It will be exciting to see how the share prices of Austria’s leading electricity companies develop today, Monday. The statement by Chancellor Karl Nehammer (VP) about an announced examination of a profit skimming due to the high electricity prices in the past week had sent the listings of Verbund and EVN down and reduced their market value by 5.4 billion euros. The public sector holds a direct and indirect stake of around 80 percent in both groups.
There were both positive and negative reactions to this initiative. Economist Christian Kimmich from the Institute for Higher Studies (IHS) said on Sunday that “moderate profit skimming shouldn’t be a problem”. As long as it is very clear that the profit skimming is derived from this unique, extraordinary situation, such an intervention can be carried out.
However, there could be legal problems if partially state-owned companies are treated differently than purely private ones, Kimmich pointed out.
He also sees opportunities to intervene in electricity pricing via the “merit order process”: “It’s not a market in free competition anyway.” The price of electricity is currently determined by the most expensive power plant, currently mostly a gas power plant. This means that the high price of gas is having an impact on electricity. WKÖ President Harald Mahrer also advocated a temporary change to this principle of electricity pricing.
Source: Nachrichten
