Without quick help, many municipal utilities are threatened with collapse – feared a domino effect

Employees of Stadtwerke Munich

Municipalities and the energy industry are demanding state aid for municipal utilities.

(Photo: dpa)

Berlin The financial situation of many municipal utilities and regional suppliers has deteriorated dramatically in recent months. Some of the companies are on the brink of collapse. The federal and state governments have recognized the problem in principle. However, according to the conviction of the municipal umbrella organizations and the energy industry, there is a lack of coherent and quickly effective concepts for rescuing the companies.

The German Association of Cities and Municipalities, the German Association of Towns and Municipalities, the Federal Association of Energy and Water Management (BDEW) and the Association of Municipal Enterprises (VKU) are therefore making a joint appeal to the heads of government of the federal states.

“We urgently encourage the state finance ministers to agree promptly with the federal government on stabilization measures for municipal utilities and other regional energy suppliers that are accessible in all federal states, and to offer help in an emergency,” says the letter to the prime ministers Handelsblatt available.

Various countries have planned or already decided on aid for municipal utilities and energy suppliers. However, there is criticism in the industry that the requirements and specifications are often rigid and hardly practicable, so that they often offer no real help in practice. The federal government, in turn, declares itself not responsible and refers to the federal states.

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The municipal umbrella organizations and the associations of the energy industry are promoting the fact that the federal states, the state development banks and the state development bank KfW take measures “that enable credit and guarantees to be granted quickly and unbureaucratically, for example via the KfW bank loans, to increase and stabilize liquidity”. . “A clear definition of the application process, an unbureaucratic grant and the designation of contact persons” are urgently needed for the companies concerned.

Associations are demanding state guarantees and hardship funds

In addition, futures trading for energy must be stabilized so that energy suppliers can offer medium-sized companies and industry, but also municipal and social institutions, longer-term energy supply contracts in the future. Credit lines, such as those made available by KfW as a hedging instrument for futures trading, are not sufficient, since their utilization impairs the companies’ ability to invest.

The initiators of the appeal are calling for state guarantees to protect against the risk of default by trading partners on the stock exchange and also in over-the-counter trading. They also doubt that the gas price brake planned by the federal government will be sufficient to protect customers from payment difficulties. Because the burden on consumers remained enormous despite the aid measures.

“The federal states should therefore take appropriate measures such as grants or hardship funds to support companies with regard to bad debts.” In order to protect municipal utilities and regional suppliers from economic collapse, the associations believe that they should be able to benefit from an insolvency moratorium in an emergency.

The public utilities have been facing immense challenges for months. They have to buy unplanned large amounts of energy at enormously high prices because more and more customers are flocking to the basic supply. At the same time, it is becoming increasingly difficult to obtain sufficient capital and security for energy procurement.

The problems that arise from this for the public utilities have direct consequences for the municipalities. Because the public utilities are not only responsible for the energy and water supply, but also often for other parts of the public service, such as garbage disposal or local public transport.

Other public services, such as the operation of swimming pools, are also often fed from the income of the municipal utility. This cross-subsidization is more and more in danger. If the local suppliers get into trouble, there would be a “threatening chain reaction and the failure of systemically important structures for the entire municipality,” according to the joint letter from the associations.

More: Utilities fear “economic meltdown”

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