Vince Farrugia | Sunday, 08 February 2009

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Ides of March

On Wednesday 4 February, I attended an important meeting with the Malta Resources Authority.
On the agenda was GRTU’s claim for revision of the electricity and water tariffs, hastily imposed by Government and backdated to October. I strongly contend that the MRA is failing miserably to understand its role as the guardian of Maltese consumers and users of electricity and water services. The whole charade that has besmirched Gonzi’s government so badly could have been avoided if MRA had the guts to stand up and prove its worth. Instead, the authority was practically absent until after 5 December 2008, when Legal Notice 330 of 2008, imposing the new electricity tariff regime, was published by the minister responsible for the MRA, who at law is supposed to act on the same authority’s advice.
I am not aware that the MRA had till then issued a single note or statement to Enemalta or the Ministry for Resources stating its approval or non-approval of the tariffs. The MRA is not only the authority that approves new tariffs, but is the authority obliged to conduct an Impact Assessment on a major event as the introduction of a new electricity tariff system. The EU Commission issues specific guidelines to authorities like MRA on how to conduct an Impact Assessment.
I love the EU model based as it is on dialogue, consultation and the protection provided by Public Regulators. But for the model to work we need more and more people of calibre. People must be given the chance to learn and grow. I am in no doubt that Ing. Joe Ellul, chairman of MRA, can grow to face his obligations and provide the public with the protection it seeks. But government should have never appointed a new person to a new post and then burdened him with a monster of a package to decide upon, when he had hardly the chance to learn the rules.
The result is, alas, what we all now know. We have an MRA that has gone round in circles trying to manage the mess imposed upon it by people who preferred to disregard the EU model. Now, the MRA can only aspire to move to the future hoping to act in a manner that makes people forget the recent past.
What the MRA now hopes to achieve is to review the electricity tariffs taking into consideration the changes to the prices of petroleum products since Austin Gatt’s tariffs were published. MRA is also expected to evaluate all complaints raised, and then include all its assessments in a revised tariff regime effective from end of March.
The new tariffs will remove any additional burdens that would have been included in the tariff regime in operation since October 1st. This is the issue that confused the 11 trade union leaders. MRA will not review the current tariffs, as these are based on petroleum figures and other considerations produced up to September 2008. MRA can refuse tariffs, not on future prospects but backwards. They see what went right or wrong in the previous six months and produce a new tariff structure based on actual facts as they transpired during the current six-month period. In practice the new tariffs will correct any previous exaggeration. But the impact will be forward, not backwards.
The longest list of complaints presented to MRA on the electricity tariff structure imposed by government since October has been raised by the GRTU. Small and medium enterprises are currently the worst-hit victims of the electricity tariff regime imposed by Government on 5 December 2008 by Legal Notice. On behalf of small businesses, we complained with MRA as soon as Austin Gatt first presented the new tariffs in October. Incredibly while we presented our complaints publicly in two press conferences and in a meeting with MRA, in a meeting with the Prime Minister and the Deputy Prime Minister and in writing also to MRA, Enemalta continued to advertise on its website the old electricity tariff rates oblivious of the fact that Austin Gatt, without issuing any Legal Notice, has stated that the new tariffs will be applicable from 1st October 2008.
Enemalta was of course right. It could not publish electricity rates that were not backed by any legal notice and did not carry the approval stamp of MRA. Businesses could not be blamed if they continued to quote their prices based on the tariffs advertised by Enemalta. Yet, Enemalta cheekily started as from October charging the new rates even though legally they had no power to do so.
GRTU requested MRA to stop this abuse but what happened was that in November the old rates disappeared and the new rates were only made available by Legal Notice on 5 December.
At the same time the workers’ trade unions raised their complaints as to how families were going to be affected by the new rates, and the Chamber of Commerce and the FOI, speaking on behalf of large enterprises, complained that the largest employers were being badly hit.
Incredibly, the Government fiddled a little with the tariffs, and gave big business some relief while polishing up the rebate scheme for households... without losing any income expected from the October tariff structure. Someone had to bear the brunt for the advantages given to these households and to big businesses. The burden was loaded all on the back of owners of small and medium enterprises.
They were already hard-hit by the first set of new tariffs. Now their burden was further increased.
MRA was supposed to have studied GRTU’s complaints and reduced the burdens hastily imposed by Minister Austin Gatt. But it idly stood by and approved the imposition of additional burdens on SME’s as follows:
So MRA had a complaint from GRTU that the new tariffs announced in October were discriminatory against printers, workshops, butchers, supermarkets, mini markets, fish shops, cold stores, confectioners, sprayers, food traders, restaurants and all other producing a product or a service with a high electricity content. Rather than evaluating this complaint and recognising the discrimination against small and medium enterprises, MRA shamelessly approved the further increased load on the already suffering small businesses.
On 16 January 2009, six weeks after the publication of the Legal Notice by the Minister responsible for MRA, the MRA issued a public statement saying they had approved the new rates.
MRA expressed its satisfaction that the figures on which the new tariffs regime was based “appear to have been correctly configured”, that the “key assumptions... accurately tie in” and that “the resultant outputs generated by the final KPMG Report as amended by subsequent changes agreed with the constituted bodies, have been correctly transposed in the Draft Legal Notice”.
I’ve never seen such barefaced statements. We have been complaining from day one. We have presented the analysis and what’s wrong with the KPMG-backed new tariffs. We have complained officially to the MRA that the rates were unacceptable and discriminatory to small and medium businesses; now, MRA had the audacity to state that everything is fine with the Legal Notices published six weeks earlier and that all this was “as agreed with the consultant bodies”. Incredible!
We acted as one of the country’s five national constituted bodies members of MCESD representing the largest cross section of small and medium enterprises, and MRA states that the additional punishment inflicted on SME’s was “as agreed with the constituted bodies”. Even Prime Minister Lawrence Gonzi denied his grotesque falsehood.
Now we have been told to wait till March. Perhaps the MRA will change something. Till then, say a prayer. Perhaps someone up there will help the lot on top to see straight.

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