Resources Ministry replies for energy regulator

The Malta Resources Authority is comfortable with the quality of the data used by its auditors to verify the energy tariffs established by Enemalta, the Ministry for Resources and Rural Affairs said in reply to questions sent by The Times to the regulator.

The questions were about criticism levelled by leading economist Edward Scicluna who, in an article last Tuesday, criticised it for failing its legal obligations to protect the consumer.

Ironically, the replies seem to justify Prof. Scicluna's concerns regarding the independence of the regulator seeing that the replies to the questions sent to the regulator's chief executive officer came through an e-mail sent by the Resources Ministry spokesman. There was nothing in the e-mail or in the replies to indicate that they came from the CEO.

The replies said that on the basis of the testing and review work undertaken so far the MRA was not aware of any "discrepancies, uncertainties, inaccuracies or unrealistic assumptions" that would undermine the reliability of the data used in the report.

Prof. Scicluna argued in his article that both the KPMG report commissioned by Enemalta and the Deloitte report commissioned by the MRA based their respective exercises on a number of "questionable" assumptions and unaudited financial data furnished by the corporation.

The MRA/Resources Ministry partially refuted the economist's argument that the regulator did not have the necessary expertise to establish the level of tariffs that should apply in a monopolistic market.

The MRA had "the expertise on matters and areas on which it has taken a position so far".

It was also admitted that, on the other outstanding issues listed in the Deloitte report, the regulator was getting professional support from people with the appropriate technical expertise.

The Return on Capital Employed at 6.61 per cent computed by Enemalta's auditors, and which would be recouped from consumers, was justified by the MRA/Resources Ministry.

"This does not appear to be excessive and is obtained from acceptable sources. However, as indicated in our consultant's report, further work is being done to establish a policy for dealing with this in future reviews," the e-mail said.

The e-mail also indicated that the MRA had approved the backdating of the tariffs to October 1.

In his article, Prof. Scicluna accused the MRA of being "conspicuous by its absence" and having "no clue" about what its legal obligations are. He insisted the authority failed to protect consumers.

He questioned the MRA's priorities and its lack of competence to determine the level of tariffs that should apply in the prevailing monopolistic scenario.

"If the authority does not have the necessary expertise to carry out these exercises it should state so," he said.

The MRA said yesterday evening it has informed the unions that a meeting with them will be held on January 30.

The authority said that it was holding the meeting in reaction to the letters it had received from the unions.

ksansone@timesofmalta.com