Compensation doesn’t address the problem

The government cannot simply pick and choose whom to compensate in what circumstances, only on the basis of what makes it look good politically.

Cartoon by Mark Scicluna
Cartoon by Mark Scicluna

This week’s total nationwide blackout has once again highlighted Malta’s vulnerability in almost every crucial aspect of its infrastructure.

Damage to a single cable at the Marsa power station last Tuesday caused a suspension of all power to every part of the island for several hours. Many localities were also left without water, as a result of the WSC’s near-total reliance on electricity for water production and distribution. In some localities it took more than a day for normal provision to be restored.

Even the airport had to be briefly closed on Tuesday, which raises separate issues regarding national security, border control and repercussions on the tourism sector.

Taken together, these factors underscore an uncomfortable reality which, though widely known, is rarely discussed in any detail. The vulnerability of Malta’s precarious energy sector is starting to take its toll on the country’s credibility. There have been nine similar total power outages in the past 14 years, and the inescapable impression is that our country can be turned on or off almost literally at the flick of a switch.

This is a structural problem, yet there is undeniably a political dimension to it as well. While energy has been an electoral issue for decades, the political parties have fought their battles mainly on individual details – corruption scandals, choice of fuel, technology, etc. – while failing to take in a bigger picture that also involves serious problems with the distribution network. Subsequent governments have tried improving the infrastructure, but there hasn’t been the necessary investment to address the broader infrastructural problems. Even today we remain reliant on boilers which should have been scrapped four years ago.

Regular outages like last Tuesday’s – together with their knock-on effects – are only a small part of the price we are now paying for this policy’s failure. Apart from the cost in damage, labour, and other economic effects of a total power outage, Malta also pays a daily fine to the European Commission for operating the Marsa power station past its expiry date in 2011. Even with a new energy policy in place, Malta still faces possible EU court action as Marsa cannot be fully decommissioned until 2017 at the earliest.

Faced with this situation, the response by the government has been baffling, to say the least. Consumers have been told they may be compensated for damage caused by the outage: though the statement stressed that this would be a one-off action and would not set a precedent for the future.

This is odd, because Enemalta is already legally liable to pay for damages caused by its own service. In fact there is a process in place for businesses and households to sue for damages through the Malta Resources Authority. The Electricity Regulations (Subsidiary Legislation 423.33) provide the following ‘Measures on consumer protection for household customers’ in Schedule III:

“(a) Customers have a right to a contract with their electricity service provider that specifies [inter alia]:… (vi) any compensation and the refund arrangements which apply if contracted service quality levels are not met; and (vii) the method of initiating procedures for settlement of disputes…”

The only existing legal exemption is a disclaimer to the effect that Enemalta is not liable for circumstances over which it has no control. Yet the circumstances in this case include the fact that Enemalta is operating a dangerously obsolete power station in breach of EU rules. It can hardly claim to have ‘no control’ over its own infrastructure.

Technically, then, the government is offering to give that which it is actually legally obliged to give anyway. This is disingenuous at best; but the real problem is that the offer fails to address the root cause of the issue at stake.

For one thing, compensation for damage, on a one-off basis, does not compensate for the lack of peace of mind caused by Malta’s severely flawed energy regime. It would be more helpful at this stage for the government to lay down a clear crisis-management strategy to counter the next blackout’s effects – at the very least, to ensure that the airport and hospitals remain operational – while working double time to enact its electoral promise on an energy overhaul.

Secondly, legal liability and compensation in case of damage are not ‘special favours’ to be granted by governments if and when they choose to be generous. They are actually consumer rights enshrined at law, and form part of our obligations as an EU member state. Yet the government’s own response to the blackout indicates that it is unaware of this fact or its implications. And by offering one-off compensation, it may well have opened a can of worms.

Energy issues are hardly the only area where compensation comes into the picture. The state of the roads causes far more damage to vehicles, yet compensation is never considered in such cases. If we are to start discussing the issue of government liability, surely we must also discuss the same principle across the full spectrum of situations in which government actions, entities or situations may ‘cause damage’.

Simply put: the government cannot simply pick and choose whom to compensate in what circumstances, only on the basis of what makes it look good politically.

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