Electricity rates to rise 8.9% in April

Rate hike intended to ease IEC’s cash-flow problem.

Electricity lines 390 (photo credit: Thinkstock/Imagebank)
Electricity lines 390
(photo credit: Thinkstock/Imagebank)
The Public Utilities Authority has approved an 8.9 percent electricity rate hike for April. The Finance Ministry asked for an immediate 8.9% electricity rate hike, well above the 6.5% rate hike published in the summons for the hearing, people familiar with the matter told Globes Thursday.
Finance Ministry officials made the demand at Tuesday’s Public Utilities Authority (Electricity) discussion on the planned rate hike, the sources said. Two of the five members of the board opposed the proposal and demanded a lower electricity rate hike. Rates have already climbed 25% since the summer of 2011.
Finance Minister Yuval Steinitz had tried to postpone the Public Utilities Authority meeting until possible solutions were formulated to ease the planned rate hike, Globes reported Wednesday.
Ministry officials objected to Steinitz’s request, saying the Public Utilities Authority had full independence to determine electricity rates. The officials were backed by a legal opinion.
The Public Utilities Authority’s decision on electricity rates in 2012-14 has been delayed by a month. Israel Electric Corporation is seeking an immediate 9% rate hike, which Public Utilities Authority chairwoman Orit Farkesh strongly opposes. She insists on keeping the originally planned 6.5% rate hike, the first hike scheduled for a three-year period decided on by a team headed by Finance Ministry acting director-general Doron Cohen.
The rate hike is intended to ease IEC’s cash-flow problem.
IEC faces a NIS 3 billion shortfall in the coming months because it needs to buy more-expensive diesel due to the stoppages of natural-gas deliveries from Egypt and the depletion of Israel’s Yam Tethys reservoir.
The Finance Ministry has given government guarantees to IEC for the raising of NIS 1.5b., and the company has promised to raise an additional NIS 1.5b. The raising of this debt will boost the utility’s debt to over NIS 70b.