Swiss bail-out plan aims to prevent electricity crunch

Switzerland’s electricity supply to end-users is secured by more than 600 companies. Suppliers range from small regional utilities to international energy groups. Most of them are public sector entities. © Keystone/Gaetan Bally

The government has decided to prepare a bail-out plan for Switzerland’s main electricity companies to prevent an energy shortage.

The aim is to ensure financial liquidity for companies trading energy on an international scale and to avoid an electricity crunch in Switzerland, Energy Minister Simonetta Sommaruga announced on Thursday.

She said the bankruptcy of a major electricity company could set off a chain reaction threatening the energy supply of Switzerland.

“We have no time to lose, we have to be prepared for a worst-case scenario,” Sommaruga told a news conference.

Under the plan, the government would intervene as “lender of last resort”, while energy firms and their shareholders are urged to take the necessary measures to cope with the massive price hikes since the end of last year.

Companies are competing in a highly volatile international market, made more difficult by the war in Ukraine and Russia’s position as an important export nation of gas, notably to western Europe.

Strict conditions

Sommaruga said the conditions for the bail-out package would be strict, including a ban on paying out dividends, to discourage too many applicants.

It’s estimated that only a few electricity companies would qualify for the government support of up to CHF10 billion ($10.67 billion) in total over the next four years.

Sommaruga said the government will present a bill to parliament to discuss and adopt the law in June.

In January, one of the main Swiss electricity companies, Alpiq, asked the government for financial assistance, but later withdrew its request.

The energy ministry set up a task force amid calls from the right-wing Swiss People’s Party to focus on domestic energy production and the postponement of a planned reduction in CO2 emissions.

Other measures include setting up a hydropower reserve and the construction of several gas power plants.