Energy regulation generally focuses on efficient and safe generation and consumption of energy from various sources from fossil fuels, through nuclear power, to renewables. Legislation in this field also deals in detail with network matters, including interconnection of and access to energy networks, thus ensuring that the market regulated is a competitive one, offering reliable energy supplies at reasonable prices and with minimum environmental impact. The regulation of the energy sector is thus intimately connected with environmental laws, particularly those on climate change. This section deals with the infrastructural aspects of energy regulation as enshrined in a number of instruments at both EU level and in Malta.

Until the 1990s, most of the national electricity and natural gas markets were still monopolised; legislation in this field therefore commenced by opening these markets progressively to competition. As in other network sectors, regulation aimed to:

  • establish independent regulators to oversee the sector;
  • identify non-competitive parts of the market and impose access obligations thereon;
  • remove barriers preventing alternative suppliers from importing or producing energy;
  • allow customers to change their supplier as they wished.

The first liberalisation directives (Directives 96/92/EC concerning common rules for the internal market in electricity and 98/30/EC on common rules for the internal market in natural gas) were replaced by a second set of directives in 2003 and then again in 2009 (Directive on Electricity – 2009/72/EC) and (Directive on Gas – 2009/73/EC), bringing in additional measures and a further step towards liberalisation with each amendment. In February 2015 the European Commission published a Communication on the Energy Union Package entitled ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy’.

Additional legislative instruments supplement these two main directives, for example: Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency aims to guarantee fair trading practices on European energy markets; Directive 2005/89/EC establishes measures aimed at safeguarding the security of electricity supply, to ensure the proper functioning of the internal market for electricity, an adequate level of interconnection between Member States, an adequate level of generation capacity, and balance between supply and demand; Regulation (EU) No 994/2010 concerning measures to safeguard the security of gas supply was adopted in 2010 to strengthen prevention and crisis response mechanisms; Directive 2009/119/EC obliges Member States to maintain minimum oil stocks; Decision 1364/2006/EC lays down guidelines for trans-European energy networks that identify projects of common interest and priority projects among trans-European electricity and gas networks.

Electricity

The provisions of the electricity directives were transposed into National Law by means of the Electricity Market Regulations (‘EMR’) (Chapter 423.22 of the Laws of Malta). Under the said regulations, generation of electricity, supply of electricity, construction of new generation capacity and any of the activities of a Distribution System Operator (DSO) can only be done under a licence issued by the regulatory authority, namely the Malta Resources Authority (‘MRA’). The EMR is supplemented by subsidiary legislation, including regulations dealing with electricity supply, promotion of energy from renewable energy sources, tariffs, photovoltaics and more.

Malta has been granted a number of significant derogations from the directives in relation to requirements relating to the unbundling of transmission systems and the unbundling of DSOs, third party access, market opening and reciprocity. Additionally, Article 13(1) of the EMR specifically states that Enemalta plc is designated DSO in Malta, thus retaining a monopoly in this field. This means that Enemalta plc is subject to a number of obligations relating, inter alia, to the operation, maintenance and development of a secure, reliable and efficient electricity distribution system in Malta and for continuity of electricity supply. It must also provide those generating electricity from renewable sources with efficient access to, and use of, the distribution system at a reasonable cost.

A connection to the European electricity grid was finalised in 2014 and began operating in 2015. The interconnector, a 120km-long high-voltage alternating current system, is linked to the Terna substation at the southern Italian city of Ragusa and is capable of transmitting up to 200MW of electrical power in either direction, thus providing Malta the opportunity both to purchase electricity from Europe as well as to potentially sell excess capacity.

 

Gas

The provisions of the electricity directives were transposed into National Law by the Natural Gas Market Regulations (‘NGMR’) (Chapter 423.22 of the Laws of Malta), which regulate the distribution, supply and storage of natural gas, including liquefied natural gas (‘LNG’), biogas and gas from biomass. In accordance with the NGMR, authorisation by the MRA is required for the construction and/or operation of natural gas facilities, pipelines and associated equipment and also for the supply of natural gas. Malta imports all of its liquefied petroleum gas (LPG) while Enemalta is permitted to distribute it. The management and operation of Enemalta Corporation’s (EC’s) LPG activities has been transferred to Gasco Energy Ltd (“Gasco”).

Malta has no gas transmission networks and has therefore obtained a derogation from the requirements relating to the unbundling of transmission systems and Transmission System Operators (TSOs). The NGMR have imposed non-discrimination and transparency obligations upon DSOs vis-à-vis other DSOs, LNG system operators, and storage system operators, as well as the obligation to transport natural gas securely and efficiently at approved reasonable tariffs. New major gas infrastructure such as interconnectors, LNG and storage facilities could be exempted by the MRA for a defined period of time from the requirement to provide third parties with access to the distribution system or storage facilities, subject to a number of conditions.

The NGMR require natural gas undertakings which own storage or LNG facilities to designate one or more storage and LNG system operators to operate, maintain and develop secure, reliable and efficient storage and/or LNG facilities. Furthermore, the operator cannot discriminate between system users or classes of system users.

The government has proposed a gas pipeline between Malta and Sicily which will be able to carry methane gas in both directions. The government states that this will enable Malta to be connected to the great international gas pipeline network, the Trans Adriatic Pipeline (TAP), and also eventually to carry gas imports from Libya and Algeria.

Equinox is one of a few firms in Malta with expertise in the energy sector. Together with our affiliated advisory firm, we have provided numerous services in this field to clients in both the public and private sector both in Malta and in Europe.

Equinox offers the following services:

  • advising the Public Sector on Energy Policy and Regulation;
  • carrying out Studies and Research on Energy Regulation, Policy and Implementation;
  • advising the Private Sector on Compliance and Licensing;
  • advising clients undertaking major Projects in Renewable Energy and Procurement of Energy Infrastructure;
  • assisting clients in procedural matters relating to obtainment of Licences or Permits;
  • assisting clients in discussions with the MRA and other relevant authorities;
  • litigation relating to the Energy Sector;
  • drafting of any Commercial Agreements required, including Confidentiality and Non-Disclosure Agreements;
  • Malta Company Incorporation and Ancillary Services;
  • provision of Tax Advice as necessary;
  • assistance in the event of a Merger / Acquisition;
  • assistance in Employment Matters;
  • assistance in Data Protection Matters; and
  • registration of Trademarks and Domain Names.

For more information on Energy Law and Policy, please contact us on info@equinoxlegal.com

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