The price of electricity has been at the centre of controversy over the last few years after the government began lifting energy subsidies leading to a gradual increase in electricity prices.
Arguments over how bills are calculated and problems resulting from inaccurate readings have escalated over the last few months.
“My electricity bill has doubled for no reason,” commented Hadir Adel, a married bank clerk with no children. Her words have been echoed by many people over the last few months since electricity prices went up in July 2017 as part of the government’s plan to gradually lift energy subsidies.
“They have gone from an average of LE500 to LE950 without any real change in my consumption,” Adel said, adding that she had asked the meter-reader for an explanation. He said that her slight increase in consumption had placed her among consumers who pay significantly more.
“My consumption is almost the same every month, and yet the bill still fluctuates. In December, I paid LE1,600, but the following month it was over LE3,000,” said Mohamed Samir, an Uber driver in Cairo. Samir explained that sometimes the meter-reader did not come for the monthly reading, and then he found his bill exceeding the previous one. “That’s how I know for sure there is something wrong going on,” he said.
One extreme case was that of Sameh Abdel-Latif, the owner of a car accessories shop in Cairo, who received a bill of LE29,200 for his domestic consumption in December.
Despite living in a 600-square-metre villa, Abdel-Latif believes there is no way he had consumed electricity to that amount. He refused to pay and went to the North Cairo Electricity Distribution Company to ask for an explanation. There are nine electricity distribution companies in Egypt.
After checking the complaint, the company admitted there had been a mistake in the reading, resulting in the exaggerated bill. This was later lowered to LE4,700.
Some celebrities have also taken to social media to express their annoyance at their electricity bills. Ezzat Abu Ouf, a famous actor, posted on Facebook lately to complain about one electricity bill that had reached LE13,000. Abu Ouf said that he couldn’t explain this “huge bill” as his consumption had remained unchanged. His previous bill had been for LE5,000, he said.
Officials from the Ministry of Electricity and Renewable Energy (MERE) analysed Abu Ouf’s home consumption and compared it to his bills. One of them had said that some of his appliances, among them heaters, air-conditioners, and the pool’s power system and heater, were all heavy consumers of electricity, Abu Ouf said, and that these had put him among the highest domestic consumers of electricity.
However, some people have found inaccurate readings to be in their favour. “Last month’s bill was only LE49 compared to LE350 the previous month, but our consumption was almost the same,” said Ashraf Mustafa, an accountant who lives with his wife and three-year-old daughter.
“I was happy to pay less money, but I knew there was something wrong. The meter-reader didn’t visit before January’s bill, and I suspect the next bill will compensate for the error,” he said.
Mustafa may be right. It seems that an estimated reading was given that was less than the actual consumption and that put him in the bottom bracket of consumers charged a lower rate per kilowatt (kw) of electricity consumed.
When the next reading is taken, the actual consumption will be calculated and Mustafa may find himself placed in a higher bracket and pay more than expected.
Although there are cases where inaccurate meter-readings are to blame, many complaints result from a lack of knowledge of consumer brackets and how to calculate electricity consumption.
Electricity consumers in Egypt are divided into seven brackets, each paying a different price per kw of electricity consumed. The latest prices per bracket were issued in July 2017.
Consumers falling in the first bracket are those who consume anywhere between zero and 50kw at LE0.13 per kw. Second-bracket consumers pay LE0.22 per kw if their consumption falls between 51 and 100kw.
The third bracket includes those who pay LE0.27 per kw for up to 200kw of electricity. Fourth-bracket consumers use from 201 to 350kw and pay LE0.55 for each kw. The fifth bracket lies between 351 and 650kw at LE0.75 per kw. Sixth-bracket consumers pay LE1.25 per kw anywhere between 651 and 1,000kw. Those who consume more than 1,000kw pay LE1.35 per kw.
The brackets were designed to ensure that those who consume more pay more, and consumers in the seventh bracket do not benefit from any subsidies on their bills. There were about 34 million electricity subscribers in Egypt in December 2017, according to MERE figures, a four-per-cent increase on 2016.
Electricity prices were scheduled by the MERE in 2015 to move up gradually until they reached the real cost of production. At this point there will be no more government subsidies on electricity. The initial plan was to reach that goal in 2019, but this has now been extended to 2022.
Many people have expressed their dissatisfaction at the rising prices of electricity, which have added to their suffering after the series of price hikes that took place following the flotation of the pound in November 2016 as part of the government’s economic reform programme.
However, the problem for many has not been the fact that electricity prices have been upped. Instead, it has been what they suspect have been inaccurate or random meter-readings.
Inaccurate electricity bills can also affect the prices of certain commodities. When the bill paid by a store, for example, is not stable every month, the store will need to price its products differently and add the additional expense to the pricing of certain commodities.
“Billing problems have to be sorted out once and for all,” said Sara Atef, a pharmacy teaching assistant. “It has been a headache for a long time now, and it disrupts many aspects of our lives.”
Complaints about electricity bills can be made in different ways. One way is to go to the relevant distribution company. Another is to register the complaint centrally by calling 121 or sending an SMS to 91121 with details of the bill. More than three million calls and text-messages have been made thus far, according to the MERE. A third way to complain is by registering a complaint on the MERE’s website at www.moee.gov.eg.
The Egyptian Electricity Utility and Consumer Protection Regulatory Agency (EgyptERA) has also launched a website (www.egypterases.com) to register meter-readings online by subscribers without third party meter-readers. There is also a mobile application called “egypterases” that can be used for the same purpose. Both the website and application allow users to register their readings and calculate their bills based on their consumption, possibly leaving no room for error.
