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Increasingly high electricity rates on Cyprus are causing serious financial difficulties for expats

Statistics released earlier this month revealed that medium-sized households in Cyprus paid an average electricity price of 0.1731 euros per kilowatt-hour in 2011 the highest rate in the European Union, and around 26 per cent more than the EU average.

That price, however, is believed to have been calculated before an additional 6.96 per cent levy which was introduced to compensate for the effects of an explosion which destroyed the island's main power station at Vasiliko in July, and further increases including a two per cent hike in VAT to 17 per cent in March have been announced this year.

Expats who moved to the island in search of a cheaper life under the sun say they are increasingly struggling to pay their bills, a situation made worse by the worldwide economic slowdown. Although Cyprus has weathered the storm better than many European economies, the island's unemployment rate is at around 9.3 per cent, with those expats who depend on a sterling income, such as pensioners, having been severely hit by poor exchange rates over the past few years.

Two Facebook groups set up against the growing tariffs have attracted over 7,000 members, and are filled with expats and locals alike sharing stories of how they have been forced to stop using virtually all their appliances to avoid going into the red.

Briton Penelope Hearns, who works for the news portal CyprusExpat , says she knows of several couples, living in one-bedroom apartments, who have been handed bills of €560-plus for just one month and bad feeling, she says, she is mounting.

“Expats and local Cypriots are coming together, and exchanging information via Facebook, and have asked the EU to look into the matter. Soon protests will be staged. Consumers feel they are being ripped off, and have had enough,” she said.

Anger is being chiefly directed towards main electricity provider the Electricity Authority of Cyprus (EAC), which is accused by many of essentially operating a monopoly.

“The semi-government owned EAC is the sole supplier of electricity to the people of Cyprus, and as such are in a position to effectively hold the people to ransom,” said Jas James, who set up the Facebook group One Voice Facebook Group Against the Electricity Authority of Cyprus with two fellow expats. "The EAC can charge whatever they want, they can apply any extra charges they want to without fear of losing business, so the people must either pay what is dictated to them or simply get cut off. This is not acceptable.”

Another Briton with a home in Cyprus, who did not want to be named, said that it was time for action to be taken. “In my view electricity is not a luxury but a basic commodity for everyday life. I think the current levy issued after the Vasiliko disaster should be removed immediately, since the problem was not caused by consumers…and the government should immediately remove VAT altogether from electricity bills, or at least reduce VAT charges to the lowest possible band, which is currently five per cent.

"Finally the Cypriot government should investigate and deal with the many different ways in which consumers' money is being wasted by the EAC, and commence a competitive tendering process to open up the electricity supply market.”

The EAC claims that electric power generation on Cyprus is more expensive due to the island's small size (meaning a lack of economies of sale) geographical isolation from other grids, and because it is dependent on petroleum rather than alternatives like natural gas.

Petroleum is not only more expensive but, because it is less environmentally-friendly, can result in large fines being imposed from the EU which are then passed onto consumers.

In an explanatory leaflet which it provided for Telegraph Expat when asked for a comment, the EAC said that describing it as a monopoly was unfair, because "the fact that EAC has no competition is most likely due to the fact that natural gas is not yet available for power" something which, it added, was "not the fault of EAC, but the state".

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Expats struggle with high cost of electricity in Cyprus