The rise in world coal prices over the past year is the direct cause of the electricity tariff we will all pay in 2022 on the way up. The Electricity Authority published a public hearing (routine procedure in the Authority. JL) regarding the update of the tariff for next year, which shows that an increase of 4.9% is expected, from 43.3 agorot per kWh today to 45.68 agorot per kWh. The apparent increase comes after Two years in which the tariff was on the decline.
The electricity tariff in Israel is determined according to what is done in the electricity economy, which is a closed economy, ie all the expenses of the electricity economy must be covered by the tariff. On the other hand, revenues also enter the equation, such as the IEC reform that was launched in 2018, and as part of which power stations are sold to private entities (3 power stations have been sold to date) – among the factors that led to the tariff reduction in the last two years.
However, this year household spending increased due to the surge in coal prices. According to government targets, by 2025 the economy will be weaned from electricity generation by coal, but as of today it is still a relatively large component (23%) in the electricity generation mix.
“The main reason for the increase in the price is the global price of coal, which has risen by more than 100% in the past year,” the Electricity Authority said in a statement. “The seller’s cost for the purpose of calculating the tariff. The rise in the consumer price index and an increase in the amount of renewable energies integrated into the economy have led to a further increase in the seller’s cost,” the authority’s explanatory statement reads.
On the other hand, moderating factors are the strengthening of the local currency and the recent sale of the Hagit Mizrah power plant to Shikun VeBinui and Adletech at a price of NIS 1.6 billion.
Looking back over several years, it seems that electricity prices in Israel maintain a certain stability. In 2016, the price per kWh was 45.58 cents – ten cents lower than expected next year. Since then, like a swing, it has risen and fallen several times.
The decision on the determining tariff will be made by the Electricity Authority after the hearing procedure, during which the public is invited to submit objections or submit comments to the Electricity Authority on the matter. After the expiration of the transfer deadline, the Authority will decide, as stated, regarding the determining tariff for 2022, which will take effect from February 1, 2022.