The Malta Independent 18 January 2019, Friday

Why many of you should be fighting tooth and nail to get a rebate for your electricity bills

Helena Grech Thursday, 26 April 2018, 12:15 Last update: about 10 months ago

Many consumers should be fighting tooth and nail to get a rebate on their electricity bills.

At no point did anyone from the appropriate authorities, be it ARMS, Enemalta, consumer affairs entities or successive energy ministries take the time to explain to the public that receiving bills based on actual consumption more frequently would mean chopping up electricity quotas, which, in turn, result in being charged at higher rates or losing out on cheap units.


The Malta Independent has written successive stories on the matter. Economist Marie Briguglio, who most recently sounded the alarm on this practice took to social media to describe in the most simple of terms how this issue is effecting consumers who are billed frequently and have spikes and drops in their consumption.

"Jack and Jill both consume 6,000 electricity units per year in the island of Jalta. Jill consumes 500 units a month, every month. Jack consumes 3,000 units in July and 3000 in August and no more units during the year.

"In Jalta, both Jack and Jill are entitled to a quota of 2000 units at 10c5, and 4000 units at 12c9. Their bill should total €730. But Jalta's billing company JARMS decides to bill them every two months. It rations their quota to 333 units at 10c5 and 666 at 12c9 [based on the number of days their bill covers]. The rest will be billable at 16c1 34c2 and 60c8.

"Jill will still pay €730 and think nothing of it. But Jack, on the other hand, will pay €2,419 for the exact same units of electricity, simply because of the billing period. At the end of the year, Jack went to JARMS to ask for €1,690 to be refunded to him. To be continued."


Those who consume electricity in spikes and drops are the worst hit

This comical but highly apt analogy perfectly describes the current situation for those residing in Malta. People who have what is known as 'smooth consumption', meaning the units consumed do not vary much throughout the year, will not experience a spike in their bills because cutting up the quota per day does not make much of a difference to them.

Those who have periods of time with spikes in their consumption, such as the hot summer months or Christmas, will notice larger bills during these periods because they are not being awarded the opportunity to offset their high consumption periods with their low consumption periods. Longer billing periods would allow them to use up the 'cheap' electricity rates during the high consumption part of their billing period, and use up less electricity at the higher tariffs during the lower consumption part of that same billing period.

Those who are not consistent with their electricity consumption may also be losing out on cheap electricity. If say a bill is issued for March and April, typically a low consumption period, and you do not reach the full quota of the cheap units, you simply lose out as the next billing period starts a fresh quota. If 300 units are consumed and the 2 month allowance is 330 at 10c5, you would not be entitled to having those 30 extra units carried over to the next billing period, they are simply lost.


What can consumers do about this?

Local consumers have no other option but to buy their water and electricity from the state provider, which certainly leaves ARMS, the state water and electricity billing entity, in a highly dominant market position. Nobody can get by without water and electricity, and with only one option for consumers in Malta, it is of paramount importance that consumers receive a clear explanation on how they are being billed. Further to its importance, it is only fair to clearly explain to people how their bill is worked out, and how changes in billing are going to affect them.

When this newsroom questioned ARMS about when it started to issue bills more frequently, the official response was that the same arrangement inherited by the Waste Serve Corporation (WSC), has been retained by ARMS. WSC was the previous entity which issued water and electricity bills.

The introduction of smart meters meant that meter readers no longer had to visit on-sight to take readings as they could be accessed remotely. This allowed for bills to be issued on actual consumption more frequently. Many rejoiced at this, because they could plan their finances better and not receive a large scare when after six months or even a year they receive a whopper of an electricity bill covering the entire period.

By August 2014, roughly 87 per cent of electricity meters in Malta had been replaced by smart meters.

Cheaper electricity tariffs do not mean cheaper bills for many people

People further rejoiced when then Energy Minister Konrad Mizzi announced that just one year after being elected into power, the government would be reducing water tariffs by five per cent and electricity tariffs by 25 per cent at the cheapest rate.

More frequent bills at cheaper electricity rates were supposed to mean that consumers could plan their finances better and bolster their disposable income to spend on other things, right?


Misleading information available to the public

When taking a look at the ARMS website, it clearly lays out different consumption 'bands' and their respective prices. The information is presented in a way where under the 'Cumulative consumption' column, different bands of consumption are shown at different prices, for example the first 2,000 units (0-2,000 kWh) are priced at 10c5 and so on and so forth.

The way the information is presented and the use of the word cumulative leads most to believe the first 2,000 units consumed are priced at 10c5. A legal provision also says that households "may be billed on a pro rata basis" but also speaks of "cumulative consumption per annum".

When looking at explanations provided for how the billing system works when the reduction of tariffs was announced in 2014, TVM reported then Energy Minister Konrad Mizzi as explaining how the first 2,000 consumed are being charged 35 per cent cheaper, 25 for the flat decrease in the tariff and the remainder referring to the eco-reduction.

Demand that ARMS carries out reconciliation exercises returns any extra money paid

Since most people believed that they would simply be charged on a cumulative basis and had no idea that their electricity quotas would essentially be chopped up based on the number of days their bills covered, ARMS should be carrying out a reconciliation exercise and return any money overpaid.

In 12 months a household is awarded 2,000 units at 10c5. A bill covering 60 days leaves a household with 328 units at 10c5. During a high consumption period, say a family of five consumes 1,000 units for that 60 day billing period. The first 328 units (2,000 units/ 365 days x 60 day billing period) are therefore billed at 10c5 while the rest would be billed at the higher tariff 12c9, despite the fact that 2,000 units have not yet been consumed in the calendar year in question. That two month bill cost €34.44 at 10c5 and €86.688 at 12c9, a total of €121.13.

Say that family happens to spend most of their time at a relative's house and in the remaining 10 months of the year they only consume 1,000 units. A total of 2,000 units consumed in one year at 10c5 should result in an overall annual bill of €210. What the family will actually be paying is €121.13 for the first bill, plus €105 for the remaining five bills issued throughout the year covering 1,000 units at 10c5, a total of €226. That €16 will not be refunded by ARMS even though that family did not consume more than 2,000 units.

In this analogy the difference is €16, however households are experiencing far bigger overpayments. The people should be demanding that ARMS reconcile annual consumption to ensure that people are really being charged at the rates advertised by ARMS and the government.


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