Confusion over ARMS eco-reduction workings while more consumers miss out

● MCCAA and Parliamentary Secretary for Consumer Protection silent over quota rationing system resulting in higher bills

Helena Grech As if ARMS cutting up electricity quotas per day was not bad enough, consumers have now come to the realisation that their eco-reduction electricity concession is also being rationed, making it that much more difficult to be eligible for the benefit.

Following a series of stories about the billing system, readers sent in correspondence with ARMS, even roping in the Malta Competition and Consumer Affairs Authority (MCCAA) and the Regulator for Energy and Water Services (REWS).

The eco-reduction concession is a form of ‘discount’ awarded to consumers who stay below a specific amount of electricity consumption, acting as an incentive to be mindful of waste. The eco-reduction was introduced under previous Nationalist Party (PN) administrations and retained by Joseph Muscat’s 2013 Labour government.

Eligibility for the eco-reduction can be attained by not exceeding 1,750 units per person per year, in the case of households with more than one person registered to be living there. A proportion of 25 per cent is discounted on the first 1,000 units consumed and a further 15 per cent on the remaining 750 units consumed. For households with one registered person, the threshold is 2,000 units per year.

If that seems deceptively simple to understand, it’s because it is. The official definition that has been provided by ARMS to consumers who have inquired, as well as the definition found on the Enemalta website, reads:

“A Residential Premises Service, which is provided to the primary residence of an individual, shall be eligible for an Eco Reduction of the amount due for consumption of electricity for the billing period in question, which shall be calculated in accordance with the following rates and thresholds, on a pro rata basis of the relative annual cumulative consumption. The reduction will not be applicable if the indicated thresholds are exceeded:

“Two or more person households

“Subject that consumption does not exceed 1,750 units per person per year, the following discounts will apply: (1) 25% on the first 1,000 units; (2) 15% on the remaining 750 units or part thereof.”

Some consumers contend that this definition is open to interpretation as to whether the ecoreduction is calculated on annual cumulative consumption, or whether it is to be calculated pro rata for the billing period in question. The inclusion of the seemingly conflicting provisions within the same definition has caused confusion for many who believed that they would be receiving an eco-contribution but, on receiving the bill, find they have not.

Quota rationing

The issue lies in the way the eco-reduction is being calculated, where it is essentially being rationed per day. In order to remain eligible, you would need to work out your daily consumption. Going over the daily quota just once in a two-month billing period results in losing the eco-reduction for the entire billing period.

When one particular consumer wrote to ARMS to ask about why he has not received his ecoreduction, as he is accustomed to benefitting from it due to his family’s energy efficient home, this is the reply he received:

“Below please find how the eco reduction is calculated: 1750 units are entitled per person per year if more than one person is registered on the account.

“1750 multiplied by the number of persons (4) = 7000 divided by 365 days = 19.17 (units that can be used per day) multiplied by the amount of days of the bill (61 days) = 1169.86.

“This amount was not to be exceeded during the 61 days in order to benefit from the eco reduction.”

His family had consumed 1,441 units of electricity in the billing period in question, and therefore he did not qualify for the eco-reduction. His reply does however confirm that ARMS calculates the eco-reduction by working out the quota per day.

Conflicting Information

From the explanations provided on the ARMS website, this consumer – and many more – believed that, in addition to see- ing the total consumed in the billing period in question, ARMS would also look at how much that household consumes on average annually. In this case, the consumer highlighted the fact that the billing period had come at a time of the year of high consumption.

In the ‘Frequently Asked Questions’ page of the ARMS website it is equally confusing, with no mention of billing periods or daily quotas to be found anywhere:

“Your eco-reduction is calculated on the number of registered consumers on your account. If your electricity account has one registered consumer and you consume less than 2000 electricity units during the whole year, a reduction of 25% on the electricity bill will apply. For residences with more than one person registered on the account, and where consumption is less than 1,750 units per person, a reduction of 25% per person will apply on the first 1,000 units and a further 15% per person will apply on the remaining 750 units.”

When the consumer wrote to the Malta Competition and Consumer Affairs Authority (MCCAA), it replied saying that this issue was not in its remit, directing him to the Regulator for Energy and Water Services (WERS). WERS informed him that the way ARMS calculates the eco-reduction is in line with the law, citing a legal provision to support this claim. When the consumer asked if he could begin receiving bills every six months, so that at the very least he could smooth out his consumption which helps keep ARMS electricity bills lower, he was presented with a legal notice stating that ARMS can bill for any period of days it may determine.

Authorities silent when asked for comment about ARMS rationing

The issue surrounding the ecoreduction calculations are the same in principle as the way ARMS calculates electricity consumption as a whole. It chops up the various electricity quotas, which are charged at different rates per day. A bill covering a high consumption is likely to result in customers moving up to more expensive electricity because the cheap electricity ration is consumed quickly and what is left are more expensive units of electricity. Either a reconciliation exercise together with a rebate, or less frequent bills, would resolve this issue.

For over a week, this newsroom has written to Parliamentary Secretary Deo Debattista for comment on the matter. Despite daily reminders, no replies have been forthcoming.

The same can be said for the MCCAA which, according to correspondence with various consumers such as the reply referred to above, shows that it does not believe the issue is within its remit.

Energy Minister Joe Mizzi was away on business when questions were sent to his office, but the Ministry replied promptly, saying that on his return he will be fully briefed on the matter in order that he can respond more comprehensively.