Losses relating to electricity decreased by 76 per cent with the use of smart meters, resulting in savings of over €45 million. On the other hand, non-billed consumption relating to water remained stable over the project’s lifetime, the National Audit Office said.
Auditor General Charles Deguara presented a performance audit to Speaker Anglu Farrugia on Wednesday.
Through an investment of €131 million over a period of 12 years, the smart electricity and water radiofrequency (RF) meters generally yielded positive results, NAO said.
This included the automatic transmission of real-time readings based on actual consumption. Enemalta managed to substantially decrease the amount of unbilled electricity lost through apparent losses and an aggressive revenue collection policy, particularly with respect to cases of electricity theft.
Also, Water Services Corporation (WSC) utilised data to detect in real time third party internal leakages, thus reducing unnecessary financial burden and operational manpower, and improving customer experience.
The potential for billing based on actual consumption through smart and RF meter technologies is currently estimated to be around 90 per cent of all electricity and water accounts. In practice, in 2020, these statistics were in the region of 80 and 67 per cent respectively. This variance is due to various technical issues resulting in delays in the transmission of readings.
In the case of water RF meters, this variance mainly arises from the different interpretation by WSC and ARMS of what constitutes a ‘stopped’ water meter.
Apparent losses relating to electricity decreased by 76 per cent, which translates into savings of over €45 million. On the other hand, non-billed consumption relating to water remained stable over the project’s lifetime. In part, this is due to the greater susceptibility to technical faults of the water meter setup. A recent WSC and ARMS study calculated that, in 2021, there were 17,928 water meters flagged for inspection, which amounts to over six per cent of total water accounts.
Despite the high level of automation, questions relating to cost efficiency at the billing agency arise. The number of staff employed by ARMS has increased significantly in recent years. It was not always evident as to why most departments within ARMS were augmented with human resources when both the billing and the administrative functions were generally automated. ARMS contends that the increase in staff is reflected both in the increased services being offered by ARMS, as well as in the efficiency of internal processes and in the departments within the company.
The utilities’ companies and ARMS have always based billing on a pro-rata basis, where units in specific tariff bands are apportioned on a monthly or bi-monthly billing basis. This practice has also been endorsed by the Regulator. Billing calculations according to this methodology were generally found to be correct.
In actual fact, NAO’s analysis shows that, in 2020, 46 and 63 per cent of the total analysed electricity and water accounts respectively did not reveal any significant variance, essentially amounting to less than €2 annually, whilst the more substantive variances are attributable mostly to the heavy consumer class.
The NAO said that, since the case is sub judice, it is prudent to limit its comments to the foregoing. Nonetheless, the government committed to address issues of electricity and water consumption billing methodology in the recent Budget speech. In this regard, one needs to keep in view the fundamental polluter pays principle enshrined in Article 191 of the Treaty on the functioning of the European Union.
PN reaction
Reacting, the Nationalist Party said the NAO had confirmed that the government had robbed Maltese families some €6.5 million a year in overcharged utility bills.
It pledged that it would give back over €50 million in overcharged payments, if elected to government.
Government reaction
In its own reaction, the government said the NAO had confirmed that energy bills are being calculated in the same way they have always been calculated. “In fact, the only change since 2013 was the 25% reduction in tariffs.”
“In his report, the Auditor General says that with the annualisation billing methodology, heavy consumers would benefit more whilst the more responsible consumers would be affected negatively. This reflects what the Ministry for Energy has already stated, namely that the rushed statements by the Opposition would result in higher bills for thousands of clients and endanger the eco-reduction benefit.”
The government said the NAO had also noted the declaration in Budget 2022 in which the government committed to addressing the issue.
“In his conclusions, the Auditor General was clear that bills calculated according to the current methodology are generally correct,” the energy ministry said.
The Auditor General wrote that; “more in-depth studies are required as quasi favouring the heaviest peak consumers would deviate from the fundamental polluter pays principle.”
“The need for well-thought-out solutions which are not based on populism are reflected in the position already adopted by this government when, in the Budget for next year, it declared that a new system will be announced. This system would be fair without negatively impacting any clients. This is contrary to what the Opposition has been stating, with its rushed proposal which would have increased the bills of thousands of clients.”
“Whilst the Opposition does not offer studied solutions, during an international crisis the Maltese government continues to ensure the lowest bills for consumers. At the same time, consumers in member states across the European Union registered considerable increases. Malta today has the lowest energy bills in the Euro Zone because this government decided to side with the Maltese and Gozitan consumers. This government chose to support consumers and not pass on to them the burden of international pressures whilst the world is still emerging from a pandemic,” the ministry said.