“Austrian Power Solution” (ÖSL) seems impossible


Booz Allen Hamilton - expert’s report on ÖSL: „Merger not justifiable“.

Due to the fundamentally altered general conditions on the European and the Austrian power market as well as the critical judgement on the development of competition on the domestic power market through the federal competition authority and E-Control, the implementation of the “Austrian Power Solution” (ÖSL) seems impossible at this point of negotiations. The internationally well-known Consultants Booz Allen Hamilton confirmed this in their recently presented report on „Chances and risks of the Austrian Power Solution from today’s perspective“.

The report was commissioned in order to examine the potential synergies, expected more than three years ago when discussions started, for VERBUND of the “Austrian Power Solution” by an independent expert based on the recent market development. Booz Allen Hamilton had already calculated the synergies for an “Austrian Power Solution” according to the market conditions in 2002 and had presented them in a report.

The discussion put on hold in the fall of 2004 were started again with the goal of a sustainable hedge of the synergies under changed market conditions. The power experts of Booz Allen Hamilton have now come to the clear result that: “In conclusion it has to be noted, that the limited potential of synergies does not justify a merger as aspired to in the Austrian Power Solution”. The case study sees considerable overall risks versus very much reduced potential chances.

In view of this result, the management board of VERBUND, a listed company, considering its legal responsibility towards the shareholders, can no longer conclude the Austrian Power Solution contracts with EnergieAllianz.

With respect to this situation VERBUND will check alternatives to the power solution, whilst remaining open for an Austrian power partnership model with clear and lean structures. VERBUND´s concept will be introduced on April 28th to the partners of EnergieAllianz. The recommendations of the competition authority in order to revive the Austrian power market and the economic benefits for VERBUND will play a decision making role.

The recommendations of the competition authority and the results of the report of Booz Allen Hamilton have confirmed the VERBUND strategy to remain open to competitive processes. VERBUND will continue in any case to offer all domestic end-users locally produced hydroelectric power at attractive conditions, whether with a new Austrian partner or not.