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Austrian authorities are probing the trades that forced Vienna’s municipal power utility to seek federal guarantees for its exposure to energy markets.
Wien Energie GmbH said over the weekend it needed as much as 2 billion euros ($2 billion) to cover trading positions by noon on Tuesday because of soaring wholesale electricity prices. Officials pegged the volume of a potential bailout, including future financing needs, closer to $6 billion on Monday.
"We’re on a good path toward finding a solution,” Austrian Finance Minister Magnus Brunner said Tuesday at a briefing in Vienna. The government is demanding that Wien Energie clarify the trades leading to the margin call, he said.
The threat of European Union intervention in electricity markets throttled the crisis overnight, with benchmark power futures falling to 602 euros a megawatt hour at 12:31 p.m. in Berlin after touching a record 1,050 euros on Monday. That means Wien Energie doesn’t currently need a government backstop, the finance minister said.
Still, the government continues to work on a package in case the need arises, Brunner said.
"Continuing to believe the energy market can still continue operating without massive interventions is like the Titanic changing course from New York to Rio de Janeiro after hitting the iceberg,” said Christian Kern, Austria’s former Chancellor who formerly oversaw power trading at Verbund AG.
The city of Vienna’s finance chief, Peter Hanke, demanded late Monday in a broadcast interview on ORF public television that Austria follow other countries in establishing a fund to cover high trading-collateral requirements. German energy giant Uniper SE also sought extend a government credit line to 13 billion euros due to deteriorating liquidity.
"This isn’t about speculation,” Hanke said. "This is about a completely insane market that’s blown up.”
