Your editorial, The surcharge report, TMID, 30 May draws the only possible conclusion from the Deloitte & Touche audit of the surcharge mechanism: that the surcharge is an inevitable result of spiralling international oil prices and that even a good chunk of that is being absorbed by Enemalta and not passed on to the consumers.

Your editorial does however make a few observations that require clarification.

The first is the optimistic view that the introduction of wind energy will return cheaper electricity bills to consumers. This has not been the experience wherever this technology was introduced. There are other important reasons for introducing wind energy: reducing carbon emissions; reducing the impact of fuel price fluctuations; reducing pressure on global warming.

That is why we are looking at ways to promote the introduction of this alternative source. But even at current prices, wind energy is more expensive for each unit of energy generated than fossil fuel energy and expectations of the reverse have no grounds in fact.

Another observation in your editorial is “the mistake the government made when the surcharge was announced when it had said the surcharge would increase by just over one percentage point every month (when) it should have said that the situation would fluctuate depending on the international market.”

The small percentage increase on the 55 per cent rate was the transitory measure balanced out by the temporary increase on tax on petrol products. The government had indeed announced that the surcharge would be revised every two months strictly on the basis of the international market reality at the time.

I refer you to the announcement of the surcharge in Minister Austin Gatt’s parliamentary statement of 26 October 2005. Details of the surcharge formula were given in that speech including the following explicit quote: “Since the surcharge is based on the principle of differentiation between expenditure for the current and the previous years, Enemalta will extrapolate the actual fuel expenditure for the preceding two months over the current year, compare that with expenditure in 2004-5 and add what has already been raised by the surcharge. The result shows what would need to be collected in the next two months according to the model agreed at the MCESD last year and that will be retained this year. This will mean that the surcharge rate – in the same manner as fuels sold from petrol pumps – will follow international market oil prices and can increase or decrease every two months”.

Jesmond Saliba

Communications Coordinator

Investment, Industry and IT Ministry