No magic wand for electricity sector

The problems in the electricity sector will have to be addressed step by step and with a long-term goal in mind — balancing public interest with the bottom line.
TIRANA TIMES EDITORIAL
By all accounts, Albania’s energy sector has been trouble for some time. With lack of any serious investment on the state-owned assets that produce energy as well as massive losses due to theft and a dilapidated network — it is no wonder all state-owned companies involved in the production, transmission and selling of electricity are major money pits for state coffers.
Things got so bad that World Bank officials say that in early 2013, “the power sector was nearing collapse, with demand far outstripping domestic supply, years of negligible investment, staggering technical and non-technical losses, low collection rates and insolvent institutions.”
The problem is that there is no magic wand to solve the problems. They will need to be addressed step by step and with a long-term goal in mind — keeping in mind that as state-owned electricity monopolies have to weigh public interest in addition to looking at the bottom line.
The Albanian state has already started a major operation aiming to instill a new culture of prompt bill payments for electricity as well as one of fear for those who for so many years had simply stolen their power supply. This is about modernizing Albanian society. As such, a nationwide campaign to give an end to electricity theft, ending the massive culture of non-payment of bills is to be applauded.
However, the government should be careful to stay within the law (and within common sense) when enforcing the rules. A couple of issues have come up: massive sacking of public sector employees over unpaid electricity bills and a lack of a proper appeals process when the power company has clearly over-billed and overcharged customers. Some are being forced to pay large amounts of money they know they did not owe with a vague promise of a later refund.
The legality of both actions is in question and will likely be seen in future court cases that might end up costing the government (and taxpayers) again. It’s a fine line between enforcing and abusing the law at times, and authorities should be careful not to cross it.
Another thing the government needs to look at is how to address the soaring price of electricity, which is already high considering average incomes in this country. It is already higher than six other countries in Europe, including all of the Albania’s non-EU neighbors and EU member Bulgaria. (Wealthy little Iceland has cheaper electricity too.).
It is now about to be increased, yet again, even though the exact figure has not been spelled about as the government weighs public discontent with the need to keep the power companies afloat.
The Albanian prime minister is set on selling the price increase coming next year as “a restructuring of price,” arguing there will be no increase. Data shows those who consume less – about 70 percent of Albanian families – will see a jump in the amount of money they will have to pay. (Albania has had a two-tier price system that was aimed to gives incentives to conserve electricity, as the country has to buy half of what it consumes from abroad at a high market price. The government will now get rid of the tiers and charge everyone the same.)
The government knows raising the price alone won’t be a final solution. The payment base must be increased as well as irrelevant costs must be trimmed, all of which are goals the government seems eager to pursue.
To address the drain, authorities must act quickly to also plug grid losses. Technical losses due to the dilapidated grid remained almost unchanged at 37 percent of distribution network losses and they must be addressed just like the theft, which so far has made up about two-thirds of distribution losses.