Malta has the sixth highest electricity rates in the EU and were it not for the government’s decision to subsidise household tariffs they would have risen further.

The island was one of just two member states that saw their electricity tariffs unchanged in 2011, despite the continued global hike in the prices of fossil fuels, according to the latest Eurostat data released in Brussels yesterday.

The other country was Finland. However, much of its electricity is derived from nuclear power, an energy that is much cheaper method to produce.

Eurostat said that, at the end of 2011, the average tariffs of household electricity in the EU soared by 6.2 per cent over 2010 to €18.4 per 100kw per hour (18.4 Purchasing Power Standard) while Malta’s remained unchanged.

The only member state where electricity became cheaper was Luxembourg, with a dip of 4.9 per cent. Geographically nestled in the centre of the continent, Luxembourg imports most of its electricity needs from France, which also produces much of its power through nuclear reactors.

At 23 PPS per 100kw per hour – an artificial common reference currency unit that eliminates price level differences between countries – Malta’s electricity tariffs ranked sixth highest in the EU, following Cyprus (26.7), Hungary (26.4), Slovakia (24.9), Germany (24.2) and Poland (23.5).

“The return of subsidies in Malta means electricity tariffs are not reflecting the real costs of production,” an EU official said.

“Although some form of subsidies is allowed under EU rules, in reality they can’t go on forever” he added.

According to Eurostat, the cheapest electricity rates in the EU in 2011 were in Finland (11.4 PPS) and France, (12.6 PPS) per 100kWh. Although natural gas – still unavailable in Malta – costs much less than oil to produce energy, its price on the international commodity markets is also rising at a staggering rate.

Eurostat said that in 2011 the average price of natural gas soared by 12.6 per cent over 2010, to reach 7.1 PPS per kWh.

Although this if Malta used natural gas to fire its power stations, electricity prices should in theory go down significantly, the country still lacks the infrastructure to import gas and this will have to be factored in when calculating the cost of production.

This infrastructure alone is estimated to cost between €250 million and €350 million.

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