Since the extreme increase in energy prices as a result of the Ukraine war, utility companies have had to deposit huge sums of money as collateral when purchasing on the energy market. With the recent easing of prices, this expense has not decreased, but actually increased. The municipal utilities are demanding more state aid.
The association of municipal companies has asked the federal government for a protective shield for municipal utilities and more speed in the energy transition. Shortly before a two-day association conference in Berlin, Managing Director Ingbert Liebing and President Ulf Kampfer declared that public utilities and energy suppliers, as buyers of gas who are mostly active in over-the-counter trading, would have to deposit higher security deposits in futures trading. “That ties up liquidity, which in turn makes trade more difficult or blocks it. And in the end, this liquidity is also lacking for necessary investments in the energy transition.”
With long-term energy procurement strategies, municipal utilities would have dampened and stretched prices and thus protected consumers from worse price increases. “Now prices on the markets are falling, but they are still double or triple the pre-crisis level. It sounds paradoxical, but with the falling prices the default risks for sellers increase.” That is why the federal government must put up a protective shield for municipal utilities as a precaution.
“You don’t need any new money for that,” according to the VKU leadership. The existing “margining” program for exchange trading should be expanded. That would calm trade and could have a price-dampening effect. Companies have to deposit collateral for trading in gas, electricity and emission certificates on futures exchanges. After the outbreak of the Ukraine war, the requirements for these security deposits, known as margins, were tightened because prices fluctuated sharply. The federal government recently extended financial aid for energy traders by one year until the end of 2023.
The Association of Municipal Enterprises (VKU) presented a 10-point plan. In addition to the demand for a protective shield for municipal utilities, this includes the fact that the expansion of green electricity from wind and sun is extremely accelerated. This requires further simplifications in licensing law, as well as more staff in the responsible authorities and the digitization of procedures. For the early use of more hydrogen, there should be no strict separation of gas and hydrogen networks.
