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Austria Pledges Billions to Utility Hit by Power-Price Jump
(Bloomberg) -- Austria promised billions of euros in financial support to Vienna’s municipal utility after the capital’s electricity and heat generator said it faces higher collateral requirements for future energy purchases.
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Wien Energie GmbH may need as much as 6 billion euros ($6 billion) to continue providing services for its 2 million clients , the Austrian Finance Ministry said in a statement Monday. The company owned by the city of Vienna may face liquidity constraints over the next days and weeks due to surging power prices, Finance Minister Magnus Brunner told public broadcaster ORF late Sunday.
The utility said it had requested credit lines to serve as collateral on existing transactions and ensure the long-term security of energy supply. It isn’t at risk of insolvency, Wien Energie said in a separate statement.
In neighboring Germany, energy giant Uniper SE said it was seeking to extend a government credit line to 13 billion euros due to deteriorating liquidity. European benchmark power prices broke through 1,000 euros for the first time on Monday as the region’s energy crisis intensifies.
READ: Uniper Seeks $13 Billion Credit Line as Energy Crisis Grows (1)
The utility serving Vienna relies on gas-fired plants to produce power and heat. Other Austrian state-owned companies, like Verbund AG, generate most of their electricity via decades-old hydropower stations.
Austrian utilities fell after the reports of financial distress. Lower Austria’s provincial utility EVN AG, whose second-biggest shareholder is Wien Energie, dropped as much as 4%. Verbund, Austria’s biggest and most valuable listed company, fell as much as 6.8%.
Wien Energie’s short-term debt jumped sixfold to 4.15 billion euros in 2021, mostly related to obligations on financial derivatives, according to the company’s annual report.
The Finance Ministry said officials were still discussing terms on the loan, which would probably be issued by the Austrian Federal Funding Agency, OeBFA.
(Adds Finance Ministry statement from second paragraph, Wien Energie in third.)
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