Oil price drags down Enemalta's costs by 17%

Consumers can expect to start paying lower electricity tariffs from April 1 but the cost for water will remain unchanged, the Infrastructure Ministry confirmed yesterday.

After announcing revised lower electricity tariffs last Monday, the ministry yesterday gave a breakdown of the costs on which they were based.

Minister Austin Gatt said the corporation's costs fell by almost 17 per cent since October with the biggest contributing factor being the price of oil. The corporation's fuel bill, including excise duties, is now projected at €159.4 million against the €223.1 million estimated in December.

Enemalta's total costs to be recouped from consumers now stand at €254.2 million, down from the €305.1 million in December.

As a result of this drop, electricity tariffs have been revised downwards by 22 per cent for households and up to 26 per cent for commercial and industrial consumers.

However, the water tariffs would remain the same as those established last year because the cost base for water production remained practically unchanged, Dr Gatt said.

He insisted that the new tariffs would not be backdated and consumers would not be refunded for bills paid since October.

"Last year, the government subsidised Enemalta to the tune of €70 million but the corporation still had a shortfall of €68 million. This shortfall needs to be recouped in some way or another. Any loans the company takes to finance its operations and the interest that accrues are part of the corporation's cost base so what goes around eventually comes around and the consumer still pays," Dr Gatt said.

He confirmed that the new tariffs, the costs on which they were based and the principles adopted by Enemalta to guide it in the exercise have not yet been given the green light by the Malta Resources Authority.

The corporation had forwarded the principles on which it based its calculation to the MRA on February 7 and the authority had requested feedback from the public until March 4.

"I am informed that nobody commented on the principles. After they finished their populist campaign the Labour Party and the General Workers' Union remained silent. I interpret this either as indifference towards the country's future needs or else tacit approval of the process adopted by Enemalta," Dr Gatt said.

Enemalta chairman Alex Tranter said that in talks the corporation had with the MRA there was no sign of disagreement with the principles adopted by the corporation.

"Irrespective of how long the MRA takes to vet the technical workings, Enemalta is committed to introduce the new tariffs by April 1," Dr Gatt added.

In complete contrast to what happened last year, the ministry opted for a staggered approach to providing information about the electricity tariffs.

"We wanted to avoid confusion," Dr Gatt said. He probably took a leaf out of the Prime Minister's recent statement that one of his major regrets for 2008 was the way the water and electricity issue was handled.

So after announcing the tariff revisions last Monday, the ministry yesterday explained the cost base and is today expected to delve deeper into the details of the new tariff structure.

The tariffs indicate a drop of 4c2 per kilowatt hour on the basic rate for the first 2,000 kWh of consumption and a further reduction of 3c9 per kWh on the second band of 6,000 kWh. The third band at 10,000 kWh will see the tariff drop by 3c7.

There are no reductions in the rates for those households that consume 20,000 kWh and more.

The service charge and the eco-reduction mechanism are to remain the same.

For non-residential consumers the corporation has proposed an average reduction of 26 per cent in electricity tariffs.

The new tariff structure is the same for hotels, industry and other commercial concerns unlike the differentiated structure in place today.

The highest tariff applicable for heavy industrial users consuming more than five million kWh of energy will be 8c6 per kilowatt hour, a reduction of 4c8 on current consumption charges.

ksansone@timesofmalta.com