Malta has been exempted from an EU plan to slash peak-hour power consumption, agreed upon by member states on Friday in an effort to bring down sky-high energy prices.

The EU deal, reached during a meeting in Brussels led by the Czech EU Council presidency, aims to mitigate energy costs sent soaring by Russia's war in Ukraine and as the northern hemisphere winter looms. 

It will allow EU member states to tax the windfall profits of energy giants – a plan announced by EU Commission President Ursula von der Leyen some weeks ago – and use that money to provide direct aid to energy consumers.

It also commits member states to cut power usage by “at least five per cent” during peak hours.

Malta and Cyprus exempted

Malta, however, will not have to apply that measure, with the final text exempting Malta and Cyprus from it due to their “distinct characteristics”. Both countries are in large part cut off from mainland Europe’s energy markets, with only the undersea interconnector linking Malta to it. 

Furthermore, they rely intensely on electricity, even using power to generate water. 

The country imports roughly 20 per cent of its electricity from Europe through the interconnector. 

The EU has also previously exempted Malta from a plan to slash gas demand by 15 per cent, for similar reasons. 

Energy Minister Miriam Dalli described the exemption as a major win, noting that slashing energy consumption during peak hours would have been problematic for business operators and consumers and put spokes in the country’s economic growth.

Missing from the announced measures, however, was an idea espoused by 15 EU countries -- among them Malta, France, Spain, Italy, Greece and Poland -- for a price cap on imported gas.

Dalli acknowledged that shortcoming, saying Malta now wanted to see further proposals from the European Commission on how to control gas prices.

 The EU ministers' agreement came a day after Germany -- the bloc's export powerhouse that had long been dependent on Russian gas -- announced a €200-billion energy aid package to shield its consumers.

Other EU countries have deployed smaller-scale national measures with the same aim, but several demanded European-level concertation, in part to clamp down on energy-buying competition between EU peers.

Push for gas price cap

The energy crisis, which had been brewing even before the war in Ukraine, took on greater magnitude when Russia severely curtailed natural gas supplies to Europe in retaliation for Western sanctions over its invasion.

Energy prices in the EU are calculated on the basis of the most expensive source, in this case gas, which has gone up around fivefold over the past year.

Several EU ministers went into the meeting wanting a gas price cap to be discussed.

"There is big disappointment that in the proposal that is on the table there is nothing about gas prices," Polish Climate Minister Anna Moskwa said. 

"This maximum price for gas would be supported by the majority of European countries" and "cannot be ignored," she said.

But Germany resisted, fearing that a price cap would simply see liquified natural gas (LNG) shipments avoid Europe and sent to more lucrative markets, worsening the supply crunch for the EU.

The European Commission shares those concerns, although EU energy commissioner Kadri Simson said there needed to be a way to target just Russian gas -- which arrives in the EU by pipeline, not in LNG form.

"We have to remove the incentives that are there for Russia to manipulate these volumes, and the answer is clear: We have to offer a price cap for all Russian gas."

European Commissioner for Energy Kadri Simson addresses journalists before the meeting. Photo: AFP

She and other participants, including Irish Climate Minister Eamon Ryan, said that, for a gas price cap to be effective other major buyers such as Japan and South Korea needed to cooperate with the EU.

German opposition

German Economy Minister Robert Habeck said that, while Berlin was open to the idea of a price cap on Russian gas "as a sanction", the broader application being called for was "treacherous".

He insisted that "we need to bring down consumption" as a priority, and "we must not allow insufficient gas to reach Europe".

While the measures agreed Friday were steps in the right direction, the Bruegel think tank in Brussels had warned in an analysis they were "not sufficient".

"A more comprehensive plan needs to ensure that all countries bring forward every available supply-side flexibility, make real efforts to reduce gas and electricity demand, keep their energy markets open and pool demand to get a better deal from external gas suppliers," it said.

Further EU measures were likely to be discussed at an informal summit in Prague next week, and another EU energy ministers' meeting on October 11 and 12.

"We need to go further on these issues and come to a rapid conclusion," French Energy Minister Agnes Pannier-Runacher said.