Malta’s energy billing company ARMS has found a way to charge consumers more for the electricity consumed and never informed the public about the new system that was introduced. The system sees households being billed every two months instead of twice a year and works out the rates in a way that consumers are charged at the higher tariffs more often.
How are energy bills calculated?
In Malta, energy tariffs get progressively more expensive the more you consume. Until recently, it used to cost 10c5 per unit for the first 2,000kWh consumed a year, 13c for the next 4,000kWh consumed and 16c per unit for the next 4,000kWh after that.
Recent statistics show the average annual electricity consumption in Malta stands at around 5,007kWh per person, meaning several small households will never hit the 16c band and few will exceed it. If you do consume more than 10,000kWh a year though, the price of electricity will double to 34c a unit and shoot up again to 60c a unit if you consumer more than 20,0000kWh.
Bills were sent every six months and were calculated purely based on your energy consumption, meaning that you would never have to pay more than the first two bands if you managed to keep your consumption lower than 6,000kWh a year.
The tariffs are calculated per household irrelevant of how many people live there. However, the government also offers eco-reduction benefits to households depending on how many people live there – as an incentive for them not to consume more electricity.
So what has changed?
The entire system has been twisted around. Electricity bills are now being posted every two months and, instead of allowing you to work your way up the band ladder, ARMS has started ‘rationing’ out the bands from the start.
The table below, compiled by economist Neville Zammit, explains the situation perfectly. The 2000kWh at the cheapest 10c5 band has now been split into six equal billing periods of 333kWh each (2000÷6), meaning you will automatically move onto the second band if you consume more than that amount per two months. If you consume more than 1000kWh every two months, by no means an unlikely prospect even for a small household, then you will move onto the third band. If you consume more than 1667kWh every two months, you will move onto the fourth band and, if you consume more than 3333kWh you will move onto the fifth one.
This is how the billing system used to be
And this is how it is now
What is the big deal though?
Well, the new system wouldn’t be a problem at all if a household’s actual electricity consumption is the same every two months. The problem is that this is absolutely not the case, as people use more electricity in the summer (on air conditioners and cooling devices) and in the winter (on heating devices).
In the old system, you could afford to be liberal with your use of heaters and ACs and still dodge those dreaded fourth and fifth bands so long as your electricity usage was more frugal throughout the rest of the year. That is no longer possible – you will automatically be forced to pay the 34c/per unit band as soon as your bimonthly consumption reaches 1667kWh and the 60c/per unit band as soon as it reaches 1333kWh.
If that wasn’t enough, the eco-reduction has also been split up and transposed into this new system – meaning you won’t qualify for the incentive if your electricity consumption exceeds your household limit for two months.
The system is a complicated one, but the end result is that ARMS has given people far less flexibility in managing their own finances and is clearly set to rake in more money from the higher band rates. Until recently, you needed to consume 10,000kWh a year to reach the third band and 20,000kWh to reach the fourth one, but you will now hit them both if you consume more than 3,333kWh July and August – regardless of how much you consume the rest of the year.
Energy minister Joe Mizzi has played down the problem
Worse still, ARMS introduced this system without informing the public, leaving people with the nasty surprise when they opened their bills. The Malta Independent picked up the story and quizzed Energy Minister Joe Mizzi about this new system. However, Mizzi insisted nothing has changed in the system except for the eco-reduction workings, which he is expecting feedback on.
Spearheaded by economist Marie Briguglio and tenant activist Patricia Graham, consumers have created a Facebook group to spread awareness about this new system. Their ultimate aim is to pressure ARMS into granting rebates to people who are made to pay higher electricity rates than those dictated by their annual consumption.
“No consumer benefits from having their electricity consumption rationed out like this,” Briguglio told Lovin Malta. “From which ever way you look at it, the only entity which stands to profit from this new system is ARMS.”
Opposition leader Adrian Delia yesterday accused the government of charging consumers higher electricity tariffs and urged people to bring their bills to Dar Centrali so the party can analyse them and challenge the government.
Lovin Malta has asked ARMS how much it has profited from this new scheme and why it didn’t inform consumers beforehand, but has yet to receive a response as of the time of writing.