Verbund CEO says volatility is the 'new normal' on power and gas markets

VERBUND AG

12/10/2023 11:40

By Alexandra Schwarz-Goerlich
       VIENNA, Oct 12 (Reuters) - European countries must
expect volatile power and gas markets in the long run even after
the current conflicts in Ukraine and the Middle East have faded,
the head of Austrian hydropower heavyweight Verbund  VERB.VI 
told Reuters in an interview.
    The escalating conflict between Israel and Hamas in Gaza has
sent oil prices higher, and while gas and power prices have
fallen far back from peaks reached after Russia's invasion of
Ukraine, they remain higher on average than before the war. 
    "Turbulence on energy markets is the new normal," Verbund
CEO Michael Strugl said. His company is one of the largest
producers of electricity from hydropower in Europe, with around
130 hydropower plants in Austria and the neighbouring southern
German state of Bavaria.
    "Our assessment is that we will no longer see the price
level we had in the past (before the war in Ukraine)," Strugl
said, declining to provide more specific price forecasts.
    In the past year daily wholesale gas futures prices
 TRNLTTFMc1 , which are closely linked to power prices, have on
average been twice as high as they were in the year before the
war in Ukraine. 
    Most of this year they have hovered between 20 and 50 euros
($21.23-$53.09) per megawatt hour (MWh). Until 2020 they rarely
went above 30.
    Russia's invasion of Ukraine last year sent wholesale gas
and power prices soaring and governments scrambling to cushion
the large knock-on blow to consumers.
    A consumer rights group acting at the request of the
Economics Ministry won a case on appeal against Verbund
challenging a price increase in spring of last year. 
    Verbund has now appealed that ruling to the Austrian Supreme
Court. Should Verbund lose, around 350,000 customers could be
entitled to a refund.
    "We urgently need a legal basis that holds up in court,"
Strugl said, adding that the company had set aside 100 million
euros to cover the potential costs. 
  ($1 = 0.9416 euros)

 (Writing by Francois Murphy; Editing by Jan Harvey)
 ((francois.murphy@thomsonreuters.com; +43 1 2530 165 010;))