Enemalta explains tariff principles
No tariff in respect of a unit of energy sold would be lower than the respective price of oil required to produce the energy sold, the chief executive of Enemalta said today in a letter to the chairman of the Malta Resources Authority.
In his letter, the chief executive said that Enemalta understood that tariff proposals had to be based on applicable legislation.
The corporation was obliged by law not to make losses in any financial year, a principle that made sound economic sense, but also understood that it should not make excessive profits since it enjoyed a monopoly in generation, transmission and distribution.
It also understood that tariffs for the supply of electricity were meant to recover reasonable expenses incurred in the generation, transmission and distribution of the same and that the role of the regulator was to ensure that in doing business, Enemalta did not have an unreasonable level of profits.
The corporation said that conscious of all this, the principles it would apply to its tariff proposals, most of which principles were applied to the tariffs published in December, included full recovery of all budgeted costs incurred.
As the corporation was informed by the government that subsidies to socially deserving cases would be paid through an energy benefit mailed directly to the deserving persons, the tariffs would not apply subsidies to any sector.
The chief executive said that Enemalta would not expect any subsidy from the government so would not base its projections on either a loss making scenario to be financed by government or on an operational scenario that depended on the government to finance its operational costs.
Consumers, he said, should pay for whatever amount of electricity they consumed, within the time frames established, failing which they would be subjected to interest payments and penalties.
Moreover, no tariff in respect of a unit of energy sold would be lower than the respective price of oil required to produce the energy sold.
The tariff would distinguish between residential and non-residential users provided that the utilities might suggest the inclusion of other categories from time to time.
They would also ensure that there was no cross-subsidisation between tariff users and income from each user group would be roughly in line with the percentage of generated units used by each user group. The tariffs would ensure that, as far as possible, there was no discrimination internally within each user group.
The chief executive said that the service charge would generally aim to recover expenses incurred by the transmission, distribution and retail sectors whilst the consumption tariff would aim to recover the expenses incurred by the generation sector.
Enemalta reserved the right to make exceptions within the law for reasons of social justice or for reasons of national economic interest, develop new principles and undertake to notify the same to the regulator, as well as suggest amendments to existing principles approved by the Malta Resources Authority.
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J. Sultana
Feb 8th 2009, 10:37
"No tariff in respect of a unit of energy sold would be lower than the respective price of oil required to produce the energy sold,"
Given this statement, it would be interesting if Enemalta goes further and explains:
- a person who qualifies for a 20% ECO-rebate is still paying a unit-price which is more than the cost price?
- if yes, does it mean that the a person who pays the full unit price is paying at least a price which leaves more than 20% profit for Enemalta, profit which goes higher with the consumption bands ?
- if no, and hence a unit which is ECO-rebate deducted by 20% is costing the person LESS than the cost price, does it mean that this unit is being subsidised by those who do not qualify for an ECO-rebate? Wouldn`t this be a case of cross-subsidisation ? In the latter case, just because i go past the ECO-threshold by 0.1 unit, am I to subsidise someone who wastes 0.2 units less than me?
- Since now the government will not be subsidising "irresponsible waste", can Enemalta explain the logic of why the units increase in price if you consume more?
A.Sciberras
Feb 8th 2009, 03:17
Hey minister,
its daylight robbery!!!!!!!
jzahra
Feb 8th 2009, 00:55
surprised that the names of the ceo or chairman were mentioned in this article
E. Azzopardi
Feb 8th 2009, 00:51
Ok, Let us continue The corporation is obliged to make the best possible choices when buying oil. The corporation is obliged to give the best possible service to its clients and when a fault arises it does not take the corporation hours on end to fix that fault. The corporation is obliged to issue bills at stipulated regular intervals as promised!!! Do you know that I am still waiting for my the bill and others have received theirs five weeks ago???? The obligations work both ways, you know.
M. Mizzi
Feb 7th 2009, 23:30
What about ENEMALTA's audited accounts, when will these be published?
What about operations, number of Managerial Grades vis a vis employees? No of employees employed in the 6 months before March 2008 and after and promotions given?
It would be prefered that readers residing abroad and not liable to receiving Enemalta bills should refrain from commenting on this issue
Marco Cremona
Feb 7th 2009, 21:20
"The tariff would distinguish between residential and non-residential users provided that the utilities might suggest the inclusion of other categories from time to time."
Why should there be different tariffs for residential and non-residential users, with the tariff for domestic users being the higher ( and therefore subsidising the non-residential tariff)?
A unit of electicity has the same value whether it's being puchased by a home, a factory or a hotel.
If anything, I would do it the other way round, with the domestic sector benefitting from a lower tariff structure than the non-residential sector - because the latter can benefit from economies of scale when investing in energy-efficiency and renewable energy technologies.
Moreover, the monetary value of energy-related grants being provided to industry and hotels by far exceeds that budgeted by the domestic sector.
