I had to raise 20 million in 90 minutes in a market in crisis

Less than 20 minutes ago

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On Monday last week, Rogaland’s Dalane Kraft power company received an urgent warning from Nasdaq.

The message stated that Dalane Kraft, which is owned by several municipalities in southwestern Norway, had to cover the required margin within 90 minutes.

The margin requirement is the security that the company must provide to operate in the financial energy market.

– We get many e-mails from Nasdaq saying “urgent” with an exclamation point. Then we have 90 minutes to sort things out and put the money in place.

This is what financial manager Rosita Ågesen of parent company Dalane Energi says.

The company had to raise another NOK 20 million within the deadline.

The margin requirement increased to NOK 267 million, from around NOK 30 million in July.

This was for the moment the latest in a series of several such urgent messages that the company received from Nasdaq this summer.

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Financial crisis plot

The Nasdaq has no comment on the matter.

“We can’t get into these kinds of customer-specific discussions,” says David Augustsson, Nasdaq communications manager in Europe.

The Swedish authorities said the situation could have turned into a financial crisis if it hadn’t occurred measures. The statements came shortly before the elections in Sweden, which will be held on 11 September.

In Norway, the authorities said so there is no need to act in the financial power market now.

Strong price increases and large fluctuations in the electricity market have recently led to a significant increase in the need for security.

The fear is that an actor in the financial energy market will go into technical bankruptcy, or that it will end up in default because it is unable to provide the security required by the Nasdaq by the deadline.

Knut Kroepelien is CEO of Energi Norge, an organization of interest to the Norwegian energy industry.

He says in an interview with E24 that in the last two weeks there has been contact between Nasdaq and Norwegian companies. There, there was “enormous time pressure” to enter a liquidity situation where you have to find large funds.

The actors have so far avoided problems in fulfilling their obligations. Finanstilsynet claims that it is not aware of Norwegian insolvencies in this market.

Energy giant Fortum receives state funding

Awaiting response from the bank

Dalane Kraft must provide more and more security to be able to trade on the Nasdaq.

– We have had a gradual increase from July to today of 24 million euros, and then we need a bank that comes together and is involved, says Ågesen.

Previously, the Finnish energy giant Fortum announced that the margin requirement increased by nearly NOK 10 billion in one week.

Fortum gained access to funding on Tuesday 23 billion crowns by the Finnish state, to deal with any problems with the security provision. At the top, the company had a margin requirement of NOK 49 billion.

Dalane Energi is now awaiting a response from its bank connection, Danske Bank. The bank carries out a credit assessment of the company to see if it can make more loans. If the bank says no, Dalane Energi must notify that he will participate in an authorities plan.

According to Ågesen, Danske Bank said other customers have also contacted the bank with similar problems.

E24 asked Danske Bank questions on this topic and received the following statement from Gunnar Myrvang, Head of Energy and Renewable Energy.

“We are well aware of the turbulent market situation that prevails and we follow the developments together with our customers”.

– Strange

According to Kroepelien of Energi Norge, there are many indications that there is not an acute situation in the Norwegian market now.

However, the organization believes that it would appear wise if the Norwegian authorities also reached an agreement similar to that of Sweden and Finland.

– The price range is very large in the time to come, so we should rather prepare ourselves than risk having to act later. It will seem strange if both Sweden and Finland have reached such an agreement, while Norway has not, he says.

Beyond the winter, there is an extremely large margin for price change, says Kroepelien.

– Even if we are fundamentally better off than our neighbors, we should establish agreements similar to them. We now also have a 14-day period where the Swedish scheme also covers Norway, she says.

The trading volume collapses

Dalane Kraft is about NOK 90 million in red on contracts this year, Ågesen says. Also last year, Dalane Kraft recorded a loss on its hedging instruments.

In last year’s report from the power company, Dalane Kraft is stated to insure both sides of the volume and price when selling power.

Chief financial officer of parent company Dalane Energi says the group has avoided entering into new contracts this year. The company still has hedges on the Nasdaq stock exchange as it has entered into contracts that span three-year periods.

E24 has already written about it the volume of trade collapses on the Nasdaq power exchange, and they have some players reduce market exposure.

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