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Enemalta, WSC file request for increase in tariffs as from January

New tariffs not announced

Enemalta and the Water Services Corporation have filed a request with the Malta Resources Authority (MRA) for an increase in tariffs effective as from next January 1 to make good for increased operating costs.

The Infrastructure Ministry said in a statement that on the direction of the MRA, it was not announcing the scale of the revision to the tariff bands being requested until such time as the revision was approved.

The ministry said the revision retained the principles approved, following widespread public consultations, by the Malta Resources Authority, which is the regulator, that:

1. utility rates should reflect the rise and fall of operating costs;

2. except in the case of sewage, tariffs could not be used as a form of subsidy by being kept artificially low ;

3. subsidies were permissible in certain cases provided they were given directly to the consumer by the state .

The ministry said the present increase in costs was almost altogether driven by the international price of oil which rallied strongly over the past several months.

It said the price of oil rose steadily since the last tariff revision and was expected to rise even more in 2010 with the price next October expected to be higher than it was in October 2008.

Prices in $

Oct 08

revision

March 09

revision

Current

(Oct 09 Average)

Jan 10

(Futures)

Gas Oil (0.1%)

748.90

484.00

612.83

690.00

Fuel Oil (0.7%)

423.20

314.00

445.76

492.00

Crude Oil

73.68

54.70

74.02

81.80

The ministry said oil represented 62 percent of all of Enemalta’s expenses. It was, therefore, inevitable that tariffs had to be readjusted again to deal with the reality of rising costs.

Enemalta costs for 2010 were expected to increase by €74.2 million divided as follows:

· €47.5 million increase in the price of oil based on current future prices and notwithstanding that electricity generation decreased by eight percent. Projections of future prices were entirely driven by international market realities as they existed today and were independent of any influence or control of the corporation;

· €21.5 million being the shortfall in tariffs that would be registered since the last tariff revision in March since oil prices in the period increased by much more than was expected when the tariffs were introduced. The table below shows the parameters used in the March revision compared to the actual outcomes, the latter resulting as substantially higher:

Used in Tariff

Outcome

Crude Oil

$54.70/bbl

$76.00/bbl

Fuel Oil

$314.00/MT

$469.75/MT

Gas Oil

$484.00/MT

$631.50/MT

$/€ Rate

$1.3500

$1.4750

· €4.7 million increase in the return on capital employed, representing a return on the investment in additional assets in particular the portion of investment that would be made next year on the smart meters system and the new power generating plant.

All other Enemalta costs (such as wages, administration, unbilled units, etc.) would remain the same as this year. So none of the increases the corporations would be proposing could be attributed to internal operational considerations or inefficiencies.

The increase in the cost of electricity would adversely hit the Water Services Corporation while the full operation of all three sewage treatment plants in 2010 would increase WSC operating costs for 2010: Principally, these are:

· €5.9 million increased electricity costs;

· €2.3 million additional operational expenditure with the coming on line of the Ta’ Barkat sewage treatment plant;

· €2 million increase in depreciation mostly due to the smart meter system;

· €1.7million increase in interest payments on loans used to finance investments.

In line with EU Directives, all EU member states had to take into account the principle of recovery of the costs of water services, including environmental and resource costs and in accordance with the polluter pays principle.

Malta would fall in line with this EU directive but this would not affect the consumer since the proposal would be cost neutral to the end consumer.

If both corporations were taken together it could be seen that the increases in costs for 2010 could be divided as follows:

· €74.9 million attributable to the increased cost of oil;

· €10.7 million attributable to investments in the new sewage treatment plants, the smart meters system and a new power station in Delimara.

Investment in sewage treatment plants was required for Malta to be able to comply with its environmental and public health obligations, while investment in the energy sector would improve the reliability of energy supply, enable improvements in air quality as a result of the eventual shutting down of the Marsa power station, reduce costs as a result of theft and other losses and allow families and businesses to reduce their energy costs through detailed information about their consumption behaviour. These benefits had costs that needed to be met.

On the other hand, the impact of the increases in the costs of oil were inevitable though Enemalta was presently undertaking an effort to ensure the highest possible degree of stability for consumer expenditure during 2010.

However, stability in and of itself could not entirely make up for the structural reality of increasing costs in international markets.

The ministry said that the tariff revision exercise submitted to the MRA was in line with the principles the MRA had established in the beginning of this year for such revisions.

As such, both corporations had and would submit all the details required by the MRA and would be subject to the scrutiny of the MRA’s auditors, an exercise that was already done prior to the March 2009 revision.

Both corporations would cooperate with the regulator and would follow all directions given by the regulator to have the exercise concluded as soon as possible but without prejudice to the need for a full and thorough scrutiny process.

