SME Chamber

GRTU seeks a quick solution to the Electricity Tariffs problem


GRTU has this morning called a press conference on the Electricity Tariffs to explain GRTU's comments as sent to the Malta Resources Authority and to give an update on GRTU's position on the tariffs.

The Press Conference was chaired by GRTU President Paul Abela and addressing were also Vincent Farrugia, Director General and Joseph Attard. Mr Abela explained that "to the GRTU it was clear from the first report presented by the KPMG that the capping system would be retained and that SMEs as a result would be carrying the burden. GRTU stays by its principle: We pay for what we use"


Mr Abela continued by explaining how the subsequent events took place.

He said that:

"after making our position clear with the Prime Minister Hon Laurence Gonzi and Deputy Prime Minister Hon Tonio Borg they both reassured us that our proposals were reasonable and therefore would be taken into consideration. GRTU was therefore very taken aback when we learnt that a meeting was called with some constituted bodies, excluding the GRTU, were an agreement was signed that would have diminished the cost of the biggest users and eventually increasing it on the smaller ones."


This, he continued explaining, was subsequently proved by Hon Austin Gatt's presentation of the 6th Tariff structure. Mr Abela admitted that GRTU and Government have been discussing this issue for now over 6 months and GRTU is tired of the current situation. He therefore called on the Prime Minister to intervene and cut the chase so that our members and the whole Maltese population can put its mind at rest, at least on this issue.


Mr Vincent Farrugia, Director General of GRTU took over from the President saying,

"the issue is very serious for GRTU and its members because small enterprises are having their rights under European law ignored. The new electricity tariffs infringe the Electricity Directive because they have a strong element of discrimination."


Mr Farrugia further insisted that it was up to the Malta Resources Authority to ensure, as outlined by the Directive: non discrimination, effective competition, efficient functioning of the market and a high level of transparency by the monopoly undertaking and itself.


"GRTU has already taken the issue to the European Courts, who in turn insisted we should exhaust the local jurisdiction procedures. GRTU is presently doing exactly that by insisting that the issue of non-discrimination is taken away by the Malta Resources Authority.


At this particular moment Government has all our support in relation to the adverse situation brought about by the global economic crises and Government is doing well by moving ahead and helping industry as they do need Government's help. It is however unacceptable for Government to help industry without helping SMEs. I would like to remind Government that SMEs in Malta employ 65,000 persons and to Government these should not be any different from the workers in hotels and factories.


Small Enterprises not helped by the state cannot choose not to pay the electricity Bill, the water Bill, VAT, or the material they need to work or sell. Doing any one of these would close their business. The only expenses they can afford to give up when the going is slow is one or two of their employees. GRTU would rather not have this situation occur and we are sure that to Government safeguarding the employment of a worker at a hotel is as important as safeguarding that working within a small enterprise. The electricity tariffs are threatening their livelihood. GRTU therefore proposes that this burden is alleviated".


Mr Joseph Attard gave a description of the chronology of events as they took place. Mr Attard also emphasised that the Electricity Directive is being infringed as the new tariff structure could not have been introduced until a due diligence impact assessment is carried out for all end consumers.


"The Minister for Resources and Rural Affairs and the Authority have acted against public interest, customer protection and the scope of the Directive when they endorsed the tariffs issued in December 2008, by the said monopoly utility, backdated and without proper investigation and analysis resulting in unfair and discriminate application on public groups, affecting SMEs extremely negatively.


Enemalta and the Minister responsible for the said entity did not submit the new tariffs to MRA for approval prior to their entry into force as required by the Malta Resources Authority Act, the Electricity Directive and the Maltese Legislation in place."


The way forward Mr Attard explained is as follows:

–         The electricity provider should not incur a loss in its operations but stricter controls should be put in place to bench mark all operations and processes.

–         Return on capital employed is to be based on longer term recuperation of invested capital and thus move away from current EU proposed of just over 6%

–         Large account holders should not be given quantitative discounts under the EU principle of "Think Small First". 10 or 20 users together use the same energy as one large account holder.

–         Billing being issued by Enemalta Corporation from October 01 to date is ultre vires in its totality taking into consideration that MRA and the Minister responsible for this entity did not abide to the EU Electricity Directive and accordingly to its transposition to Maltese Law.

–         Billing issued according to second schedule of LN 330 of 2008 (2A) to non-residential accounts consuming less then 1.2 million KWH, will for a period of time benefit from a reduction in the billing. This to make up for the bill received to date. This should consist of a one time reduction of 40% of the value of units billed from October 1st 2008 until when the new tariffs are issued, according to appropriate and acceptable guidelines.

–         All new applications for electricity which were made to pay the new tariffs (€300/900) for new installations before October 1st 2008 are to be reimbursed the difference.

–         Removal of the payment of maximum demand to SMEs/ non-residential users effected

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