Risk Management
Risk management serves to avoid financial damages in the case of default on payment by registered
market participants. Therefore, all balance responsible party must deposit variable collateral and
a base collateral calculated on their turnover volumes in balancing energy, with the variable
collateral being used to cover defaults on payment of the respective balance responsible party. The
amount depends, among other things, on the result of credit check conducted by OeKB to assess the
financial situation (first in the registration procedures and then annually).
The base collateral is also used to cover such defaults on payment, but also serves as collective security within the regime of joint and several liability for defaults that are not covered by the variable collateral deposited by individual market participants.
This system of dual security is designed to cover as far as possible all risks that may occur in connection with any defaults on payment of individual market participants.
The collateral amounts were increased in 2006 versus 2005 – the increase was due to the higher gas prices.
The review of the existing concept for covering risks that started in the year 2005 is being continued by AGCS (among other things, by investigating an insurance solution as a possible additional security net); the current mechanisms are to be perfected and fine-tuned to adjust to the dynamic economic circumstances.
The base collateral is also used to cover such defaults on payment, but also serves as collective security within the regime of joint and several liability for defaults that are not covered by the variable collateral deposited by individual market participants.
This system of dual security is designed to cover as far as possible all risks that may occur in connection with any defaults on payment of individual market participants.
The collateral amounts were increased in 2006 versus 2005 – the increase was due to the higher gas prices.
The review of the existing concept for covering risks that started in the year 2005 is being continued by AGCS (among other things, by investigating an insurance solution as a possible additional security net); the current mechanisms are to be perfected and fine-tuned to adjust to the dynamic economic circumstances.