Residential electricity tariffs

Believe it or not, one of the recent statements made by our politicians is that water and electricity tariffs would be periodically revised. Without going into the merits about whether the rates are justified or not or whether this promise has been adhered to, I would like to bring to the attention of our enlightened politicians that during the last revision the government created an injustice that requires a Papal pardon to be redeemed.

The new tariffs are highly discriminatory against households with more than one person. Whereas in the previous tariffs, allowance was always made to the number of persons residing in a single household, the last tariffs do away with this basic principle of justice and market economics. I have gone through the tariffs for a number of years and it is clear that policymakers always understood that the greater the number of persons in a household, the higher the consumption.

The policymaker has recognised this also for the water tariffs. In fact, even the present tariffs allow for a basic consumption per person, above which the market rates would apply. This is very logical and sensible and is also based on social justice. Not the same has been done insofar as electricity rates. What I cannot understand is that although the electricity rates were fought out by the trade unions no one raised this great injustice.

The current electricity tariffs are based on the table below.

From the KPMG report (page 23) a household of six has an average annual consumption of 6.550kWh. This is an average consumption of 1,093kWh per person per annum. I argue that this average is very low and it needs immediate revision. It would be interesting to have the Malta Resources Authority publish a list of household appliances with their normal average annual consumption in KWh. This would be of great assistance to households to budget their electricity consumption.

The above tariffs are applicable to all household sizes in a regressive method. This means that consumption is not worked progressively starting from band 1 and going up. Consumption is being calculated at the band rate of consumption, without taking into consideration that a household has higher consumption due to the number of persons and not through higher (wastage) of consumption.

A household with one person and with an annual consumption of 1,650kWh will pay at the rate of 11c9. In the case of a household of six, with an annual consumption of 6,540kWh, the household will pay for the whole consumption at the rate of 15c2.

Both households have, in accordance with the official workings, normal consumption patterns and there is no wastage or excessive consumption due to super luxuries. The higher electricity consumption in the case of the household of six is only generated since the household is composed of six persons and not one.

Notwithstanding that both households have normal electricity consumption, the household of six is being penalised at a higher rate from 11c9 to 15c2 per kWh. This is happening since the bands are not being applied in a progressive manner. There is no provision for each person in a household to pay the same rate for the first quantity of allowable electricity consumed.

I would like to give you this example worked on the new 2009 tariffs:

One person with an annual consumption of 10,769kWh receives an annual bill of €1,542.68.

A household of six with an annual consumption of 10,840kWh receives an annual bill of €1,557.53.

Both households nearly receive the same bill when this should not be the case for the simple reason that for the single person household the consumption of 10,769kWh means an excess of 8,744kWh above normal consumption and this should be charged at higher rates based on the current principle that excessive consumption should be paid at higher tariffs.

In the case of the household of six, the consumption is based on their average allocation of about 1,093kWh per person per annum and should be charged at the rate of band 1 because each person in the household is only making use of his/her normal consumption. Under the current tariffs, the household is paying at the rate of band 3, that is 15c2 per kWh.

I strongly believe that the Consumers Division (if it exists) and the Malta Resources Authority should take up the matter seriously and request Enemalta Corporation to have their consultants revise the electricity tariffs so that all citizens will be treated equally on their homeland.

Furthermore, the new company set up by the Water Services Corporation and Enemalta Corporation to purchase new software to administer the billing of water and electricity should make an effort to make public consultations before making its final decisions.

The current billing system does not reflect the aspirations of a country claiming to be the first smart island in the world.