Costs amounting to €85.6m to be borne by consumers

Households and commercial consumers will be paying higher water and electricity rates come January 1 but the increase remains a mystery as the government did not publish the revised tariff bands yesterday.

The Infrastructure Ministry said last night Enemalta and the Water Services Corporation had filed a request with the Malta Resources Authority for an increase in tariffs, which would come into force next year. However, the scale of the revision was not announced "on the direction of the MRA".

The public will only get to know by how much their bills will rise when the MRA approves the tariffs.

From past experience it has taken the authority weeks and even months to approve the public utility companies' tariff revisions. Last year, the tariffs introduced on April 1 were published by Enemalta in March and approved by the authority in May.

The ministry said the upward revisions were required to make good for increased operating costs, primarily the rise in the price of oil, which represents 62 per cent of all Enemalta's expenses. Forecasts showed that fuel oil was expected to cost more in 2010 than it did in October 2008 when the new tariffs were introduced for the first time, it added.

The total increase in costs for Enemalta and WSC to be borne by consumers is expected to be €85.6 million. Of these, €74.9 million are attributable to higher oil prices and €10.7 million to investments in the new sewage treatment plants, the smart meter system and the new power station at Delimara.

The higher cost of oil also includes a €21.5 million shortfall the corporation is expected to register at the end of 2009 because tariffs did not cover increasing oil prices.

Last April, the new tariffs were intended to raise €254.2 million in revenue to cover the corporations' costs. Adding €85.6 million to that amount means consumers would have to fork out €339.8 million to cover next year's increased costs. This is almost €35 million higher than the total cost intended to be recovered from consumers when the tariffs were originally introduced in October 2008.

The ministry said the government would continue to subsidise bills for low-income earners through an energy benefit. The sewage sector, it added, would also continue to be "heavily subsidised".

In May, Minister Austin Gatt admitted that the increases in the water and electricity rates should have been introduced in January 2009 rather than October 2008.

With the latest tariff increases it seems he has learnt the lesson of not introducing back-dated tariffs but the decision not to publish the proposed hikes may very well present another one to the learnt.

The electricity tariffs were cut by 22 per cent for households and by up to 26 per cent for commercial and industrial consumers in April.