A €200 million fund allocated by the government to subsidise utility bills will have to be topped up by another €50 million to cover rising electricity costs and this will only last until the end of the year, according to internal government predictions.
Sources said the cost of the government’s policy to subsidise utilities bills is expected to amount to about €250 million by the end of the year as the price of purchasing energy from the European power grid remains sky high.
In April, the government committed €200 million to protect consumers from surging energy prices which first climbed because of the COVID-19 pandemic and then went through the roof as a consequence of the Russian invasion of Ukraine.
One senior government source said forecasts drawn up by the state utility provider Enemalta show that the €200 million budget will be eaten up in “a few weeks”.
Subsidies could cost €300m-€400m next year
The government has not said how long consumers can expect to have their utility bills subsidised by the government, however, it is understood that the aid will continue at least until the end of this year.
Government predictions indicate that the situation could be even worse next year.
Enemalta projects that the subsidies could cost the taxpayer something between €300 million and €400 million to keep consumer prices stable throughout 2023.
Replying to questions sent earlier this week, Energy Minister Miriam Dalli did not say what the overall budgetary allocation was for the subsidies.
Instead, a spokesperson for the energy minister said: “The government is determined to continue taking the necessary decisions to incentivise investment and economic growth in order to be in a position to continue supporting Maltese families and businesses.”
Malta is currently buying electricity from the European grid for more than five times the price it used to in 2020.
Malta paying about €600 per megawatt via interconnector
According to a map of European Union energy purchases, Malta had to pay around €591 per megawatt-hour for power through the interconnector on Monday.
That figure then climbed to €608 per megawatt-hour the following day and was at €596 by yesterday.
Sources at Enemalta said that, two years ago, power from the interconnector was priced at around €100 per megawatt-hour.
The prices are forecast to climb even higher, to a quarterly high in the region of €700 per megawatt-hour, according to industry experts.
The price Enemalta pays for electricity from the interconnector is determined by a daily auction on the open market.
The €591 per megawatt-hour the island paid for its latest purchase is in line with what other member states are paying.
Germany paid €600 per megawatt-hour, while France paid €611 and Italy paid €605. Spain paid a much lower €182 but they are buoyed by their significant dependence on renewable energy production.
Malta only partially relies on the interconnector to Italy to meet electricity demands.
The country’s energy supply is a mix of the interconnector cable and a gas-fired power station in Marsaxlokk.
Correction August 26, 2022: A previous version misstated the unit of measurement used when calculating energy prices.