Whenever the electricity rates go up, the parties and politicians complain that consumers are being burdened with a higher cost of living and urge the government to intervene and reduce the price. Last year, the government ordered the Electricity Authority of Cyprus (EAC), to cut 10 per cent off bills from April to September because of the pandemic, while a few days ago, with electricity prices having risen by 38 per cent, a party leader suggested that a lower VAT rate should be charged on electricity bills.
It is rank hypocrisy for the politicians to complain about the electricity rates we pay – among the highest in the EU – because they contribute to the problem. The parties, with the exception of Disy, are supporters of the EAC monopoly and fully back the unions’ efforts to keep it in place for as long as possible. The main reason we pay such high electricity rates is because the EAC is a big and inefficient monopoly that, in the absence of any competition, passes all its costs onto the consumer. It is not as if they could go to another provider.
Stung by the latest criticism, the EAC tried to explain the higher prices, through spokeswoman Christina Papadopoulou, who said the main reason for the 38 per cent increase for the year was the increase in the world price of oil. The price of mazut, used for power generation had risen to $475 per tonne, compared to $255 in July last year. She added that oil prices were at a historic low in 2020 whereas today they had returned to 2019 levels.
Cyprus is paying significantly more for greenhouse emissions now, because of its failure to meet the targets set for use of renewable energy sources (RES). Who is to blame for this but the EAC, which wanted to set up its own big photovoltaic parks and blocked private companies from doing so. Papadopoulou said the EAC’s PV park that will produce 12MW of power will be ready in 2023 and it is also in cooperation with the Archbishopric for the creation of more PV parks.
We failed to meet our RES targets because the EAC was exercising its monopolistic power blocking the creation of big PV parks by the private sector. And it is not in a big hurry to set up its own, because it can pass on the full cost for greenhouse emissions to its customers anyway. This is how a monopoly operates, and it is no less toxic if it is state-owned. Our populist politicians need to wake up the fact that by defending the EAC’s monopoly they are ensuring the high electricity bills they have the nerve to protest about.