THE ENERGY Regulator is looking into increasing electricity prices by six per cent to ensure the viability of the Electricity Authority (EAC), it was revealed yesterday.
Head of the Cyprus Energy Regulatory Authority (CERA), Costas Ioannou, yesterday acknowledged that he had sent the Commerce Minister a letter raising the issue after a report came out in yesterday’s Politis.
According to the paper, Ioannou highlighted in his letter the deep financial waters that the EAC was in, noting that the semi-government organisation had debts of €350m and a €40m overdraft. With annual profit after tax at around €10m, and a planned development programme calculated at one billion euro, the only way to ensure a healthy future is to increase basic electricity tariffs, he concluded.
Speaking to CyBC yesterday, Ioannou confirmed that he was ready to begin a round of consultations on increasing by six per cent basic tariffs, which have remained unchanged since 1983, adding however, that the decision has yet to be taken.
“I’d like to clarify that there is no decision to increase EAC tariffs. CERA is examining a request by the EAC for an increase of tariffs, and has decided to enter into public consultation, starting a round of contacts with the government, parliament and other organisations with full transparency before taking any decision,” he said.
Although electricity prices have gone up and down in recent years, the main reason has been the massive fluctuations in fuel costs, which are passed on to the consumer, not changes in profit.
Head of the EAC board Haris Thrasou said yesterday that the EAC asked CERA for a gradual price increase of 12 per cent and sent evidence to support their request in 2006. “Perhaps due to the sudden increase in fuel prices a few years back, CERA didn’t consider it the appropriate time to further burden the consumer. Now, bills are 25 per cent lower than last year,” he said, noting that this might have convinced CERA the time was right to discuss increase.
Thrasou explained that the EAC did not wish to implement a 12 per cent hike immediately but over a number of years. “Tell me if there is any organisation or company selling products at 1983 prices today, that speaks for itself,” he added.
Ioannou
“The viability of the EAC affects all citizens. It’s an important issue, and I assure you, if at the end of this process, increases are agreed, they will be very small, gradual and accompanied by commitments from the EAC to increase production and efficiency, and reduce operational and other costs,” said Ioannou.
According to Politis, CERA is considering a two per cent price increase for each year from 2009 to 2011, reaching six per cent in total. It further noted that until 2007, successive governments dipped into EAC profits throughout the years, taking up to €130m in total.
