Public Utilities Authority – Electricity (PUA) head Amnon
Shapira announced in a newspaper interview over the weekend that electricity
prices would drop precipitously in February because of the switchover to much
cheaper natural gas rather than the more expensive fuel or diesel oil.
That announcement via the press prompted National
Infrastructures Minister Uzi Landau to demand Shapira's immediate resignation
on Sunday night, a source close to the minister told The Jerusalem Post Monday.
"Shapira and PUA are sabotaging the minister's agenda.
Instead of implementing policy, it is attempting to set the policy and the
agenda, and that is where the minister drew the line," the source charged.
But wait, isn't reducing electricity prices by a significant
margin a positive development meant to assist the consuming public?
Not necessarily, contends the ministry, environmental groups
and other sources in the energy field.
Lower prices means more electricity consumption, since if it
is cheap people don't worry so much about using it. That's a big problem for
energy strapped ,
they contend. Demand is growing every year and the Israel Electric Corporation
is struggling to keep up with enough power plants. Reserves are at a mere 2%,
when they should be between 17-25%.
already has some of the lowest prices for electricity in the Western
world," the ministry source added.
So what should happen instead?
Instead of lowering prices, the prices should either stay
the same or even go up. The resulting difference between cost and price should
then be put aside in a special fund, overseen by an external observer, for
energy efficiency projects, the ministry, the environmental groups, and energy
sources all agree.
Strangely enough, PUA also agrees that that would be a good
use for the money. However, it contends that as the law stands now, such a fund
would be illegal. According to the authority, it is its job as a regulator to
set the basis for prices which reflect the cost of production every five years.
Which means if the cost of electricity production dropped because of the replacement
of expensive fuels with cheaper ones, the authority is legally bound to adjust
the price to the consumer accordingly. It is that five year price update which
is due out next month.
Energy efficiency is generally funded in the Western world
either directly from the state budget or by adding 1% to the electricity
tariffs, a PUA spokeswoman told the Post Monday. However, if the entire price
differential were to be used for such a fund, it would constitute an illegal
subsidy and a fine on the public.
The spokeswoman said that PUA took the idea for an energy
efficiency fund to the ministry two years ago and said it required a change in
the law before it could be implemented.
"Since then, nothing has been done," she said.
However, the source close to Landau responded that "the
Authority was fully aware of our efforts to change the law. We had had
discussions with them about it. But instead they launched a preemptive strike.
"For months, they had been denying there would be any
substantial change in electricity prices. Then they dropped this bombshell on
us and on the public through a press interview. They didn't even have the
courtesy to bring their intention openly to the minister," the source
The main agenda of the ministry right now is reducing electricity
usage in accordance with the government decision from September 2008 to reduce
usage by 20% by 2020. Lowering rates yanks the main plank out of that platform,
Moreover, reducing rates will pull the plug on the emerging
Energy Service Company (ESCO) industry. The ministry has been encouraging the
industry which consults to companies and entities how to reduce their energy
"Instead of a seven to eight year return on investment,
it would mean a 15 year payback [which makes it a far less attractive
investment]," the source said.
Energy efficiency is critical from an environmental
perspective as well, since the less consumption, the less need for polluting
power plants, he said. Energy efficiency is even more important than renewable
energies since it is cheaper and just as effective.
While natural gas is considerably less polluting than diesel
or fuel oil, it is still a fossil fuel and not a clean energy source. Moreover,
if demand continues to rise, the argument for another coal-fired power plant in
gets correspondingly stronger.
That's why the Israel Energy Forum and other environmental
groups have been working with the ministry on energy efficiency initiatives.
The source added that Landau's decision to call for
Shapira's resignation also derived from months of delays on other projects. The
tariff for medium –sized solar fields was delayed by PUA, they were supposed to
present a plan to incentivize reducing usage and never did, and only half of
the pumped storage quota the ministry decided was necessary was approved, the
The PUA spokeswoman charged in response that the demand for
Shapira's ouster emerged after he contended in the interview that the ministry
was not pushing forward the reform of the energy market. A reform to introduce
more private producers and an administrative agency to oversee a privatized
energy market has been in the works for a long time.
She added that Shapira was confident in his professional
opinion and would not resign. The national infrastructures minister does not
have the authority to dismiss Shapira directly.