ELECTRICTY PRICES are set to rise again by around 1.5 per cent as part of the planned three-year phased increase decided in 2009.
Head of the Cyprus Energy Regulatory Authority (CERA) Giorgos Shammas yesterday confirmed that the authority will publish the new increases in the Official Gazette, giving the Electricity Authority of Cyprus (EAC) the green light to increase prices in the coming days.
According to CERA, the decision to increase electricity prices by 4.5 per cent over a three-year period was taken in 2009. On January 1 of 2010 and 2011, prices went up by 1.5 per cent respectively.
This year, CERA plans to do the same, implementing the final phase of the increase. However, not all end users will be affected the same.
In order to comply with EU directives, the EAC has had to commit to phasing out its subsidies to certain sectors, meaning that some sectors will see bigger increases than others, as part of CERA’s balancing act.
Shammas told the Cyprus Mail that households will see a 1.5 per cent increase as planned. This is on top of the 6.96 per cent rise in electricity bills approved in September by the energy regulator to cover rising operating and fuel costs as a result of the Mari explosion on July 11 which knocked out the Vassilikos power plant. The ‘Mari’ hike will be reviewed six months after the decision was taken.
According to industry sources, the 6.96 per cent hike is expected to be renewed as the EAC will still be paying higher than normal operational and fuel costs this year until the Vassilikos plant can return to full operational capacity.
On top of the above hikes, electricity consumers can expect further rises. Last month, parliament approved a 2.0 per cent increase in VAT, which will see VAT rise from 15 to 17 per cent as of March 1, 2012.
The energy regulator released a statement yesterday listing price increases for various sectors, including small commercial and industrial businesses, medium-sized industries, street lighting, pumping stations and storage heaters. Some of the above were due to see a higher price increase than the 1.5 per cent for households but due to the ongoing economic crisis and Mari aftermath, CERA decided to reduce the increase for some sectors.
According to CERA, the price increase for small commercial units will be 0.5 per cent instead of 1.5 per cent. For small industries, medium-sized industries, street lighting, pumping stations and storage heaters, the increase will be 2.0 per cent instead of 3.5 per cent.
These reduced rates will apply for the first six months of the year. On July 1, 2012, the original increases decided by CERA last year will be implemented with two exceptions. Small commercial units will see the increase go up to 1.0 per cent instead of 1.5 per cent, while the hike for small industries will be 2.5 per cent instead of the intended 3.5 per cent.
During a CERA meeting in January 2011, the regulator set a number of preconditions before agreeing to the price hikes, including requests for greater transparency in the EAC’s accounts, streamlining its organisational structure to increase productivity and reduce the cost passed on to the consumer, cutting spending and reducing operational costs.
At a meeting with CERA on December 20, 2011, the EAC board confirmed its commitment to gradually reduce staff by an average 2.0 per cent per year, with the aim of reducing staff by 10 per cent in five years through early and normal retirements.
The EAC noted that the first stage of staff reductions will be included in the EAC’s 2013 annual budget.
