Now that the dust has settled on the surcharge affair we feel there may be a few points to be made not motivated in large part by political expediency.
The government has come out of this affair looking devious, secretive and inept in energy matters. No hint was given that Enemalta does not purchase crude but only refined products, until Malta Today brought up the matter in its November 28, 2004 issue. The Malta Today case was essentially correct; as far as the price movements of fuel oil (87 per cent of consumption by weight in 2003) were concerned, the 2004 price was actually lower than the 2003 price. For gasoil (diesel), used in Enemalta gas turbines, prices did track the crude oil variations. While the market demand for diesel is very strong, that for fuel oil, be it of low or high sulphur content, is rather weak. Refineries simply charge the highest prices the market can stand.
With the crude prices cover blown, ministers ran for shelter behind the PriceWaterhouseCooper (PWC) report; but to little avail. The crude oil price explanation was abandoned and the total Enemalta fuel bill for generation invoked instead. The baseline year was taken to be 1999, when "the tariffs were last adjusted" (for which read "the 1997 near-doubling of tariffs by the Labour government was removed") and the fuel bill was reckoned at Lm18.7 million. Ironically, the following year 2000 saw the biggest recorded jump in fuel bill, by Lm10.7 million, which increase is supposed to reach Lm35.6 million in 2005, with the sum due solely to increased fuel costs being Lm22.7 million. The figure of Lm31 million was taken as the baseline cost of fuel at which "the surcharge will be removed" according to the full page ads in local newspapers.
The 17 per cent was to be charged on the total water and electricity bill except meter rentals. Prodcation of a cubic meter of water (a mix of ground and RO) requires an average of four units (kWh), which cost Enemalta 10c to generate. The University of Malta buys water at 110c/m3 while domestically one pays 40c/m3 with state subsidy.
So the Enemalta/WSC combine is making a fat profit out of water sales, now to be further increased by the surcharge. By the Lm31 million rule - the fuel bill was around that between 2000 and 2001, with lower fuel prices and lower generation than today- removal of the surcharge could come around judgement day. But then "Enemalta will keep absorbing 52 per cent of the incremental fuel cost" said the ads.
The claim that the "Average household [will] pay 5c3 more a day for utilities" is based on an inflated figure (183,957) for the number of households. The NSO lists 127,000 households; of these, 11,000 are listed as "social cases" with zero bills. That brings the average for paying households to 8c.4 per day. The discrepancy arises through including garages with a separate meter and summer houses as separate families. These "families" have near-zero bills; while contributing little to the collected sum, they still serve to "massage" the average daily figures downwards.
The real need for a "surcharge" could have been put to good, long-term use. Rather than a "surcharge", one could have a tariff structure with increased unit charges at the high consumption levels. Unit cost should be connected to fuel prices per tonne and not to the total fuel bill. At the same time Enemalta, the Malta Resources Authority (MRA) and other interested bodies could embark on a strong efficiency/ economy drive which could include every aspect of energy use, including energy efficient building design. The increased charges, extended to all fuels could also have served as an occasion to launch a renewable energy (RE) fund.
This great concern with the fuel bill of Enemalta contrasts strongly with the constant refrain from past chairmen that any RE contribution to meeting demand "only saves the fuel". In any case, Minister Austin Gatt has sweepingly dismissed RE as being more "expensive" than fossil fuels; Minister Ninu Zammit decries the primitive state of solar energy technology and unaesthetic wind turbines, while promising generation of five per cent of our electricity by renewable energy come 2010.
Mr Zammit's promise was an off-the-cuff affair. MRA, after issuing a consultation document (a local device for picking people's brains at zero cost), awarded a Lm100,000 contract to a UK consulting firm for a determination of the local RE (sun and wind) potential. In fact, the work has already been done by locals; so much so that MRA is insisting, quite unethically, that it be handed over to the UK consultants who will charge us Lm100,000 for the privilege. Local institutions like the university and the Meteorological Office, which have spent large sums of money collecting and working up the data, are expected to whistle for their supper.
So while we pay out large sums for others to tell us all we know, the fraction of electricity we are generating using renewable energy is completely negligible.