Energy supply: Which risks can be taken into account 


A look beyond the core issue of energy supply availabilities and rising costs.

It is impossible to imagine the headlines without energy supply at the moment. Rising costs and impending supply difficulties are topics that are present in the media every day and affect all people and companies.   

Energy suppliers and network operators currently have a lot on their plate and are in the special focus of public interest: What would happen in the event of the declaration of the alarm level or the emergency level of the gas emergency plan? How prepared would we be for a gas embargo on the part of the EU or a supply freeze on the part of Russia? What is the current level of gas storage? Who would still be supplied or in what order would they be shut down? 

And how will prices develop, which have already risen disproportionately even before the Russian invasion in 2021? What do we do with these additional costs? 

Utilities work at full speed

Competent experts from the utilities are working at full speed in various committees and within their companies, associations and also in exchanges with major customers on the various scenarios and approaches to solutions. The initial situation is so complex that abstract scenarios can hardly be planned and corresponding specifications - such as concrete shutdown sequences - cannot be given in a meaningful way at present. The influences are simply too diverse: such as weather conditions, future filling levels of gas storage facilities, future savings by the population and industry, but also possible economic and business damages, the importance of companies for the basic supply of the population, e.g. with food and medicines, shortages among European neighbors, recourse claims and claims for damages. 

According to Alexander von Humboldt, "everything is connected with everything else. Therefore the experts in the energy industry are currently more than busy with the concrete planning of possible supply bottlenecks or with the development of a good data basis for later decisions. 

That is why we as WB Risk Prevention Systems dare to take a look that complements the above-mentioned topics and starts where the currently urgent issues stop.  

Thinking outside the box

We are not "gas experts" and therefore deliberately do not want to develop advice for topics that the utilities or the Federal Network Agency know much better than we do. On the other hand, we would like to point out possible "side effects" that are probably (still) in the background in the processing of the current tasks and are therefore perhaps not yet being considered: 

a) Possible price increases may become a safety risk for utility/network operator employees

Particularly with regard to society, energy suppliers are facing risks that could come to a head in the coming weeks and months and that hardly anyone is thinking about at the moment. Rising costs for energy supply coupled with a fundamental increase in the cost of living may fuel the already high shorter fuse of the company. Our recently published Analysis confirms that, especially during the last two pandemic years, the propensity to violence has increased significantly among broad sections of the population. But this short fuse of people is not limited to sports or music events. Disputes at the checkout in the supermarket, shouting matches on public transport or even frustration at constantly rising prices could continue to increase.  

Could it then happen that the growing anger will lead people to the doors of the municipal utilities / energy suppliers? At that moment, the employees could quickly become the focus of attention and the target of aggression. What preventive measures must already be be taken to then be able to protect the workforce? 

b) Possible price increases may lead to cash flow problem for utilities

Further increases in costs could lead to an ever greater proportion of tenants and owners no longer being able to pay their energy bills. This scenario should also be considered now. What would be the impact on utilities' cash flow and liquidity by fall at the latest? Who would be able to bridge or absorb liquidity bottlenecks and how?  

c) Possible pressure on decision-makers and management by lobby and affected companies

In addition, however, there will also be pressure "from above", which will be particularly evident at the management level of the utilities, i.e. in the ranks of the management and/or the supervisory board, and will come from "their own circles".  

The good connections to industry, built up via networks and associations, personal contacts, memberships in locally relevant associations (Rotary, Lions, Freemasons, stud. connections, carnival associations, etc.), are quickly used in times of need to call in "favors". We are already sounding the alarm here: The risk of corruption will increase and preventive measures, such as the use of another person with a "filter function" who stands between the customers and the management, could become useful. Suitable persons within the company organization should already be identified and trained. 

d) Lack of openness in the mandatory exchange between all stakeholders

Open communication and "genuine" cooperation of the stakeholders involved is a crucial part of risk prevention. This sentence is so self-evident that it hardly needs to be mentioned. However, it suddenly becomes more relevant when concrete threats or a shortage situation appear on the horizon, because then "genuine" openness and transparency of the stakeholders (i.e., also of the most important customers and suppliers) suddenly breaks away.  

Because, when an emergency is assumed to be a "realistic scenario", in practice there is often a mixture of a) "elbow mentality": Everyone fights for their own superiority and every advantage they can get, as well as b) "securing one's own negotiating position": Where compromises become necessary, I claim a more extreme position than would actually be necessary, so that a later compromise becomes less harmful for me than is actually bearable. That's why legal departments sit at the table in the background to secure legal positions and recourse. Discussions take place more on a problem-oriented than a solution-oriented level. 

We know such (emergency) negotiation situations from various emissary activities in diverse projects from Asia. Be it disputes within companies, between companies and the state or between utilities and customers: The more threatening the situation becomes, the less all parties involved work on a common plan, but are rather focused on being classified as "particularly important for the common good" or on gaining special priority by outlining horror scenarios (e.g. mass unemployment). 

Similar to how the "hot wire" was once set up (and currently again between Russia and the European headquarters of the U.S. Armed Forces If a direct exchange between the general staffs is used to prevent misunderstandings and errors, one can think about setting up corresponding informal information channels. In this way, a pragmatic planning level of the stakeholders can be created away from the formal negotiating positions. 

In dialogue with an external sounding board

External Sounding boardswhich deliberately do not come from the "municipal utilities" sector, enable a view beyond the horizon of the energy industry.

Set up with outstanding competence in their own field, there are developments and examples from completely different industries or regions of the world that are transferable in parts or can at least provide interesting pointers. Not as a replacement, but as a supplement.

Are you a utility or a company that would like to think outside the box and enter into a creative exchange with us? Do you need an external sounding board or have questions on the subject? Write to us and we will get back to you promptly. Or simply give us a call +49 234 9041836-30