Bigger Electricity Consumption, the Bigger Sanitary Bills
08 September, 2011
Bigger Electricity Consumption, the Bigger Sanitary Bills

 

To make bills for sanitary service more socially-oriented, Tbilisi City Hall introduced a new calculation mechanism of bills.

Instead of fixing monthly tolls of GEL 2.5 per capita, the new system calculates toll rates per family monthly electricity consumption – 5 tetri per 1 kw of consumed electricity. However, the new tolling system embarrassed rather than pleased the subscribers who find it unfair. Economic analysts find it violating rights of consumers and free market principles.

 

 

To solve the problem of unpaid bills

for sanitary service and water Georgian government introduced united bills and tied payment of bills for water and cleaning service with electricity starting December of 2010. As a result, if a subscriber does not pay for water and sanitary service he/she faces a blackout. On the other hand, City Hall doubled tolls for sanitary service from GEL 1.2 per capita to GEL 2.50. The increase of bills and unfair unification of bills for water, trash and electricity caused indignation of population who protested unfair billing system as outrage of consumer rights and free market principles but to no avail. The system was approved and enforced. To mitigate the rage of social and oppositionist political parties, under pretext of making sanitary bill more socially-oriented, Tbilisi City Hall introduced a new calculation system of tolls starting July 1st, 2011 that charges a family with 5 tetri per kilowatt hour of electricity consumed per month.  However, it turns out that the toll will vary according to seasons as in summer electricity consumption decreases while in winter it doubles and even triples for those families who have no gas supply and use electricity for heating. Some relatively new districts in Tbilisi specifically those that are composed of 16-storied residential houses have no gas supply for safety reasons in compliance with construction standards.

Associatin of Young Financiers and Businessmen (AYFB), assures the new charging system doubles tolls for cleaning service, counters all free market principles and violates rights of consumers.

“It is illegal; taxation of citizens counters market economy principles and has no analogue world over except of the toll imposed by Mongols who took one cow per hundred capita of cattle,  ” Nodar Chichinadze, Vice-President of AYFB said at the briefing on August 22, 2011.

However, City Hall assures that the new tariff eases life of socially-vulnerable families who consume less electricity than the well-off households. According to Koki Ionatamashvili, member of majority of City Council, new sanitary service charging system is socially fair as bills are limited to 200 thousand subscribers out of 375 thousand, and only 20-25% of subscribers face higher payments starting July when the new tariff was adopted.

“And even this high tariff is not too big, it varies between GEL5-10 not more,” he said on July 31, 2011in response to oppositionist political party Free Democrats which rallied in front of City Hall on July 31, 2011 to protest  unfair charging for sanitary services.

AYFB downplays the City Hall social-oriented excuse.

“On what social justice can we speak when a four-member family that paid GEL 10 for sanitary service before has to pay trice more now as far as this kind of family consumes about GEL 100 worth electricity monthly at average and based on new system it has to pay GEL 28-30 for cleaning service,” AYFB experts say. They suspect that the authorities who are oriented towards electricity export  try to reduce electricity consumption through this mechanism. Young financiers assess the new billing system as an outrage of economic principle as far as it is impossible to define market price of one commodity by the value of different commodity. Electricity supply and sanitary service are different kinds of services with different market price and different economic factors influence them. Therefore, to tie these two things together is an economic absurd.

Levan Kalandadze, an economic analyst, understands that Tbilisi municipality searches for the new way of charging for communal service as far as it has no effective tool to ensure bill payment at the moment but finds the newly introduced system unfair and not optimal.

“A household makes almost similar volume of trash within a year while electricity consumption depends on seasonal effect that separates these two services in core; besides, people who have no gas supply have high electricity bills in winter and they will be the biggest victims,” he told Georgian Journal.

On the other hand increase of communal service payments that is believed to happen to all households in winter due to tied sanitary service  and electricity consumption charge will instigate inflation pressure; and Kalandadze is perturbed that it may affect all people including socially vulnerable ones.

 

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