Editorial

The saga regarding the new tariffs for water and electricity is becoming unnecessarily bizarre. This is not helping consumers understand whether they are in fact being given a raw deal by Enemalta. The involvement of the energy regulator, the Malta Resources Authority, has not helped to address consumers' concern.

Edward Scicluna, in an article in The Times, raised a number of important points. Firstly, he pointed out that the regulator's prime duty is to protect the consumers from unfair pricing that a monopolistic enterprise, like Enemalta, can impose. Secondly, he questioned the relevance of the terms of reference that MRA gave to the auditing firm Deloitte that was asked to check the workings of another firm, KPMG, commissioned by Enemalta to verify the new tariffs computation for water and electricity. Should a regulator of a monopoly be merely content with checking the mathematically accuracy of price computations without challenging the assumptions on which these computations are made?

Thirdly, in the context of a monopolistic environment, should not the MRA be setting strict equitable criteria for the fixing of prices by Enemalta to ensure that consumers get value-for-money, as they would have got had there been other providers of these services in the market?

In a small country like Malta, the provision of electrical energy and water to households and industry is a natural monopoly. This makes it that much more important for the regulator to be completely independent and transparent in the way it addresses the concerns about the fairness of the present tariffs expressed by trade unions, economists and the public. The MRA has called trade unions for a meeting on Friday. It is hoped that it will come up with clear explanations that address both the unions' concerns and the points raised by Prof. Scicluna.

The way things have developed and also given the behaviour of the MRA, including the fact that questions sent to it by The Times were answered through an e-mail sent by the Resources Ministry, only served to raise more eyebrows as to why exactly did the regulator justify Enemalta's new tariffs regime. The MRA must be seen to be indeed acting as a defensive shield for consumers against the might of monopolistic operators.

In the last few years people have been urged to accept that the privatisation of state-owned enterprises was an essential step to modernise the economy. It is also generally accepted that public finances had to be sanitised, partly by the increase of taxes and the elimination of subsidies. The few remaining state-owned enterprises should therefore be extra sensitive to public opinion that doubts the fairness of their pricing system.

The MRA was right in calling the unions for a meeting to continue to scrutinise the computation of the energy prices. But if it really wants to be seen acting in the consumers' best interest then it must lay all cards on the table. The Prime Minister's declaration on Sunday that "eventually" water and electricity tariffs will come down is welcome; one hopes this is not a repeat of Infrastructure Minister Austin Gatt's broken promise that the surcharge will be reduced if the cost of oil drops below a certain price. However, in future one needs to avoid the kind of distracting conflict that followed the increases in the tariffs. Only an effective regulating authority that is really independent and transparent can guarantee this.