27.03.2023 | Management audit finds no major shortcomings or cause for complaint
A management audit of the federal credit line commissioned by Axpo’s owners has vindicated the company’s management. Now it’s time to draw a line under this matter and once more look to the future. Axpo aims to generate value for its shareholders and contribute to a carbon-free future, says Thomas Sieber, Chairman of the Board of Directors.
When Russia attacked Ukraine on 24 February 2022, at Axpo we knew that this new world crisis would have a major impact on an energy market already under pressure. But we had no idea how severely it would affect us. When electricity prices climbed to 20 times long-term levels, Axpo was forced to apply to the federal government on 2 September 2022 for a credit facility of CHF 4 billion as a precautionary measure in case the war should escalate. To date, Axpo has not called on a single franc of this facility and is doing everything to ensure that this remains the case.
After 6 September we had to take heavy criticism. In light of the speed of events and the complex subject matter, many of the questions raised were understandable. Our owners, the cantons of north-eastern Switzerland and their electricity companies, wanted more information and consequently commissioned external auditor Deloitte to conduct a management audit. Deloitte has now prepared its final report for the General Meeting of Axpo owners on 27 March 2023.
Deloitte found ‘no major shortcomings or cause for complaint. The audit confirmed that the application for the federal credit facility was attributable largely to the securing of Swiss electricity production. This in turn was caused by the highly unusual price fluctuations over the previous year. Deloitte noted that the international trading business provided significant liquidity and thus helped to counteract the crisis. According to the auditor, Axpo has a detailed and well-documented risk management process and a detailed, industry-standard liquidity management system. Along with these observations, the report contains suggestions for improvements. Naturally, we will take these on board, review them and then implement them as appropriate. Every organisation has to continually work to improve itself.
At the General Meeting, the shareholders accepted the audit report and expressed their confidence in management.
I feel vindicated in our actions and measures by the audit. It shows that Axpo management and employees acted correctly in the crisis. The Board of Directors thanks our employees, who have done an extraordinary job in this turbulent time.
Now it’s important that once more we look to the future. Axpo will advance its strategy, generating value for our shareholders and the people they represent, while contributing to a carbon-free future. Our strategy, diversified in terms of markets and business areas, has carried us through the recent months of crisis. It has three pillars: the Swiss business, the expansion of renewable energy throughout Europe, and the international customer and trading business.
Our role as the largest Swiss electricity producer is one we take very seriously. We optimise our hydro and nuclear power plants continuously. Over the last 10 years, 70% of our investments have been made in Switzerland. We aim to add a further 1.2 gigawatts of solar energy by 2030, with more than half coming from ground-mounted installations – in the Alps. for instance. We will also drive expansion of hydro, wind power and biomass as well as new technologies such as hydrogen.
The expansion of renewable energy has become even more important, particularly in light of the war in Ukraine. The alternative electricity generation and storage methods that Axpo is advancing at home and abroad will contribute to greater independence of energy supply in Switzerland and Europe.
Trading provides significant revenues that make possible a large part of our investments in security of supply and the energy future of Switzerland. As mentioned, the international trading business – the subject of much recent criticism – has made a significant contribution to coverage of the high liquidity requirement needed to secure Swiss production. At the same time, the trading business and renewable energies represent significant growth opportunities. Axpo needs these to compensate for the loss of hydroelectric concessions and nuclear power and to maintain or even increase the value and dividend capacity of the company.
I am glad that we can now draw a line under the question of how the credit facility came about. At the same time, it is clear to me that we have to show our commitment throughout Europe and above all our ties to Switzerland. We are grateful for the confidence expressed by the shareholders and are committed to ensuring that this confidence remains justified and is strengthened in the future.