Government has, once again, got its priorities wrong.
lgalea
Feb 7th 2009, 20:59
J Martinelli
Do you think that EneMalta had bought oil for a whole year?
It had also been advised to buy oil when it went down to its lowest price and it would have been able to average the costs, but those (ir)responsible running EneMalta are so arrogant that they think that no one is able to advise them for the better.
And by the way, EneMalta started making losses under the EFApn government.
EneMalta has no reserves because it has been mismanaged by those appointed by EFApn and Gonezipn and that is why Gonezipn and Agostino Pio do not want the regulator to work independently because their blue-eyed boys would get the blame once the public would come to know the truth.
The regulator had agreed with the 11 unions that the tariffs should be revised back to October 2008, but he backtracked upon higher orders because Gonezipn has an empty coffer to fill.
They challenged him by making a declaration under oath. He didn't, so he LIED and should resign.
J Busuttil
You are perfectly correct.
Paul Barrett
Gonezipn has already sent us back to the stone age
R.Zammit
Feb 7th 2009, 20:35
It is up to the Regulator to check Enemalta's costings and audited financial results. It should be ascertained that this job is done properly by MRA. Of course Enemalta should recoup costs as well as make a reasonable profit.
What should not be allowed is Enemalta (and Water Services) loading costs resulting from inefficiencies (including excess labour costs); institutionalised robbery or wastage of electricity/water/raw materials and consumables as well as other losses of water/electricity due to inefficient networks. It should also be ascertained that the Government, parastatals as well as political parties are indeed paying for their consumption.
Enemalta (a monopoly) should not be allowed to fund their modernisation programme by simply increasing its client's fixed charges. The Regulator should use his "authority" and reverse Enemalta's 100% increase on its fixed annual meter charges (besides the initial installation charge). There is no justification for this dramatic increase except for funding its badly needed modernizing, since the infrastructure is already there.
Lastly any eco reduction schemes have to be achievable and pertinent to lifestyles of today. It makes little sense to incentivise citizens to go back to lifestyles of the 1970s.
Simon Caruana
Feb 7th 2009, 20:04
Kemm hu bravu allajbierek dac-chairman.
Hallini Sur chairman of the Malta Resources Authority u isimghu darba ghal dejjem il-karba tan-nies tat-triq. Il-kont tieghi imwahhal mal-frigg qieghed u nahseb hemm ha jibqa imissha tisthi l-Enemalta go dar bi 2 minn nies li ghal 10 sieghat mill-gurnata tkun vojta minghajr a/c u heaters u kmamar kollha energy savings u nircievi kont ta' 368 euros!!!!
J Martinelli
Feb 7th 2009, 20:02
@ J Abela
Very simply, an enterprise does not stay in business unless it makes money. Present law prohibits Enemalta to sell the product below cost since the difference can only be made up with your tax money. This was the practice which is no longer allowed as much as subsidies to the Shipyards ceased on December 31, 2008, so what makes Enemalta's case any different?
The tariffs were calculated at a time when the refined oil was purchased at high prices however when the high priced stock is exhausted and replaced by cheaper fuel, the tariffs will be revised. Do you find anything wrong with that?
Sony, Toyota et al have been raking in huge profits for many years and have substantial cash reserves. If they have a bad year they can dip into the reserves to tide them over. Enemalta has no reserve funds, therefore it has to at least charge its consumers the cost of production plus a small margin for thefts, inefficiencies of older plant, maintenance of transmission lines, etc.
Whether government or privately owned, the cost of running power plants remains constant.
J Busuttil
Feb 7th 2009, 19:39
To know more about the tariffs issue go to www..uhm.org.mt and see what Gejtu Tanti President of UHM wrote today. It's interesting.
J. Abela
Feb 7th 2009, 19:08
QUOTE - "Moreover, no tariff in respect of a unit of energy sold would be lower than the respective price of oil required to produce the energy sold"
Fair enough. However this is not the case as consumers are paying much more in order to cover the company''s financial losses.
QUOTE - "Moreover, no tariff in respect of a unit of energy sold would be lower than the respective price of oil required to produce the energy sold"
Whih law is this?. So companies like Sony, Toyota and other multi-million companies increase the cost of their products - cars, electronics etc etc. Of course, every company would like to increase the prices to keep on generating revenue..
Sorry but can't make sense out of it.....whatever the government or CEO say and point fingers to each other..the customer has to adapt to what is said - like it or not. As mentioned below - Monopoly...lets play!
Paul Barrett
Feb 7th 2009, 19:05
No tariff in respect of a unit of energy sold wouldbe lower than the respective price of oil required to produce the energy sold, the chief executive of Enemalta said today in a letter to the chairman of the Malta Resources Authority.
If the above statement is true, it means that those that do not qualify for the "eco" price are in effect paying not less than between 10% to 25% more than the respective price of oil required to produce the energy sold. Thanks a bunch Enemalta - lets all move back to the stone age.