DIn view of the exploding costs for electricity and gas, the municipal utilities in Germany are warning of widespread insolvency on the part of customers and bankruptcies in their own ranks. “Until now, the payment defaults have been well below one percent of sales from delivered quantities, that’s manageable,” said the general manager of the Association of Municipal Enterprises (VKU), Ingbert Liebing, of the Reuters news agency. “But if we came up with five to ten percent or even threatened 15 or 20, then that could be threatening for the public utilities.” The VKU represents the interests of more than 1,500 companies, including mostly public utilities, with a turnover of around 123 billion Euro.
“We can already see that the situation is getting more tense. Just a few months ago, we recognized the risks on the horizon and said we must prepare for them. But now we’re finding that certain issues, liquidity issues, are becoming more acute,” Liebing explained. The Stadtwerke are systemically important in total. “Of course we want to prevent a wave of insolvencies, that’s our top priority.”
The energy industry is in turmoil. Gas supply cuts in Russia have sent prices through the roof in recent months. Large gas importers such as Uniper or Leipzig-based VNG have to be supported with billions because they have to cover Russia’s losses with high losses on the expensive spot market.
Gas prices have increased tenfold
But the “second row”, the municipal utilities and regional suppliers, are also sounding the alarm. “If you now have to pay ten or twelve times as much for gas purchases as was the case in the past, then that poses enormous financial challenges for the municipal utilities, which first have to buy before they can sell,” explained Liebing . In addition, higher security deposits are now required not only for trading on the stock exchange, but also outside of direct business (OTC), where most public utilities are active.
If municipal utilities needed their entire liquidity and their entire credit line for trading, there would be no more scope for investments in the energy transition, said the VKU expert. The KFW aid program launched by the federal government, worth EUR 100 billion, only helps those who trade on the stock exchange. It must be improved. It is possible that the 100 billion euros will not be enough if the program is extended to off-exchange trading. “We need an understanding between the federal and state governments regarding the liquidity problems of the municipal utilities and the development of a rescue package.”