Energy cost explosion in Austria
“Wien Energie” is the electricity supplier for the Austrian capital and the surrounding federal state of Vienna. He now has massive financial problems. The opposition and other circles are asking how it could come to this. The topic is currently making waves in Austria (August 30, 2022, Süddeutsche Zeitung).
Was the city of Vienna to blame for the crisis itself?
The Viennese opposition parties ÖVP and FPÖ want to know from the Mayor of Vienna Michael Ludwig (SPÖ) whether the city has got itself into financial difficulties due to extremely high energy prices. In addition, there is the question of whether the energy supply of the city of Vienna might even be endangered. On August 30, after days of silence, Ludwig went before the press to trivialize the alleged scandal: According to Ludwig, it was a “non-event” and the city government had “nothing to hide”.
The main point is that Wien Energie, after all the supplier to two million industrial, commercial and private customers, is unlikely to be able to cope with the unusually high loads that have now been discovered and has therefore asked the federal government for help. The group referred to the enormous price jumps on the gas and electricity markets. In order to secure future energy purchases on the trading exchanges, you now need a subsidy. Initially it was supposed to be two billion euros, which turned into up to ten billion euros within a few days. The federal government should create a financial shield that companies in Germany and Switzerland would eventually get.
Why the late reporting of the difficulties at Wien Energie?
After the first meeting, Federal Finance Minister Magnus Brunner from the ÖVP reported with irritation that the City of Vienna had reported the dramatic situation to the federal government unusually late. After all, the insolvency of Wien Energie is to be feared. In the course of the week it became known bit by bit that Wien Energie had speculated with indirect futures transactions to secure prices. Experts are of the opinion that the company is taking risks that are difficult to calculate.
It was surprised by the exorbitantly rising electricity and gas prices and in the end could no longer pay the so-called margins for the futures contracts. Company and city officials, however, denied the allegations. There was no disproportionate speculation that futures contracts for hedging prices were common. The City of Vienna does not produce any electricity itself and therefore buys all of it on the exchanges. Deposits have to be paid for this, which secure futures (business for the future). Their prices unexpectedly exploded when the market got out of hand.
Financial management of the City of Vienna and the company Wien Energie
The financial needs of Wien Energie obviously offer the possibilities of the City of Vienna. Despite this, Mayor Ludwig has provided collateral for Wien Energie in the amount of 1.4 billion as part of an emergency decree. This money is no longer enough. When prices fell again slightly on August 30, City Councilor Peter Hanke gave a pleasant all-clear: Maybe you don’t need that much money after all. Nevertheless, one wants to apply to the Federal Financing Agency for a protective shield of two billion euros if prices rise again and thus increase the financial gap again.
This back and forth now persuaded the opposition to take a closer look at the financial conduct of the city council and the company Wien Energie. It turns out that the group, whose balance sheet total is only three billion euros, may have speculated on futures transactions on falling electricity prices and thus quickly maneuvered itself into bankruptcy. These speculations are likely to have started as early as 2021. The Russian war of aggression and the ensuing European energy crisis then shattered earlier price forecasts.
Criticism from almost all parties
With the exception of the SPÖ, all major parties have sharply criticized the process. A turquoise-green coalition currently governs the Austrian federal government, in Vienna the Neos are co-governing, the FPÖ is in the opposition here as well as in the federal government. Representatives of these parties expressed massive criticism of the communication of the City of Vienna. You acted negligently. On August 30, Austria’s Federal Audit Office said it would look into the matter.
Mayor Ludwig countered this announcement by saying that he would also have it checked. The ÖVP candidate Anton Mattle, who is currently campaigning for the office of Tyrolean governor, immediately let it be known that Tyrol would not pay for the mistakes of other energy suppliers. Federal Environment Minister Leonore Gewessler (Greens) reports that such problems only exist at Wien Energie, but not at other Austrian energy suppliers.
Last updated on September 5, 2022 at 9:16 am. We would like to point out that the prices displayed here may have changed in the meantime. All statements without guarantee.
Last updated on September 5, 2022 at 9:16 am. We would like to point out that the prices displayed here may have changed in the meantime. All statements without guarantee.
Last updated on September 5, 2022 at 9:16 am. We would like to point out that the prices displayed here may have changed in the meantime. All statements without guarantee.