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Malta's electricity tariffs fifth highest in EU

Domestic electricity in Malta was the fifth costliest within the EU, according to a new study for 2009.

Maltese consumers paid 25 per cent above the EU average for 100 kWh of electricity, Eurostat reported, although an official advised caution when interpreting the findings.

The study is adjusted for purchasing power (PPS), an artificial currency unit that eliminates price level differences between countries. Using such measure, 100 kWh cost households 20.68 PPS in Malta at the end of 2009 as opposed to a 16.45 PPS average across the 27 member states.

One PPS unit buys the same volume of goods/services in all EU member states and is the measurement used to calculate the strength of the EU economies when it comes to Gross Domestic Product.

A Eurostat official however did point out that comparisons between Malta and the EU in this area were misleading.

"Malta has an isolated energy production system and, thus, the cost of energy is always going to be significantly higher than the EU average if charges are based on the real production costs as they are today. The EU member states on the continent have the option of buying cheaper energy from other countries produced through various options including nuclear, gas and natural resources such as wind," the official said.

"As long as Malta remains totally dependent on oil to fire its power stations, the country can't really have cheaper energy tariffs."

Malta has seen a dramatic increase in the cost of electricity over the past few years as the government shifted its policy from heavily subsidising power generation to charging tariffs based on real production costs including the high cost of oil bought on the international markets.

The government has plans to diversify the island's sources of electricity. They include the installation of two submarine cables linked to Sicily, offering the possibility of importing up to 200 Mega Watts of energy from the European grid, and the building of onshore and offshore wind farms. The projects require hundreds of millions of euros in investment.

Despite being among the dearest in the EU last year, the price of electricity in Malta was still 1.5 per cent cheaper than in December 2008.

The highest rates in the EU were paid by Hungarian consumers (24.26 PPS per 100 kWh), followed by the Poles (22.03), the Germans (21.36) and the Slovaks (21.12). On the other hand, the Finns and the French paid almost half what Maltese consumers had to fork out. In both countries, much of the electricity is generated from nuclear plants.

According to Eurostat, in the EU27, household electricity prices fell by 1.5 per cent between the second half of 2008 and the second half of 2009. In the same periods of 2007 and 2008, household electricity prices in the EU27 had risen by 6.8 per cent.

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