Sociologist from Malta

Saturday, August 04, 2018

Utility bills, ARMS and consumers - Michael Briguglio

Why should ARMS not issue bills on a more regular basis, allowing consumers to benefit from favourable rates provided by law?

Question Time - Times of Malta, 4 August 2018

In the past months the Nationalist Party, the independent media, academics and a new civil society group called Up in Arms showed how Government is sending higher and more frequent utility bills to many people. Some may not have noticed small increases, but others were shocked to see that they have to pay heftier bills. This further increased challenges for people who already have to content with a higher cost of living on items such as foodstuffs.

In theory there is no problem with ARMS issuing frequent bills as long as these do not result in higher bills. Consumers should be able to pay ARMS even more often if they wish to.
The problem is that the way in which ARMS is estimating these shorter bills results in consumers paying MORE at the end of the year (when they add up their bills), than they would have paid had they paid it all in 1 bill of 6 or 12 months.
Moreover, some people are still paying the cheaper (longer period) bills because ARMS allowed them to stay on a long billing period!
This is what the law states:
Residential Premises Service shall be subject to the following Consumption Tariff based on a cumulative consumption per annum and which may be billed on a pro-rata basis.

i) For every kWh of the first 2,000 kWh ................... €0.1047; and
ii) For every kWh of the next 4,000 kWh ................... €0.1298; and
iii) For every kWh of the next 4,000 kWh ................... €0.1607; and
iv) For every kWh of the next 10,000 kWh ................. €0.3420; and
v) For every kWh of the remaining consumption ....... €0.6076”
This means that we have a quota of cheap electricity and water. This quota is 2000 units a year at 10c5 and 4000 units at year at 12c9. 
Now ARMS cuts up of the quota into smaller bits for every period (e.g. 333 kwh at 10c47), BUT it does NOT let consumers carry forward the allowance they do not use. And next period if you use up all your quota, you pay at higher rates… even if you had left-over quota from the previous period. 
Imagine you buy a top-up card for your phone.  You buy a card for 10 euro and you are told that you can use it over 6 months. Now you are suddenly told that you must use it in 2 months (or less) or you will lose the credit. The way ARMS is billing is very similar to this. It is forcing consumers to use all their quota and only their quota every 2 months or pay more.
Even if the consumer stays within the total annual quota, they do not get a rebate at the end of the year.
Why is this happening?
Obviously to raise revenue without letting the consumer know.
Malta boasts a monopoly (ENEMALTA) which employs another entity (ARMS) to issue bills at higher tariff rates than the law envisages, every 2 months, with a threat of accumulating interest rates and of being cut off the grid (plus fee to re-instate) if they do not pay. Other tenants are paying Domestic rates rather than Residential rates, which means that they have no chance to enjoy the eco-reduction AND they pay at higher rates. Bills are also bulked up into shorter period, once again ensuring that people pay more because they consume their quota quickly.
This abuse by a dominant monopolist and needs to be regulated by Regulator for Energy and Water Services (REWS) , the Malta Competition and Consumer Affairs Authority (MCCAA). In the absence of such regulation, further action will be resorted to by the Nationalist Party.

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