THE ELECTRICITY Authority of Cyprus said yesterday it had nothing to hide from a competition probe over its sky-high prices, promising consumers reduced bills for the upcoming winter months.
The Commission for the Protection of Competition (CPC) is currently preparing a questionnaire, which will be submitted to the EAC, as part of its investigation into the price of electricity. The semi-government EAC is the sole provider of electricity on the island.
CPC President Costakis Christoforou on Wednesday told Parliament the Commission was looking at various market sectors, including energy. In this context, he said, data was being collected, which would be assessed and analysed in order to adopt a clear and substantive decision. Christoforou said that within the next few days data would be requested from the EAC, adding that the commission was in the final stages of drawing up the relevant questionnaire.
EAC spokesman Costas Gavrielides yesterday told the Cyprus Mail that, “The EAC will fully co-operate with any investigation the CPC wants to carry out. We have nothing to hide.”
Gavrielides said that, “Tariffs are not set by the EAC, they are fixed by legislation which also determines the percentage of increases and decreases of the price per kW/h (Kilowatt-hours) according to the fluctuation of the price of mazut/ heavy fuel oil (HFO) .The timeframe of the price increases are not applied by the EAC either.
“Therefore, some arguments that our tariffs should have been decreased from September are not valid, the reason being that there is a time gap before mazut price decreases reach the tariff because of the three months supply reserves we keep. This is also valid in the case of increases. where we see that even though the price of mazut is rising, the prices may take up to three months to follow,” Gavrielides said.
George Petousis, the Executive Manager of the EAC Customer Services Department explained that electricity prices in other European countries were lower because of energy production using coal and natural gas. He also said that the price of electricity was determined taking into account the cost of stocks available to the EAC and the cost of new fuel deliveries. That is why, when fuel prices increased in the winter, the EAC did not immediately increase the price of electricity.
“Moreover, the EAC is monitored by the Cyprus Energy Regulatory Authority (RAEC), which makes clear that the EAC does not determine its prices or the timeframe of increases and reductions,” he added.
Gavrielides’ comments were echoed by the President of RAEC, Costas Ioannou, who said that the EAC cannot overcharge electricity bills since it is under constant monitoring from the relevant departments. Ioannou added that the investigation carried out by RAEC found that the procedure followed and the evidence on which the price of electricity was based was absolutely correct.
Gavrielides said that, “The problem of the EAC, which is also a problem of the rest of the economy, is that we completely rely on mazut for the production of electric power. This is because our suggestions and recommendations were not heard in the past and now the entire population is left to face this difficult situation.”
According to the EAC spokesman, in the early 90s, the EAC had suggested to Parliament to allow them to bring coal , one of the oldest and most widespread energy-producing fuels in the EU, to use at the Vasiliko power station. “If they hadn’t stopped us from bringing coal, electricity production today would be up to 35 per cent cheaper,” Gavrielides said.
The President of the Employers’ and Industrialists’ Federation (OEV), Andreas Pittas, said yesterday that Cypriot industry pays the most expensive electricity in Europe. He specifically stated that if a Cypriot factory was in Germany its electricity bills would be 30 per cent cheaper. Pittas attributed the increased price of electricity to the serious mistakes of the EAC administration, mainly to the fact in that “it didn’t out up a fight for energy production in ways other than mazut”.
EAC spokesman Gavrielides dismissed claims that Cypriot households paid three times more for their electricity bills compared to Greece.
“This is not in touch with reality. In Greece, prices are 20 to 30 per cent cheaper than Cyprus; Greeks produce 30 per cent of their energy with coal and 30 per cent with lignite, which is significantly cheaper than mazut.
“Let me note that the Greek Public Power Corporation (DEY) gets lignite for free.” Lignite is of plant origin but significantly younger than coal. Its calorific value is a lot lower than that of coal. As regards its origin, lignite is a so-called transfer phase between peat and coal.
“DEY bills are expected to increase by 30 per cent and because of the delays of the increase, so far, for 2008, DEY has estimated damages amounting €120,000,000.
And he had good news for the consumer: “We expect reductions on our tariffs because of the recent decreases in the price of mazut. The electricity bills issued for November will have a 3 to 4 per cent reduction, and bills issued in December will have a 7 to 8 per cent reduction.”
