The Israel Electric Corporation closed the tenderfor a new public relations consultant last week. So what issues willthe new PR consultant have to contend with, and how might his job bemade easier through real action on the part of the IEC?
"Thecompany's public image problems derive from the fact that it is a100-percent monopoly and its wage structure is among the highest in thepublic sector," Hezi Kugler told The Jerusalem Post this week.
He spent three years as director-general of the NationalInfrastructures Ministry until a few months ago and has now started hisown company, Kugler Development and Investment.
Relations between the powerful union and the IEC have been thetopic of numerous press articles and even dominated Knesset hearingsmeant to discuss the shortage of electricity. Because it's basicallythe sole provider of the country's power, a strike there has theability to affect the entire public. Add to that all the talk aboutfree electricity for employees and very high salaries, and the publicstarts out with a negative image of the company.
"Even when it [the company] is right and a cabinetdecision or action may actually affect it adversely, it is oftengreeted with skepticism. It starts out with a handicap," according toKugler.
So what can the IEC do to change its image? According toKugler, what is absolutely essential, from an image perspective, but,more importantly, from a substantive perspective, is reform.
"Its image problem will improve once there reallyis a reform and it can point to change," the former D-G opined. "Rightnow, the workers are holding the company hostage, however, even thoughthe union has been in favor of cooperating with private initiatives.There was a possible reform agreed to a few months ago and the companyand the union were supposed to start negotiating now. However, I'veread that because of the dispute over the pensions, the negotiationshave been delayed." Last week the Israel Securities Authority ordered the IEC toimmediately cancel NIS 6 billion worth of undertakings to its pensionfund, because for the past decade the corporation consistently inflatedits actuarial debt to its retirees' pension fund. "Reform used to be called privatization," but now it's morelike partial privatization, Kugler continued. "Without reform, it'simpossible to have a competitive electricity market." When he was still at the ministry, he and then-infrastructuresminister Binyamin Ben-Eliezer (Labor) "spent hours upon hours ofnegotiations with the union and with the company. Eventually we workedout an agreement both of them were satisfied with, but the FinanceMinistry rejected it." So "we are basically back at square one. Now there's a changein leadership [at the ministry], so there might be new approaches. ButI think there's a chance of reaching agreement, and I urge the entirepolitical leadership to work toward such an agreement. To get thererequires a great deal of long-term political leadership from the primeminister, the finance minister and of course the nationalinfrastructures minister [Uzi Landau of Israel Beiteinu]," Kugler said. He also vehemently rejected the notion that the IEC charged exorbitant prices for electricity. "Prices are average, even a little low, in Israel. Prices are not artificially inflated," he said. Moreover, Kugler opposes lowering prices in accordance with fuel prices. "The regulator should not be adjusting electricity prices whenfuel prices go down, or there's a change in the composition of the fuelbasket. Lower prices encourage excessive use. That's not a good thingconsidering Israel's reserves sometimes hover at less than 3% and wehave no backing from adjacent grids," he said. Instead, "the savings should be used for infrastructure, for arenewable energy portfolio, and to making sure the ambitious program ofbuilding natural gas power plants goes up on time," he said. Actually,that's IEC Chairman Moti Friedman's preferred strategy, Kugler added. Regarding the controversial plan to build another coal-firedpower plant in Ashkelon by 2014, Kugler contended that it wasnecessary. "By 2014, Israel will be faced with a potential electricityshortage. There are three ways to guarantee what's called the baseload,which needs to be constantly available: coal, nuclear power andhydroelectric. Israel only has coal, so the best thing is to keep itdown to 50% of the energy basket, as opposed to the 70% it was severalyears ago. So the plant is definitely necessary and as demand rises,more such plants will be needed," he said. However, future plants could be built with pollution-reductiontechnologies as they become available, which would limit the damage, headded. While Kugler believes that alternative energy could produce 20%of Israel's energy needs, "that's a long-term goal and there's no wayit can be met by 2014-15." Even the cabinet decision which set out 10% by 2020 is an ambitious target, according to Kugler. Yael Cohen-Paran, executive director of the Israel Energy Forum,an NGO that encourages a sustainable energy policy, suggested lettingthe IEC compete for alternative energy projects and undertake realefficiency initiatives. "The biggest challenge facing the company is the energy crisisin Israel. No