# Austria grants credit line to Vienna utility squeezed by power price surge
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-31
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Austria offers 2 billion euro credit line to Vienna power firm amid market price surge
Meta Description: Vienna's power firm, Wien Energie, received a 2 billion euro credit line from Austria to cover futures margins amidst surging market prices. Learn more
URL: https://financedigest.com/austria-grants-credit-line-to-vienna-utility-squeezed-by-power-price-surgehtml

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VIENNA (Reuters) – Austria’s government on Wednesday granted a 2 billion euro ($2 billion) credit line to the City of Vienna for the power firm it owns, Wien Energie, after the company asked for help covering its futures margins because of surging market prices.

A leap in prices following Russia’s invasion of Ukraine has increased the amount companies must hold in their accounts to keep trading power futures.

As it does not produce all the electricity it needs, Wien Energie relies on trading the market to help supply its roughly two million customers in and around Vienna.

We as the federal government are making a 2 [billion euro credit](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse billion lifeline offers limited respite to global banks") line available to the City of Vienna, which can be drawn on very flexibly, within two hours, should the need arise,” Finance Minister Magnus Brunner told a news conference.

The city’s [finance chief](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") said on Tuesday there was no immediate need to use the credit line since futures prices have eased following a peak above 1,000 euros on European power markets on Monday.

On Wednesday, [German wholesale contracts](https://www.financedigest.com/german-gdp-contracted-by-0-4-in-the-fourth-quarter.html "German GDP contracted by 0.4% in the fourth quarter") for delivery in 2023 were trading around 645 euros per megawatt hour, still far above levels of between 100 and 150 euros in January.

The liquidity shortage, which became public at the weekend, has [become a political battleground](https://www.financedigest.com/why-payments-have-become-the-next-battleground-for-banks.html "Why payments have become the next battleground for banks").

The [Social Democrats have led the city government](https://www.financedigest.com/the-impact-of-environmental-social-and-governance-esg-investing.html "The Impact of Environmental, Social, and Governance (ESG) Investing") for decades, earning the capital the nickname “Red Vienna. They have a clear [lead in national polls](https://www.financedigest.com/frances-macron-consolidates-poll-lead-after-tv-clash.html "France’s Macron consolidates poll lead after TV clash") while the conservative-led national government is increasingly unpopular.

The conservatives have suggested Wien Energie engaged in speculation on [futures markets](https://www.financedigest.com/heightened-interest-in-global-cuisines-to-brighten-the-expansion-prospects-of-herbs-and-spices-manufacturers-industry-predicted-to-rise-at-3-6-cagr-future-market-insights-inc.html "Heightened Interest in Global Cuisines to Brighten the Expansion Prospects of Herbs and Spices Manufacturers: Industry Predicted to Rise at 3.6% CAGR | Future Market Insights Inc. "), which it denies.

The contract for the [credit line states the source](https://www.financedigest.com/credit-suisse-offers-higher-deposit-rates-in-asia-to-woo-the-wealthy-sources.html "Credit Suisse offers higher deposit rates in Asia to woo the wealthy – sources") of the liquidity problems must quickly be identified since they “cannot at first sight be explained by market problems alone,” Wolfgang Peschorn, the federal government’s top lawyer, told the news conference.

($1 = 0.9993 euros)

(Reporting by Francois Murphy; editing by Jason Neely and Barbara Lewis)


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