High electricity prices send margin requirements through the roof. The industry has reported massive time pressures to find big money.
On Monday last week, Rogaland-based Dalan Craft Electric received an urgent notice from Nasdaq.
The letter stated that Dalane Kraft, which is owned by several municipalities in southwest Norway, had to cover the margin requirement within 90 minutes.
The required margin is the guarantee that the company must provide for trading in the financial strength market.
We receive many emails from NASDAQ that say “Urgent” with an exclamation point. Then we have 90 minutes to sort it out and get the money in place.
That’s what Chief Financial Officer Rosetta Aagesen at parent company Dalane Energi said.
The company had to submit another NOK 20 million within the given deadline.
Required margin increased to NOK 267 million from about NOK 30 million in July.
This was currently the last in a series of many urgent letters the company received from Nasdaq this summer.
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Nasdaq has no comment on this issue.
“We can’t get into these kinds of customer discussions,” says David Augustson, head of communications at Nasdaq in Europe.
The Swedish authorities said that the situation could have turned into a financial crisis had it not happened measures. These statements came ahead of the elections in Sweden, on September 11.
In Norway, the authorities said that There is no need to work In the financial power market now.
Sharp price increases and major fluctuations in the energy market recently have greatly increased the need for safety.
The fear is that a financial strength market actor technically goes bankrupt, i.e. ends up defaulting because it is unable to provide the security that the NASDAQ requires within the deadline.
Knut Kröpelin is the Managing Director of Energi Norge, an organization with an interest in the Norwegian energy industry.
He says in an interview with E24 that in the past two weeks there has been contact between Nasdaq and Norwegian companies. There, there was “tremendous time pressure” to get into a liquidity position where you have to find big money.
The actors have so far avoided problems with fulfilling their obligations. Finanstilsynet states that it is not aware of a Norwegian default in this market.
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Waiting for a response from the bank
Dalane Kraft should provide more and more security in order to trade on Nasdaq.
– We got a gradual increase from July to now of 24 million euros, then we need a bank that brings itself together and participates, says Ågesen.
Earlier, the Finnish energy giant Fortum reported that margin requirements Increased by nearly NOK 10 billion in one week.
On Tuesday, Fortum gained access to funding at 23 billion Norwegian kroner From the Finnish state, to deal with any problems related to the provision of security. At the top, the company had a margin requirement of NOK 49 billion.
Dalane Energi is now awaiting a response from her bank affiliation, Danske Bank. The bank conducts a credit assessment of the company to assess whether it can provide more loans. If the bank refuses, Dalane Energi must notify that it will participate in a scheme from the authorities.
According to Ågesen, Danske Bank said other customers have also contacted the bank due to similar issues.
E24 asked Danske Bank questions about this and received the following statement from Gunnar Myrvang, Head of Energy and Renewable Energy.
“We are well aware of the turbulent market situation prevailing and we are following the developments hand in hand with our clients.”
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According to Kroepelien at Energi Norge, there are many indications that there is no acute situation in the Norwegian market right now.
However, the organization believes that it may seem prudent for the Norwegian authorities to also make a similar arrangement as Sweden and Finland.
The price range is too big for the next time, so we should instead be prepared rather than risk having to act next. He says it would seem strange if Sweden and Finland made such an arrangement, while Norway did not.
After winter, there’s very much room for variation in pricing, says Kröpelin.
Although we are basically better off than our neighbours, we should make similar arrangements for them. Now we also have a 14-day period in which the Swedish scheme covers Norway as well, he says.
Low trading volume
Ågesen says Dalane Kraft has fallen to around NOK 90 million in contracts this year. Also last year, Dalane Kraft incurred a loss in its hedging instruments.
In last year’s power company report, it was stated that Dalane Kraft insures both volume and price when selling power.
Parent company CFO Dalane Energi says the group has avoided entering into new contracts this year. The company still has hedges on the Nasdaq as it has contracts spanning three years.
E24 has previously written about it Low trading volume On the NASDAQ, which is owned by some players Reduce market exposure.
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