Doubts cast on PL’s plan to fix electricity price and timescale

Labour’s plan to fix the price of electricity for 10 years has been questioned by a former chairman of Enemalta . Engineer Robert Ghirlando said long-term agreements for the sale of electricity normally included mechanisms to cater for fluctuations in production costs. “Power purchase agreements do not normally work on a fixed-price formula but they would have built-in mechanisms that cater for fluctuations such as the price of fuel,” Prof. Ghirlando said. The PL’s tariff-reduction plan is based on private sector investment in a new power station run on gas. The company will operate the plant and sell electricity to Enemalta, with Labour saying the price will be fixed for 10 years. Different models are used internationally when drafting power purchase agreements like the one proposed by the PL. An industry expert, who asked not to be named, said a fixed price was a possibility but the operator is likely to include in the formula any future risks and price fluctuations to anticipate losses. This will probably up the price at which the electricity will be sold to Enemalta, he added. Finance Minister Tonio Fenech put forward both these scenarios when squaring off with PL candidate...