Confusion reigns about ARMS billing system while more people notice an increase in their bills

Helena Grech Revelations about the way ARMS is billing its consumers has resulted in more and more people checking their bills to understand how much they are really paying on average per unit of electricity consumed.

Informed citizens have actually taken it upon themselves to set up a dedicated e-mail address, arms.bill18@gmail.com, in order to help people begin to understand why they are paying the amounts they are for the essential services of water and electricity.

In 2013, the then Energy Minister Konrad Mizzi proudly announced a much needed reduction in electricity charges. The public rejoiced, because water and electricity bills were prohibitively expensive for many families, individuals and businesses.

Fast-forward to 2018 and the views of many people on the electricity rates introduced by the government began to change. The tariffs are the same as in 2013, so what exactly has changed?

As explained in previous stories on the subject, the frequency with which ARMS issues invoices has a direct and material effect on the overall bill. As things stand, the first 2,000 units consumed per household is charged at 10c5, the next 4,000 units at 13c, the next 4,000 units at 16c, the next 10,000 units at 34c and any more units consumed after that are charged at 60c.

So, if the rates have not changed over the past five years, why have people complained of an increase? The answer is in the unit allocation. Invoices are issued on ‘cumulative consumption’ annually, which ‘may be billed on a pro rata basis’.

This translates into ARMS dividing up the units awarded at their respective rates by 365 days. The 2,000 units at the lowest rate of 10c5 are divided into 365 days, giving a household a maximum of 5.479 units per day at 10c5. The same process is carried out for each of the bands at their respective rates. Since people have begun receiving bills every two months, the quotas are being chopped up with them. A billing period covering 60 days gives 328 units at 10c5. A bill covering a four month period, say 128 days, would give you 701 units at 10c5.

Therefore, being billed more frequently gives a consumer less opportunity to offset their high consumption periods with their low consumption periods. A billing period for January and February would likely result in moving onto the higher electricity tariffs because many are using their air conditioners and other appliances to heat their premises. If the bill was issued between January and April, this would give a household the opportunity to use up their cheap electricity during the colder period and make up for it in March and April when it gets warmer, and there is less need for high-consumption appliances.

When The Malta Independent on Sunday picked up this story last week, many people were shocked when they realised why their bills had started to increase. It would appear that the issuing of bills every two months is tied to the introduction of the ‘smart meter’. The smart meter removed the need for ARMS representatives to physically check meter readings to issue a bill and ushered in the issuing of bills more frequently.

Among the sea of consumers who demanded to have this issue clarified were those who questioned the validity of the story, saying that they are billed every six months and their bills are much cheaper than pre-2013.

According to a spokesperson from ARMS, it was ‘confirmed’ that all residential bills are issued every two months. This led to some confusion based on the feedback received by the public. Some consumers are being billed for a ‘service charge’ every two months, accompanied by a ‘noreading’, and on the sixth month receive a bill with their actual consumption for the previous six months. Those people are actually benefitting from the reduced tariffs because the longer period of time allows for high consumption to be offset by low consumption.

In addition, they are more likely to use the entire quotas awarded at the various rates. For those who get billed on actual consumption every two months, if they do not use the entire 328 units at 10c5 for a 60 day period, say in April and May where an open window is enough to cool their home, they simply lose out on the cheap units not consumed. If they use more than 328 units, they move onto the higher tariffs despite not having yet consumed 2,000 units.

The Malta Independent on Sunday sent questions to the Malta Competition and Consumer Authority, the Parliamentary Secretary for Consumer Protection and the Energy Ministry to shed some light on the practice.

A spokesperson on behalf of the Energy Ministry promptly replied, saying: “ARMS has, over the past years, made significant positive improvements in its operations and billing.

“Actual bills have been significantly reduced under this government. While we are aware of certain issues in billing, the Ministry for Energy and Water management and ARMS remain committed to address pending matters and to keep working towards a smooth and seamless operation.”

When pressed to address the specific issue at hand, ie how people are not enjoying the full annual quota allocation of cheap units, the spokesperson again replied that the Minister is away on business and “intends to meet all entities and be fully briefed on the issue” so that he may comprehensively comment on the issue.

Questions sent to the consumer authority and the Parliamentary Secretary remain unanswered at the time of going to print.