SME Chamber

Utility Tariffs: Conflict Inevitable

 Government's decision to disregard MCESD is a very serious development. GRTU considers the new rates for both electricity and water as unreasonable, given the current market and economic situation in Malta and in all the other countries on which Malta is dependent for exports and tourism.

The situation in Malta today dictates unity as vital for us to face the difficulties facing us as recession hits our most important markets and government needs the full cooperation of MCESD leaders to lead the country through the difficult years ahead. As things stand conflict is inevitable.

Analysts lead by Goldman Sachs who only earlier this year raised the prospect of oil at $200 a barrel are now saying it could drop to $50. Prices of electricity and petrol are also going down across Europe. In Malta, rather then facing up to the economic challenges, Government is raising prices of essential utilities as if the world out there is of no interest to us.


Electricity Tariffs

GRTU notes that from the document presented yesterday, no total recovery amount from tariffs has been outlined. However since there were no changes in the tariffs (electricity), it is assumed that the total amount to be recovered still stands at €305 million.

The total figure for projected cost of fuels for 2009 now stands at €223 million.

Government also outlined that a review will be held every six months, or in case of a spike of 15% in oil. No basis price was however given to this spike. Neither has the Government outlined that there will be a change to the price if the price of oil decreases by more then 15% from this untold price basis.

Extrapolation from figures shows that out of a total of €305 million, Non Residential will fork a total of €192,241,500 whilst the residential sector will fork out € 112,758,500

Enemalta will subsidize Public Service Obligation, Energy benefit to Families, and Cap to Industry totalling €21,100,000,. Are we to assume that these are to be deducted from the projected income of €305 million?

The capping of €5.2 million is now based on 26 receiving companies only. Without fail, small enterprises are still paying this capping figure which is not acceptable. Further more if small enterprises were before capping 78 industries and now the capping is for 26 companies, GRTU asks how come there has been no change in the tariffs from Proposal 6?. This only means that this is a media exercise only with non-residential needing to fork out the figures as presented on 23.10.08 at MCESD meeting.


GRTU notes that after the proposed Option 6, Water Services Corporation reviewed their rates accordingly giving rise to another document forwarded to MCESD members last Monday 27.10.08. This new proposal now raises revenue from €50,787,633 to €53,697,286, thus raising also cost of potable water from €0.934m3 to 1.064m3.

The electricity portion now increases to €13,618,000 from €10,708,000. The target return on capital employed remains at €11.11 million which includes revenue for future investment.

The cost of electricity has been inflated by 69.3% from 2006. It is understood that 10% increase in Electricity raises costs by 2.4%, thus in quantifiable terms the increase of 69.3% in electricity should increase costs by 16.56%.

The variable portion of water sent out to consumers on the initial document stated billing at Euro 1.90 per m3 and now increases to €2.01 per m3.

Water: Accounts

There are 199,409 Residential and 43,059 Non Residential Accounts. 34,073 Accounts from 43, 059 relate to Commercial and Commercial Garages. Their bills will increase by 87 to 92%.  Cross subsidization is evident in the second and last proposal which is not acceptable to GRTU.

Any changes made were just cosmetic changes and the Schedule reflects that the final outcome is an increase of tariff well over those proposed in the first proposal.

Increased usage is also resulting in less payment and as such the pay as you use principle is being shelved for the purpose of these tariffs.

GRTU believes that these rates both for electricity and water will create hardships both to the Non Residential and Residential Sector. GRTU will now take all the measures possible to safeguard the interests of its members. GRTU will without fail be taking the matter up with the European Commission in respect to capping and cross subsidization of tariffs.

At a time when all Governments in Europe continue to discuss with all their social partners to find solutions to current economic crises, the Government has decided to go its own way and effectively disregard MCESD and also Small and Medium sized Enterprises.

GRTU demands a drastic change in Government's attitude and strategy; CHANGE in line with today ‘s economic reality, CHANGE in favour of Small and Medium sized Enterprises, CHANGE in favour of companies and unity.





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