Prime Minister Binyamin Netanyahu is expected to approve a deal to freeze the drought levy for three-and-a-half months and raise water prices in two phases, during a meeting on Friday morning. Negotiations over the levy and water prices have been going on over the past few days and all of the ministries and agencies are close to a deal. According to what has been outlined so far, though of course subject to change, the drought levy will be suspended from January 1 to April 15, just six months after it went into effect. The levy will automatically resume on April 15 for the summer months. Meanwhile, water prices will likely rise 25 percent on January 1. They will rise another 15% in July, but that percentage will be relative to the prices right now and not prices after the first increase. The Water Authority had wanted to raise the prices 40% in one fell swoop, but the National Infrastructures Ministry has apparently prevailed upon it to agree to a two-phase increase. However, raising water prices in two stages will leave a NIS 230 million-270m. budget gap in the water economy at the beginning of next year. That shortfall will have to be picked up by the Treasury, but it has yet to agree to do so. However, the prime minister is apparently in favor of the current deal, so he will likely prevail upon the Treasury on Friday to agree to find the funds. The drought levy is an extra tax on every cubic meter of water above a certain cap. Many MKs have vehemently protested the tax, and their pressure apparently forced the new arrangement. The levy was initiated to encourage conservation in the face of five straight years of drought. It was quite successful over the summer, reducing water consumption by 15%, according to the National Infrastructures Ministry. Water prices are rising as Israel enters the desalination age and the majority of water will not fall from the sky, but will be produced by desalination plants. The newest plant - in Hadera - was the scene of a dedication ceremony on Thursday, when it was connected to the National Water Carrier. It will produce 127 million cu.m. of water per year when it reaches full capacity sometime in 2010. At that point, there will be more water coming from desalination than being provided by Lake Kinneret. Global warming and climate change have caused rainfall averages to drop over the past several years, and while a great year of rain might come now and again, in the future the average annual rainfall is expected to be lower than in previous decades.