The price of 1 kilowatt/hour went up Wednesday night from NIS 0.5947 (about $0.16) to NIS 0.632 ($0.17), but the new rate will only last two weeks, as the value added tax is slated to increase to 18% on June 1 – pushing electricity prices in Israel to an all-time high – NIS 0.6375 ($0.18) per kWh.
For the sake of comparison, only six and a half years ago, in October 2006, 1 kWh cost NIS 0.4812 ($0.13). In other words, electricity prices went up 32% over this period.
The price hike will be felt by all Israelis. An average family whose electric bill stood at NIS 1,389 ($382) in the summer of 2011, is expected to pay as much as NIS 2,036 ($559) just two years later – an increase of NIS 650.
The tariff increase was prescheduled, even before natural gas began flowing from the Tamar field, stemming from the serious gas shortage suffered by Israel for two years following the cessation of gas flow from Egypt and the depletion of the Yam Thetis gas reserve off the shores of Ashkelon.
This situation led to increased use of diesel oil, fuel oil and coal, which are more polluting and more expensive than natural gas, requiring a sharp rise in electricity rates.
But following intense pressure by the Finance Ministry, the Public Utility Authority decided to increase the tariff in a gradual and continuous manner and prevent a one-time increase of more than 40%. As a result, electricity rates are expected to go up two more times, in 2014, and 2015, long after the beginning of natural gas flow from the Tamar field.
There is still a chance, however, that the third price hike will be canceled, and efforts are being made to cancel the second hike as well. Even if the tariff is not raised again in the coming year, it will likely not be reduced either – as there is still a large sum which must be returned to the Electric Corporation due to the use of expensive fuels.
A significant decrease in electricity rates, thanks to the introduction of natural gas, is expected only in 2015.
Those looking for a way to evade the extra costs, will be able to save on electricity consumption and save money this summer through the following arrangement: Consumers registering on the Electric Corp website will receive a 10% reduction on their electric bill if they slash more than 10% of their energy consumption. Those cutting 20-50% of their electricity consumption will receive a 20% reduction.