Ayman Hamza, a MERE spokesman, told Al-Ahram Weekly that the ministry had realised that there were problems with inaccurate meter-readings some time ago. There were about 4,000 meter-readers and 7,200 bill-collectors across the country, he said, and the ministry needed at least to double that number in order to ensure more systematic meter-reading and bill-collection.
The MERE recently signed a three-year contract with a private company to cover the shortage. The company has now started to read electricity meters and collect bills in certain areas identified by each of the MERE’s distribution companies.
The ministry is also implementing a project to replace about 30 million electricity meters with pre-charged and smart ones over the next five years at an estimated cost of LE60 billion. Pre-charged meters automatically cut the power from households when a pre-set amount has been consumed, with the power coming back on once the meter is recharged. New customers are already obliged to install pre-charged meters, and the current number of subscribers using them is estimated at 4.75 million, according to Hamza.
A pilot project to install 250,000 smart meters in six governorates started at the end of 2017, with the needed networks and data-centres also being set up. Smart meters differ from pre-charged ones in that they have additional features like enabling users to set their consumption at a certain rate before giving a warning and having two sim-card slots to allow for charging at any time.
The pre-charged meters have helped to lessen the confusion about bills, though they have led to other problems.
“I can check what pricing bracket I am in in real time, which helps me to monitor my consumption,” said Mustafa Eissawi, a university student living in a rented apartment in Cairo. “This saves the hassle of inaccurate or random readings that have been causing billing problems.”
However, the users of pre-charged meters have complained about an additional charge of around LE500 after a month of usage that they have said they did not know they would have to pay.
Employees at the Egyptian Electricity Holding Company explained to the Weekly that this was “like a fine for exceeding 1,000kw of consumption per month”. Exceeding this amount pushes consumers into the seventh consumption bracket that does not benefit from subsidies, they said. The fine reflects earlier benefits from the subsidised rate charged earlier.
“Because of timely payments through pre-charged meters, some consumers may feel they are paying more, and some of them may want to use the old meters,” Hamza said. But electronic payments and the use of pre-charged or smart meters offer advantages for all, he said.
Ahmed Bahgat, a professor of electrical engineering at Cairo University, said that people needed to rationalise their energy consumption in order to avoid hefty bills. The government had already launched many campaigns to encourage lower electricity usage when prices were lower and many people were using unnecessary lights at home or at work, or were running multiple air-conditioning units, he said. The latter are responsible for most household electricity consumption, the ministry said.
Bahgat encourages people to replace normal light bulbs with LED ones. Millions of LED bulbs have been sold over recent years as people look to save energy, he said, since LED lighting can save more than 80 per cent of the energy used by normal bulbs.
He also said that people should be careful about home refrigerators, which can use a lot of electricity, and he advises people not to leave devices plugged in when not in use, like battery chargers and television sets. “Rationalising energy consumption is now essential in order to receive lower bills,” he stressed.
Hamza believes that pre-charged meters will help consumers monitor their consumption and encourage them to rationalise it. For the MERE, the meters mean it can collect bills more easily.
In the past, much money was spent collecting money due for electricity bills from individuals and business owners alike, and some government organisations also owe large amounts in unpaid bills. These amounted to some LE120 billion at the end of December. The ministry has been negotiating payments and rescheduling them where necessary in order to find the money required to continue the development of the electricity sector, Hamza said.
A stable and secure supply of energy, mainly electricity and natural gas, ensures that factories and industry as a whole can run without fears of shut-downs due to energy shortages, as happened some years ago.
Power cuts used to take place on a regular basis until summer 2015, resulting from a gap between the production and consumption of electricity. The MERE resorted to cutting power systematically across the country in order to prevent the collapse of the national grid under heavy loads during peak hours in summer.
The power cuts affected many factories as well as houses and shops for years until the problem reached its peak in 2014. An emergency plan was carried out during the first half of 2015 to add 3,600 megawatts (mw) to the grid’s capacity in order to avoid further power cuts in summer. No mandatory power cuts have taken place since June 2015, according to the MERE.
The ministry said that more than 16,000mw of electricity had been added to the capacity of the grid from June 2015 until the end of 2017. Current projects from ordinary electricity stations and renewables will raise that number to 25,000mw by the end of 2018, it said.
The total capacity of the national grid is currently about 40,000mw, with daily consumption hitting about 25,000mw. Peak consumption last summer was a little over 30,000mw. Last year, Egypt signed an agreement with Russia to build its first nuclear power station, and this should generate a total of 4,800mw from four nuclear reactors starting by 2028.
The development projects currently being carried out, in addition to population growth to over 100 million, have all changed the rate of energy consumption compared to previous decades and also the rate of electricity production.
Minister of Electricity and Renewable Energy Mohamed Shaker said in a press statement that in addition to covering current and foreseeable future needs for electricity, the MERE aimed to turn Egypt into a regional hub for energy exchange and trading through electricity connection projects.
Egypt currently has such connection projects with Libya and Jordan. The ministry is studying ways to increase linked capacity with the latter to reach 2,000mw instead of the current 450mw.
An electricity connection project between Egypt and Saudi Arabia is underway to exchange 3,000mw of electricity. The two countries have different hours of peak electricity consumption, allowing them to exchange electricity without disrupting the stability of supply.
Approximately LE120 billion was invested in energy projects in 2017, in addition to the cost of installing and exchanging electricity meters.
*This story was first published in Al-Ahram Weekly