Most of us no longer grumble over rising electricity rates. We assume there must be objective justification for the hikes - like higher fuel costs. So we pay without much protest. But now it emerges that we are bilked and overbilled. This has a lot less to do with commodity prices in the global marketplace than we were led to believe. The revelations are rocking the Israel Electric Corporation. In a nutshell, for the past decade the IEC consistently inflated its actuarial debt to its retirees' pension fund. Last week the Israel Securities Authority took the extraordinary step of ordering the IEC to immediately cancel undertakings to the pension fund to the tune of a whopping NIS 6 billion. The IEC union's reaction was expected and unequivocal: "We have been nuked," it declared. "We won't allow this unreasonable edict to be implemented. It will instigate war with the employees and scuttle any dialogue on reforming Israel's power-supply structure." Thus looms another mammoth conflict with the super-powerful IEC union. As clearly demonstrated in past confrontations, this union hardly shrinks from inflicting hardship on the general public. We are all IEC customers because the union has thus far successfully foiled all semi-privatization schemes or overhauls that would have split the giant into smaller components. With no competition, we are all at this union's mercy. THE LATEST imbroglio began with a discovery by the IEC's auditors, Deloitte Brightman Almagor, that the actuarial calculation on which IEC liabilities to the pension fund were based was grossly exaggerated. It was arbitrarily ruled that pensions must be increased by 2 percent each year. However, many of the 5,000 IEC pensioners are at the highest pay rungs and an automatic annual increment would have taken their pensions above the top of the IEC salary scale. All this is based on the operative premise within the IEC that employees are routinely promoted and that this practice also applies to pensioners. The auditors exposed a raw nerve. IEC business mindset and labor-relations culture are worlds apart from anything acceptable elsewhere. The IEC's underlying argument is that it's unrealistic to suppose that its union would allow the value of pensions to erode (even though this is the case with nearly everyone else's pensions) and that therefore adjustments for inflation are necessary, even in the absence of inflation. The most the IEC is willing to concede is that its actuarial liabilities were excessive by a mere NIS 2.5b. The IEC, moreover, asked that all corollary accounting adjustments be spread out and that it not be obligated to immediately and retroactively modify its books and financial reports. The Israel Securities Authority has unambiguously rejected all the IEC's contentions and requests. This might have extremely dramatic implications. Reducing the pension burden from NIS 23.8b. to NIS 17.8b. would force the IEC to drastically revise its financial statements. Lower liabilities theoretically improve the positions of stock- and bond-holders. The IEC bond rating was indeed lowered due to actuarial deficit. The bottom line is that the IEC is healthier and less weighed down with debt than claimed. This should lower electricity rates in future, even if past overpayments are probably unrecoverable. Another ramification is that the company cannot now portray itself as unable to construct new power plants and auxiliary stations without raising electricity prices. The IEC is in deep, hot water. The ISA demands that, regardless of the bombshell, the IEC publish its second-quarter financial report on time at the end of this month or face fines, of the sort already imposed on it last year for missing deadlines. Of course, the IEC wouldn't be in this fix had it managed its affairs more daringly. This is comeuppance for years of capitulation to the union at the expense of reform. This union is now on the warpath again and its menace is unreduced. It can literally switch off the current. But the showdown is inevitable. The government must help the IEC's management muster the courage to stand up to outright extortion. Otherwise the entire economy - the public sector, industry, commerce and most of all ordinary citizens - will continue to pay exorbitantly for one union's outrageous actuarial hanky-panky.