COMPLAINTS about the electricity bills people have received in the last couple of weeks have become louder and more widespread. It is a perfectly justified reaction as in these hard times, with people struggling to make ends meet, the electricity bill is taking a bigger chunk of a household’s monthly income.
Bills have been hiked by seven per cent to cover the damages caused by the Mari blast and from next month will be even higher thanks to the increase in VAT from 15 to 17 per cent. But we were already paying the highest electricity bills in the EU before the blast. According to Eurostat figures, last year we paid the highest rates and in 2010 the second highest, Malta taking the top spot.
Our bills include an assortment of levies: for funding use of renewable energy sources; for covering the CO2 emissions penalties imposed on the electricity authority by the EU; for financing the discounted rates offered by the authority to ‘vulnerable’ households. Some 23,000 households currently benefit from the discounted rates, subsidised by the rest of us, but the number – and our rates – may increase substantially over the next few months, if do-gooder deputies have their way.
Earlier this week the House commerce committee criticised the government for delaying the drafting of a bill that would legally prevent the EAC from cutting off the electricity supply of vulnerable customers who could not pay their bill. But first, as one deputy pointed out, the state had to define which individuals qualified as a ‘vulnerable’.
The government has been dragging its feet on the matter, aware that with today’s unemployment rate, these vulnerable households could prove far too many to protect with discounted rates subsidised by the rest of the subscribers.
Politicians, always guided by vote-buying considerations, never think about the consequences of their populism. The subsidising of the vulnerable groups by the rest of EAC’s subscribers was President Christofias’ badly thought out idea and now populist deputies want to take it a step further, without suggesting who will pick up the bill for their social sensitivity.
In fact deputies have a nerve pretending they want to protect people, publicly attacking EAC about the high bills and for cutting off non-payers, when they are largely to blame for households being lumbered with the most expensive electricity rates in the EU. Deputies and their parties have passed legislation safeguarding the EAC’s monopoly, the very reason why subscribers have been fleeced for so many years.
As recently as 2007, when private companies expressed an interest in power production, politicians – pressured by EAC unions – passed a law making the importing of natural gas the monopolistic right of EAC, thus preventing competition. In Cyprus, the myth that state monopolies are benign and have the public interest at heart has been served for years, but nothing could be further from the truth. Cyprus Airways was charging exorbitant fares to London and Athens for decades because there was a duopoly and price-fixing. The Ports Authority’s charges make use of Limassol port prohibitive.
It is no coincidence that the two countries with the highest electricity rates in the EU are Cyprus and Malta, both of which have a power production monopoly. A monopoly has no incentive to be efficient and keep costs down because it passes these on to the consumer through higher prices.
Staff unions have been lawfully plundering the EAC coffers for decades. The authority is overstaffed, employees enjoy big salaries (average cost per employee is €50,000) and a host of scandalous benefits including university scholarships for the staff’s children plus extortionate pensions when they retire. The EAC board allowed labour costs to veer out of control because there was no competition and it could always impose higher prices on its customers.
We never heard deputies complain about EAC’s consistent abuse of its monopolistic powers, which contributed to constantly rising prices as businesses passed their high electricity bills on to the consumer.
The answer is competition, but opening up the market could take several years, given the pace at which the state services operate. If we want lower electricity bills in the foreseeable future, our socially sensitive deputies should campaign for across the board cuts in pay, benefits and pensions at EAC. The money saved could go towards lower bills and a solidarity fund for the vulnerable groups that deputies are so keen to protect.
It is time EAC’s workers gave something back to the society which has been so generous to them for so long.
