FOR EVERY €100 of an electric bill, only about €70 accounts for the actual cost of electricity, the remaining €30 covering various fees imposed by the power utility, an opposition MP said yesterday.
Lefteris Christoforou, chairman of the House Commerce Committee, was commenting on the rising number of complaints by consumers over their high bills.
Surcharges levied after the Mari blast of last July (6.96 per cent), fees for carbon emissions and for renewable sources of energy, as well as other tariffs, account for as much as 30 per cent of any electrical bill, Christoforou said.
The DISY deputy highlighted in particular the interest now being levied by the Electricity Authority of Cyprus (EAC). The interest of 5 per cent is on an annual basis and concerns only the period of any delays.
For example, the extra charge on a €200 bill that has been two months overdue would be €1.64, plus a fixed €5 in administrative costs.
The delayed payment charge had been submitted for approval to the Cyprus Energy Regulatory Authority (CERA).
Today, the House Commerce Committee has invited officials from both the EAC and the energy regulator. Deputies will seek to “persuade” the EAC to suspend levying the interest charge because it is the last thing consumers need amid the financial squeeze.
The decision obviously rests with the EAC, which by law is entitled to levy a charge on delayed payments.
Christoforou said whereas the cost of electricity is justified under the present circumstances – the island relies exclusively on expensive imported heavy fuel oil to power its plants – the additional surcharges are not.
Moreover, the DISY deputy said there was no need for Cypriot consumers to pay VAT of 15 per cent on electricity.
He argued that a number, if not most, EU countries charge a lower VAT rate on electricity. He cited the case of the power utility in neighbouring Greece, which charges 8 per cent VAT.
Christoforou said Cyprus has failed to make use of an EU directive which permits countries to apply for an exemption, allowing them to levy VAT on electricity that is lower than the highest applicable VAT rate.
In Cyprus there are three VAT rates (15, 8 and 5 per cent) yet the government has elected to keep the highest rate for electricity, he said.
And as of March 1, the maximum VAT rate will go up to 17 per cent from 15 per cent.
The power utility says the latest interest surcharge is necessary due to the organisation’s cash-flow problems in the wake of the Mari disaster.
EAC spokesman Costas Gavrielides said the interest of 5 per cent on overdue bills is far lower than the 8 per cent interest rate which the EAC pays for loans.
He said the interest levy was fair, in the sense that those who play by the book and settle their bills in time should not be penalised because of those who do not.
In fact, he said, it is not true that more people were now not paying their bills on time. That is not the reason why the 5 per cent interest was being levied. If anything, he added, more people are now settling their bills on time, partly because of the ability to pay online.
Asked then why this surcharge was being imposed now – since the EAC could have levied it any time in the past – Gavrielides simply reiterated that the EAC has no choice as it is facing revenue-stream issues.
But the Consumers and Quality of Life Union, a consumer action group, yesterday released a statement slamming the EAC and calling it “ruthless and shameless”.
“It does not take into consideration the financial crisis, unemployment, or the tragic state in which a host of social groups now find themselves, such as large families and pensioners,” the group said.
It further accused the EAC of abusing its monopoly over the market and its “imperial position” by imposing a new tariff on consumers, noting that this move amounts to nothing short of extortion.
“Thus, the EAC officials, aided and abetted by their Siamese twins in CERA… went to bed one evening, had a dream, and then woke up next morning with a new decision.”
Loucas Aristodemou, head of the consumer group, said it’s no wonder the EAC “can get away with anything”.
