A meeting will take place at the presidential palace today to examine ways of tackling high electricity prices where President Anastasiades expects to hear proposals on how cuts can be made to skyrocketing bills.
The easiest way, it is said, would be to slash electricity-related taxes – for example reducing VAT on the cost of purchasing greenhouse gas emission allowances. Another proposal involves temporarily scrapping VAT on actual electricity consumption.
Each month, electricity bills end up more than double the amount people have consumed due to the various charges they add on, especially the VAT, which is not charged on actual consumption but on the final tally including the extras. A bill might show €100 in actual consumption but comes out at €230.
If someone went into a restaurant and calculated that they ate €100 worth of food as stated on the menu and then got a bill for €230, they would not stand for it and the authorities would not expect them to.
Yet, what’s happening with electricity bills is the equivalent of this, making the state a participant in the profiteering. Much of those extra charges end up in state coffers instead of the purpose for which the consumer is charged – green projects that have failed to materialise.
According to reports, another suggestion today might be the rollout of an awareness campaign for cutting back on electricity consumption – something which some EU countries have already done. Not that people will need too much prompting to use less electricity from here on in. In many cases it will not even be a choice.
If we are honest, most of us can be careless with electricity usage because we take it for granted that it’s on-tap 24/7 but it would not be fair to blame consumers for this situation. Even if people managed to keep their bills to the bare minimum, they would still end up paying double that amount the way things stand.
In early 2019, before Covid and before the war in Ukraine, during the presentation of the EAC budget for 2019 at the House, MPs were told that consumers would have to foot the EAC’s €38.9 million bill for the purchase of carbon credits, an amount more than double that of 2018. Therefore, constantly being placed high on the list of expensive electricity in Europe is not something new for Cyprus.
More recently, last month in fact, it emerged that the EAC was buying energy from PV companies at 19 cents per KW-hour, which was the same unit price for power production from fossil fuels, while the cost to the PV company was only five or six cents per KW-hour.
So let’s hope that today, we will not be told that Covid and the Ukraine war are entirely to blame for what we’re facing now. It is decades of mismanagement, lack of RES preparation, and the delay in liberalising the market that have led us to where we are – helpless in the face of external shocks.