Malta exempted from EU emergency rules to cut electricity demand as crisis looms

EU energy ministers agree windfall tax on profits of energy companies and targets to cut electricity demand as the winter season approaches • Malta and Cyprus exempted from electricity cuts

Malta and Cyprus are exempted from cuts in electricity demand as EU energy ministers agree emergency energy rules
Malta and Cyprus are exempted from cuts in electricity demand as EU energy ministers agree emergency energy rules

Malta has been exempted from emergency rules for cuts on electricity demand as European energy ministers today agreed on action to reduce energy prices.

The common measures to address the energy crisis include a voluntary reduction target of 10% of electricity consumption and a mandatory reduction of 5% in peak hours.

Ministers also agreed to apply a windfall tax on the profits of energy companies and the redistribution of surplus revenues to final customers. A cap on electricity prices was also agreed but no deal was struck on a gas price cap.

Malta and Cyprus negotiated exemptions given their particular situations.

Member states will identify 10% of their peak hours between 1 December 2022 and 31 March 2023 during which they will reduce the demand. They will be free to choose the appropriate measures to reduce consumption for both targets in this period.

Energy Minister Miriam Dalli negotiated Malta’s exemption during the extraordinary Energy Council held in Brussels.

“This derogation was important for Malta, as a country that is heavily dependent on electricity for all its needs,” she said, arguing that any mandatory reduction in electricity demand would have a negative impact on families and businesses. 

The proposals presented by the European Commission were aimed at addressing the energy crisis hitting Europe as a result of the Russian invasion of Ukraine. Russia’s decision to cut gas supplies to Europe as payback for sanctions imposed on it has forced prices up and the problem is set to escalate further in the winter months when gas consumption increases.

Dalli said despite the derogation Malta obtained, the government is committed to encourage and incentivise the public sector, private industry and households to reduce energy waste and increase energy efficiency.

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.

The minister 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 risk livelihoods,” she said. 

Malta is one of the 15 member states pushing for a cap on gas prices to lower electricity prices derived from gas-generated production.