High-Level Review on Enemalta’s Planning and Investment in the Local Distribution Network

Auditor General Charles Deguara today presented the review in caption to the Speaker of the House of Representatives, Dr Anġlu Farrugia. This audit sought to determine the extent to which Enemalta’s planning and investment in the local electricity distribution network were conducive to a robust system that can meet the current as well as future demand for electricity in Malta. Seeing that the power outages experienced in the summer of 2023 were primarily due to faults in the national high voltage (HV) distribution network, this report also includes an analysis of this HV network’s performance between 2014 and 2023.

Audit findings show that the 2023 reported outages were due to widespread faults throughout the network rather than emanating from a single point of failure. With Enemalta (being Malta’s electricity distribution system operator – DSO) citing sustained peak temperatures and an increase in peak demands as the main reasons behind these faults, NAO mapped out the progression of these two cited factors, as well as other indicators such as actual demands and GDP per capita, to identify related trends across the scoped ten-year period. While meteorological statistics confirm that the situation that manifested itself last summer during a unique protracted period of elevated temperature was the highest within the scoped period, as was indeed the case across various other European countries, this exercise showed that all the analysed factors have been on an upward trajectory throughout the period under review.

On the other hand, statistics show that capital expenditure invested in the HV network during the scoped period experienced a downward trend. This contrasts with the above-mentioned indicators, as well as with the fact that investments in the low-voltage network and the installation of new electricity meters were on the increase. This review also shows that the DSO's actual annual expenditure on the HV network during the scoped period was significantly lower than the annual allocated capital budgets. For fairness’ sake, however, it is acknowledged that Enemalta experienced significant operational challenges, hampering its ability to execute planned projects and works, even if these would have been budgeted for. These issues included contractor availability and the sourcing of materials (such as high-voltage cables).

Network development plans did not fulfill all the benchmarked criteria set by NAO, most of which emanate from pertinent legislation and Enemalta’s own network code. In addition, this office observed that reinforcement proposals prepared by the DSO’s technical staff are based on what the entity can realistically carry out. This review further highlighted that Enemalta was not in line with its legal obligation to publish such network development plans and submit them to the Regulator for Energy and Water Services, with the latter refraining from imposing associated penalties.

As attested by the prolonged outages experienced in 2023, the DSO’s historic investments in the HV network were not entirely sufficient to mitigate the prevailing socio-economic and climatic circumstances. While this office notes that prior to the summer 2023 occurrences, the local distribution network experienced a relatively stable period, the NAO positively notes that the significant capital investment in the electricity distribution network after the summer 2023 occurrences indicates that the government acknowledges the strategic importance of addressing the risks of prolonged outages in its infrastructure.

These issues, along with others, are comprehensively presented in the audit report, along with this office’s recommendations. This report, in its entirety, may be accessed through the NAO website, www.nao.gov.mt, as well as on the NAO Facebook page, www.facebook.com/NAOMalta.