Updated 7pm with government reaction

Smart meters have helped Enemalta save €45 million in 'lost electricity' over 12 years, according to an investigation by the national auditor.

The auditor however expressed concern that utility billing company ARMS has significantly increased its staff numbers over that period, despite the meters having automated many of its processes.  

Auditor General Charles Deguara on Wednesday gave the Speaker of the House Anġlu Farrugia a performance audit about the meters' contribution to more accurate and timely billing.

The €131 million investment in smart electricity and water radiofrequency meters generally yielded positive results, his office found, including the automatic transmission of real-time readings that allowed ARMS to issue most of its bills based on actual consumption.

"Additionally, Enemalta managed to substantially decrease the amount of unbilled electricity lost through apparent losses and an aggressive revenue collection policy.

"The Water Services Corporation also utilised automated data to detect, in real-time, third party internal leakages, reducing the unnecessary financial burden, operational manpower and improved customer experience," the NAO found.

Apparent losses, also known as non-technical losses, are mainly the result of unbilled consumption caused by billing errors and electricity theft.

In its workings, the national auditor estimated around €45 million in savings.

And according to Enemalta records, since the introduction of smart meters 12 years ago, the company managed to recoup €12.6 million in addition to this amount, in terms of recovered revenue from identified theft cases as well as fines and repayments of unregistered consumptions based on an estimation mechanism.

67 per cent of water bills based on actual consumption

In its report, the national auditor noted that while, in theory, 90 per cent of accounts could be billed using actual readings, last year only 67 per cent of water and 80 per cent of electricity accounts were billed this way.

"The low percentage relating to water bills is mainly due to an overestimation of stopped water meters which are billed on the basis of estimated consumption, as well as meters which have not yet been switched to automated billing.

"The overestimation of stopped water meters arises since the billing agency uses the term ‘stopped’ as an all-encompassing category which groups together meters transmitting repetitive readings. Such circumstances do not necessarily imply that the meter is damaged."

Questions about increase in ARMS staff

But the NAO warned that despite the high level of automation, "questions arise relating to cost efficiency at the billing agency", with the number of staff employed by ARMS increasing "significantly" in recent years.

Increases linked to the agency's legal office were required to strengthen ARMS’ position in questions of litigation, it said.

"However, it was not always evident as to why most departments within ARMS were augmented with human resources when both the billing and the administrative functions were generally automated," it added.

ARMS claimed that the increase in staff was reflected both in the increased services it was offering, as well as in the efficiency of internal processes and the departments within the company.

"Although billing is one of the main functions performed by ARMS, the entity contended that this is not the only function carried out.

"ARMS fulfil other important functions including customer care, finance, debt collection and revenue management, which previously used to be carried out by WSC. Naturally, the expansion of the company’s operations necessitated an increase in the headcount."

Billing method in court

The NAO's report also referred to ARMS' contested billing methods, noting that the issue had been taken to court. 

Earlier this year, Times of Malta reported the NAO had found that consumers could have paid “extra charges” totalling €6.5 million on their electricity and water bills.  

Consumers, including those who have taken the authorities to court over the way electricity bills are calculated, have over recent years insisted that according to the law, clients must be refunded if they have overpaid through the course of a year. 

The Consumers’ Association has also warned that clients are being cheated out of lower tariffs on water and electricity due to the way the unit cost is calculated.

In its report tabled on Wednesday, the NAO said that it had analysed the difference between pro-rata and annualised billing.

"This office could only elicit these variances but is restricted from commenting on the results since this issue is subject to litigation within the Courts of Law and therefore pertains to a sub-judice case.

"The financial analysis also extended to a review of actual savings achieved by utilities through the evaluation of unbilled trends."

According to its analysis, in 2020, 46 and 63 per cent of the total analysed electricity and water accounts respectively did not reveal any significant variance, essentially amounting to less than €2 annually, while the more substantive variances are attributable mostly to the heavy consumer class.

The government has committed to reforming this consumption billing methodology, making that pledge during its 2022 budget speech.

PN: report proof government robbing people

In a statement, the PN said the report was proof the government was robbing people of some €6.5 million every year.

The party reiterated its promise to recalculate utility bills and refund more than €50 million.

Government: report confirms bills always calculated this way

In a statement on Wednesday, the Energy Ministry said the report confirmed that energy bills were being calculated in the same way they had always been calculated.

The only change since 2013 was the 25 per cent reduction in tariffs, it said, adding that the legal notice regulating the billing methodology had come into force in 2009.

"In his report, the Auditor General says that with the annualisation billing methodology, heavy consumers would benefit more whilst the more responsible consumers would be affected negatively.

"This reflects what the Ministry for Energy has already stated, namely, that the rushed statements by the Opposition would result in higher bills for thousands of clients and endanger the eco-reduction benefit."

The ministry said the need for well-thought solutions that were not based on populism were reflected in the government's position for next year's budget, when a new system will be announced.

"This system would be fair without negatively impacting any clients. This is contrary to what the Opposition has been stating, with its rushed proposal which would have increased the bills of thousands of clients. 

"While the Opposition does not offer studied solutions, during an international crisis the Maltese government continues to ensure the lowest bills for consumers," it said, adding that other EU member states had registered considerable increases.