Transparency and Efficiency in Energy Trading Focus: Systemic risk in the Swiss electricity market in the years 2021-2023

At the end of August 2022, Axpo applied to the federal government for a CHF 4 billion rescue package. Based on selected balance sheet items from the financial reports of Alpiq, Axpo, and BKW, we assess the systemic risk in the Swiss electricity market as of the balance sheet dates for the years 2021-2023. We highlight the urgency of the rescue package and the need for action under the new Federal Act on Supervision and Transparency in the Wholesale Energy Markets (BATE), aimed at providing additional capital and liquidity for energy trading activities. The need for intervention is supported by the estimated costs of CHF 24 billion for a potential liquidation of Axpo as of September 30, 2022. Finally, we discuss the benefits and informational value of selected time series that are critical for the monitoring and management of systemic risk by the board of directors, regulators, supervisors, and control authorities. Disclaimer Our statements are based exclusively on publicly available documents and data. These include, in particular, data from EpexSpot and EEX, the financial reports of Alpiq, Axpo, and BKW for the financial years 2009-2023, as well as ElCom rulings, ElCom activity reports, selected SFOE documents, and relevant federal court rulings. Our models and methods are based on assumptions either taken directly from these documents or derived from them to reflect reality as accurately as possible. The management's discretionary powers within the context of their financial reporting allow for interpretation by the readers of the financial statements. If such interpretations result in misjudgments, this could lead to a different data basis, which in turn may lead to different conclusions.

At the end of August 2022, Axpo applied to the federal government for a CHF 4 billion rescue package. Based on selected balance sheet items from the financial reports of Alpiq, Axpo, and BKW, we assess the systemic risk in the Swiss electricity market as of the balance sheet dates for the years 2021-2023. We highlight the urgency of the rescue package and the need for action under the new Federal Act on Supervision and Transparency in the Wholesale Energy Markets (BATE), aimed at providing additional capital and liquidity for energy trading activities. The need for intervention is supported by the estimated costs of CHF 24 billion for a potential liquidation of Axpo as of September 30, 2022. Finally, we discuss the benefits and informational value of selected time series that are critical for the monitoring and management of systemic risk by the board of directors, regulators, supervisors, and control authorities.