Shocking situation

Some of us have already been hit with the latest electricity bills, which are a whopping 25 percent higher than in the comparable period last year. Needless to stress, the income earned by most Israelis hasn’t gone up commensurately, if at all.

Add to that higher costs of other utilities – water and fuel, foremost – and no household can remain unaffected. Beyond that, the blow to the industrial and commercial sectors is far heavier and so is its fallout.

Raised production costs are inevitably passed on to the consumer, delivering yet another wallop to already reeling households. This side effect is bound to weaken their buying power and thus inflict ancillary injuries on manufacturing and commerce. Closures and layoffs loom ominously in the distance.

This vicious cycle is about to be exacerbated. Another 6.6% electricity rate hike is in the offing. To boot, the Israel Electric Corporation has served notice that as soon as the seasonal heat waves arrive, so may blackouts.

IEC’s chairman warned the Knesset Economic Affairs Committee this week that his organization is operating with zero generating reserves and that spikes in demands for energy could easily trigger malfunctions in already overextended power installations.

This is quite apart from the IEC’s dismal fiscal state and the inordinately high salaries it pays its employees.

The IEC’s contention indeed is that even if its entire staff were to be sacked, it would still be unable to finance soaring generating costs and the inability of capacity to catch up with runaway demand.

The IEC’s woes are mostly blamed on the anarchy in Sinai. Since president Hosni Mubarak was toppled last year, the pipeline that is supposed to pump natural gas to Israel had been bombed 13 times. There’s no hint of any effective action by Cairo to stem the sabotage. The bottom line is that that Egyptian gas is no longer a reliable option.

All substitutes are pricier. This year alone IEC is expected to shell out NIS 25 billion to replace the lost Egyptian gas. In 2011 this expense cost NIS 14b.

There’s yet more disconcerting news. The gas bounty expected from the Tamar Field is still estimated to be some 18 months away. Meanwhile, other local gas sources are appreciably exhausted. The upshot is that 2013 may be even tougher.

The worst kind of a bad situation is the sort in which there’s no single problem. That means a complex set of variables that combine to cause things to go awry. Such composites of difficulties are the trickiest to tackle because they preclude simple remedies.

To be sure, no magical quick fix exists to guarantee us affordable electricity. What’s urgently needed is creative thinking and flexibility on the part of all concerned. Our skyrocketing bills cannot be returned to what they were last year (which was costly enough) but further increases can be reined in.

It would be comforting to suppose that the IEC could be reformed overnight and run things less extravagantly. But its ultra-powerful union stands as an impenetrable bulwark against any reorganization. Overhauling this giant has been a bone of contention in the past and no immediate benefit would accrue from seeking another confrontation with the union in the current dire circumstances, especially because the IEC – profligate as it is – cannot alone be blamed for such trouble as gas supply cutoffs.

This is where it behooves the government to evince greater flexibility. VAT, for example, can be lowered on assorted replacement fuels to render them fractionally more economical.

An easing of concern for the environment wouldn’t go amiss either until Tamar gas reaches our power stations. The IEC is currently coerced to substitute diesel fuel for gas although it costs three times more than heavier fuel oil. The latter is indeed a considerably greater pollutant but it makes sense as a very short-term alternative.

It’s essential that the public and its representatives realize that they can’t have everything – collecting maximum revenues, while enjoying the cleanest of clean energy, supplied without interruption and at bargain prices. Something has got to give.