Electricity Prices Set to Rise Again in Cyprus

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Electricity prices in Cyprus are set to rise again by 1.9%, despite an increase of 1.5% already imposed at the beginning of the year.
 

The 1.5% rise at the beginning of the year is part of a three-stage plan to increase the prices by 4.5% over a 3 year period. Further 1.5% rises are planned for 2011 and 2012.
 

The 1.9% increase is a result of “pollution credits” which is a fine by the EU for failing to achieve the low level of pollution set by the EU over a given number of years.
 

Last year the Electricity Authority of Cyprus (EAC) paid €12m in pollution credits. In June 2009, the Cyprus Energy Regulatory Authority (CERA) approved the EAC’s proposal for a 3% rise in electricity prices to cover the costs of paying for extra pollution credits. The increase was never introduced due to a public backlash in the wake of the economic crisis.
 

Now an agreement has been reached between the EAC, CERA and the Ministries of Finance and Commerce to reduce the “pollution tax” from 3% to 1.9%, the implementation of which is expected soon.
  

The 1.9% rise is likely to apply for 7 years, as opposed to a few years planned for the 3% increase. This means that the lower rate will still apply when the EAC starts reducing its carbon footprint through the use of natural gas in electricity production.
  
  
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