Don’t use cost of electricity as excuse for price rise

Erdan: There is no place for threatening the government and public with price increase in the wake of unpreventable electricity rates rise.

August 9, 2011 05:15
1 minute read.
Minister Gilad Erdan and MK Ze’ev Bielski

Environmental Protection Minister Erdan and MK Ze’ev Bielski. (photo credit: Yisrael Malovani)

Environmental Protection Minister Gilad Erdan warned manufacturers on Monday not to use the 10 percent hike in electricity rates as an excuse for raising the price of goods.

“There is no place for threatening the government and the public with a price increase in the wake of the unpreventable electricity rates rise,” Erdan said in a press statement.

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He was responding to comments made earlier Monday by Manufacturers Association President Shraga Brosh, who said the hike, along with an increase in water rates, would cause retail prices to rise as well.

Brosh said the Public Utilities Authority’s policy was having the opposite effect of what the government was trying to do, He added that instead of making electricity more expensive, the authority should have allowed the Israel Electric Corporation to use NIS 2 billion worth of cash reserves from overpayments last year. The money is currently slated for investment in IEC infrastructure.

“Given that continued investment is critical for development of the electricity grid and IEC’s financial position prevents it from raising funds at a reasonable price, the government should act as its guarantor. This would solve the problem of raising funds, leaving electricity rates unchanged on the one hand, and enabling the investment plan to be implemented on the other,” Brosh said.

Electricity rates rose 10% on Monday, half of the 20% hike called for by the Public Utilities Authority to deal with disruptions in the supply of Egyptian natural gas and the rise of global fuel prices.

Finance Minister Yuval Steinitz stepped in late Sunday by lowered the excise on diesel and cut the purchase tax on diesel for producing electricity, which brought the rate hike down to 12%. At the same time, the Environmental Protection Ministry approved a Finance Ministry request to allow the IEC to operate two out of its six units using fuel oil, which brought the rates hike down a further 2%.

Globes contributed to this report.

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