As many Maltese consumers have started to realise they are being overcharged by ARMS for their electricity consumption, a group of activists has come up with a pretty simple demand to the national energy billing company – a rebate for the higher electricity tariffs they are unnecessarily being made to pay.
“It seems reasonable to ask that if ARMS’ billing procedure results in households paying higher tariff rates than those indicated in the law for that household’s annual consumption, that ARMS at least offsets any extra payments made by the household against the last bill that year,” economist and activist Marie Briguglio said.
In 2009 ARMS introduced an electricity ‘banding’ system through which tariff rates get progressively steeper depending on how much electricity is consumed throughout the year. Therefore, it costs 10c5 per unit for the first 2,000kWh of electricity consumed per year. It then goes up to 13c for the next 4,000kWh and 16c per unit for the next 4,000kWh, before leaping to 34c per unit for the next 10,000kWh and 60c per unit for the next 20,000kWh onwards.
The system was intended to incentivise consumers to reduce their energy consumption and carbon footprint and meant that households who consume under 6,000kWh of electricity per year could rest assured that they will never be charged more than the second band rates.
The law clearly states that, while ARMS may bill consumers on a pro rata basis (every year, every six months, monthly, weekly etc.), the tariff rates must be based on a cumulative consumption per year.
Screenshot from Malta’s energy legislation
And this is where the crux of the matter lies. ARMS has progressively started billing consumers every two months instead of every six months, applying the ‘pro rata’ clause of the law. However, and crucially, it is no longer allowing consumers to work their way up the band ladder but is ‘rationing’ out the bands on a bimonthly basis. Therefore, the 2000kWh at the cheapest 10c5 band has now been split into six equal billing periods of 333kWh each, meaning you will automatically move onto the second band if you consume more than that amount per two months.
While the difference between the first three bands is minuscule, it is a different story altogether when you progress onto the fourth (34c per unit) and fifth (60c per unit) bands. In the past, you had to consume over 10,000kWh a year to reach the fourth band and 20,000kWh a year to reach the fifth band, but the new system means you will start paying fourth band tariff rates if you consume over 1,668kWh every two months and fifth band tariff rates if your bimonthly consumption exceeds 3,333kWh.
Explanatory graphs compiled by economist Neville Zammit
Since households tend to consume more electricity in the peak of summer and winter, due to the high energy consumption of cooling and heating devices, the new system means they are far more likely that they will be billed at the higher rates for those months. If a household exceeds 3,333kWh in two summer or winter months, they will automatically start paying the higher 60c per unit tariff rates even if their annual consumption is lower than the 20,000kWh quota needed to hit those rates. This contradicts the law, which clearly states the tariffs are based on a cumulative consumption per annum.
Aggrieved consumers, who are getting organised in a Facebook group aptly called Up In Arms, are not fighting the new system per se but are merely demanding that ARMS rebates them at the end of the year for any bimonthly tariff rates that are higher than the quotas dictated by their annual electricity consumption rates.
Since publishing a story about this system yesterday, Lovin Malta has received a number of messages from consumers who feel hard done by the new system.
“We used to receive estimated [every two months] and actual bills and of course the difference in money that we pay was deducted when we received the actual bill,” one person said. “Now we noticed that we are only receiving actual bills, a very good tactic through which ARMS are abusing of us consumers when they calculate their bills.”
ARMS insists nothing has changed
In response to questions by Lovin Malta, ARMS insisted that its formulation and calculation of water and electricity bills has remained unchanged since 2009 – a statement that omits the anomalies created by applying this system to two-month periods.
“During the last 10 years, the only changes to utility bills were the changes in tariffs, with an upward revision of 30% in 2010 and a 25% reduction in 2014 and 2015 for residential and non-residential customers respectively,” an ARMS spokesperson said. “The 2014 and 2015 tariff cuts have led to substantial reductions in energy bills for all customers. Two-monthly electricity consumption cost based on actual consumption for a typical two-person household in 2017 are 30.40% cheaper when compared to the same bill, with the same actual consumption readings and calculated in the same way, but using 2013 tariffs.”