Updated 3.45pm with government statement

Utility billing company ARMS breached the law when calculating bills and must refund two consumers with the money they overpaid, a court has ruled. 

The judgment vindicates consumers who have been protesting against the billing system for years and sets a precedent for every other utility bill issued under the system.

Lawyer Maxilene Pace said the judgment means virtually anyone who decides to take ARMS to court over their bills, should be granted a full refund of the amount they overpaid.

The case began in 2017, when Darren Cordina and Melvin Polidano accused the authorities of breaching the law because ARMS issued their bill on a pro-rata basis, rather than on an annual cumulative consumption basis.

They said the manner in which the bills were issued did not allow them to reap the full benefits of the underfloor heating system they had installed in their house. The two were even threatened with having the electricity provision suspended, forcing them to settle the excessive bill under protest.

The court, presided over by Madam Justice Anna Felice, has now ordered ARMS to revise the 2017 bill and refund the customers the full amount they overpaid ever since.

Cordina and Polidano were represented by lawyer Maxilene Pace.

Government and Opposition promised redress

Former prime minister Joseph Muscat had acknowledged in 2018 that “anomalies” existed in the ways ARMS was calculating bills and had promised redress for the anomalies in 2019.

Initially, the billing method remained unchanged and Robert Abela’s government remained silent about the redress promised by his predecessor.

Then, in May last year, a report by the National Audit Office (NAO) found that consumers could have paid “extra charges” totalling €6.5 million on their electricity and water bills.

Subsequently, Opposition leader Bernard Grech promised to refund some €50 million “stolen” by the government since 2013 through this overbilling.

On Tuesday, the PN called on the government to refund all consumers, not just those who decide to take ARMS to court.

"After it was confirmed by the Auditor General, and now by the court, every bill should be adjusted according to the court order and all consumers who were unfairly billed, not just those who are willing to go to court, should be given a refund of the amount they overpaid," energy shadow minister Mark Anthony Sammut said.

Last January, Energy Minister Miriam Dalli announced a new utility billing system will be introduced, allowing consumers to benefit from cheap units all year round.

How was ARMS billing customers?

ARMS Ltd used a staggered system to bill consumers. The first 2,000 units of electricity are charged at one rate and further consumption at higher rates.

Thus, for every kWh of the first 2,000kWh consumed in a year, residents should be charged 10.47c and then pay 12.98c for every kWh for the next 4,000kWh, 16.07c per unit on the next 4,000kWh, and so on.

However, ARMS would split up this allocation pro-rata according to the number of bills a consumer receives in the same year.

This means that if a residence is billed every two months, the first 2,000 units were split between six bills, amounting to an allocation of 333 units per bill at 10.47c per unit.

If a residence consumed fewer than 333 units in a two-month billing period, the remaining units at the cheaper rate were not brought forward to the subsequent bills. The allocation was lost and could not be used in the subsequent months, with the same method being applied to the higher bands.

Legal notice will be backdated to January

In a statement later, the government said it is in the process of "finalising all aspects" of the new legal notice regulating utility bills, and once it is introduced, it will be put into effect backdated to January.

Times of Malta also asked Energy Minister Miriam Dalli whether, in light of this judgment, she is considering awarding refunds to all consumers in Malta who were unfairly billed over the years.

However, this question has, so far, remained unanswered.

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