Labour to pledge 25% reduction utility rates by 2014

Labour is guaranteeing a 25% reduction in the burden of tariffs by 2014 with the full conversion of the Delimara power station to gas-fuel from the current operation of heavy fuel oil.

Labour's plan to reduce utility rates is based on the supply of gas through the development of a liquefied natural gas terminal, with a regasification facility, if funds arrive from the EU.

Labour candidate Konrad Mizzi, who addressed the press during the presentation of the party's much-touted plan to reduce utility rates, said the savings of the total conversion to gas from heavy fuel oil would be €187 million a year.

"The savings are so high that we cannot procrastinate any more... LNG is a common fuel used in the EU and the environmental impact is minor," Mizzi said.

According to Labour's plan, which will reduce energy rates by 25% by 2014 and water desalination costs by 5%, a new 200MW gas-fuel fired unit and gas supply infrastructure at Delimara will be constructed at €166 million.

The conversion of the BWSC turbine at Delimara to gas from HFO will cost €68 million. Another €142 million will be invested in the LNG terminal.

The combined €376 million capital cost is close to a feasibility study conducted by the finance ministry which claimed the cost of Labour's plan would be €350 million.

The use of the Malta-Sicily energy interconnector will be retained, Mizzi said, allowing for an energy cost of 0.096 cents per unit.

"This will give us savings of €187 million a year, reduce emissions, ensure the close of the Marsa power station and a portion of the old Delimara power station, and the removal of the large chimney from the Delimara skyline, as well as the end of heavy fuel oil," Mizzi said.

Mizzi also said the financing of €376 million would be done through public-private partnerships.

"Enemalta will only convert the BWSC plant to gas, but private companies would focus on the new part. There are sufficient savings to enable this, and Enemalta will not be privatized," Mizzi said.

"We hit the ground running in May 2013, with a tender for a 10-year fixed-term electricity contract.

The savings will allow us to give €77 million in tariff reductions and pass on €110 million to ensure the sustainability of Enemalta, a fair private sector return, and the repayment of debt through the special purpose vehicle."

Mizzi said the eco-reduction and energy benefit mechanisms will be retained.

The Labour Party has presented its plan to reduce electricity bills, in a strategy widely believed to adopt the use of gas importation through an offshore gas tanker depot.

The party says its plan is "affordable, reliable and clean", and will push for the conversion of the Delimara power station's fuel from heavy fuel oil to gas.

Mizzi, a former chief information officer for state energy company Enemalta, and Labour deputy leader Louis Grech are presenting the plan.

"This issue goes beyond beyond the simple reduction of bills," Grech told the press gathered today for the presentation of the plan. "It is a policy on which we will base our energy policy, fundamental for businesses, families. The issue must be treated urgently and we must now move forward from the argument that Enemalta has too much debt. We believe a serious proposal can address the rates' issue."

Grech said the change from HFO to gas would be less polluting, environmentally friendly, and improve people's health in the environs of Delimara.

"We will include the private sector in the generation of energy, but at no point will Enemalta be privatised - no workers will be laid off. Consumers will buy energy from Enemalta at no extra tax or higher rates. We believe we have found a system to sustain Enemalta's operations."

Grech said that in March 2015, decreases in rates for industry would have also been worked out. "This means that a year after elected, we would reduce consumer bills by 25%."

"We are looking at the energy holistically, given its fundamental importance for the economic situation of country. We expect the PN to tell us what its proposals are on energy, which should go beyond simply saying that Enemalta must become more efficient, or buying fuel at better prices. It should address a long-term vision."

Labour will finance the necessary changes through private public partnerships. #Malta2013 — Stefan Zrinzo(@stefanzrinzo) January 8, 2013

Labour's plan, said to include savings of €187 million, is based on a focus on gas fuel, which includes the construction of a gas pipeline to Europe; the interconnector to Sicily for the provision of electricity, and a major push towards renewable energy.

Labour candidate Konrad Mizzi said there would be "an inclusive transition to the new energy model with a special focus on consumer rights."

Mizzi said Labour's plan had also been vetted by Enemalta consultants DMV KEMA, on the sustainability of the project. "We asked whether we could change the fuel mix, shift to gas, and what the capital costs were for gas, and lowering the cost of generation using new gas generators and the interconnector." DMV KEMA consultant Thomas Leonard was present for the Labour press conference.

Foreign consultants DNV Kema confirming @josephmuscat_jm 's plans to reduce energy bills by 25% for families and business #malta2013 — Kurt Farrugia (@KurtFarrugia) January 8, 2013

Mizzi said Malta was already producing enough energy for double its operation. "Businesses here pay nearly double the EU average. Consumer tariffs are not affordable and 25% higher than the eurozone average, the result of unsustainable production costs which in 2012 was cost 18c per unit," Mizzi said.

"The wrong choices were made with the decision to depend on heavy fuel oil, the delay in the decommissioning of Marsa, and unclear pricing on the interconnector. The debt at Enemalta is at €835 million."