Should the new and improved, gas-fired power station come to fruition and the power supply agreement which the government has struck with the consortium of companies responsible for its construction and operation go according to the original plan, the country will be looking at a 21st century version of the 1980s Deserta factory, and the economically disastrous economic model to which it belonged.Most Maltese of a certain age will remember the days when there was little choice but Deserta when it came to satisfying a chocolate craving, because of the grossly misguided, economically isolationist policy of the day: that if a product was not made in Malta, it could not be sold in Malta.Extrapolating on that nearly disastrous economic ethos, today's government is threatening to do the same thing with its commitment to purchase electricity from the new Delimara plant for the next 18 years and at a fixed price for the next five years following the inauguration of the Delimara plant.Should matters go according to that plan, the country's consumers face the prospect of being placed in a straightjacket, with fluctuations in the international price of gas, when favourable, benefitting only the producer and not the end consumer.The country would be obliged to purchase the bulk of its energy from the new Delimara plant at a higher rate than it could get elsewhere, such as from the interconnector or even the Chinese-owned BWSC power plant.Should that come to pass, there could, however, be a silver lining - solar power may be in for a boom and Malta may reach its renewable energy quota of 10 per cent of all electricity production after all, and perhaps earlier than anyone had previously envisaged.Today, there is, however, one saving grace that the country did not have back in the Deserta days: the European Union.  That is because, for better or worse, the country now has to answer to the European Commission, and perhaps ultimately the European Courts of Justice, when it comes to the protection of the Single Market and its consumers.As we report in today's issue, the granting of state guarantees for financing the construction of power stations - such as the now €360 million state guarantee that the Maltese government has given the banks financing the power station's consortium - is nothing new.  It has been done in the UK, Finland, France and elsewhere.There are, however, certain checks and balances that come into play when the Commission determines what, exactly, constitutes state aid in such scenarios.  While the European Commission is of the belief that the EU's Member States are free to determine their energy mix, when public money is committed to supporting companies, the European Commission has the duty to verify that this is done in line with EU state aid rules, which aim to preserve Single Market competition.And that is exactly what the Commission is doing at the moment with Malta's Security of Supply Agreement, which it currently has under its microscope.Earlier this week, the Energy Minister hinted that the EU may tweak the Security of Supply Agreement, without specifying what tweaks were actually under discussion, while the European Commission told our newsroom that it is in contact with Maltese authorities on this project, in particular as regards its compliance with EU state aid rules.The government and the Delimara consortium are both involved in talks with the EU over the matter, and the EU's previous practice in such cases, if applied to this particular case, could be expected to be met with resistance from the consortium, which may explain the delay in the Commission's verdict.Last October, the Commission gave the green light to a similar situation in the UK.   The Commission had assessed both a UK state guarantee covering any debt which the operator will seek to obtain on financial markets to fund the construction of a nuclear power plant - a parallel with the Maltese government's controversial €360 million state guarantee for ElectroGas - as well as the price support mechanism that ensures the operator receives stable revenue for a period of 35 years, paid for by UK consumers - again, another parallel with the Maltese government's 18-year agreement with ElectroGas.In the first case, the Commission ruled that the fee remunerating the granting of the UK's state guarantee had to be significantly increased "in order to accurately reflect the risk profile of the project," so as to benefit British tax-payers and to reduce competition distortions created by the aid. The Maltese government said this week that ElectroGas Malta has paid the government a "market-orientated" loan guarantee fee of €8.8 million on the new €360 million guarantee, and Brussels could now be seeking to have that amount raised further.As regards the price support mechanism, additional safeguards were added by the Commission, which ensured that any higher profits of the project than those expected will be shared with UK consumers and tax-payers. Two so-called "gain-share" mechanisms were put in place: the first of which will be triggered if the construction costs are lower than expected, while the second will kick into action if the overall operator's profits - in the form of a lower operational costs for one reason or another - are attained.In the UK example, if such extra profits materialise all the gains will be shared between the plant operator and the public entity - the latter through a decrease of the price paid by the public entity to the operator per unit of electricity generated.In this scenario, it is difficult to imagine that the consortium does not have any red lines in its negotiations and this could very well explain why the government is describing the Security of Supply Agreement as a 'draft' agreement. It is, however, a little late in the day, considering all the electoral pledges that have been made for such obvious details to be ironed out.  If the Commission imposes conditions that are unacceptable to the consortium, there will be two options left: to scrap the project altogether, which will leave the government to face the inevitable political fallout, or to turn the private project into a state project, which carries its own serious political risks.