by Andreas Kokkinos
The issue of electricity pricing is at the top of every household's agenda, especially with galloping inflation and the increase in fuel prices, making it a big hurdle for many. Despite this, things seem to be encouraging as far as September is concerned as bill pricing is expected to be reduced.
Following a decision by the Cabinet as a measure of relief for households - and beyond - the coming electricity bills will be lower, the difference being in the way the discount (subsidy) is calculated. The spokesperson of the Cyprus Electricity Authority, Mrs. Christina Papadopoulou, who was responsible for explaining the new way of calculating the cost of electricity, spoke to Kathimerini and analyzed the differences in the new formula and the impact it will have on every household.
Back to 19% VAT but...
Initially, the spokeswoman of the Public Power Corporation clarified that the reduced VAT rate that was in force for households/domestic users will be a thing of the past, but according to the new measures announced by the State and given the green light by the Council of Ministers, there will be a state subsidy on energy costs beginning with electricity bills from June 2022. This subsidy will be granted on a tiered basis based on consumption, while in addition to domestic citizens - as was the case with the reduced VAT - small businesses will also benefit. In fact, the amount of the subsidy will more than cover the reintroduction of VAT at 19% (it was 5% for vulnerable groups and 9% for domestic users).
How much will I pay next month?
So calculating average consumption at around 800 kilowatt hours, there will be a subsidy of 85% for the first 400 (on top of the increase in fuel price), from 401 to 600 at 75% and from 601 to 800 at 50%. So translating the subsidy into real numbers the "discount" that will be reflected in the electricity bill that arrives in a household user's mailbox will be 14%, a sum of around €68. Therefore, a household that consumed 800 kilowatt-hours and paid €293 in the previous two months will now pay €250. In fact, of the 68€ mentioned as an example by the AHK, 25€ will be used to cover the VAT reintroduction and the other 43€ will be the actual reduction.
What applies to vulnerable groups
As far as vulnerable groups of the population are concerned, the corresponding household that paid around 230€ in the previous two months for the same consumption (with VAT at 5%) would now pay 250€, but with the subsidy covering more than 100% of the increase (exclusively for vulnerable users) the reduction reaches 20% with the bill amounting to 200€. In conclusion, and in response to our question about why the subsidy has essentially "capped" at 800 kilowatt-hours, the spokeswoman of the AHK said that it is an alternative way to pass on the sense of responsibility in terms of energy savings to the user with the energy crisis to spread its tentacles.
[This article was translated from its Greek original]