Consolidated Financial Statements of the Stadtwerke Leipzig Group ...

As from October 2008, the EEX has been allowing
negative prices. This can lead to a price having
to be paid for feeding in power if the gas and
steam turbine plant is operated to guarantee the
security of supply of district heating. This risk
did not occur in 2009 and is largely excluded by
the sale of amounts of electricity.
The demand for natural, unprocessed timber
has risen markedly in the catchment areas of our
biomass power stations. At times our contracting
parties are unable to meet their contractual
delivery obligations. In order to ensure a secure
supply for the Bischofferode and Piesteritz
biomass power stations, therefore, it is necessary
to buy timber pro rata at the currently high
regional price level.
Profit and valuation risks for the biomass power
stations (in excess of the economic risks already
covered in the balance sheet) can arise as a result
of a larger than expected rise in the price of
timber or smaller (in terms of volume) steam deliveries
to third parties. On the other hand, there
are opportunities from a further improvement
in our own wood procurement, the stabilisation
of procurement costs, and higher payments for
cogenerated electricity.
Wholesale Energy Trading: The value of the
portfolios in own-account trading and portfolio
management is subject to an electricity- and
gas-price risk arising from open positions.
The prices of heating contracts – and also the
bilateral medium-term gas contracts – are tied to
the price of oil, resulting in an oil price risk for
the company. The methods used for the day-today
monitoring of the market risk to the open
positions in the individual portfolios include a
value-at-risk approach and different scenario
calculations and stress tests.
Credit risks: In energy trading, Stadtwerke
Leipzig GmbH is primarily confronted with the
credit risk. Another potential risk is that prices
may change when energy deliveries have to be
replaced or resold, e.g. if a supplier or customer
defaults. A further risk arises from the loss of
receivables outstanding if a trading partner
becomes insolvent.
To minimise such risks, every business or
trading partner is assigned a credit limit using
internal balance sheet and creditworthiness
assessments or based on external credit ratings;
compliance is monitored daily. Furthermore, the
creditworthiness of trading partners is subject
to permanent review. Standardised contracts
of the European Federation of Energy Traders
(EFET) are generally used to limit credit risks in
off-board trading.
Energy Marketing: Competition in district
heating comes from substitutes such as heating
oil and liquid gas. Since the gas market was
liberalised in 2007, competition has increased
considerably and has been developing much
faster as a result of experience on the electricity
market. Competition is expected to intensify in
the future. Sales opportunities in the field of gas
supplies for new buildings are lower due to the
Renewable Energies Heat Act (EEWärmeG).
Medium-sized business customers are reacting
in an increasingly price-sensitive way. The
related higher requirements demand an increasingly
professional approach. In our dealings
with business and private customers, we counter
sales risks by active distribution and marketing
activities. Newly designed products counter the
restrictions on unilateral price changes in the
electricity and gas field demanded by the courts.
28 | Annual Financial Statements of Stadtwerke Leipzig GmbH