On the direction of the Malta Resources Authority, the Ministry is not announcing the scale of the revision to the tariff bands being requested until such time as the revision is approved by the Authority.

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Comments

E Gatt (2 weeks ago)
@Charles J. Buttigieg

My name is not Edgar and I never had the pleasure of meeting you.

I am glad you realise that if some Nationalists blamed the MLP government for the hike in petrol prices during the 70's world crises they were being stupid. This means that you realise how stupid some people are being today.

I was too young at the time but I do know that Mintoff nationalised the petrol market at the time – could that have contributed to part of the increase in Malta in 1973? As a people we are to blame for not yet reversing that socialist madness and introducing competition.

Unfortunately our size does not make competition in the water and electricity market feasible (as far as I am aware). We are also still lumped with the socialist mentality that it is ok for others to pay for your consumption and that redundancies at Enemalta and other government bodies is a taboo subject.

Many people seem to forget that we are an oil importing country. If the price of oil goes up we suffer. We are not Kuwait.
Alex Mifsud (2 weeks ago)
One should consider why a large number new vehicles fleet were bought and left to be used by Enemalta employees as they like. Is it fair that that we need to contribute from our tax for convenience of Enemalta Employees? Hope some competent from Enemalta give me a response
Charles J. Buttigieg (2 weeks ago)
Perhaps Enemalta could explain to us why they are showing us the price of crude in USD when it settles its bills after buying the weak American Dollar with the strong Euro. Where is the gain on the currency fluctuation going?

Can Enemalta and WSC give us a brief of their operating costs spelled out in ‘fixed’ and ‘variables’ and the annual amount of their generated revenue? Both entities enjoy a monopoly and both are government subsidiaries therefore the tax payers own them and have a legal right to see the balance sheets. The naive excuse of commercial confidentiality is a load of gobbledygook.
Charles J. Buttigieg (2 weeks ago)
@ E Gatt.

I’ve known you since 1973 and I remember well when in 1974, the international price if crude rocketed sky high and overnight the cost to fill up the tank trebled you blamed Mintoff. When Mintoff negotiated a preferential deal with Libya your protégées called it ‘Trattat ma tal Habbaziz’; when it didn’t rain you blamed it on Mintoff because he was cursing our Country, and now you are asking why people blame everything on the Government? People are blaming the government because its economics are wrong and its priorities are upside down that’s why.

If my roof leaks, my toilet is blocked and I’m having difficulties with money to buy paraffin for my stove I’ll first fix my dire needs before buying a Chrystal chandelier for my sitting room which is always kept closed anyway.

Answer me now, isn’t the Piano Project Gonzipn’s crystal chandelier? That is only one reason why people in pain are putting all the blame on Gonzi dear Edgar.
Rocco Cauchi (2 weeks ago)
I sincerely hope this is not a cover-up for a hefty rise in the METER RENTAL to make good for the supefluous new meter reading system which we could have simply done away with had we thought of stricter laws against abusers.
Charles Zammit (2 weeks ago)
The full recovery of costs is indisputable. No business can sustain financial losses indefinitely. Having said that I cannot agree with the simplistic comparative absolute value of crude now and in the past. The absolute price of crude increased as a result of dollar decline mainly. We pay our bills in Euro not Dollar so any price increase should also reflect the currency exchange fluctuations for them to be truly representative of the current running cost of Enemalta. In the absence of the foregoing the price fixing mechanism is erroneous.

Additionally I am still not convinced that Enemalta is being run so efficiently that no cost cutting could be made. It is only after proper cost management is effected that Enemalta could start claiming the full recovery of its running costs otherwise it is only projecting its efficiencies on its customers.
j,spiteri (2 weeks ago)
And rightly so. Wasn't it the Maltese voters trusting GonziPn again? Anyone moaning to me about high tariffs will be served with a piece of my mind as I was dragged into this mess by unreasoning voters.
carmelo briffa (2 weeks ago)
If Dr. L Gonzi could not hold Enemalta to stop from increase in tarrif then the POPLU of the Maltese Island should go on national strike to show this Government that it failed to its obligation to look after the nterest of the the Maltese People and it should Gonzi that now the people are more then fed up paying up for others mistake such as the vat scandal. waste of water and stealing from electrical meters . This is not all the Maltese people are doing so but the innocent are paying for the guilty ones and this is an unfair justice. So let us go Nation Strike and paralise the island till we find better hands to manage the government - IF THERE IS ONE- AS I doubt it very much so.
A. Mizzi (2 weeks ago)
A HAPPY and not so BRIGHT New year to all, with compliments of Dr. Tonio Fenech and Government appointed Boards , CEO’s and whatever who did such a bad job at managing Enemalta and WSC and reduced it to this state.

