NEWS | Wednesday, 29 October 2008

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STUBBORN

GOVERNMENT STEAMS AHEAD WITH HIGHER ENERGY TARIFFS

Kurt Sansone
Ignoring appeals made by all the social partners to reconsider its energy hike, government yesterday announced substantially higher utility tariffs which will come into force retroactively as of 1 October.
The electricity tariffs are the same as those presented to the social partners last week, while the water tariffs are the same as those originally published in the KPMG report at the beginning of October.
A two-person household with average consumption patterns can expect its yearly utility bill to increase by €231 while a four-person household could expect its bill to rise by €271.
The increases are over and above what households are currently paying with the 95% surcharge.
There will be no additional compensation for households apart from the statutory cost of living increase.
The decision by government to go ahead with its planned tariff increases was announced by Infrastructure Minister Austin Gatt and Finance Minister Tonio Fenech, who downplayed the potential impact of the higher utility bills on the country’s economic prospects.
For Fenech, the negative impact of the looming international recession was of bigger concern to economic operators than the higher electricity and water costs they would have to pay.
He insisted having “yet to see a foreign government subsidising or bailing out industries hard-hit by the global economic slowdown.”
“The financial crisis should not be confused with the global economic slowdown. The bail-outs to the financial and banking sectors have nothing to do with recession,” Fenech said when asked whether it made sense to cut subsidies that would translate into additional burdens to industry at a time of global recession.
The new tariff structures are higher than what people are paying for now with the 95% surcharge, since government has opted to remove the subsidy it gives Enemalta.
The only subsidy government will be giving amounts to €21.1 million, with €7.8 million to finance the public service obligation of the Corporation (such as street lighting), €8.1 million as an energy benefit to poor families, and €5.2 million to cover the capping mechanism.
The new tariff structures for electricity see an adjustment in the capping mechanism for the higher-end users in industry. Around 26 companies, none of them hotels, would have their higher bills subsidised by Enemalta if the annual increase would be greater than 40% of what they paid in the previous year. This new measure is intended to protect jobs and will cost Enemalta €5.2 million.
The ministers said that capping for industry would be phased out over three years. The commercial sector would be making up for Enemalta’s lost revenue due to the capping mechanism by paying higher utility rates.

ksansone@mediatoday.com.mt

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