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Want to know how much you’re really paying for electricity on average? Economist shares life-hack

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Receiving electricity bills more frequently, which cover a shorter billing period, means there is an extremely high probability that you are paying more for your bills than you should be, especially during high consumption periods.

This all relates to ARMS ltd chopping up the cheap electricity quotas based on the number of days it is billing an account holder. When being invoiced for a shorter billing period, especially during the cold and/or the very hot months, this results in people jumping to higher electricity tariffs despite not consuming the full annual number of units at the cheaper electricity rates. A full explanation of this may be found below.

Following The Malta Independent’s story last week, this newsroom has been inundated with messages from concerned citizens who have noticed an increase in their billasking how they can effectively confirm the reason they are paying more is due to being billed more frequency.

Economist Dr. Marie Briguglio, who has conducted research on the water and electricity tariff said she was alarmed to read on social media how many people said they had no idea how to read their electicity bills. After posting a simple explanation of the bill, several people contacted her for help to explain their own bill.   She then offered a simple calculation in order to understand how much households were consuming and at what rate.

Briguglio wrote: “ARMS bill life-hack! To check if your consumption is “normal” STEP 1. Check your electricity consumption UNITS e.g. 600 units STEP 2. Check the period DAYS e.g. 60 days STEP 3. Divide units by days to find your daily consumption e.g.10 units. With this you can understand if your consumption is “normal” relative to last year, to other households etc. The lowest consumption is ZERO. The highest consumption could be up to 10 units per person per day or even more.To check the rate at which you are paying for your consumption, Step 4. Take the total cost of electricty consumption excluding the meter rental (e.g. 60 euro) and STEP 5. divide it by the total units  (e.g. 60euro/600 units = 0.1 = 10c per kWh)

This calculation shows the average electricity rate being paid out per unit on a particular consumption period.

“So you can say ‘4 residents, from January to February, consumed 600 units (average 10 units per day for 60 days) and paid €60 (so average cost per kWh= 10c per unit).’”

If you are wondering why this exercise is of any use because ARMS clearly lays out the prices for various units of consumption, people have actually found that they were paying on average 21c, 24c and more per unit of electricity in a particular billing period when they have so far not exceeded the 2,000 units which are supposed to be billed at 10c5.

Your first 2,000 units should be charged at €0.1047; and your next 4,000 kWh at €0.1298, another 4000 at €0.1607, then 10000 kWh at €0.3420; after that at €0.6076.

Say a bill is issued for January to February for a period of 60 days. The 2,000 cheap units are divided by 365 days (one year) to give you 5.479 units per day at 10c5. A 60 day period provides for an allocation of 328 units at 10c5. January and February were unseasonably cold and most people used their heaters and air-conditioners to heat their homes, especially those who spend more time at home. It therefore stands to reason that the 328 units are going to be consumed very quickly, moving on up to the 12c9, 16c1 and 34c2 tariffs despite not consuming over 2,000 units. The above exercise will therefore serve to show how much you are actually paying on average in a given billing period.

 “But many people are now asking NOW WHAT? What if my rate is effectively 24c? Or 28c?

“My understanding is that the quota provided for by the law is a per annum quota. If ARMS wishes to bill every 2 months, and to ration the quota for ease of billing, then it should make a calculation every year to rebate the extra amount paid by the resident (at unnecessarily higher rates) if the resident stayed under the ANNUAL quota levels.”

Rebates are so far not being offered, despite consumption staying under the annual quota levels.

Questions have been sent to ARMS about the number of consumers being billed every two months and whether there are any plans to increase this so that all consumers in Malta and Gozo are to be invoiced for shorter periods.

 To find the initial story linking a spike in electricity prices with more frequent bills, go here

 Let The Malta Independent know about whether you have noticed an increase in your electricity bills or not by taking our poll

 

 

Original article found on The Malta Independent

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