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'The supply is secured': Vienna to audit energy firm after price shock

Amanda Previdelli
Amanda Previdelli - [email protected]
'The supply is secured': Vienna to audit energy firm after price shock
Vienna at night - most of the city's energy is supplied by Wien Energie (Copyright: @Johannes Zinner / Wiener Linien)

Vienna's Mayor Michael Ludwig (SPÖ) has spoken out about the financial crisis hitting the state-run energy company Wien Energie. Here's what the authorities say.

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Austrian City of Vienna Mayor Michael Ludwig (SPÖ) began a press conference this Tuesday by ensuring the population that the energy supply is secured.

"There is nothing to hide. The supply for the two million customers of Wien Energie was never endangered and will always be guaranteed. That's the most important thing to me", he said.

Ludwig was forced to call the press conference after Wien Energie, the energy supplier owned by the City of Vienna, announced it was in financial troubles and needed cash as energy prices rose worldwide.

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Despite reiterating it is not "insolvent or bankrupt", the company did say it would need more money to pay off mandatory security measures that "increased unexpectedly" last Friday.

The sudden financial emergency had Austrian authorities calling for a better review of the state company. So this Tuesday, the mayor announced there would be a special audit by the City Audit Office in Vienna and that "external experts" had also been called in.

READ ALSO: EXPLAINED: Why is Wien Energie asking for €6 billion from the Austrian government?

The city government also announced two credit lines (a type of loan) for Wien Energie worth €700 million each, which should work as a "protective umbrella" for the company against the effects of price increases. Ludwig added that Germany had also taken similar measures to protect its gas companies.

'There is no speculation at Wien Energie'

The general director of Wiener Stadtwerke, the parent company of Wien Energie, Peter Weinelt, was also at the press conference. He went into details about the company's finances and reiterated several times that there was no financial speculation at the state company.

Instead, he explained that "extreme price increases last week led to short-term liquidity peaks".

Wien Energy is getting €800 million back in deposits

As The Local reported yesterday, Wien Energie deals in the energy market with purchases and sales years in advance, looking to ensure some price stability for its consumers. However, as prices exploded, the "security deposits" ("almost like a Kaution", Weinelt explained. using the German word for a deposit) also rose short-term, leading to the financial emergency.

According to the director, these security deposits are essential to remove the risks of these trading operations. They are a cost, but they get returned to the company.

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READ ALSO: Austria looking to cut energy bills in old residential buildings

Wien Energie on Tuesday said: "Since yesterday, the price of electricity has fallen again by around 23 percent and the price of gas by 13 percent". With that, deposits to ensure that transactions are safe also go down - and the company gets some of its money back.

"Today, Wien Energie is getting back security deposits amounting to around €800 million," it added.

Weinelt also said the short notice cash need was because "a Black Friday on the stock exchange is not foreseeable to anyone". So now, Wien Energie has applied for a loan of €2 billion to be "on the safe side" incase there is "another crazy day".

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"They don't need it at the moment, but that could change quickly. That's why there was cooperation with the federal government", Vienna's Finance Councillor Peter Hanke (SPÖ) said.

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