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How Swiss businesses became the casualties in Europe’s ‘War on Electricity’

  • By Paige Baschuk
  • 7 September 2022

SRF Schweizer Radio und Fernsehen this week explores how Swiss companies are paying the price in Europe’s looming energy crisis and how some businesses are taking matters into their own hands.
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How Swiss businesses became the casualties in Europe’s ‘War on Electricity’

A wastewater plant in Thun predicts a 600 percent markup in price that will eventually be passed off to residents.

The “War of Electricity” has begun.

Electricity prices across Europe are soaring, pushing larger companies to shore up stock on the free market and leaving smaller companies scrambling for the scraps.

A 600 percent mark-up on electricity

Even public service providers such as ARA Thunersee, which treats the wastewater from 37 communities and over 120,000 people in the Thun/Bernese Oberland region, are feeling the effects. The wastewater company says they will pay a whopping 600 percent more for electricity in the near future.

“We are in the unfortunate position that our old electricity supply contract has just expired and we now have to buy on the open market,” says Stephan Oberli , operations manager ARA Thunersee.

That is why the costs for the ARA Thunersee are skyrocketing: the company will have to spend 3.7 million francs more on electricity in 2023 than this year, so the net operating costs will rise from almost five to almost 9 million francs. This also affects the communities that have their wastewater cleaned at the ARA Thunersee.

“We must not accumulate any reserves and must claim the higher costs from the municipalities,” explains Oberli.

The municipality of Wimmis, for example, now has to pay an additional 30 francs per inhabitant for sewage charges. However, people are not yet feeling the price hike at the ARA Thunersee directly, as the municipality of Wimmis can still cover the price increase from reserves.

How Swiss businesses became the casualties in Europe’s ‘War on Electricity’

The Olwo lumber mill is considering cutting down their workweek and electric expenditures.

Why one Swiss sawmill is in trouble

The exploding electricity prices are also causing difficulties for Olwo, the largest sawmill in the canton of Bern. At its three locations, the company consumes as much electricity as 1,100 four-person households every year. As a major consumer, Olwo buys electricity on the open market.

“For a long time we relied on the ‘principle of hope’ and believed that the madness on the electricity market would soon stop,” says Managing Director Markus Lädrach. That is why the electricity purchases have been postponed for a long time. Now, companies only acquire the electricity in tranches. Nevertheless, the company expects additional costs of several 100,000 francs per location.

Outsmarting the electricity crisis

The high price of electricity hits Olwo hard, although the sawmill installed a large solar system with 5,400 panels ten years ago. Managing Director Lädrach is now mulling new working models in order to take make the company’s own solar panels most effective.

“We should do most of the work when we have the most solar power,” Lädrach says. Additionally, he is considering cutting wood on only four days instead of five.

How Swiss businesses became the casualties in Europe’s ‘War on Electricity’

Obtaining hardship loans are a federal issue, not a cantonal one, officials say.

Are hardship allowances the answer?

The electricity price explosion is causing existential problems for some companies.

“There is a certain powerlessness because there is no panacea against the current development,” says Daniel Arn, President of the Trade and Industry Association of the Canton of Bern.

Some companies have probably not yet realized what the development means for their bottom lines. Hardship allowances, which were doled out during the Covid-19 pandemic, could protect sectors from going bankrupt in droves and thus causing difficulties for the economy.

“A temporary network is needed to cushion the price shock of 2023,” Lädrach says, who has sent inquiries on the matter to cantonal officials.

Bernese economics director Christoph Ammann counters that at least a few dozen companies in the canton of Bern failed to sign electricity contracts in good time.

“It’s an entrepreneurial risk that you took,” Ammann says, adding that the canton itself cannot provide economic aid. It was the federal government which approved of and handed out pandemic loans. Otherwise, the economic aid could vary greatly across the country, creating a “cantonal patchwork quilt,” Ammann says.

This article is reprinted from SRF.

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