Vince Farrugia | Sunday, 01 February 2009

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Electricity tariffs – daylight robbery for SMEs

GRTU still fails to understand how government has managed to mess up the electricity tariffs issue so badly, and why they stubbornly keep saying they are right, when no one, not even the party diehards are convinced.
I take the case of the complaints by small and medium businesses. How can someone who’s being asked to pay for the consumption done by others be convinced that the government is acting logically?
Why do 10 or 20 small retailers who consume together as much electricity as one very large consumer, pay 33% more for their consumption?
While government continues to insist that SMEs are the backbone of the economy, they contradict this by insisting on doing exactly the opposite on the electricity tariffs issue. The way SMEs are being rewarded for consuming less energy is by paying 33% more to subsidise higher consumers: consume less = pay more.
The GRTU continues to insist that we are not against incentives given to the large commercial consumers as they are important to our economy, as long as SMEs do not foot the bill! The current cross-subsidisation is negatively discriminating on the lower consumer. The higher consumer is not only being helped but is having part of its bills paid by the lower consumer, who is an SME and cannot sustain such an expense.
A quick look at what SMEs were paying before the sudden change occurred, helps you understand better. First of all the first 200 units of energy were free and the rest of the charges were shown in table A
The tariffs proposed by the KPMG report and presented to MCESD by Minister Austin Gatt on 23rd October 2008 (table B).
After analyzing the change in the tariffs structure, I met first the Prime Minister and afterwards Minister Tonio Fenech and on behalf of GRTU members presented them with our alternative proposals. Our proposal included stepped tariffs that would start low and gradually reach the new tariff structure within a three-year period. This would have allowed for an adequate transition period that would have diminished the sudden shock and inevitable consequences we are facing today to propose a more responsible way forward. Making the change proposed a more responsible one.
GRTU was never given an answer to its proposal and accordingly on 1st December 2008, we wrote to the Malta Resources Authority requesting them to issue Enemalta with a ‘cease and desist order’ not to implement any new Tariffs.
On 5th December 2008, Legal Notice 330 of 2008 was issued with the following two different tariff structures: commercial users using less than 1,200,000 Kwh and commercial users using more than 1,200,000 Kwh (table C).
The adopted tariff schedules show that one large consumer using 1,200,000 units and over would pay €154,016 whilst ten small consumers who altogether consumed 1,200,000 units would pay €205,416, a staggering 33.3% increase.
Data which has not been confirmed by Deliotte & Touchet or KPMG shows that 103 consumers actually use more then 1,200,000 Kilowatt Hour units, whilst over 40,089 account holders use less then 1,200,000 Kilowatt Hour Units.
The European Electricity Directive does not allow for cross-subsidization of tariffs and does not allow for discrimination against users, in this case SMEs, and we believe that whatever else the Malta Resources Authority is saying (and honestly no one understands what they are saying exactly) the above tariffs are in breach of community law. GRTU has issued a judicial protest in respect of these tariffs, and you can remain assured that this time round no one from the European Commission will tell us that we have not exhausted the local legal hurdles.
Our target is of course the European Courts and procedures. I have already stated that we have no faith in the ability of the public regulator, the Malta Resources Authority, to act independently. How can they act independently when the final decision belongs to the minister and the minister is part of the Cabinet that has approved the new electricity tariffs regime? Notwithstanding, they are the only reference point we have so we have to refer to them. This also in spite of the many contradictory statements being said by government spokesmen as to what MRA has really decided or not decided.
MRA have unfortunately allowed themselves to be used, pushed and be beaten. Now they cannot expect much respect. They seem to enjoy being punching bags. That’s why we continue to insist that beyond the Maltese law courts there are also the European Courts and procedures. The facts we publish are the real facts. They are simple. They are self-explanatory.
On 16 December 2008, during the National Conference held by GRTU for its 60th Anniversary, entitled “Facing Today’s Economic Reality, Bringing Home the European Reality to Small Businesses”, GRTU emphasized the European principle of “Think Small First”.
Dr Lawrence Gonzi, present for the said conference, said SMEs together employ 67,000 employees. ‘Thinking Small First’ means that SMEs should truly be treated as the backbone of any European Economy.
GRTU continues to insist that government still has time to come to terms with this fiasco. The saga continues.

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