VIENNA – The Austrian government on Wednesday granted a 2 billion euro ($2 billion) line of credit to the city of Vienna for the electricity company it owns, Wien Energie, after the company applied for l helping to cover its forward margins due to soaring market prices.
A price spike following Russia’s invasion of Ukraine has increased the amount companies need to hold in their accounts to continue trading power futures.
As it does not produce all the electricity it needs, Wien Energie relies on market trading to help supply its approximately two million customers in and around Vienna.
“As the federal government, we are providing the city of Vienna with a credit line of 2 billion euros, which can be used very flexibly, within two hours, if needed,” said Finance Minister Magnus Brunner at a press conference.
The city’s finance chief said on Tuesday there was no immediate need to use the credit line as futures prices fell after peaking above 1,000 euros in European markets. electricity on Monday.
On Wednesday, German wholesale contracts for delivery in 2023 were trading around 645 euros per megawatt hour, still well above levels between 100 and 150 euros in January.
The cash crunch, made public over the weekend, has become a political battleground.
Social Democrats ruled the city government for decades, earning the capital the nickname “Red Vienna”. They have a clear lead in national polls as the Conservative-led national government grows increasingly unpopular.
The conservatives have suggested that Wien Energie engages in speculation in the futures markets, which it denies.
The contract for the line of credit stipulates that the source of the liquidity problems must be quickly identified because they “cannot at first sight be explained by market problems alone”, said Wolfgang Peschorn, the federal government’s main lawyer, during the press conference.
($1 = 0.9993 euros)