The rationale behind the Arms billing system

The principle is that if you consume more, you pay at a higher price per unit.  This is commendable policy.  However, is it fair that a one-person household has the same daily allowances at each band as a household of 5, say?

As illustrated in Understanding the Arms bill (1), the daily allowances at each band are as follows:
 
For every kWh of the first 5.4794 kWh per day @ €0 .1047
For every kWh of the next 10.9589 kWh per day @ €0.1298
For every kWh of the next 10.9589 kWh per day @ €0.1607
For every kWh of the next 27.3973 kWh per day @ €0.3420
.........................................remaining kWh per day @ €0.6076
 
This means that every household needs to consume 27.3972 units per day before hitting Band 4 (€0.3420 c per day).  EVERY household. 

So a household of 1 has the same allowance of 27.3972 units per day - before hitting the high band of €0.3420 per unit - as does a household of 5. 

Now I know that a household of 5 doesn’t have five times the electricity requirement as does a household of 1.  After all, most households – large and small – have one fridge, one washing machine etc.  But still it will be obvious to most that a larger household will consume more electricity –  more heaters, more fans, more washing loads, more cooking…

Does the annual eco reduction superimposed on this stepped billing system make a difference for larger households?  Does it make it fairer for larger households? Let’s look at this more closely. 

How does the eco reduction work?  In any one year, 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 consumed. 

So, converting this to a daily ceiling, there is a 25% reduction on the cost of the first 2.74 units per person per day (1000 units divided by 365 days) and a further 15% reduction on the next 2.05 units per person per day (750 units divided by 365 days).  If this daily consumption of 4.79 units per person per day is exceeded, then there is no eco reduction.
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To summarize:
How the eco reduction is calculated:

• There is a 25% reduction on the cost of the daily consumption of the first 2.74 units per person.
• There is a 15% reduction on the cost of the daily consumption of the next 2.05 units per person.
• If this daily consumption of 4.79 units per person is exceeded, then there is no eco reduction.

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 Illustration
Let’s illustrate this for a household of 5.  To be eligible for an eco-reduction, this household has to therefore consume less than 23.95 units per day (4.79 units per person multiplied by 5 persons).  If this household exceeds this 23.95 units per day, then they get no eco reduction.
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In my opinion, the annual eco reduction superimposed on a stepped cost per unit billing system is not working.  It is meaningless to have these two initiatives acting in tandem.  On the one hand, if you consume less than 27.3972 units per day (any size of household), you will not hit the very expensive €0.3420 band per unit.  On the other, a household of 5 will also get a (small) eco reduction if it does not exceed 23.95 units per day (or 4.79 units per person per day). 
 
The cost per unit jumps from €0.1607 at Band 3 to €0.342 at Band 4.  Larger households will be more likely to cross from Band 3 to Band 4.  This is a more significant factor than any compensation of an eco reduction in periods of lower consumption. 

The table below shows the detail of the Arms billing of our household's annual electrical consumption.  I looked at only the cost of our electricity consumption.  I did not look at the service charge.  We are a household of 5.  As you can see from the table below, the daily cost per day is exactly the same pre eco reduction as it is post  eco reduction.  The eco reduction is clearly not compensating.   ​
       

In my opinion, the Arms billing system needs to be completely overhauled.  Currently, it is incoherent and indecipherable.  For a household to range from paying @ €1.20 per day to €8.00 per day (see table above), depending on the period of consumption, is unjust.    Most people do not understand how this billing system works.  Heck, I have spent days deciphering it.  It shouldn't be rocket science.  A household  should not have to pay  €456.08  over a period of 57 days for its electricity consumption  because it dares occasionally use two electric heaters over the cold period.  It was far cheaper to run a centrally heated house in the depths of a Scottish winter.    This billing system is  clearly not fit for purpose.  

 How Arms calculates the cost of electricity:

From the Electricity Supply Regulations, these are the annual allowances at each band on the Residential Tariff:
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i) For every kWh of the first 2,000 kWh ..................... €0.1047; 
ii) For every kWh of the next 4,000 kWh ................... €0.1298;
iii) For every kWh of the next 4,000 kWh ................... €0.1607; 
iv) For every kWh of the next 10,000 kWh ................. €0.3420; 
v) For every kWh of the remaining consumption ....... €0.6076.
 
Arms converts the above ANNUAL allowances at each band to DAILY allowances. 
 
For example, at Band 1, the 2000 kWh annual allowance is divided by 365 days.  This gives the consumer a daily allowance of 5.4794 kWh at €0.1047.  Below are the DAILY allowances of kWh (units) at each band: 
 
For every kWh of the first 5.4794 kWh per day @ €0 .1047
For every kWh of the next 10.9589 kWh per day @ €0.1298
For every kWh of the next 10.9589 kWh per day @ €0.1607
For every kWh of the next 27.3973 kWh per day @ €0.3420
.........................................remaining kWh per day @ €0.6076

Our 2269 units of electricity therefore cost 20.55 c per unit of electricity on average – practically double the cost per unit at Band 1 (10.47 c).

This calculation also taught me something new about the Arms billing system.  Effectively larger households obviously get through the cheaper bands more quickly than smaller households.

However, larger households get larger allowances for the eco reduction.  Next on the agenda, I will be looking at whether the larger eco reductions for the larger households compensate for the higher cost per unit (on average), when compared to smaller households.    I will also be illustrating how  being billed every two months is  costing us money.

