Updated 1.50pm - Added ARMS statement

Consumers are being cheated out of lower tariffs on water and electricity due to the way the unit cost is calculated, according to the Consumers’ Association, which wants to see a change in regulations.

The association, an independent voluntary organisation that represents consumer interests, has long received complaints about the unfair way utility bills are worked out, said association president Benny Borg Bonello.

“When we raised complaints about the way that ARMS (Automated Revenue Management Services) calculates the cost of units, we were told it is done according to law. If this is the case, we are calling for a change in the law,” he told The Sunday Times of Malta.

READ: Bring us your electricity bills, Delia tells voters

The Sunday Times of Malta sought his comments after complaints about the tariff system recently resurfaced on social media. ARMS uses a staggered system to bill residents. The first 2,000 units of electricity, for example, are charged at one rate and further units at higher rates.

According to current legislation, residential premises are subjected to tariffs based on the cumulative consumption per year, “which may be billed on a pro rata basis”. For every kWh of the first 2,000kWh consumed in one year, residents should be charged 10.47c, while they pay 12.98c for every kWh of the next 4,000kWh, 16.07c per unit on the next 4,000kWh, and so on.

READ: Unfair billing is making Enemalta more money than allowed, says PD 

However, ARMS splits this allocation, pro rata, among the number of bills that a consumer receives in one year. This means that if a residence is billed every two months, the first 2,000 units are split between six bills, amounting to an allocation of 333 units per bill at 10.47c per unit.

If a residence consumes fewer than 333 units in a two-month billing period, the remaining units at this cheaper rate are not brought forward in the subsequent bills. The allocation is lost and cannot be used in the subsequent months.

If, in the following two months, a residence consumes more than 333 units, it will be charged higher rates from the 334th unit onwards. For Mr Borg Bonello, this means residents are being cheated out of paying the lower rates for the full allocation of 2,000 units.

Concerns about improper billing methods were first raised in the Malta Independent, with consumers' ears quickly pricking up. 

As complaints came in, the association met the Regulator for Energy and Water Services and Arms about them.

“We were told that the pro rata allocation is in accordance with the law. But we believe that this method of calculation is unfair and the law regulating this allocation should be changed,” he said.

We believe that this method of calculation is unfair

Logic would demand, he said, that consumers are billed for cumulative consumption. Once they have used up their allocation of 2,000 units at the cheaper rate, only then should the higher tariff kick in.

Alternatively, if ARMS continued to use a pro rata system of billing, it should refund any overpayments made at the end of the year, he said. Mr Borg Bonello said the increasing number of complaints coming in were not just about this issue. Consumers had become more inquisitive – as they should be, he added.

One common gripe is about the sometimes huge difference between one bill and another. The association is in favour of monthly bills, as they would stabilise expenses and allow families to plan better, instead of a situation wherein some customers receive low bills followed by very high ones.

Even worse, he said, was being billed in bulk – after not having received a bill for up to two years. When consumers protest against this kind of billing, their bill is then split across a period of time and they actually notice a drop in the total amount.

This makes it more pertinent for consumers to know how bulking is calculated, Mr Borg Bonello added.

He also raised the issue of smart meters, which were not smart at all, he said.

“The only thing they are smart at is cutting off electricity when the bills are overdue. Sometimes they are actually redundant, as people receive estimates instead of actual bills. When we raised the issue with the authorities, we were told there could be some ‘interference’.

“This could explain why experts have told the association that the kind of smart meters installed in Malta are susceptible to hacking.”

To make matters more confusing for some customers, they receive overlapping bills, he added. “We cannot understand how, with today’s technology, it seems to be difficult to fix this issue.”

Nothing has changed since 2009 - ARMS

In a statement issued on Sunday afternoon after Opposition Leader Adrian Delia highlighted concerns with the way bills were being calculated, tariff billing company ARMS Ltd. said that tariffs had been reduced over the past years and that the average two-person household was now now paying bills 30 per cent cheaper than in 2013. 

It said reduced tariffs led to people using more energy-intensive items, with electricity demand up by 6 per cent in 2017 and more than 3.5 per cent this year so far, and that the company was now issuing 78 per cent of bills based on actual readings - up from 48 per cent in 2012. 

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