Should the government proposal to raise the contribution rates for the Renewable Energy Sources (RES) fund be accepted by parliament, it means that an average household will pay €64 annually instead of the current €24, the spokeswoman of the Cyprus Electricity Authority (EAC) Christina Papadopoulou said on Wednesday.
On Tuesday the House commerce and energy committee was briefed by government officials on their proposal for increasing the green charge from €0.005 per kWh currently to €0.0135 per kWh, to help keep the RES fund afloat.
To date, the RES fund has been solely funded through a special fee on all electricity bills, fixed at €0.005 per kWh. The power utility pays RES producers the total amount owed and subsequently files for compensation from the fund.
But the fund is currently in the red to the tune of €25 million, due to reduced electricity consumption and falling fuel prices which led to lower production costs. The new rate would apply for the period September 2016 to December 2017.
The problem lies in the fact that the energy ministry had signed contracts with RES producers – owners of wind farms and photovoltaic parks – when the production cost was much higher and did not include a tariff renegotiation clause, thus the government still has to pay the agreed price despite electricity production costs going down since.
“If this proposed increase is implemented, a household that consumes 800 kWh per month, instead of the €24 per year it pays currently as contribution to the RES fund, it would pay €64,” Papadopoulou told the Cyprus Mail.
At the moment, the RES fund owes to the EAC €11.4m, Papadopoulou said, as the utility is paying the renewable energy producers, and it receives the money back from the fund. But due to the constant drops in crude oil prices, she said, the fund is in no position to pay that money back.
Papadopoulou stressed that it was the government that was contemplating on imposing this increase, and not the EAC, whose role is to merely collect the contributions.
“The energy ministry is collecting contributions to the RES fund, though the electricity bills,” Papadopoulou said. The utility, she said, has no say as to how this deficit will be covered, nor how the fund will remain viable. In charge for the decision to increase the contribution of households, are the energy ministry and the energy regulatory authority.
The government proposal was not well received by MPs who had said that consumers should not be burdened with the extra cost.
The possible increase has also alarmed the consumers’ association which slammed the energy ministry on Wednesday for not coming up with a better solution.
“The energy ministry had no other inspiration than the obvious and easy solution: to burden consumers again …,” the group said in an announcement.
It also suggests that RES producers should also contribute to the fund as it has been years since their investments and they are now “paying off”.
The group proposed that the energy ministry finances the RES fund from the state revenues from taxes on fuel prices, “which consumers pay anyway”.