one views the IEC as a company which encouragesefficiency, except on a PR level. If it embarked on true efficiencyprojects, like reducing use in industry and households, then its imagewould improve," she told the Post on Thursday. A cabinet decision has kept the IEC out of renewable energy andthat's a problem, according to Cohen-Paran. Such projects shouldn't berestricted solely to the IEC, but "if it had been allowed into themarket, then there would have been more alternative energy in use inlarge quantities for a while now." "If it were allowed to try to meet the government's 10% goal,then it would have been taking the necessary steps, but insteadalternative energy is not proceeding as it should," she added. "Its image problem will improve once there reallyis a reform and it can point to change," the former D-G opined. "Rightnow, the workers are holding the company hostage, however, even thoughthe union has been in favor of cooperating with private initiatives.There was a possible reform agreed to a few months ago and the companyand the union were supposed to start negotiating now. However, I'veread that because of the dispute over the pensions, the negotiationshave been delayed." Last week the Israel Securities Authority ordered the IEC toimmediately cancel NIS 6 billion worth of undertakings to its pensionfund, because for the past decade the corporation consistently inflatedits actuarial debt to its retirees' pension fund. "Reform used to be called privatization," but now it's morelike partial privatization, Kugler continued. "Without reform, it'simpossible to have a competitive electricity market." When he was still at the ministry, he and then-infrastructuresminister Binyamin Ben-Eliezer (Labor) "spent hours upon hours ofnegotiations with the union and with the company. Eventually we workedout an agreement both of them were satisfied with, but the FinanceMinistry rejected it." So "we are basically back at square one. Now there's a changein leadership [at the ministry], so there might be new approaches. ButI think there's a chance of reaching agreement, and I urge the entirepolitical leadership to work toward such an agreement. To get thererequires a great deal of long-term political leadership from the primeminister, the finance minister and of course the nationalinfrastructures minister [Uzi Landau of Israel Beiteinu]," Kugler said. He also vehemently rejected the notion that the IEC charged exorbitant prices for electricity. "Prices are average, even a little low, in Israel. Prices are not artificially inflated," he said. Moreover, Kugler opposes lowering prices in accordance with fuel prices. "The regulator should not be adjusting electricity prices whenfuel prices go down, or there's a change in the composition of the fuelbasket. Lower prices encourage excessive use. That's not a good thingconsidering Israel's reserves sometimes hover at less than 3% and wehave no backing from adjacent grids," he said. Instead, "the savings should be used for infrastructure, for arenewable energy portfolio, and to making sure the ambitious program ofbuilding natural gas power plants goes up on time," he said. Actually,that's IEC Chairman Moti Friedman's preferred strategy, Kugler added. Regarding the controversial plan to build another coal-firedpower plant in Ashkelon by 2014, Kugler contended that it wasnecessary. "By 2014, Israel will be faced with a potential electricityshortage. There are three ways to guarantee what's called the baseload,which needs to be constantly available: coal, nuclear power andhydroelectric. Israel only has coal, so the best thing is to keep itdown to 50% of the energy basket, as opposed to the 70% it was severalyears ago. So the plant is definitely necessary and as demand rises,more such plants will be needed," he said. However, future plants could be built with pollution-reductiontechnologies as they become available, which would limit the damage, headded. While Kugler believes that alternative energy could produce 20%of Israel's energy needs, "that's a long-term goal and there's no wayit can be met by 2014-15." Even the cabinet decision which set out 10% by 2020 is an ambitious target, according to Kugler. Yael Cohen-Paran, executive director of the Israel Energy Forum,an NGO that encourages a sustainable energy policy, suggested lettingthe IEC compete for alternative energy projects and undertake realefficiency initiatives. "The biggest challenge facing the company is the energy crisisin Israel. No one views the IEC as a company which encouragesefficiency, except on a PR level. If it embarked on true efficiencyprojects, like reducing use in industry and households, then its imagewould improve," she told the Post on Thursday. A cabinet decision has kept the IEC out of renewable energy andthat's a problem, according to Cohen-Paran. Such projects shouldn't berestricted solely to the IEC, but "if it had been allowed into themarket, then there would have been more alternative energy in use inlarge quantities for a while now." "If it were allowed to try to meet the government's 10% goal,then it would have been taking the necessary steps, but insteadalternative energy is not proceeding as it should," she added.