With a view to economic development in the fiscal year 2022/2023, forecasts by economic research institutes are pessimistic across the board due to the sharp rise in prices and limited consumer purchasing power. In any case, the IHS, WIFO and IMF expect the economy to drop very sharply in 2023, forecasting GDP growth for Austria in the range of +0.2% to +1.0% with inflation between +5.1% and +6.8%. In the euro zone, economic growth of +0.3% to +2.3% is expected for 2023.
Shortly after the end of the reporting period, the National Emission Allowance Trading Act (NEHG) 2022 implementing the eco-social tax reform came into force on 1 October 2022 and the Market Premium Regulation on 4 October 2022. The changes in the tax system resulting from CO2 pricing and the new legal regulations announced for energy efficiency, heating and climate protection will define new general conditions for all sectors of the energy industry; this will naturally have an impact across all consumption segments – from households to industry – and will be a factor shaping further sales activities.
On 18 November 2022, the Austrian federal government announced the key points related to the national implementation of the EU Emergency Measures Regulation on the absorption and redistribution of surplus proceeds. In future, a revenue cap of EUR 140.0/MWh will apply for electricity producers, which can increase in case direct additional costs are proven. There will also be an input credit for investments into renewable energies and energy efficiency. These regulations come into effect on 1 December 2022 in Austria and will apply until 31 December 2023. An initiative for the new Energy Crisis Levy Act was already submitted to the National Council and a resolution is expected in December.
The general conditions in the energy industry remain challenging for Energie AG, and for the entire industry. The future development of prices on the international energy markets is difficult to assess for the 2022/2023 fiscal year due to the many unpredictable factors influencing these. Key factors will include the further course of the Russian-Ukrainian war, political or regulatory intervention in the market, including possible energy-steering measures by the Austrian government, economic developments, and weather conditions, particularly in the coming winter.
Against the backdrop of the rising and volatile energy prices and the related procurement risk, tightly meshed integration of procurement and sales processes will continue to play a central role in the coming months. The price guarantee in the residential and commercial customer segment will end at the beginning of the 2023 calendar year; prompted by higher procurement costs, a price increase will be necessary for the electricity and gas supply to existing customers. The support measures planned or adopted by government – such as the electricity price cap – are intended to ease the burden on customers.
In the generation sector, work on the Ebensee pumped-storage power plant project will push forward intensively in order to bring about a building decision in the 2022/2023 fiscal year. The construction of additional flexible storage capacities is a basic prerequisite for achieving the ambitious national expansion targets for electricity generation from renewable energies while at the same time ensuring security of supply.
The focus for the Grid Segment in the fiscal year 2022/2023 will be on the in-depth regulatory review of costs and structures in the electricity grid sector and the establishment of the electricity distribution grid operator benchmark based on this. In terms of tariffs, higher electricity grid utilisation fees can be expected due to the fraught situation on the energy market, as high energy prices will also have an impact on the procurement prices for grid losses. In addition to this, the implementation of the EAEC package will play a central role. Expansion of photovoltaic systems is expected to remain at a similarly high level in the coming years; the challenges will then shift to expanding the existing grid infrastructures. In addition, further relevant changes in the statutory environment are expected for the Grid Segment in the course of the 2022/2023 fiscal year, for example, due to the Electricity Market Act for the electricity sector, and due to the Renewable Heat Act for the gas sector.
In the Waste Management Segment, the very good economic environment prevalent in the 2021/2022 fiscal year is unlikely to continue at the same level. A noticeable turnaround has already begun and the market situation is expected to be challenging in the 2022/2023 fiscal year. In the paper/cardboard sector in particular, the paper industry is expected to purchase significantly lower volumes due to production cutbacks. The market for waste wood is currently tight due to high demand and limited availability. In addition, further cost increases can be expected due to high inflation.
High energy costs will continue to be a major challenge in the Czech Republic Segment, particularly in the first quarter of the new fiscal year 2022/2023. The Czech government has decided to cap prices for electricity and gas as of 1 January 2023; this is expected to prompt a positive development in results from the heating and water sectors. Close monitoring of the current developments on the electricity and gas market, which are dramatic in terms of costs, is continuing, especially since these drastic price increases are exposing suppliers, operators and customers under serious pressure. One focus in the coming fiscal year will be on the ongoing development of energy efficiency projects for the heat and water supply and wastewater management. VAK Zápy s.r.o. was merged with its owning company VAK Beroun a.s. at the beginning of the 2022/2023 fiscal year; the company will in future manage the water and wastewater activities in the central region around Prague. The services provided to municipalities and cities are forecasted to remain stable in the 2022/2023 fiscal year, although – here too – there are signs of greater reticence in terms of communal investment.
In the telecommunications business area, the focus in the next fiscal year will be on wholesale, i.e., the marketing of bandwidths to internet service providers. In this area, work is underway to optimise the product range and take a more active approach to customer support and acquisition. In addition, the interfaces and processes with the recently created BBOÖ GmbH are being continuously improved in order to push forward with the fibre-optic roll-out for Upper Austria in the best possible way. In the area of intra-Group services – in particular operational technology – the aim is to continue to develop existing services with a view to the needs of users, and create attractive offerings for the Group’s partners by doing so.
In its function as an energy supplier majority-owned by the Province of Upper Austria, Energie AG will continue to make every effort in the 2022/2023 fiscal year to reliably perform its system-critical tasks, in particular supplying its customers, in a fragile economic and geopolitical situation. The permanent orientation of all services to customer needs, the focuses of digitalisation and innovation, and the financial stability of the Group will remain important strategic objectives in the future.
At the same time, the focus is more than ever on making a significant contribution to the energy transition by expanding renewable energies, establishing a comprehensive circular economy system and pushing forward with the transformation in mobility. The stable financial situation achieved in recent years through forward-looking measures and the Group’s diversified business portfolio provide the basis for mastering these challenging developments.
Against the backdrop of the significant number of uncertainties and highly volatile price developments, EBIT for the 2022/2023 fiscal year is expected to come in at least at the level of the 2021/2022 fiscal year – subject to further potential interventions in the market by policymakers or regulators.
Linz, 5 December 2022
The Management Board of Energie AG Oberösterreich
Chief Executive Officer
DDr. Werner Steinecker MBA
Chairman of the Management Board
Dr. Andreas Kolar
Member of the Management Board
Dipl.-Ing. Stefan Stallinger MBA
Member of the Management Board