Vienna Power Company Requests Government Loans, Energy Crisis Unfolds
Vienna’s main power company, Wien Energie, is requesting government backing. Has the firm been risky with its capital or is the energy crisis too close for comfort?
Aug. 30 2022, Published 12:50 p.m. ET
The main power company in Vienna, Austria is requesting government loan backing to continue its operations amid the energy crisis. Austria’s Finance Minister accused the company, Wien Energie, of speculative trades resulting in lost capital.
Has the Vienna power firm been risky with its money or is the energy crisis too close for comfort?
Wien Energie seeks government support to fill financial gaps.
Wien Energie requested billions of euros from the Austrian government to fill financial gaps and continue operations.
The firm is the leading provider of electricity and gas in Vienna. As European power costs hit record highs, the European Union promised an “emergency intervention and a structural reform” of the energy markets. However, Wien Energie says it needs capital stat. With higher costs, the company says it must continue to increase its margin deposits for energy trading.
Parent company Wiener Stadtwerke owns Wien Energie. Austria’s conservative finance minister Magnus Brunner alleged Wien Energie is pulling some sort of scheme to get the money, likely after making speculative trades with its margin deposits. Wien Energie is reportedly seeking about 2 billion euros in federal support, though that could change.
Is Vienna’s main power company making speculative trades?
Brunner said about Wien Energie, "The interesting thing is that, since the German issue keeps coming up, Wien Energie would probably not have been able to avail itself of this German umbrella scheme because speculation is not allowed at all.”
In this, Brunner suggests the Vienna power company made speculative energy futures trades with its margin deposits and is seeking financial respite from the government.
Wien Energie vehemently denies this. Peter Weinelt, deputy chief at Wiener Stadtwerke, said simply, "There is no speculation at Wien Energie.”
The reality of whether or not Wien Energie made speculative futures trades with their margin deposits remains unclear, but it’s possible that the soaring energy prices alone are enough to send Wien Energie in the red. Nearly 1.9 million people populate Vienna, and the loss of its primary energy services would be detrimental.
The energy crisis is impacting power companies — will loans be enough?
Vienna’s Wien Energie isn’t the only company seeking assistance. Germany’s Uniper requested an additional 4 billion euros be added to an existing 9 billion euro credit line by state-owned bank KfW. Uniper cited its need for “short-term liquidity” as the reason for the request.
The crisis is a result of energy prices soaring to 343 euros per megawatt hour, up by nearly a third over the course of about a week.
At Uniper, CEO Klaus-Dieter Maubach announced, “We are working at full speed with the German government on a permanent solution to this emergency as otherwise Uniper will no longer be able to [fulfill] its system-critical function for Germany and Europe.”
For Vienna’s Wien Energie and the city's citizens, the outcome could be the same. Whatever the case, the EU and its member nations must remain hyper-focused on the quickly changing energy markets to ensure operational sustainability moving forward.