THE CYPRUS Energy Regulatory Authority (CERA) has approved an incremental 4.5 per cent increase over the next three years on the base rate of electricity bills, parliament heard yesterday.
The chairman of CERA said a 1.5 per cent increase will be introduced at the beginning of each year through to 2012.
At the end of the day this will provide the Electricity Authority (EAC) with around €10 million in much needed extra revenue per year.
The extra cost to an average household with a €50-bill will be €9 extra per year. Bills come every two months.
This is the first increase in the base rate since 1983 although bills have climbed during this time through the fuel-cost adjustment.
The fuel cost adjustment is automatic depending on the fluctuation of fuel prices.
“This increase is not enough to solve all the EAC’s financial problems,” CERA chairman Costas Ioannou told the House Trade Committee, pointing out that the authority must also take internal measures to alleviate its financial woes.
The EAC has said it will take specific measures to cut its operating and other expenses to avoid further hikes in the future.
EAC’s current debts are around €350 million, in addition to its €40 million overdraft, and it plans to borrow a further €250 million to fund the construction of the new Vasiliko Five unit (ordered last month) and the €50 million upgrade of the Dhekelia unit.
The EAC has also started paying fines for its CO2 emissions which are expected to reach between €70 million to €75 million by 2012.
It is understood that the authority has so far paid around €12 million on C02 fines.
Ioannou said the EAC had asked for much steeper hikes of 14 percent but “there was no chance anyone would have approved that.”
“We want this to work as a motive so that other things are done,” he said.
EAC chairman Harris Thrassou said the aim was to recover a big part of the millions taken by previous governments.
Over the years, the state, as the main shareholder, took some €240 million from the EAC.
“With these increases we unfortunately regain a smaller part of what we expected,” Thrassou said. “We cannot fully respond to our development program.”
Thrassou said the authority has hired consultants, who, in cooperation with the employees will try to find ways to save money and implement the biggest part of the development programme.
He brushed aside the suggestion to scrap putting cables underground at a cost of €53 million until the authority’s finances improved.
Houses were already built under pylons and the wires had to go underground, Thrassou said.
He said the authority would cut back the programme but not terminate it.
“We will try and implement our development programme as much as possible within this tight frame,” Thrassou said.
Trade and Industry Minister Antonis Paschalides said the main aim was to “build the EAC of the future; a performing and productive EAC, which will continue to work for the good of Cypriot consumers.”
Paschalides said the hikes could not have any negative effects on other products.
“The price of electricity at this time last year was about 20 per cent more expensive than this year,” the minister said. “When the price went down 20 per cent what were the respective cuts in the various products and services?”
He said the approved hike was much smaller than the 20 per cent figure and could not have any negative effects on other prices.
