Shortly after the end of the reporting period, the Austrian Federal Government presented the key points of the eco-social tax reform on 3 October 2021; the reform is due to be phased in gradually starting in 2022. In addition to tax relief, this will mean greening of the tax system in the form of CO2 pricing for energy applications in buildings and transport and for companies outside emissions trading from mid-2022; this in turn will lead to increases in the cost of, for example, non-outsourced logistics and also the price of gas.
Against the backdrop of the ongoing COVID-19 pandemic and imponderables such as supply chain issues, there are limits to the reliability of forecasts on the economic development for the fiscal year 2021/2022. Having said this, experts expect the economy in the Euro area to continue to develop dynamically, while inflation rates will be significantly higher than in the past.
At the end of the 2020/2021 fiscal year, prices on the international energy markets showed massive increases with records being broken almost daily. After prices reached their previous peaks at the beginning of October, a phase of high volatility and erratic price changes, which is still ongoing, followed. A highly volatile sideways movement of wholesale prices is expected to continue in the six months of winter. An easing of the situation can be expected subsequently, parallel to an increase in supply or a dip in demand for gas and coal. A return to the favourable energy prices seen immediately after the start of the COVID-19 pandemic is not to be expected. The development on the commodity markets provides an essential basis for pricing in the electricity and gas sectors. If the high level continues in the long term, Energie AG's risk on the procurement side will grow.
In addition to the demanding situation on the procurement markets, the general energy policy conditions – especially the ambitious targets for the expansion of renewable energies and CO2 reduction – will also pose a major challenge for Energie AG in the 2021/2022 fiscal year.
Vertrieb GmbH intends to keep electricity and gas retail prices for existing private and business customers with standard products (with the exception of float prices) and fibre-optic internet constant, until at least 1 January 2023. Due to the dramatic increase in procurement costs, the prices for new customers in the area of electricity and gas had to be adjusted to market levels as of 16 November 2021.
Work on the Ebensee pumped-storage power plant project will push forward intensively in the coming fiscal year. The focus of the ongoing preparatory project is detailed planning and tender planning. Energie AG's thermal electricity production capacities continue to be highly significant for providing grid reserve management. The Timelkam CCGT power plant is also available to the transmission system operator for congestion management in the 2021/2022 fiscal year.
In the course of the comprehensive strategy project with eww ag, the heat supply to both households and businesses in the Wels area will be significantly expanded and condensed from 2021 onwards. In addition, a second large transport pipeline will be built in the north of the city in 2021 and 2022, while two state-of-the-art hot water generators will be built to secure the district heating supply. This will significantly increase heat extraction from the Wels waste incineration plant. Umwelt Service GmbH will start supplying heat to eww ag from 2022.
Beyond this, Energie AG will be taking over operational management of the new Traunleiten hydropower plant and other small power plants from 2022. Energie AG will therefore manage the entire Traun power plant chain in the future; this will allow for further optimisation in the interaction of the generation plants, leading to a significant increase in efficiency in the production of green electricity.
The general regulatory conditions for the Grid Segment can continue to be assessed as stable in the electricity sector for the fiscal year. In terms of the general economic environment for gas, the decision for the year 2020 is still outstanding; having said this, it can be assumed that the parameters based on the decisions taken for the years 2018 and 2019 will be applied throughout the third regulatory period. One special focus will be the cost determination procedure for gas for the fourth regulatory period (probably from 1 January 2023), which was initiated in September 2021. In addition to current projects in the gas and electricity grids, other key areas of focus will be the implementation of the requirements of the Renewable Energy Expansion Act package announced on 27 July 2021 and preparations for certification in line with EN ISO 27001.
In the Waste Management Segment, prices for paper and metal recyclables are expected to flatten off in the fiscal year 2021/2022 after the sharp rise in the reporting period. In addition to cooperation with external partners in the context of recycling used plastics, further considerations are underway on reestablishing a plastic sorting facility.
In the Czech Republic, the upcoming energy transition with the phase-out of coal-based energy generation and a revamped climate policy holds numerous opportunities for Energie AG's Czech Republic Segment. This will require examining EU funding programmes in the area of energy efficiency, and the development projects for heat supply, water supply and waste water management. The current developments on the electricity and gas price market, which are dramatic in terms of costs, are being closely monitored, especially since these drastic price increases are putting suppliers, operators and customers under massive pressure with an outcome that cannot be predicted. In terms of services provided to municipalities and cities, there are no signs of a downturn in order volumes so far.
In the new fiscal year, the intent is to combine the Energie AG's capabilities in FTTH expansion with those of the Province of Upper Austria. This is designed to create optimal conditions for the roll-out of fibre optics in the entire region of Upper Austria. In the course of this, the intent is to spin off Energie AG's FTTH fibre-optic network into a joint entity. The focus for the fiscal year 2021/2022 in the fibre optics sector is therefore on the operational realisation of the spin-off and the organisational and process-related realignment of the remaining areas. Particularly in the remaining fibre-optic business customer sector, it is important to secure income in an increasingly competitive environment.
The focus of business activities in the 2021/2022 fiscal year will again continue to be on the reliable performance of all system-critical tasks, especially guaranteeing security of supply for customers. In addition to the long-term orientation of all services to customer needs, the focuses of digitalisation, innovation, regionality and financial stability will remain as important strategic objectives. The energy transition and circular economy, but also the turnaround in mobility, will require the industry to assume appropriate responsibility in the coming years on the one hand, but on the other, they also offer new opportunities that Energie AG seeks to leverage in a proactive manner.
Against the backdrop of currently highly volatile price developments on the international energy markets, and assuming a continued economic recovery, a satisfactory development of earnings is expected for the 2021/2022 fiscal year, although this probably will be below the very good results of the reporting period.
Linz, 03 December 2021
The Management Board of Energie AG Oberösterreich
Chief Executive Officer
DDr. Werner Steinecker MBA
Chairman of the Management Board
CEO
Dr. Andreas Kolar
Member of the Management Board
CFO
Dipl.-Ing. Stefan Stallinger MBA
Member of the Management Board
COO