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Wednesday, October 22, 2008



GRTU publishes energy cost mitigation plan: Government proposals ‘unacceptably excessive’
by David Lindsay

The debate over revising the country’s water and electricity tariffs gathered yet more steam yesterday ahead of today’s meeting of the Malta Council for Economic and Social Development, with the Malta Chamber of SMEs (GRTU) publishing its ‘mitigation plan’ to address the country’s burdensome energy costs.

The plan includes penalising and rewarding consumers for their energy consumption, banning incandescent light bulbs from the beginning of 2009, 70 per cent rebates on solar water heaters and photovoltaic systems, compulsory solar water heating for houses built after the beginning of next year, energy audits for all households, multi-tiered billing formats for peak, intermediate and off-peak hours, converting street lighting to solar power and a raft of other measures.

While GRTU director-general Vince Farrugia yesterday stressed the chamber had adopted an approach of “constructive criticism” toward the contentious issue in which it aimed to present an alternative way forward, he nevertheless labelled the government’s new tariff proposals as “unacceptably excessive”.

In fact, he said that any rise in utility prices from the current 95 per cent surcharge would be “unacceptable”. Mr Farrugia stressed the situation had not reached crisis status, a predicament that could be avoided if the situation were managed properly.

Speaking yesterday, Mr Farrugia also expressed confidence that the government would be shelving its proposal to make its tariff revision proposals retroactive to 1 October at the two-day MCESD meeting starting this morning.

The GRTU yesterday appealed to the government to leave the current surcharge plus basic tariff system in place, which could fluctuate to reflect the international price of oil.

The GRTU also deemed the annual global figure of €365 million that the government’s advisors KPMG say need to be recouped by Enemalta as being excessive – based as it is on an assumption of oil prices hovering at the $100 per barrel mark. The international price of oil yesterday stood at $72.

The GRTU’s “mitigation plan” consists of two main forks – a power conservation programme based on quota allocations for different types of buildings based on 2005 usage levels, and a customer behaviour change programme to incentivise consumers to use less electricity and invest more in renewable sources.

The power conservation programme would see different consumers being given different and reduced consumption allocations based on 2005 usage levels. Hotels, resorts and shopping centres would be given an allocation 20 per cent below their 2005 consumption level while commercial concerns, office buildings with floor space over 1,000 square meters and government ministries and departments would be given a 15 per cent lower allocation.

The residential and industrial sectors’ allocation would meanwhile be set at 10 per cent under 2005’s usage level and the agricultural sector at five per cent.

Consumers using more than their consumption allocations would be subject to penalties while small domestic consumers not exceeding their allocation would have a 10 per cent reduction in their surcharge rate, according to the GRTU’s plan.

The programme, according to the GRTU, would dramatically improve energy efficiency, render a positive environmental impact through reduced energy use, while also forcing a behavioural change that would become permanent.

Among the GRTU’s proposals in terms of bringing about a change in consumer behaviour, the GRTU yesterday proposed that Malta bans the imports of incandescent light bulbs at the beginning of next year, a year earlier than the EU plans, while the government continues to work on a system providing five compact fluorescent lamp (CFL) bulbs for free and discounted rates for another five.

Coupled with that, according to the GRTU’s plan, would be a heavy, 70 per cent rebate system for solar water heaters and photovoltaic systems – with half the rebate being refunded by payment and the other half rebated through billing deductions over a one-year period. The funds for the scheme would come from the European Commission approved plan for Malta’s renewable energy initiatives.

Moreover, all houses built after 1 January 2009 would be obliged to include solar water heating, coupled with the implementation of the Energy Efficiency Directive coming into force at the same time.

The GRTU has also proposed that engineer-certified energy audits be carried out for all households through a centralised or localised system, with households being reimbursed 50 per cent of the audit’s cost. A recent pilot project in Valletta cited by the GRTU yesterday had yielded positive results, and the cost of such audits was estimated at around e60.

The GRTU also argued for a multi-tier billing system incorporating peak, intermediate and off-peak rates, as well as for a guaranteed 365-day price option allowing consumers to plan a year ahead. While Enemalta has a right to hedge and dictate its long term expenditure, the GRTU argued, citizens should have the same right.

Smart meters for residential consumers were also advocated by the GRTU, which pointed out that improved communication between consumers and utility providers result in large energy savings, especially during peak hours.

Street lighting, the cost of which is borne by Enemalta, should also be converted to solar power with battery backup, while the GRTU also advised the hospitality sector convert all its water heating to solar.

In terms of government buildings, the GRTU recommends that, over the short term, electricity supplies to government buildings be switched off after hours, the promotion of efficient use of heaters and air conditioners and that cleaning services be carried out during office hours so as not to use excess energy.

Over the medium term, government buildings should install energy management devices on appliances, and install energy efficient lighting systems. Under the GRTU’s plan, solar energy systems and sensor lighting would be installed in government buildings.

In terms of water supply, the distribution costs of which the GRTU says have risen “alarmingly” over the last two years, meter rental fees should be removed and included as part of the tariff structure. The chamber also recommended a two-tier billing platform for water – one standard tariff for a year’s use payable in advance and subject to a discount, and another for all other users but with a discount for early billing through electronic sources.

Hotels, the GRTU advises, would place sub-meters in each rented room and place a benchmark on each room, with clients paying for water usage over and above the benchmark. In the same vein, the GRTU has proposed a long term rebate plan for hotels and industries using better water technology in the form of a 70 per cent rebate of total investment over a five-year period based on a 50 per cent billing rebate and 50 per cent in staggered payments.

What the GRTU has agreed with the government on is that the practice of capping utility bills for the tourism and manufacturing sectors was “discriminatory” and that it should be brought to an end. Other sectors used large amounts of electricity and it was simply unfair for what the GRTU estimates to be 10 per cent of people’s utility bills going toward subsidising the sectors.

The GRTU yesterday proposed that formal energy audits be carried out on the sectors, following which the government would subsidise enterprises from revenue collected from excise duty on imported fuels, amounting to e140 million per year, which it says would not infringe on EU rules. Moreover, benchmarks and targets are to be set for each individual company so they would be able to invest in renewable energies as soon as possible.


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