FLP opposes new FEA deposit rates
[posted 14 Oct 2011,1300]
FEA should first furnish an account of all moneys collected since 1966 as
security deposit before it can raise the deposit rate, says the Fiji Labour
Party.
Letters have been sent to the Authority as
well as to the Minister for Energy, Timoci Natuva, opposing FEA’s decision
to increase the rate for the security deposits and asking that it be
rescinded.
“The issue of FEA’s demand for enhanced
deposits must be assessed against its treatment (usage) of the deposits. If
it is established that the Authority misused it by allocating these deposits
to its operating expenditure, then it is quite clear that it is abusing the
requirement for the security deposit and should be held accountable for its
actions,” FLP Leader Mahendra Chaudhry said in his letter to the Minister.
Furthermore, the FLP is concerned that FEA keeps raising electricity charges
in one guise or the other in these troubled economic times when the ordinary
consumer is already struggling to survive faced with escalating costs of
living.
“Electricity rates are now quite excessive
and indeed oppressive for the poor. Actual rates in the past six years have
risen by almost 60% with an additional 30% surcharge on fuel. Last year
alone (June), a massive 34% hike was imposed on domestic tariff. Along with
other tariff restructuring that took place, this almost doubled electricity
rates for all high-end domestic consumers.
“The ‘restructuring’ provided FEA an excuse to bring in other manipulative
measures to increase revenue. The lifeline threshold was lowered from 250kWh
per month to 130kWh pushing close to 100,000 poor and lower income
households into the high-end domestic user bracket. At the same time, FEA
changed the basis of its bill calculation from actual usage to a fictional
average daily usage,” Mr Chaudhry said.
Under the circumstances, the current hike is both harsh and insensitive
given the mounting social distress in the country.
“It is the duty of any responsible government to ensure that the cost of
utilities remains affordable and within the reach of the ordinary income
earner. FEA should not forget that it is not just a commercial entity
required to show good profit, it is the provider of an essential service
with social responsibilities to the citizens of Fiji,” Mr Chaudhry said.
FLP’s letter to FEA is reproduced
hereunder:
11 October 2011
Mr Hasmukh Patel
Chief Executive
Fiji Electricity Authority
2 Marlow Street
Suva
Dear Mr Patel
re: Review of Consumer Security
Deposit - Act No. 2016210114
I refer to a letter from the FEA dated 24 September 2011 notifying us of an
increase in the required security deposit from the current $80 to $133.57.
We are now asked to pay an extra $53.57 to comply with FEA’s increased
security deposit requirement.
I am aware of the extent of discontent
this has caused consumers at a time of economic stagnation when most
families are facing extreme financial hardship. It will simply add to the
burden they already carry.
FEA’s annual report 2010 shows that the
Authority collected close to $2 million ($1.847m) in prepayments and
deposits for the year, an increase on the $1.8m collected in 2009. This is a
substantial amount raising some relevant questions:
As far as we are aware, FEA has not so far
given an account of the moneys it has collected over the years (since 1966)
as security deposit. Last year alone it collected close to $2 million and,
based on this, it would be correct to assume that a huge sum running into
several millions must by now have accumulated in this security deposit fund.
This money does not belong to FEA but is held by them as a deposit on behalf
of consumers. As such, FEA should account for these moneys, which should
have been kept in a separate fund, on an annual basis. This it has not done
as far as we can ascertain.
In the circumstances, it would be a
perfectly legitimate demand of the consumer(s) that FEA first publish an
account of all the moneys collected as deposit and how these have been
treated over the years.
The issue of FEA’s demand for enhanced
deposits must be assessed against its treatment (usage) of the deposits. If
it is established that the Authority misused it by allocating these deposits
to its operating expenditure, then it is quite clear that it is abusing the
requirement for the security deposit and should be held accountable for its
actions.
Furthermore, why are people who have not
defaulted on their electricity bill payments, being lumped with this
additional hike? Higher security deposits may be justified in the case of
persistent defaulters whose accounts run into arrears. There would hardly be
any objections should such consumers be targeted. But to penalize everyone
at a time of widespread financial hardship faced by working families with
ordinary incomes, is nothing short of irresponsible exercise of corporate
power.
Electricity rates are now quite excessive
and indeed oppressive for the poor. Actual rates in the past six years have
risen by almost 60% with an additional 30% surcharge on fuel. Last year
alone (June), a massive 34% hike was imposed on domestic tariff. Along with
other tariff restructuring that took place, this almost doubled electricity
rates for all high-end domestic consumers.
The ‘restructuring’ provided FEA an excuse
to bring in other manipulative measures to increase revenue. The lifeline
threshold was lowered from 250kWh per month to 130kWh pushing close to
100,000 poor and lower income households into the high-end domestic user
bracket. At the same time, FEA changed the basis of its bill calculation
from actual usage to a fictional average daily usage.
Having thus inflated the tariff rate and
brought 100,000 more households into its tariff net, FEA then announced,
almost simultaneously, that it was going to review the security deposit to
reflect these increases, in line with the requirements of the Electricity
Act. Instead of the standard $80 it was collecting so far, security deposits
will now be equivalent to the average cost of two months of usage per
household.
This is not only insensitive in light of the hardships people are already
facing from the crippling effects of rising cost of living, it is also
unethical corporate practice. It seems FEA intends using the millions raised
from security deposits as a ready source of cash to meet its operating
expenses and debt repayments.
We remind you that increasing the charge
for security deposits will not only inflict greater hardship on ordinary
families, it will also unduly increase the cost of doing business for people
in the commercial and industrial sectors. This will have further
inflationary impact on consumer prices.
Also a word of caution may be timely. If
FEA keeps raising the tariff as it has been doing, it could very well price
itself out of the market. Higher tariff is discouraging usage, forcing
people to either cut back or resort to alternative sources of energy. FEA
needs to be able to strike a balance between what is punitive and what will
be permissive.
We call on FEA as a responsible corporate
entity owned by the people of Fiji, not to take advantage of the current
political situation to unilaterally impose such insensitive policies on our
people. If the Authority needs to be bailed out financially, it should turn
to the State for help, not keep placing inordinate burden on the consumers.
We write this letter not for our own sake
but for the thousands of poor families who are struggling to survive in an
environment of escalating poverty.
It would be a humane gesture on the part
of FEA to abandon its plan to extract its pound of flesh from its already
bleeding consumers.
We look forward to your Board’s proper
understanding of this critical situation.
Mahendra P. Chaudhry
Leader FLP/NFU
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