“Krone” analysis – Wien Energie: You don’t speculate with tax money!


Despite all the rescue attempts and appeasements of the SPÖ: the law of gravity counts on the stock exchanges. This also applies to Wien Energie and all other companies with public participation and local authorities trying the financial world. The pattern is always the same. At some point things go wrong, and it’s not the fault of unsuspecting politicians and officials, but of “evil financial sharks”, advisers and “unforeseen” events. A classification.

According to the first estimates, Wien Energie, like many others, tried to earn a small amount on the power exchange in order to distribute the profits. For example, through a budget contribution to Wiener Stadtwerke or the city of Vienna. That has been going well for years and that is why SPÖ finance municipal councilor Peter Hanke keeps talking about the successful business operations of recent years.

Wien Energie is part of the speculation
But suddenly the term ‘margin call’ pops up: Simply put, a deposit that an investor – in this case Wien Energie – must provide as soon as he wants to do business on the electricity market. But: you only get such a margin call on futures exchanges or so-called OTC contracts (off-exchange trades) if it goes against the investor.

In this regard, according to the assessment of leading experts, Wien Energie should also have so-called short positions on the EPEX (European Electricity Exchange). Simply put, this means nothing more than that Wien Energie has also purchased and sold electricity on a large scale to other market parties and sooner or later speculates with it.

Delivery order means “buy”
Without this speculative element, Wien Energie would have no margin calls in the current situation. After all, the company produces far less electricity in its own plants than it sells to its end customers, so it must buy net – not sell. So the supply order is “buy” but there will still be overhangs here and there that may need to be sold in the future. And of course Wien Energie also has to provide securities for electricity purchases. Ultimately, prices may fall and the company must be able to afford the high forward rates.

Again and again the raw awakening: Salzburg, Hypo & Co.
So there are many indications that we are dealing with the same risk attitude as in the financial scandal in Salzburg or at Hypo Alpe Adria: speculating for a good cause to fatten the balance sheets, and that simply by using the owner’s guarantee.

The stupid thing: Unfortunately, this company’s risk is often unlimited, hence Hanke’s generous “leeway” in the “ZiB 2” interview. If prices continue to rise, the whole thing will become a bottomless pit. And that has been happening for a few days.

How were these deals even possible?
To do this kind of business, you need capital. Lots of capital. The owner, ie the city of Vienna, has always generously provided the financial safety net. But that is exactly what has become too hot after the payments of two times 700 million euros, which were not reported to the city council by means of an emergency decree. That is why the city of Vienna now passes the ball to the federal government, which advocates security of supply.

What dangers are now looming?
If the positions are not closed and prices continue to rise, then you can say “good night” in the truest sense of the word – the risk in these positions is not only theoretically unlimited. This also explains the hourly demand growth rates and the associated demands on the federal government.

A rather tricky situation: if the contracts are closed, the loss is realized, ie it has to be paid out. As the contracts roll out, the risk increases – and usually with no cap.

What are the ways to get out of misery?
But if electricity prices plummet as a result of the planned EU measures – an electricity blackout with EU Commission President Ursula von der Leyen is scheduled for 9 September – and Wien Energie dives through it, Wien Energie could even make a huge profit. However, if the positions are closed in a panic and the EU regulates electricity prices, the city of Vienna will be the one to lose, but at least the risk related to the current loss is limited.

Moral of the story: you don’t speculate with taxpayers’ money. But none of the politicians or officials will have known anything in the end, they just blindly trusted the professionals and the advisers and are now bitterly disappointed. Sense of responsibility: none.

Source: Krone


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