Wien Energie’s business activities were not problematic and the Austrian government’s bailout of the Vienna utility was justified and necessary due to “extremely” unpredictable developments, independent auditors have found.
Amid the current energy crisis, the near collapse of Wien Energie, which supplies electricity, gas and district heating to the capital, has been politically blamed on mismanagement. The utility had experienced a massive cash crunch after soaring cash prepayment obligations associated with trading activity.
The company said in late August that it would need billions of dollars in support, raising concerns that misguided market bets had backfired. Now independent auditors in Austria have found the company to be without fault for its dire situation.
The audit was a prerequisite for the EUR 2 billion credit lines provided by the Austrian government. There was no indication of speculation or inadequate risk management, auditors found.
The company’s market operations were “no alternative” because giving them up would have meant undue exposure to price shocks. Utilities typically sell their products years in advance in so-called futures markets for planning security.
There were many controls in the business to manage risk, the auditors said. Wien Energie reacted very early to price developments on the market. In the end, whatever was done, the August 26 liquidity effect could not be predictable or avoidable, the auditors concluded.
Across Europe, public services that serve towns and cities are beginning to decline. Wien Energie, one of the most prominent cases, was a warning to policy makers. Germany has started to bail out energy companies with a fund endowed with more than 60 billion euros.
[Edited by Zoran Radosavljevic]