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

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.

'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)

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.

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.

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”.

“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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How Austria plans to secure the food supply in the event of a blackout

The energy crisis and war in Ukraine have raised fears of blackouts in Austria this winter. While the risk is low, there are now plans in place to distribute food if the worst happens.

How Austria plans to secure the food supply in the event of a blackout

Grocery retailers in Austria have agreed on an emergency plan to secure the food supply to the nation in the event of blackout.

The agreement followed a meeting with Energy Minister Leonore Gewessler (Greens) and Agriculture Minister Norbert Totschnig (ÖVP) on Tuesday (November 29), reports ORF.

FOR MEMBERS: Energy crisis: What to do in case of a power outage in Austria

A statement released following the meeting said: “As a system-critical infrastructure, the domestic food retail trade has a social responsibility to be prepared for emergencies and to be able to ensure the basic supply of the population even in the event of a blackout.”

What is the emergency plan for Austria’s food supply?

If Austria is hit by a widespread blackout, all grocery stores will close to protect the supplies.

On the second day, supermarkets will open from 10am to 3pm, but staff will hand out bags of fresh food at the front of the shops and customers will not be allowed to enter.

This will take place at Spar, Interspar, Maximarkt, Billa, Penny, ADEG, Sutterlüty, Hofer, Lidl, Nah- und Frisch, Unimarkt and M-Preis stores.

The bags will contain ready-made food, water, non-perishable bread and canned goods. Convenience products and candles will be sold for cash. Baby items and hygiene products will be available on request.

If a blackout extends to a third day, only dry food will be distributed.

Additionally, all Austrian households are advised to have a supply of food to last for 14 days, as well as around €100 in cash per family member.

READ MORE: Who to call and what to say in an emergency in Austria

How secure is Austria’s energy supply?

Austria is a country with a stable electricity supply – with most of the power coming from hydroelectric or wind power farms.

In 2020, hydropower accounted for 55 to 67 percent of the electricity generated in the Alpine country. The leading electricity companies operate around 130 hydropower plants, especially taking advantage of its mountainous location.

According to the country’s Climate and Energy Ministry, wind power accounted for 10 percent, while solar 4 percent. In total, around 80 percent of Austria’s electricity comes from renewables.

Vienna has one of the most secure supplies worldwide, according to the independent regulatory authority E-Control. Moreover, the current figures on the subject of security of supply show that the Viennese were only affected by a power failure for just under 18 minutes a year – an improvement from 2021.

The capital is also equipped with “black start-capable power plants”, which can start up independently without outside help – thus ensuring supply even if a prolonged widespread power blackout should occur in Europe.

The situation in the rest of the country is similar. But Viennese authorities have asked the federal government to enter into talks with the federal states to develop a national emergency plan. 

Emergency preparation guidelines for the general population include keeping a flashlight with working batteries in case of a power grid malfunction, keeping a battery-powered radio in your home and even having non-perishable food and potable water in the household.

READ ALSO: Reader question: What are the chances of blackouts in Austria this winter?

Austria’s energy emergency system

Since March, shortly after Russia invaded Ukraine, Austria has been at level 1 (the early warning level) of the alert system related to energy consumption.

However, due to the aggravated situation surrounding gas deliveries, the increasing number of cases of suspected sabotage of gas pipelines to Europe and the current developments relating to the Ukraine war, an alert level (level 2) could be expected for Austria.

Level 2 is declared if the gas situation deteriorates. At this stage, businesses are encouraged to use alternatives to natural gas whenever possible. 

Level 3 – the emergency level – is activated when gas can no longer be supplied and the current demand can no longer be met. Measures for industry, such as substituting natural gas with other energies as energy control measures, are to be put in place.