Fabian Demicoli

ELECTRCITY TARIFFS – A DAYLIGHT ROBBERY FOR SMEs

Vince Farrugia

GRTU still fails to understand how Government managed to mess up the electricity tariffs issue so badly, and why they stubbornly keep saying that they are right, when no one, not even the party die-hards are convinced.

I take the case of the complaints by small and medium businesses. How can someone who's being asked to pay for the consumption done by others be convinced that the Government is acting logically?

Why do ten or twenty small retailers who consume together as much electricity as one very large consumer pay 33% more for their use?

Whilst Government continues to insist that SMEs are the backbone of the economy, they contradict this by insisting on doing exactly the opposite on the electricity and ware tariffs issue. The way SMEs are being rewarded for consuming less energy is by paying 33% more to subsidise higher consumers, consume less = pay more.

The GRTU continues to insist that we are not against incentives given to the large commercial consumers as they are important to our economy, this as long as SMEs do not foot the bill. The current cross-subsidisation is negatively discriminating on the lower consumer. The higher consumer is not only being helped but is having part of its bills paid by the lower consumer, who is an SME and cannot sustain such an expense. A Robin Hood upside-down policy.

A quick look at what SMEs were paying before the sudden change occurred, helps you understand better. First of all the first 200 units of energy were free and rest of the charges were as follows:

 

Up to June 2008

0.129/Unit (with the 50% surcharge)

Between June and September 2008

0.169/Unit (with the 95% surcharge)

 

 

 

The tariffs proposed to the KPMG report and presented to MCESD by Minister Ausin Gatt on 23rd October 2008 were as follows:

 

Units Consumed

Tariff 5

Tariff 6

0-2000

.153

.128

2000-6000

.161

.136

6000-10000

.170

.149

10,000-20,000

.183

.164

20,000-60,000

.199

.181

60,000-100,000

.164

.166

100,000-1,000,000

.169

.153

 

 

 

 

 

 

After analyzing the change in the Tariffs structure, GRTU met first the Prime Minister and afterwards Minister Tonio Fenech and on behalf of GRTU members presented them with our alternative proposals. Our proposal included stepped tariffs that would start low and gradually reach the new Tariff structure within a three year period. This would have allowed for an adequate transition period that would have diminished the sudden shock and inevitable consequences we are facing today to propose a more responsible way forward. Making the change proposed a more responsible one.

GRTU was never given an answer to its proposal and accordingly on 1st December 2008, we wrote to the Malta Resources Authority requesting them to issue Enemalta with a ‘cease and desist order' not to implement any new Tariffs.

On 5th December 2008, Legal Notice 330 of 2008 was issued with the following two different tariff structures

  1. commercial users using less than 1,200,000 Kwh
  2. commercial users using more than 1,200,000 Kwh

Units Consumed

As per LN 330of 2008   

% inc over Tariff 6 dated 23/10/08

As per LN 330of 2008   

 

Users of less than 1.2m Kwh

Users of more than 1.2m Kwh

0-2000

.147

14.8%

.104

Next 4000 units

.155

13.9%

.112

Next 4000 units

.168

12.7%

.125

Next 10,000 units

.183

12.8%

.14

Next 40,000 units

.20

10.5%

.157

Next 40,000 units

.185

11.5%

.142

Next 900,000 units

.172

12.4%

.129

 

 

 

 

 

 

The adopted tariff schedules show that one large consumer using 1,200,000 units and over would pay Euros 154,016 whilst ten small consumers who altogether consumed 1,200,000 units would pay Euros 205,416 , a staggering 33.3% increase.

Data which has not been confirmed by Deliotte & Touchet or KPMG shows that 103 consumers actually use more then 1,200,000 Kilowatt Hour units, whilst over 40, 089 account holders use less then 1,200,000 Kilowatt Hour Units.

The European Electricity Directive does not allow for cross subsidization of tariffs and does not allow for discrimination against users, in this case SMEs, and we believe that whatever else the Malta Resources Authority is saying, and honestly no one understands what exactly they are saying, the above tariffs are in breach of community law. GRTU has issued a judicial protest in respect to these tariffs, and you can remain assured that this time round no one from the European Commission will tell us that we have not exhausted the local legal hurdles.

Our target is of course the European Courts and procedures. I have already stated all we had to say to the local public regulator, the Malta Resources Authority. They have however allowed themselves to be used, pushed and be beaten, and they cannot now expect much respect. They seem to enjoy being punching bags. That's why we continue to insist that beyond the Maltese Law Courts there are also the European Courts. The facts we publish are the real facts. They are simple. They are self explanatory.

On December 16th 2008, during the National Conference held by GRTU for its 60th Anniversary, entitled "Facing Today's Economic Reality, Bringing home the European Reality to Small Businesses" GRTU emphasized on the European Principle of "Think Small First". Dr Lawrence Gonzi, present for the said Conference outlined that SMEs together employ 67,000 employees.  ‘Thinking Small First" means that SMEs should truly be treated as the back bone of any European Economy.

GRTU continues to insist that Government still has time to come to terms with this fiasco.

The saga continues………….

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