Argentina has massively subsidized energy in recent decades and is in the ranking of the top 25 countries that subsidize energy worldwide (IEA, 2022). The distributive impact of these subsidies has been largely studied but regional disparities and public financing are two usually omitted dimensions by previous research. In this paper we extend the analysis in those directions with theory and measurement focusing on the electricity sector. First, we develop a conceptual framework to formalize the departure of prices from production cost, following the literature on the design of prices for public services. Second, combining micro-data from Argentina households’ surveys and sectoral administrative data, we measure the subsidies at the household level, and we perform distributional analysis. Our results indicate that regional disparities in the costs of electricity distribution and in the prices set by the distribution companies are key drivers of subsidies' distributional incidence. Also, omitting subsidies' financing leads to bias the belief about their redistributive effect. A series of globally relevant policy recommendations (on subsidies' inefficiency, their weak distributive impact, the importance of financing, regional differences, the irreversibility of public policies, and the need for a robust conceptual framework) can be derived from the paper.
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