In an emergency, the Federal Council intends to provide electricity companies with up to CHF 10 billion. What you need to know.
With a rescue parachute, the power supply should be secured if necessary. But bourgeois parties and electricity companies are skeptical.
If there is a conflagration on the energy markets, the Federal Council wants to set up a rescue package for the electricity industry. This afternoon, Energy Minister Simonetta Sommaruga will be presenting the message that will then be discussed in Parliament in the summer. But what does the Federal Council’s legislative proposal look like? And how was it received by the electricity industry and the political parties? Answers to the most important questions about the rescue parachute.
Why does the electricity industry need a rescue package?
Prices have been exploding on the energy markets since the end of last year. This historically high level of volatility is making electricity trading very nervous. Because in order to protect themselves against failures, the trading places require companies to deposit more and more money. As a result, the supplier Alpiq got into financial difficulties shortly before Christmas and approached the Federal Electricity Commission (Elcom) with a request for a temporary liquidity subsidy.
The Alpiq company withdrew the request. Despite this, the Federal Council fears that a conflagration on the energy markets, for example if the supply of Russian gas is stopped, could result in the uncontrolled failure of one or more large companies. If this scenario occurs, it would probably affect the power supply in Switzerland. In order to avert this danger, Energy Minister Simonetta Sommaruga wants to set up a rescue package for the electricity industry.
How does the federal government intend to help companies financially?
Energy Minister Sommaruga emphasizes that the federal financial aid should only be on a subsidiary basis. First, the electricity companies would have to do everything possible to ensure the necessary liquidity, stressed Sommaruga. Only when all reasonable measures, which would also include shareholders and creditors, have been exhausted, should companies receive help from the federal government in the form of guarantees and loans.
According to the previous situation, which companies can put themselves under the rescue package?
The Federal Council only wants to help the system-critical companies Axpo, Alpiq and BKW. For them, however, the rescue package is not voluntary. They are subject to the rescue package by law.
What conditions does the Federal Council want to attach to the rescue package?
In order to prevent false incentives, Energy Minister Sommaruga wants to make the conditions for the protective shield as unattractive as possible. If the companies come under the new regime, they first have to pay a lump sum, regardless of whether they ever take out a federal loan. This flat rate per company should be between 10 and 15 million francs.
For the emergency loans, the federal government demands a risk premium of 20 percent of the loan amount in addition to the usual market interest rate. Companies that claim the bailout must also meet additional transparency requirements, provide collateral in the form of a pledge of shares, and they are also no longer allowed to distribute dividends.
How was the proposed bailout received?
The draft law fell through in the consultation process. In the electricity industry, people do not want to fundamentally close themselves to the idea of a rescue package. However, the conditions for the help are considered to be far too strict. The Association of Swiss Electricity Companies, for example, describes the emergency measures proposed by the Confederation as disproportionate, prejudicial and unprecedented in scope.
Criticism also comes from the three companies concerned: They think that the Federal Council’s proposal overshoots the target by far. There is also great skepticism in the parties. Only the SP supported Federal Councilor Sommaruga’s proposal. The FDP, on the other hand, called for an alternative solution on a voluntary basis that not only takes into account the three systemically important electricity producers, but all of them.
What happens now?
Federal Councilor Sommaruga will present a revised version of the rescue package this afternoon. Your timetable provides for the new law to be passed by the two councils by emergency decision this summer.
However, it is almost impossible for her to succeed. The office of the National Council, which includes the parliamentary group leaders of the parties in addition to the Council Presidency, put on the brakes: Last Friday, they spoke out against the rescue package being discussed in the National Council during the summer session. This means that the deal can be said goodbye in autumn at the earliest.