It just appears that recession at Enemalta and WSC has been going on uncontrolled for years and not just for the last year.

And why have the consumers have to pay for these deficiencies where there appears to be no accountability and responsability within.

What about yearly financial reports and not for this last year?

What are the Corporations policies for employment and promotions andis here a policy fo H.R?

What about Human Resources , are the corporations overstaffed and mismanaged with the pre-electoral appointments and promotions?

Have through investigations been carried out on losses and theft?

There will truly be Silent Nights around Malta come this Christmas knowing what will be in store for the New Year.






R. Gauci (2 weeks ago)
Ghax ma tissikkax naqra c-cintorin l-WSC? Mhux spiccajna b'Dockyard ohra fejn hemm nies jithallsu anke 90,000 ewro fis-sena f'salarji u bis-sahha tal-monopolju li ghandom jitfu l-inkompetenza taghhom fuq il-poplu. Jizbaljaw huma u nhallsu ahna, mhux sewwa. U jekk imsallbin ghala dahlu ghal spiza bhal dik ta` l-ismart meters li swew miljuni kbar?
R.Zammit (2 weeks, 1 day ago)
What about auditing Enemalta's efficiency? (by an independent auditor of course). Many Government monopolies have been re-aligned for more efficient practices........ what is stopping the same happening at Enemalta?? Surely millions can be saved at the first attempt.
Paul Barrett (2 weeks, 1 day ago)
I tried to look up the translation for the word "incompetence" in the English/Maltese on-line dictionary today - the answer was "Not Found"

Having just suffered two total black-outs tonight, (One and a half hours and 30 minutes later, another 30 minutes black-out); I find it difficult to say anything praiseworthy towards Enemalta (or should that be Enemy Malta). Perhaps I should be looking up the word inefficiency but I suspect the same answer as that for incompetence.

Posted quickly before the next blackout.

p.s. Last May I reported that my water meter was not working properly. The report was acknowledged but nothing done. I sent a reminder some three months later but this was not acknowledged. The meter still is not working properly but I expect they will still charge me the rent on the meter, working or not.
Anthony Henwood (2 weeks, 1 day ago)
I think that our energy company needs to start thinking out of the box and get their managers and minister off their behind.It is futile to use the argument that energy prices are going up beyond any of our control. Most energy companies in both the EU and the rest of the world have been wise enough to either have their own National Oil Companies or be part of a consortium in securing their own energy needs. But I guess Enemalta has to find oil under their own doorstep to secure it's enegy needs and it's managers does not know that their is a whole world out their beyond our shores, were other Countries are securing their future energy needs.If you think that by talking green that will serve our energy needs tomorrow than you should be back in the classroom, because even in peak oil and all the green talk, every country that has oil (even EU ones), will not be plugging their oilwells any time soon. So much for Smart Island filled with dumb people
P Farrugia (2 weeks, 1 day ago)
Is the speed (and rate) at which the utility rates are being requested to be adjusted upwards to reflect the recent trend of int. oil prices the same as when the utility rates were decreased when the oil prices were on a constant decline months back??
Galea. L (2 weeks, 1 day ago)
3. continued

Recreational Tax
Retail Sales Tax
Service Charge Tax
School Tax
Telephone Tax
Telephone, mobile Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Water Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax

STILL THINK THIS IS FUNNY?

Not one of these taxes existed 100 years ago, and our island was prospering
We had absolutely no national debt, had a large middleclass, and Mom stayed home to raise the kids.

What in the hell happened? Can you spell 'politicians? '

I hope this goes around Malta at least 100 times!!!!! YOU can help it get there!!!!
GO AHEAD - - - be Maltese !!!!!!!!!! SEND IT AROUND EVERYWHERE for a change

PITY ON US LAWRENCE. YOU HAVE RUINED US.
Galea. L (2 weeks, 1 day ago)
2. Continued

When he screams and hollers;
Then tax him some more,
Tax him till
He's good and sore.

Then tax his coffin,
Tax his grave,
Tax the sod in
Which he's laid.

Put these words
Upon his tomb,
'Taxes drove me
to my doom...'

When he's gone,
Do not relax,
Its time to apply
The inheritance tax.

