Authorities finalizing work on electricity prices

ISTANBUL

Authorities are putting the final touches on work to ease the burden of electricity bills on households and businesses.

Government officials are devising a plan with different options, expected to be submitted to the cabinet soon.

The blueprint foresees the introduction of gradual tariffs for businesses and a possible reduction in value-added tax (VAT) in electricity prices for households.

Energy and Natural Resources Minister Fatih Dönmez is likely to make a presentation on proposals at the next cabinet meeting, scheduled for Feb. 16.

Amid mounting complaints from the public, officials started to look for ways as to how to reduce electricity prices.

Last month, a gradual tariff was introduced for households’ consumption, and the Energy Market Regulatory Authority (EPDK) set the limit in the two-stage electricity billing system as 150 kilowatt-hours.

Under the new tariffs, consumption up to 150 kilowatt-hours (kWh) a month would cost 1.37 Turkish Liras per kWh, and consumption above this limit would cost 2.06 liras, corresponding to 50 percent, and 127 percent increases in electricity prices. However, the limit was later lifted to 210 kWh.

According to the plans under consideration, the VAT rate in electricity prices, which currently stands at 18 percent, could be slashed, but only for households, not all users, such as businesses.

The government recently lowered the VAT on basic food from 8 percent to one percent in a bid to rein in consumer price inflation, which rose by 11 percent on a monthly basis in January, bringing the annual increase to 48.9 percent.

The plan also includes a proposal to increase the 210-kWh limit in the gradual electricity tariff to further up to 240kWh.

Officials are also working on possible steps to be taken for businesses. At the start of the year, electricity prices for industrial users and businesses also increased by around 126 percent and 128 percent, respectively.

The blueprint proposes a gradual electric tariff for businesses like the one currently in effect for households. The target is to provide some relief particularly to small-sized businesses. Different alternatives will be presented to the cabinet, according to the officials.

As part of this proposal, associations, foundations and Alevi houses of worship (cemevi) will discontinue to be classified as business establishments.

Energy prices rose by 27.4 percent in January for an annual increase of 76.3 percent, according to the latest data.