Absent again – the MRA

Some weeks ago we had a power-cut. It was a long power-cut but one which was easily dismissed as something for which there could be no guarantee that it will not happen again. Enemalta’s Chairman also dismissed the idea that Enemalta should pay any compensation.

In the majority, the press reviews stopped there. The matter seemed to have been nothing out of the ordinary and the discussion stopped there. If it had not been for the MEP Professor Scicluna who had tried to quantify the damage to the economy, we would probably have only read a small paragraph about it, unless somebody didn’t try to label the whole thing as sabotage!

For me there was something amiss. The Malta Resource Authority (MRA) was conspicuous by its absence and silence. I was surprised for two reasons that the regulator in this area kept silent. First, it is its responsibility to ensure that the provider supplies a continuous service. Second, it is its responsibility to ensure that the Enemalta Corporation compensates the consumer.

Let’s consider the first responsibility. In this time and age it is simply not on that a country goes through a complete blackout for several hours. It is MRA’s responsibility to set standards. Several years ago, when I was leading the Consumers’ Association, I wrote to the Chairman of MRA asking if the Authority had set up any standards re power cuts. Needless to say, the MRA never answered, in spite of several reminders. To date I cannot find any reference of any standards set in this area.

The MRA should immediately set standards as this is basic. Once these standards are set, the provider is then bound to meet those standards. If these are not met, then those running Enemalta should be responsible. The argument then crops up. If Enemalta is to pay up, aren’t the consumers themselves who will be paying for the lack of management? At first glance and as things stand, yes. But is that the way it should be?

If people are accountable, the matter should take a different turn. If the people who are running Enemalta, its management and the Board of Directors become accountable then they should pay for their inefficiencies. We, consumers, are paying them good money to run the Corporation efficiently. If they are inefficient they should pay for their inefficiency.

There seems to be two versions, though not necessarily conflicting, for the power-cut, if one dismisses the "series of coincidences" harboured by the Prime Minister.

The first version is that put forward by the Chairman of Enemalta who gave a detailed technical explanation the day after the power-cut. He is reported to have said that a boiler at the Marsa power station tripped in the morning, having a domino effect on the remaining boilers that could not take the added load. The situation was exasperated by the fact that two boilers were undergoing a scheduled overhaul and another two had been subject to maintenance.

If one adheres to this version, a number of questions arise. Who took the decision to overhaul and maintain four boilers at the same time? I am sure that such a decision is not taken lightly and that the top management was aware. If this is so, who is going to assume the responsibility?

There is however, another version. In spite that it was known to management that the capacity of the present system could not meet the increasing demand, no new investment was made. Who is going to carry this responsibility? If the present management and Board of Directors found such a situation, are the previous ones going to assume the responsibility of the present situation? Who is going to pay for these inefficiencies?

And this brings us to the second point. The fact that the Enemalta’s Chairman dismissed any compensation does not mean that nothing can be done. Those who suffered damages can sue Enemalta.

But should we take this approach? Litigation is both expensive and lengthy. Thus it works in favour of those economically strong – in this case Enemalta. Surely if we adopt this approach, the consumer will come out the loser.

What about the Malta Resource Authority? Why can’t it facilitate matters by investigating each payment request and then decide whether compensation should be paid or not? Why can’t it take its responsibilities more seriously? Why does it need to be evident through its inactivity?

The MRA also needs to explain another matter which arose just before the June European Parliament elections. It was reported that Minister Gatt was having second thoughts about his decision to introduce the high utility rates last October. But what about the MRA, which finally approved these rates? Is it still maintaining that it took the right stand when it approved the rates proposed by Government?

In order to justify its position, it commissioned an accounting report. Does it still maintain that this report was valid? And if it still maintains that, can it inform us on what basis it accepted the new rates which became applicable since April? Did it base its calculations on the same principles as on the previous occasion? Why did it not publish a report to show the basis for the rates applicable in April?

Could it be that even on this occasion the MRA just followed the Government who found it expedient to reduce the tariffs at that time? And if it did that, was it acting as a Regulator should?

The Regulatory system was set up to ensure that the consumers would absorb the benefits of the market system. As most of our Regulators are failing in their responsibility, the consumer is finding itself in a worse situation – it is paying higher prices on the market and paying for useless Regulators. It is high time that we tackle this problem

In fact this is something that the new MEPs should take up while in Brussels. I believe that it is high time that DG Competition should take a deep look at our regulatory system. This is especially needed as there is no local political will to ensure that the regulators are truly independent both of the Government and the producers, and act in the interests of both competition and the consumer.

Published in Maltastar.com on 15^th July 2009