public.

What are the implications for the Macri administration as well as homeowners and businesses, the main parties reached by the ruling? Not everything is clear yet. There were issues, such as what’s going to happen with businesses, that were left out. This is what we known, what we can interpret and what we can speculate about the steps the Macri administration will take from now on.

Why Does The Ruling Only Apply To Homes?

The justices explained that in order for a ruling to apply to other people besides the party who filed the suit, the issue at hand must affect a large portion of the population, making it redundant for everyone to file their own suit. The Court defined this as “homogeneous individual interests” in a precedent-setting case called “Halabi.” 

According to the Court, in this particular case, the La Plata Federal Court that banned gas increases “issued a ruling that affected the entire population, without making a distinction between residential users, businesses, factories or different levels of income.”

The only group that actually meets this “homogeneous individual interests” requirement, the Court says, are residential users, or homeowners. “These are citizens who would have a difficult time filing a suit on their own. Hence, access to justice is affected and they are eligible to be represented in a class action,” the ruling reads. According to figures provided by La Nación, homeowners represented 30 percent of the country’s gas consumers during the first five months of the year.

How Much Will Homeowners Pay, Then?

Since the increases were annulled, prices will go back to the April rates, before the Macri administration implemented the measure. Those who paid bills with price increases between May and August will have what they paid deducted from their future bills until the gas companies settle their debt. Those who haven’t paid will now have to pay their overdue bills — without interest, surely — along with their future ones. It’s likely the Macri administration will instate a payment plan for those who can’t or won’t pay their bills all at once.

What Does The Government Have To Do To Increase Utility Bills Now?

The Court ruled that that policy changes of this nature must first be presented to the people through public hearings before being implemented. This is in accordance with Article 42 of the Constitution, which “foresees the participation of users in public service and republican democracy.”

Photo via lapoliticaonline.com
Photo via lapoliticaonline.com

“Information, debate and substantiated arguments must be part of the decision-making process adopted at a given moment,” the ruling adds.

How Will The Public Hearings Work?

Public hearings will take place in a designated location and will either be presided by the board of ENARGAS, the State-run entity in charge of regulating gas services and consumption in the country, or by a representative of their choosing. It will be open to the people, who will be represented by a designated attorney. Whoever presides over the hearing will have to kick it off by doing the following:

  • Provide a brief summary of the facts
  • Outline the laws that have to be taken into consideration to make the decision
  • Establish when each party will be able to speak out

Once the hearing is underway, participants will be allowed to offer any information or evidence they deem pertinent to support their arguments. Attendees will be allowed to ask for explanations from experts and/or question what is being said. Finally, parties will give a closing speech, which can be contested by their counterparts.

Will Hearings Have An Impact On The Final Prices?

No, not at all.

They are only held for informational purposes and are not legally binding, according to the protocol for public hearings.

What About Businesses And Factories?

The ruling doesn’t apply to them and they will have to face the increases.

However, this doesn’t mean they have no other choice but to pay. Since they weren’t included in the class action, each business or company would have to file its own suit to get out of paying the increases. However, since trials usually take years to be solved, they might want to file injunctions to get courts to quickly suspend the increases for them as well.

Photo via Infobae
Members of the Supreme Court. Photo via Infobae

This is more than likely considering the Court’s ruling for residential users. However, there’s another problem. It’s also unclear whether they have to retroactively pay the increases from April. Should this be the case, small- and medium-sized businesses would find themselves in rather large debt.

How Much Will The Ruling Cost The Government?

According to Santiago Urbiztondo, an economist working for the Foundation For Economic Investigations in Latin America, “by applying to homeowners only, the ruling affects half the amount the government destined to energy subsidies.” “Overall, it’s around AR $40 billion,” he said.

What About Electricity Bills?

The ruling only applies to gas increases. Electricity increases are still suspended by the ruling issued by Federal Judge Martina Isabel Forns. However, the Macri administration appealed the decision and now the Court overseeing her actions will decide over the increases. Having the Supreme Court’s decision as an immediate precedent, it’s highly likely it will reach the same conclusion and determine electricity increases go down the same path as the gas ones.