‘Konrad Mizzi talks nonsense’ – Fenech on night tariffs

There was nothing misleading in Nationalist Party's electoral pledge to introduce night tariffs, Tonio Fenech told MaltaToday yesterday, as this would have been possible by spreading the savings and averaging a price.

On Sunday, Energy Minister Konrad Mizzi revealed an email by consultants KPMG that gad advised the Nationalist administration to reconsider the time period proposed for the night tariffs.

In its electoral programme, the PN pledged electricity night tariffs with costs going down by 26% between 10pm and 6am, once the Malta-Sicily interconnector would be on stream and all smart meters installed.

The system was to be introduced next year after Malta would have started buying cheaper electricity at night through the interconnector.

But a report by KPMG commissioned by the PN in January 2013 suggested they should revaluate the 10pm-midnight time bracket, as this would not have been feasible.

According to the auditing firm, the period between 10pm and midnight was characterised by "high demand with a relatively higher interconnect cost".

KPMG argued that prices in Sicily declined significantly at midnight and achieved even more attractive levels after 1am.

"The feasibility of a reduced tariff between 10pm and midnight is doubtful," KPMG had told the PN on 17 January. "With the computed tariffs being mitigated to be advantageous but still indicating little economic benefit to consumers, you may wish to re-evaluate whether to include this period in the definition of night time."

Mizzi insisted that Simon Busuttil, as the author of the electoral programme, "should be held accountable for promising something he knew he couldn't honour".

But according to Tonio Fenech, the energy minister was "talking nonsense". He said that Enemalta currently produced night electricity at between 11c and 12c per KWh.

"Between midnight and 6am, this production would go down to between 2c and 3c per KWh. We proposed that the tariff would increase marginally making it possible to include the 10pm and midnight bracket, spreading the reduction and averaging out the final cost," Fenech said.

The average tariff would have gone down to around 5c per KWh.

The former finance minister said he was "fascinated" by Mizzi's interest in the PN's electoral programme.

"Wouldn't it be better for Mizzi to concentrate on his promises rather than wondering on what the PN would have done? He should, for example, be implementing his promise to reduce utility tariffs by between 25% and 35% for all," Fenech said.

He insisted that a number of families would in reality be enjoying less than 15% reductions.

"It is now clear they won't be honouring their electoral pledge. A family of four consumes more than 6,000 units so, effectively, they will see only a 15% reduction or less."

The Opposition has argued that the reductions in utility tariffs announced in this year's Budget, and to take place in 2014 for domestic households, had been made possible by the former government's investment in the Delimara power station.

A weekly €1 million savings in the cost of electricity generation, the Opposition argued, was only thanks to the decision of the former administration to procure a new combined-cycle turbine from BWSC.

The Delimara extension was the subject of great controversy due to the decision to run the new engines on heavy fuel oil, rather than diesel or gas.

The PN argued that up until March, the €62 million in savings would be financing the first €25 million utility rate reductions in 2014.

"The truth is these reductions would not have been possible without the BWSC plant. If the agreement with the private company had already been signed, I would have believed the government. But in the absence of this contract, it's clear that the March's tariff cuts promise is being honoured because of the savings gained through the increased efficiency," Fenech said.

He also hit out at Mizzi for "over-exaggerating" Enemalta's financial situation. "If the entity was as bankrupt as the minister likes to say, would they have increased the excise duties on HFO and gasoil by 2c? This is a phenomenal sum when one considers the amounts Enemalta buys," Fenech said.

He insisted that with the proposed energy mix, it would be impossible for the Labour government to introduce night tariffs. The energy minister has not excluded the introduction of night tariffs in the future.

"The government is binding to purchasing electricity from a private company. In short, irrespective of the cheaper price which would be available thanks to the interconnector, the government would still have to buy energy at a higher price from the private," Fenech said.

He added that contrary to the promise of a 10-year fixed price agreement, consumers will be given only five years.