20.05.2022
Temporary liquidity support for power supply
Economic analysis with regard to the «Federal law on subsidiary financial assistance for the rescue of system-critical companies of the electricity industry» on behalf of Axpo.
On 18 May 2022, the Swiss Federal Council passed the legislation and the dispatch on «Subsidiary financial assistance for the rescue of system-critical companies of the electricity industry». The bill regulates federal loans to electricity companies which may face short-term liquidity constraints due to extreme price distortions on the stock exchanges.
Within the framework of the present economic analysis, incentive-compatible, balanced liquidity support measures are approved. This is a pre-emptive measure which should prevent Swiss energy companies being excluded from the stock exchange in the energy market due to liquidity constraints. Ultimately the structure of liquidity support measures must focus on avoiding increasing systemic risk. In this regard, liquidity support measures should be available to all electricity companies active on the stock exchange. They should guarantee that all electricity companies can hedge their production on the stock exchange in spite of extraordinary market developments.
The current crisis is caused by extreme price increases and fluctuations, which could intensify further as a result of the war in the Ukraine. In contrast to the UBS rescue the energy companies are profitable, precisely because of the high energy prices. It is highly improbable that the electricity companies will use the liquidity support measures or, in the event of utilisation, that they cannot be repaid. It is therefore important that the conditions for the liquidity support measure are proportionate.
Das Wichtigste in Kürze (65.9 KB) Link to the publication On 18 May 2022, the Swiss Federal Council passed the legislation and the dispatch on «Subsidiary financial assistance for the rescue of system-critical companies of the electricity industry». The bill regulates federal loans to electricity companies which may face short-term liquidity constraints due to extreme price distortions on the stock exchanges.
Within the framework of the present economic analysis, incentive-compatible, balanced liquidity support measures are approved. This is a pre-emptive measure which should prevent Swiss energy companies being excluded from the stock exchange in the energy market due to liquidity constraints. Ultimately the structure of liquidity support measures must focus on avoiding increasing systemic risk. In this regard, liquidity support measures should be available to all electricity companies active on the stock exchange. They should guarantee that all electricity companies can hedge their production on the stock exchange in spite of extraordinary market developments.
The current crisis is caused by extreme price increases and fluctuations, which could intensify further as a result of the war in the Ukraine. In contrast to the UBS rescue the energy companies are profitable, precisely because of the high energy prices. It is highly improbable that the electricity companies will use the liquidity support measures or, in the event of utilisation, that they cannot be repaid. It is therefore important that the conditions for the liquidity support measure are proportionate.