Malta has successfully negotiated a derogation from a European Commission proposal that imposes mandatory reductions in electricity consumption on member states.

In a statement saying it was “defending” the island’s national interest, the government celebrated the exemption, obtained by Energy Minister Miriam Dalli following negotiations in Brussels today.

“Any mandatory reduction in electricity demand would have a negative impact on families and businesses,” the government said, noting this is the third derogation obtained in this sector.

Saying that “due to our island peculiarities, Malta should not carry this additional burden,” the island was able to get out of the mandatory EU-wide reduction plan.

“Despite Malta’s successes in obtaining these derogations, the government remains committed to encourage and incentivise the public sector, the private sector, and households to reduce energy waste and increase their energy efficiency,” it said.

Dalli said she was concerned that the European Commission’s proposed measures would not alleviate the problem for all member states.

The European Commission proposal stipulates a 10% mandatory reduction in electricity consumption and other reductions when demand is at its peak.

During peak demand, the proposal specifies that consumption has to be 5% of gross electricity compared to the previous five years. This regulation would require the issuing of tenders by the private sector to compete in reducing their consumption while seeking compensation for the business lost during the hours when consumption has to be reduced.

The entity that seeks the lowest amount of compensation would win the tender and have to reduce consumption to equal to the amount declared in the tendering process. Such a measure is expected to affect business competitiveness negatively and could also result in lower productivity which would affect employment.

Addressing the Council meeting, Dalli stressed the importance that only those measures that can directly lead to a reduction in electricity prices should be implemented.

Malta imports around 20% of its electricity from the interconnector with Sicily. However, those prices are amongst the highest in the EU.

Dalli emphasised the need to analyse gas consumption reduction measures properly.

“We need to heed our peoples’ concerns, families, businesses and industries. As a Union, we cannot jeopardise the competitiveness of the whole European economy that would result in lower investments and risking livelihoods,” she said.

Malta is one of the 15 EU member states pushing for a cap on gas prices to lower electricity prices derived from gas-generated production. The idea is to cap prices dynamically, as opposed to a fixed capping, which would be tied to non-EU indexes so that while the EU would remain attractive for LNG producers, it would eliminate prevailing market speculation.