Argentina has increased the discount limit on electricity received by provinces in the form of hydroelectric royalties. According to the new regulation, published on Tuesday, provincial distributors can now write off up to 50% of their billed electricity to settle debts in the Wholesale Electricity Market (MEM). This measure, established by Resolution 588/2025, aims to strengthen the financial solvency of distributors in generator provinces without causing significant distortions in national system costs. The official document explains that the decision seeks to 'strengthen the ability of provincial distributors to meet their obligations by using the electricity received as hydroelectric royalties'. At the same time, it also aims to 'preserve a sufficient volume of transactions at the full MEM price to ensure the correct formation of economic signals and the sustainability of the general tariff regime, maintaining an adequate balance between the fiscal interests of the provinces, the solvency of the distribution sector, and the protection of end-users'. Thus, it is emphasized that the measure contributes to improving the financial situation of provincial distributors, ensuring that a larger volume of electricity can be used to settle debts in the MEM, alleviating the financial pressure on provinces with a high share of hydroelectric generation. Under the new regulatory framework, the electricity received as royalties can be discounted up to 50% of the monthly bill of the Distributor Agent providing services within its jurisdiction. The increase of the limit to 50% was backed by a technical-economic assessment that concluded that the increase does not significantly alter the average supply cost or final tariff levels for users. In this regard, the official text points out that 'the resulting variations remain within the quantitative margins considered compatible with the current policy of gradualism and tariff predictability'. This modification, which renders previous limits void, will be effective from the economic transaction of January 2026.