Accounts Receivable Tax
Airport tax
Airline Fuel Tax
Building Permit Tax
Cigarette Tax
Corporate Income Tax
Death Tax
Dog License Tax
Driving Permit Tax
Excise Taxes

Electricity and wtaer surcharge Tax
Income Tax
Fishing License Tax
Food License Tax
Petrol Tax ( too much per litre)
Gross Receipts Tax
Health Tax
Hunting License Tax
Hydro Tax
Inheritance Tax
Interest Tax
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Mortgage Tax
Personal Income Tax
Property Tax
Poverty Tax
Prescription Drug Tax
Provincial Income Tax
Real Estate Tax

Galea. L (2 weeks, 1 day ago)
The Tax Poem - attention. Law.Gonzi.

At first I thought this was funny...then I realized the awful truth of it.
Be sure to read all the way to the end!

Tax his land,
Tax his bed,
Tax the table
At which he's fed.

Tax his tractor,
Tax his mule,
Teach him taxes
Are the rule.

Tax his work,
Tax his pay,
He works for peanuts
Anyway!

Tax his car,
Tax his cow,
Tax his goat,
Tax his pants,
Tax his coat.
Tax his ties,
Tax his shirt,
Tax his work,
Tax his dirt.

Tax his tobacco,
Tax his drink,
Tax him if he
Tries to think.

Tax his cigars,
Tax his beers,
If he cries
Tax his tears.

Tax his car,
Tax his gas,
Find other ways
To tax his ass.

Tax all he has
Then let him know
That you won't be done
Till he has no dough.


John Inguanez (2 weeks, 1 day ago)
Why does not EneMalta finance its investment though bonds or loans and not from the consumers money?
Mark Piscopo (2 weeks, 1 day ago)
Hope that these increase in the utility rates will not be introduced. Everyone will suffer from these drastic increase in utility rates. Now everyone knows that Dr gonzi have "par idejn sodi"
G.Debono (2 weeks, 1 day ago)
@T.Bone What you call inefficiency (which is true and i agree with you there is) is basically an alarming amount of employees working with corporations. Now if we had to reduce the workforce, Labour, from behind the scenes would entice the GWU to wreak havoc within the country, and they would. Thus the major inefficiency would not work out. But even if we live in Alice in Wonderland and the parties agreed to work for Malta and not for their own party and agreed not to entice GWU when PN in government and UHM when Mlp is in government, we still have a problem. All the people made redundant would start getting social services, free housing, no tax, no full power rates, low consumption therefore low vat in coffers. Who will have to pay for that ? You and I. Therefore moving one inefficiency from one place to another. Bottom line you start getting taxed to make good. The solutions are: Opposition to work with Government and vice-versa Unions at bay Creation of opportunities (new ones that can take employees from corporations to work with them) Voting for a 3rd party in parliament would help start the process for the above.
E Gatt (2 weeks, 1 day ago)
I honestly believe that some people do not realise that there is a relationship between the price of oil and the cost of electricity. These same people must believe that the Maltese government dictates the world price of oil. It's going to be a rainy weekend - shall we blame this on the government too?
Adrian Borg (2 weeks, 1 day ago)
Let's cut on useless employees first! Three working ... four taking their break! And managers? If they had their own business, they wouldn't last a day!
C.R. Taliana (2 weeks, 1 day ago)
Happy New Year Indeed Malta!
M.Bezzina (2 weeks, 1 day ago)
Il-Gas joghla , Dawl u ilma Joghla......xi pjacir x rigal sabih tal Christmas dak!!U il poplu jcapcap bil ferh!!
D.Agius (2 weeks, 1 day ago)
Nice strategy -but not original at all! The same thing happened last year-...utility tariff increases are outlined just before the budget...in a poor attempt not to show up increases in tariffs during next Monday's speech when attention will supposedly be toward the budget. Now, Gonzipn will come out with pump:"no increases, no increases, no increases were mentioned in the budget!" We are simply fed up!
Tonio Bone (2 weeks, 1 day ago)
The main issue here is that the administration and public sector are too expensive for our current economy and WE have to make good for that deficiency. It's a shame because we can really do so much better, but as I always say, 'better' is not in the interest of everyone.
Tony Caruana (2 weeks, 1 day ago)
What A JOKE. Austin Gatt takes everybody for fools !'' MRA it wasn'st so tragic i would die laughing.
Manuel Micallef (2 weeks, 1 day ago)
What a load of Gimmicks!!! What about hte people of Malta filing a request to:- 1. Find the origins of the BLACK DUST; 2. Increase the efficiniency of power station to a decent % output which modern powerstation should have; 3. the people of Malta ask the management of these entities to do their job properly and hedge against oil increases, rather then be puppets of in hands of GonziPN.
Tonio Bone (2 weeks, 1 day ago)
It's all speculative rubbish to me. We're spending Euro 200 million on an power station extention, someone's got to pay for it and there is no money for it. Solution, get the consumer to pay for it! Happened before, and will happen again.

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