THE PARLIAMENT DECIDED TO BANKRUPT THE EAC AND ITS CUSTOMERS - Filenews 28/3 by Charalambos Zakos
The Plenary Session of the Parliament proceeded, erroneously and hastily, to vote in favor of a law proposal, which is not only deemed unconstitutional, but may cause serious problems to the state, to the Electricity Authority of Cyprus, to its reserve and liquidity and, by extension, to the very robustness of the Organization and to the customers of the Authority themselves.
The logic is very simple. Electricity is a difficult equation and it certainly cannot be solved with party calculations.
In particular, the Parliament decided to compensate the excess electricity from residential photovoltaics in the context of net metering, which is currently reduced to zero every three years. This provision, however, in addition to its unconstitutionality, poses very serious risks both for the EAC and for the state and its own citizens who indirectly pay for net metering, which will be explained below. Dangers that the Parliament, unjustifiably, chose to ignore.
Based on this law, thousands of contracts are "dismantled" and the interests of the state, the more than 300,000 households that do not have photovoltaics and logic are affected.
The most paradoxical thing is that a proposal for a law on such a serious issue was submitted in the form of urgency, without any prior consultation and, above all, without any cost-benefit assessment having been made. This is a decision that, at this stage, only seems to serve pre-election expediencies.
Behind the scenes and not only, even the MPs who voted in favour of this proposal know very well that there is no way it will be signed by the President of the Republic, and the purpose, at least of those who knew that the law would definitely be referred back, seems not to have been to bankrupt the EAC, which in the end would be spared since as a regulated Authority its costs would be passed on to its customers, but to create a surrounding, shortly before the polls.
Residential PV is not intended for surplus production
This proposal suffers not only legally, but also in substance, in terms of its applicability. The reason is simple. The purpose of installing home photovoltaics has never been to produce surplus energy, but to meet energy needs, at least to a large extent, through self-consumption.
It is also paradoxical that the Parliament chooses to proceed with such legislation, at a time when as of January 1, 2026, the net metering plan has been abolished and replaced by net billing. The state correctly understood that there was a distortion in the previous system, as it provided for the offsetting of the energy channelled into the grid with the energy consumed by it, substantially burdening both EAC and its other customers financially.
In practice, the new legislation will place an even greater burden on the EAC and other consumers who do not have photovoltaics. Because they are, in essence, the ones who "subsidize" the net metering system.
To explain as simply as possible. When a residential photovoltaic system produces energy at noon and feeds it into the grid, most of the time this energy has zero value, because there is already excess production in the electricity system and there is no corresponding demand to absorb it. At the same time, during the evening hours, the EAC provides free energy to the specific household through offsetting, even though this energy costs itself, and by extension other consumers, 26 cents per kilowatt hour, at least by today's standards.
With the new legislation passed by the Parliament, this burden not only remains, but is expanding. The EAC and other consumers will not only bear the 26 cents for each kilowatt hour that will be returned to households, but also an additional 11 cents, as provided for in the proposal, as compensation for each kilowatt hour that will be written off from the surpluses every three years.
Pre-election firework
The reduction of the cost of electricity cannot be achieved through simplistic solutions that sound reasonable or pro-people. It requires knowledge of how the system works and an understanding of the electricity market. The current model is already causing malfunctions. So, instead of looking for solutions, the Parliament decided to add another problem.
Residential photovoltaic systems were never designed to produce surplus energy, but to cover, to a significant extent, the needs of the households themselves. The fact that there is overproduction is in itself a distortion. And the demand to compensate for this excess production not only does not solve the problem, but exacerbates it.
As mentioned above, the referral of the law should be considered certain. Unfortunately, MPs knew that this regulation was not going to solve problems, but to create new ones. They also knew that her referral was essentially a one-way street.
Once again, MPs and parties chose, for pre-election reasons, to put an entire semi-state organization in adventures. If there was a real intention to change the system, there was the required time, for the four years that they have been on the benches of the Parliament, so that the issue could be discussed in depth and suggestions could be submitted in the right institutional way, so that a substantial result could be obtained.
The submission of such a bill in the form of urgency is a major political and institutional foul that shows that the purpose was not the fair solution of any problems, but another application of populism, two months before the elections by MPs who operate in panic due to the polls. On the contrary, if their purpose was really this, that is, to compensate for the surplus energy of households, then the problem is even greater, since it seems that they do not understand what they voted for, nor what problems they would bring, in case – which is not going to happen – this legislation was signed by the President.
