Greek newspaper Kathimerini reports in its October the 7th 2010 morning edition that Austrian Power Company Verbund-Energa’s operations may cease, because of its high accumulated short term debt.
Austrian Verbund-Energa started operating in Greece about a year ago selling retail level energy to households and corporations and has an accumulated debt of about 5 million Euros.
Verbund, Aegean Power and DEI
Market sources report that this debt and resulting dismal business situation was expected and is a clear failure of the business model that Verbund is operating under. The said business model depends on a low cost marginal system and the regulated retail energy invoicing methods followed by the Hellenic Power Corporation, or DEI.
When the marginal costs were raised in the spring of 2010, the business model effectively went to negative returns (as a project may turn negative with the unforeseen raising of the marginal cost of capital) thus pressuring Verbund’s returns and marginalizing dangerously Verbund’s (and Aegean Power’s) profits.
