Sigmaringen's municipal utility company in crisis chaos: This is how a million-off deficit was caused!

Sigmaringen's municipal utility company in crisis chaos: This is how a million-off deficit was caused!

Sigmaringen, Deutschland - The Stadtwerke Sigmaringen faces a considerable extent before a financial crisis. With a minus of around ten million euros last year, the city has to intervene with a rescue operation and pump 11.5 million euros into the municipal utility to avert bankruptcy. The motives for this drastic situation are diverse and raise questions that those responsible have to answer.

Interim managing director Falk-Wilhelm Schulz explains that the misguided shopping policy of the municipal utility company plays a central role in the disaster. At a time in the summer of 2022, when energy prices were on a record high due to the Russian delivery freezing, the municipal utilities decided to buy large amounts of energy at high prices. In doing so, they seem to have made the far -reaching decision not only to buy energy for 2023, but also for the years 2024 and 2025. This tactics, motivated by the fear of having no access to affordable energy, led to an overcap, which later turned out to be a serious problem.

causes of the deficit

The error was not only in overpriced purchasing, but also in the insufficient pricing policy towards customers. Despite the possibility of at least partially passing on to the high purchase prices - supported by the federal government's energy cost brake, which covered electricity prices at a maximum of 40 cents per kilowatt hour - the municipal utilities only set 50 cents. This decision also made it difficult for the municipal utilities to find a compensation for the high costs, which is now shown in the worrying balance.

Mayor Marcus Ehm emphasizes the urgency of the situation and hires lawyers to examine the circumstances of this financial misery. The company's responsible persons are the focus, especially since the exact sales figures are only determined after a meter reading at the end of the financial year. Schulz notes that the lack of implementation of an early warning system to identify financial problems was a serious mistake. In the future they want to introduce such a system in order to be able to react better to such crises.

The decline in energy consumption in Sigmaringen, which was reinforced by the Federal Government's recommendations to save energy, led to another problem: the excess of occupied energy had to be sold under value, which also stressed the situation. All of this happened in an environment in which the municipal utilities had to fight to keep their customers. In the first five months of the current year, they lost around ten percent of their electricity and six percent of their gas customers.

Future view and strategic decisions

Despite this dramatic deficit, the municipal utilities plan to check the reduction in electricity and gas prices on January 1, 2025. Schulz explains that the municipal utilities cannot do without this price reduction, as customers could otherwise switch to cheaper providers. However, this strategic decision could mean that the company does not need additional income that would be helpful to cover the deficit. All of this, while a planned expansion of a local heating network on the Riedbaum is probably delayed, which increases the operational challenges.

The municipal utilities currently feel the negative consequences of their financial situation in other areas. Another problem is the dependence on urban financial aids to stabilize their equity ratio and prevent further debts. With a debt of around 25 million euros, the return to bank loans after the accounting for 2024, which is planned for April 2025, is uncertain

These developments show how sensitive the situation is and how important quick and well thought -out decisions are in order to regain the trust of citizens and customers. A comprehensive analysis of financial practice in the company will be necessary to avoid future wrong decisions and to attribute the Sigmaringen municipal utilities to a stable course. Continuous information on this topic is available www.schwaebische.de .