THE ELECTRICITY utility has hit back at allegations that it is bleeding consumers dry in the wake of the three per cent hike in rates.
Consumers associations are up in arms meanwhile, threatening not to pay their electrical bills in full.
The Electricity Authority of Cyprus (EAC) was caught in the eye of the storm this week after the introduction of the latest tariff, imposed on consumers so the EAC can pay off a carbon emissions “fine.”
Opposition Party DISY piled on the pressure by publishing Eurostat figures showing Cyprus had the highest electricity prices charged to final consumers in 2008 for households and medium-sized industries.
The data showed that Cypriot households were being charged 0.1559 euros per kWh (average calculated for 2008), compared to the EU-27 average of 0.1211. People in Bulgaria paid almost three times less for their electricity, at 0.0593 euros per kWh.
The EAC has become something of a bête noire, protests its spokesman Costas Gavrielides.
“No-one ever notices when the rates come down, only when they go up,” he told the Mail.
According to the EAC, their rates have dropped by 35.1 per cent since last October, when they were at their highest because of spiraling fuel prices.
Besides the fact the Eurostat figures quoted by DISY are outdated, said Gavrielides, “one needs to look a little deeper to discover why electricity is expensive here.”
The main factor is the cost of fuel. Cyprus’ plants are powered exclusively by Heavy Fuel Oil (HFO), which is a costly. And then of course there are the shipping costs, said Gavrielides.
Another reason is the EAC’s inability to take advantage of economies of scale. Providers such as DEI in Greece have the luxury of having 10 million customers, compared to the 700,000 in Cyprus.
But the greatest inhibiting factor was geography. Because the island is cut off from the European continent, this has several consequences, all of which lead to rising costs for the EAC.
“Say a power plant in a European country malfunctions and has to find the missing capacity elsewhere. Because the transmission systems are connected, they will look for the best deal and buy that capacity from another country. Obviously, we in Cyprus cannot do that.
“And because we cannot do that, we’re forced to maintain an extra generating capacity in the event of breakdowns etc. This extra capacity, which normally is idle capacity, costs money to maintain.”
To illustrate, Gavrielides that last year the cost of fuel amounted to 70 per cent of the EAC’s total expenses.
“If you were to take out the cost of fuel from the equation, do you know which country is the cheapest in Europe? Take a guess: Cyprus. And I challenge anyone to refute this,” remarked Gavrielides.
“So much for the argument that the EAC is not competitive because it’s a monopoly. But I predict no one will even answer me,” he added.
The EAC also dismisses the notion that it stalled plans for switching to natural gas, a cleaner and cheaper fuel. In fact, it says it has been “two steps ahead of everyone else,” having invested some €200 million in new turbines that will work with natural gas.
The year 2014 is the official ETA on a land-based terminal processing natural gas. About a month ago, after repeated delays, the EAC got the green light to invite tenders for a consultancy firm, which is to advise them on how the natural gas project—with a price tag of €500 million by conservative estimates—should be implemented.
Though not actually saying it, the EAC blames the government – both the present and previous administrations – for the natural gas saga.
Yet observers are quick to point out that the electricity authority is not blameless. They say it is precisely the EAC’s insistence on maintaining its monopoly status that has perpetuated the use of HFO in Cyprus, which in turn has led to the “green fines.” One example was that of Golar, a private company offering to produce Liquefied Natural on an offshore plant, which it was willing to fully finance.
But Golar’s initial license was rescinded by the energy regulator. The company was caught in limbo because of a law that gives what is essentially a monopoly over the purchase and supply of LNG to a corporation jointly owned by the state and the EAC.
Golar, which has taken the government to court, reckons it could have had the LNG facility up and running by summer this year.
