Compensation for damage caused by power surges (Malta, Parliamentary Ombudsman)

11 August 2010, Valletta. The Parliamentary Ombudsman publised a report dealing with Malta's national electricity producer, Enemalta Corporation, which is refusing to compensate clients that suffered damages consequent to electricity power surges.

The Ombudsman explains that this is one of a number of complaints received, concerning compensation from Enemalta for damages sustained as a result of power cuts, mostly to household electrical appliances and electronic equipment. In this case, when power was restored following a power blackout in June 2010, the surge was so overpowering that it melted half of the circuit cable of complainant’s residence welding it to the piping system. Repairing the damage involved considerable expense because immediate action entailed breaking up the tile works or bypassing to install a new cable. When complainant requested some form of compensation for this damage, he was informed by Enemalta that the Corporation was unable to accept liability for any damage because “that power cut on that date was totally beyond our control”. Enemalta maintains that it is disclaiming any liability “in accordance with Enemalta’s Act Section 14”.

Section 14 states:

 "With respect to the supply of electrical energy by Enemalta, the following provisions shall have effect:

(a) Enemalta may reduce as it thinks fit the quantity of energy supplied to any consumer, if, by reason of any unforeseen circumstances beyond the control of the Corporation, it appears that the supply of electrical energy generated is insufficient to enable the full quantity to be conveniently supplied;

(b) where the quantity of energy supplied has been reduced as aforesaid no liability shall be incurred by Enemalta in respect of any loss or damage caused by such reduction;

(c) Enemalta shall not be liable for any damage to person or property or for any cessation of the supply of energy which may be due to unavoidable accident, fair wear and tear or overloading due to unauthorised connection of apparatus, or to the reasonable requirements of the electrical system, or to the defects in any electrical installation not provided by the Corporation.”

On the above-quoted section 14, the Ombudsman held that "Nothing in this Section exempts the Corporation from liability in the case of damages that occur as a result of electricity being supplied to a consumer. It is presumed that the Corporation has full control on the manner in which the supply of electricity is restored and that its transmission mechanisms and cables are properly maintained and capable of ensuring a smooth and stable supply of electric current. In this respect the legislator did not consider it appropriate to interfere in the general provisions of law that regulate other contracts of service. The restrictive interpretation that should be given to Section 14 does not allow that it be extended to apply to cases like those of complainant and others presently under review."

During the same enquiry, the Ombudsman recommended that the Corporation sets up an independent board to examine cases where damages are incurred as a result of power surges. He also recommended that the Corporation considers the position at EU law. The Corporation reacted by citing Directive 2009/72/EC (concerning common rules for the internal market in electricity), which according to the same Corporation was satisifed by the creation of a system of compulsory arbitration and eliminating the 'forum shopping' that existed prior.

The Ombudsman on the other hand focussed on art.3 of the Directive: 'Member States shall ensure that an independent mechanism, such as an Energy Ombudsman or a Consumer Body, is in place for an efficient treatment of complaints and out of court dispute settlements' . The Ombudsman concluded that the current arrangement, forcing people to arbitration, did not satisfy this requirement because this was equivalent to going to court and did not amount to an out-of-court settlement. He recommended that, while it was not necessary to set up yet another mechanism of redress, the expertise of the present regulator i.e. the Malta Resources Authority, could be utilised to determine whether or not a claim for compensation is justified, and in case of persistent disagreement on the amount to be paid, the consumer and the Corporation should accept to take the matter to voluntary arbitration.

To read the full report click here