The Malta Independent 17 August 2022, Wednesday

Court finds that ARMS billing method is in breach of law, orders it to refund overcharging

Albert Galea Tuesday, 5 July 2022, 12:46 Last update: about 2 months ago

A court has found that a billing method used by Automated Revenue Management Services Ltd (ARMS) resulted in the illegal over-charging of a Lija resident on his electricity bills between 2016 and 2017.

In a judgement which could set a significant legal precedent on what was already known to be a controversial issue, Judge Anna Felice ruled that the way in which ARMS calculated the electricity bill of Darren Cordina and Melvin Polidano was illegal.

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The court found that the computations which ARMS used to work out the pair’s electricity bill was on a pro-rata basis, rather than on cumulative consumption – meaning that they had been overcharged by ARMS in their electricity bill.

This was found to be in breach of Subsidiary Legislation 545.01, which states that tariffs for residential homes should be based on cumulative consumption which can be calculated pro rata but eventually the calculations have to reflect annual actual consumption, with the possibility of being refunded for excessive estimated payments.

Cordina had filed a judicial protest based on the bill he received from ARMS where he stated that it does not reflect the aforementioned law as the tariff is not calculated on actual consumption nor does is provide for refunding excessive payments nor paying underestimated consumption.

ARMS did not accept the request to revise the tariff based on actual consumption and in its response to the protest, ARMS did not even acknowledge the issue.

Subsequently, another protest was filed where Cordina argued that the way in which ARMS calculated his bill goes against various laws and directives relating to rights of the consumer, energy efficiency and dishonest commercial practices in the internal market.

The pair demanded that bills clearly show the actual price of the energy consumption, and they also requested damages for the excessive charges. ARMS continued to ignore both protests, resulting in Cordina making use of all legal remedy to rectify the situation.

ARMS then said that Cordina and Polidano’s application should be deemed null because it was confusing and contained different and conflicting actions – however these preliminary pleas were rejected, meaning that the case continued in court.

The court in fact on Monday found that the way in which ARMS calculated the pair’s electricity bill was actually illegal.

The court said that ARMS had to revise the electricity bill in question “and refund him the full amount which he paid extra because the bill was worked out on a pro-rata basis rather than on an annual cumulative consumption basis.”

ARMS was also condemned to paying all case-related expenses. Lawyer Maxilene Ellul represented Cordina and Polidano in the case.

The case is sure to make waves, particularly as the issue of ARMS possibly overcharging people on their electricity bills has been in the news ever since this case was opened in 2017.

A National Audit Office report published at the end of last year found that a significant number of accounts which were analysed had discrepancies which meant that consumers across had been overcharged by 4.6 million because of the way ARMS was calculated electricity bills.

The NAO report reads: “The NAO’s analysis shows that 46% of the total analysed accounts (39 out of 85 accounts) did not reveal any significant variance between the current pro rata and annualised billing methodology that is, the difference between the two calculations was less than €2. Nonetheless, 32 out of the 85 electricity accounts reviewed registered a difference between the current pro rata and annualised billing methodology of more than €10. The range of this difference was between €10.74 and €468.90. The latter amount relates to a domestic account with heavy consumption. 78% (25 out of 32) of these variances relate to the category between €10 and €50”

“When extrapolating these results on the total 324,501 electricity accounts, a net variance of around €4.6 million between the pro rata and annualised billing methodologies will result. On the other hand, an annualised billing system will also lead to cases where consumers incur higher utility costs,” the report reads.

The report led to the Nationalist Party mounting a campaign calling on people to take their water and electricity bills to their headquarters as it sought to address how they were being calculated.  Around 2,000 people subsequently took their bills to the party’s headquarters.

Energy Minister Miriam Dalli had told Parliament in January that a new ARMS billing system would apply from that same month to address what she described as “anomalies” in the previous billing system.

However, to date, that system is yet to be implemented.

Court confirms what we have been saying for a long time – PN

The Nationalist Party reacted to the judgement by saying that it confirms what the PN has been saying for years: that the system in which electricity and water bills which ARMS started to use in 2014 is in breach of the law.

The PN’s energy spokesperson Mark Anthony Sammut said that the government’s justification – that the change in the way in which bills were worked out was done because of a legal notice which the PN enacted in 2009 – for the changes was “a lie.”

“The Court clearly declared that the method which the Labour government started using in 2014 is in breach of that Legal Notice, not because it started to follow it,” the PN said.

The PN sustained its position that, after the matter was first confirmed by the Auditor General and now by the Courts, the annual adjustment must start applying to everyone, and that all those people who were overcharged – not just those ready to open a legal case – should get their money back.

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