electrical gird 311.
(photo credit: Ariel Jerozolimski)
“Electricity rates will rise by 18 percent,” Public Utilities Authority chairman Amnon Shapiro told a special session of the Knesset Economic Affairs Committee on Monday.
He attributed the rate hike to: disruption of natural-gas deliveries from Egypt (7%), the directive by Environmental Protection Minister Gilad Erdan for Israel Electric Corporation (IEC) to use diesel instead of fuel oil (7%) and a routine update because of delays in the construction of power stations (4%).
The Finance Ministry’s intention to levy excise on diesel used for
electricity production was “greed and insensitivity in the face of the
difficulties facing Israeli households,” Economics Committee chairman MK
Carmel Shama (Likud) said at the start of the meeting about the
forecast of a 20% rise in electricity rates.
Disruptions in gas deliveries from Egypt have forced IEC to increase its
use of diesel seven-fold. The utility pays NIS 3,300 in excise and VAT
per ton of diesel it consumes, compared with NIS 14 per ton for fuel
Erdan’s directive forces IEC to greatly restrict its use of fuel oil and almost exclusively use diesel.
Consequently, the Treasury will reap billions of shekels in unplanned
tax revenues from a 20% hike in electricity rates – a rise that have an
effects on prices throughout the economy because electricity is a basic
input for most products manufactured in Israel.
Shama said he had asked Finance Minister Yuval Steinitz to cancel the
excise on diesel for electricity production, adding that the Economics
Committee would “go to war” over the issue.
IEC chairman Yiftach Ron-Tal said: “If there is no solution to the
purchase of diesel, how will I generate electricity? We have diesel
reserves for four to six weeks. Under current circumstances, we’re
receiving only half of the natural gas, and we don’t have the money to
buy diesel. In 2012, due to the absence of Egyptian gas, we’ll be
drawing more from the dwindling Yam Tethys reserves, which will run out
in early 2012.”