1. Reflecting Reductions in Energy Cost to Businesses

Proposal:

GRTU is proposing the reduction of electricity tariffs for SMEs by 30%. The price structure of electricity tariffs should also be transparently disclosed and discussed in MCESD.

Context:

Utility bills undoubtedly feature as a substantial cost for SMEs which effects their financial viability directly. Being effected by market fluctuations and the national energy mix, sound policy is essential for energy tariffs not to hinder competitiveness. Recognising that energy tariffs for SMEs have been reduced as of 31st March 2015 should not eliminate the fact that for a number of

 years Maltese businesses have not only suffered high electricity prices because of the international prices of oil whilst being burdened with sustaining the inefficiencies of the electricity supplier. Therefore, given that the various factors that have caused high electricity tariffs in the past, have now evidently reduced costs of provision drastically, it is high time that this is transposed onto our businesses in full.

The reduction in cost has been far higher than that of 25% and should therefore be revised to reflect a further 30% decrease. The international price of crude oil has on average been halved. The supply received through inter-connector is significantly lower than rates upon which electricity tariffs have been calculated in the past. Moreover, the BWSC plant has been reported to operate with substantial improvements in terms of efficiencies that have reflected cost reductions. These factors have been in place for a number of months and therefore there is valid and reliable reason to believe that a further decrease is necessary to reflect the trend.

Taking these considerations jointly, a scenario of a higher decrease than the 30% being proposed beyond the March 2015 reductions is possible and evident. It is in this spirit that GRTU appeals for the logical conclusion that this discrepancy is addressed imminently to ensure stronger competitiveness for businesses when cost of provision has declined. This will in turn incentivize our economy.

Outcome

It is evident that this reduction in energy tariffs is synonymous with reduction of enterprise running costs leading our businesses towards becoming more competitive. The principle of transcending the reduction of costs of provision onto a reduction to the costs of SMEs shall lead to our businesses increasing turnover and improving profitability. This is in turn expected to result in further investment, expansion and thus job creation. This flagship GRTU proposal is intended to enhance competitiveness to drive the economy forward rather than constricting it through electricity tariffs that no longer reflect the cost of provision.