Electricity going up another 1.9 per cent
ELECTRICITY PRICES are expected to rise by a further 1.9 per cent as part of the Electricity Authority’s efforts to cover the gap left by the imposition of “pollution credits”.
The latest hike comes on top of the 1.5 per cent increase imposed at the beginning of the year, as the first part of a three-stage 4.5 per cent increase which will see the same 1.5 per cent increases in 2011 and 2012.
This is the first increase to the base rate since 1983 although bills have climbed during this time through the fuel-cost adjustment, which adjusts automatically depending on the fluctuation of fuel prices.
Speaking about the new hike yesterday, Chairman of the Electricity Authority of Cyprus (EAC), Harris Thrassou, said the authority would not go ahead with the initial three per cent hike, approved to cover pollution costs, but will instead impose the 1.9 per cent price rise.
In June 2009, the Cyprus Energy Regulatory Authority (CERA) approved the EAC’s proposal for a three per cent hike in electricity prices to cover the costs of paying for extra pollution credits. The increase was never introduced as President Demetris Christofias called on the authority to delay implementation, following a public backlash at rising prices during an economic crisis.
Eight months later, a new agreement has been reached between the EAC, CERA and the ministries of finance and commerce to reduce the “pollution tax” from three to 1.9 per cent, implementation of which is expected to come soon. Thrassou noted that vulnerable groups in society would receive a cut rate on the carbon emissions rate, without going into further detail.
However, the 1.9 per cent hike is likely to apply for seven years, as opposed to the few years planned for the three per cent increase. This means that the lower rate will still apply when the EAC starts reducing its carbon footprint through the use of natural gas in electricity production. One industry source likened it to a house loan which could be paid off with large instalments over a short period of time or lower instalments but for a longer period.
The EAC paid €12m in pollution credits last year, which the authority considered “cheap” given the fluctuations in the market price of pollution credits.
Last month, the government announced a one per cent cut in electricity prices stemming from the power company’s reduced subscription to COSMOS, the organisation responsible for storing and managing oil stocks.
(Source: Cyprus Mail)
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