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IEC eyes electricity price hike in 2013

Israel Electric Corp aims increase electricity rates by 12%-15%, unless government issues new round of subsidies

Avital Lahav
Published: 12.23.12, 14:40 / Israel Business

After a series of electricity price hikes in 2012, amounting to 21.7%, Israel Electric Corp is eyeing yet another increase in 2013, Ynet learned Sunday.

 

IEC is aiming for a 10%-15% increase in power rates, and deliberations with the Treasury and Energy and Water Ministry are said to be in full throttle.

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A conservative estimate pegs the future hike at 12%.

 

Officials privy to the debates said that both the IEC and the Treasury are downplaying the talks, given the sensitivity involving yet another price hike for such a basic necessity, and the looming elections.

 

The negotiations are expected to conclude after the January elections, and once the IEC completes its 2013 operational projections.

 

The next two months will afford the government a window of opportunity to stop electricity prices from going up.

 

The first possibility, which was used in 2012 and is therefore unlikely to be used again, is affording IEC additional State subsidies and guarantees. The Treasury has already granted the company NIS 4 billion (roughly $1 billion) in guarantees, against debts amounting to NIS 70 billion ($18.6).

 

The Treasury may also choose to extend the current fuel oil tax mitigations given to IEC; or to temporarily release funds from the IEC workers' pension funds.

 

The government may also choose to apply a scaled increase in electricity rates, as the 12% hike is part of a three-year plan to that effect.

 

A decrease in electricity prices is still a few years away and depends on natural gas production at the Tamar and Levitan offshore projects.

 

Electricity prices in Israel began edging up as the supply of natural gas from Egypt faltered, eventually coming to a near-halt.

 

Israel Electric Corp said that "The cessation of natural gas supplies from Egypt to Israel and the global rise is fuel prices, have resulted in a real need to increase the electricity rate by over 40%.

 

"IEC is leading an extensive initiative to temper the projected hikes, and has spread them across three years in order to ease the consumers' burden.

 

"The move called for a gradual increase of 8.9% in 2012, with the next phase – a 4.4% increase – set for Q1-2013."

 

According to the statement, "Power consummation has gone up by 10% over the past year. IEC has formulated various steps to reduce consumption by the various sectors and is currently reviewing its own fuel oil needs."

 

 

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