In the meantime, folks, I would urge all of you to become experts on how the bills are calculated.  This billing system must be the most non-transparent, most unwieldy, most unnecessarily complicated billing system in the universe.  We need to understand how our bills are calculated. 

All I know is that it was cheaper to centrally heat a three-bedroom house in the depths of a Scottish winter than it is to have two electric heaters (occasionally used), two water heaters (occasionally used) and an electric oven.  We don’t have a dryer or a.c. 

A cost of €466.23 for 57 days is excessive, in my book.

Some of my compatriots are very quick to take offence at any criticism of Maltese administration.   If I dare criticise our NHS or our education system, for example.  Or our lack of regulation of the long let rental market.  Or any of the myriad failures of Maltese administrative policy.


But am I criticising Malta when I criticise the above? 

From where I’m standing, no.  For me, Malta is not the sum of these failures or inadequacies.  Malta is my childhood; my family and friends; its history; the efforts of my ancestors; the streetscapes; the cityscapes; the landscape of ħajt tas-sejjieħ, bajtar tax-xewk hedgerows, terracotta soil, the encompassing sea; the home of my children; the adopted home of my Scottish husband…  In actual fact, it is very difficult to put in words what Malta means to me.  I suppose this is the same for anyone trying to put in words what their ‘patria mia’ means to them.

So why is there this prickly defensiveness?  Why do some believe that any criticism of any Maltese administrative policy is a betrayal of ‘Malta’, a lack of patriotism?  After all, is the administration of the day all that there is to Malta? 

And why is it that people feel the need to defend the indefensible?  Why this blind loyalty?  Are they defending ‘Malta’ or the regime of the day?  Why is a criticism of the current administration equal to a criticism of ‘Malta’?  Why refute the very possibility that there may be better ways of doing things?  Is there only the ‘Maltese way’?

Mostly, I think, the issue is that we don’t see the wood for the trees.  If we’ve stayed in the wood all our lives or most of our lives, we haven’t experienced other ways of being, living…  In this case, we only have this frame of reference.

Recently my son needed medicine for bronchitis.  The cost of the medicine amounted to more than 50 euro.  Having lived in both England and Scotland, I know that children get their medicines free of charge in both these countries.  In fact, in Scotland, everyone now gets their medicine free of charge. 
Now, this isn’t an issue for us – we can afford 50 euro to spend on medicine.  Of course, there are opportunity costs but these opportunity costs would be fine if I had a sense that the state was prioritising more urgent needs.  Clearly, however, it is an issue for people who cannot afford to have a decent roof over their head, let alone 50 euro on medicine for a child. 

But is the state prioritising urgent needs over the need to access free medicine?  The ongoing shady Vitals saga doesn’t inspire you with confidence that our government is looking after our money and health system. 

A doctor friend informed me that there are generic versions of the different medicines - equally safe and effective - which are much cheaper.  I didn’t know about the existence of these cheaper medicines.  How many people are aware that they can ask for the cheaper version?  Why, in l-aqwa żmien, do we not find innovative ways of distributing our nation’s supposed wealth more fairly?  Should pharmaceutical companies get rich on the ill health of some people? Aren’t children worthy of being invested in?  Aren’t they the future adults who will be paying for our pensions?  Should we have a tax on being sick?

A few days after we incurred this cost, news broke of Victoria’s death from aplastic anaemia.  It is being alleged that this family was once billed for medical treatment at Mater Dei hospital.  Even though they were eligible for free healthcare.  It is also alleged that, after this billing, they did not seek Maltese medical advice ever again.  Leave aside the importance of finding out whether the state shares responsibility for the death of Victoria, the important question to be answered is:  how did this family live under the radar?  How on earth were they billed, if they had been granted refugee status?

Many of you will know that when we moved to Malta in 2010, our disposable income was 300 euro per month after rent and the Arms bill (on the incorrect tariff).  Leave alone that the state was underpaying me by as much as 700 euro per month.  After all, in a country where the average wage is 18 000 euro (gross) it is not inconceivable that there are other families on a net income of 1 000 euro per month.  The point is that there was no one to see that we were in an impossible financial situation.  Like us, there were, and are, many others in similar situations.  We had the financial support of our families plus other resources.  Again, it is not inconceivable that there are people without the resources we had.

Another alarm bell sounded in 2013 when our ex landlord took out a precautionary garnishee order on our bank account and my salary.  For obvious reasons, it was not tenable for us to stay in this rental property.  So, I phoned the Housing Authority and explained our situation.  Consult a lawyer, I was told.  That was the sum support provided by the Housing Authority.

Stories abound on social media of individuals or single parents in desperate need of housing, food, clothes…  The only recourse I see is people providing charity.  Or an appeal to the President or some minister.  This is the sum total of the safety net for many of these people.  Totally haphazard and ad hoc support.  A social worker with a caseload of 1 000 cases. A teenage patient in Mount Carmel hospital running away and then found dead, having committed suicide.

These are the cases we know about.  Goodness knows how many are enduring miserable lives in silence, ashamed to come forward, to ask for help.  Because they witness at first hand the internet trolls taking people in need to task for needing a safety net.  I managed, I picked myself up, brushed myself off and managed.   So can you, they blithely trumpet.

Malta desperately needs a safety net.  With no holes big enough for any person to fall through.  After all, the measure of any society is how we treat our most vulnerable.  In l-aqwa żmien, we are clearly failing these.