The Electricity Authority announced yesterday that the electricity rates for 2023 will be about 8.2% more expensive for the home consumer starting December 1, 2023.
According to the Authority’s announcement, the tariff base for the production segment for the Electric Company for the years 2022-2027 will also be updated. According to the Authority’s announcement, “The decision to update the production cost calculation model for the Electric Company consists of a large number of changes, among them a 35% reduction in the rate of return recognized by the Electric Company on equity, so that it will now stand at 6.8% instead of 10.4%, which saves approximately NIS 250 million per year Reducing consumer payments for operating costs, management and company headquarters, worth about NIS 150 million per year; Changing the method of return to capital, so that it will be spread over many years, while reducing the annual burden on consumers worth about NIS 750 million per year, and more. Yes, the application of the decision from 2022 allows the offsetting of the debt for the coal so that it drops from NIS 4 billion to NIS 2.5 billion.” And in short, the Electricity Authority, by increasing the price, did a great favor to consumers. According to her, “Without these amendments, the increase in the electricity tariff for the consumer would have been expected to be much higher.”
Of course, the Electricity Authority is not to blame, and they are in other places: “Other factors that led to the increase in the rate are a delay in the construction of the gas-fired power plants that will allow the closing of the polluting coal-fired plants (1-4) in Orot Rabin; a delay in the project to convert the rest of the coal-fired units from coal generation to gas generation and Approval for additional production hours due to the emission permit issued by the Ministry of Environmental Protection for units 6-9 at the Eshkol site of the Electric Company, a sharp increase in the exchange rate; a continuous increase in the consumer price index; and interest rate increases in Israel and around the world.”
The Authority’s decision is intended to “balance between the need to maintain the financial stability of the electricity sector and the mitigation of the impact on consumers in the economy, the Authority decided on the spread of the debt created due to the sharp increase in the cost of coal in 2022 over three years. This is based on a cautious assumption that in the next three years the use of the vast majority will be reduced of coal in the production of electricity for the Israeli economy”.
“The Electricity Authority has carried out a coup which means that the economic burden on the business sector has been increased and the cost of living has been increased for the general public in Israel. This is while taking advantage of the opportunity that there is currently no functioning government,” commented Attorney Uriel Lin, President of the Association of Chambers of Commerce in response to the Electricity Authority’s decision to increase electricity rates by 8.2% in the coming days. According to a calculation by the union’s economists, this is an annual increase of about NIS 800 for an average family and an increase that can reach thousands of NIS a year for businesses.
Lin calls on the incoming Prime Minister, Binyamin Netanyahu, and the appointed Minister of Finance, Bezalel Smotrich, to address the issue of the electricity sector in Israel immediately upon taking office. “Electricity prices are now rising due to the neglect of the issue by the Israeli governments. They could have taken a series of steps that would have prevented the price increases, such as lowering the taxation on coal and making sure to lower gas prices. They didn’t do it and now the public is paying.
“The new government must demonstrate governance and establish, first and foremost, a body that will include all the activities of the energy sector in Israel, a body that will put an end to the chaos in the electricity sector and the conduct of the electricity company,” Lin said.
Regarding the current increase, Lin returned and claims that the public should not pay for the failed conduct in everything related to the electricity sector in Israel. “The incoming government should finance the increase through the wealth fund, instead of increasing the burden and cost of living on the public,” said the President of the Association of Chambers of Commerce.
The President of the Federation of Manufacturers and Chairman of the Presidency of Employers and Businesses, Dr. Ron Tomer, commented on the second consecutive increase in the electricity rate, stating that “the increase in the electricity rate was made without giving the public the right to challenge the erroneous assumptions that led to the rate increase, as part of an organized public hearing. Also, this increase was made after the Electricity Authority promised not to raise the rate, and after the incoming Prime Minister (Benyamin Netanyahu. LA) also promised to freeze the electricity rate. However, as the public can see for themselves, there is no connection between the beautiful promises and the reality. Although we proposed Many solutions to prevent the tariff increase, the Electricity Authority has chosen again to raise the electricity prices, which are still high. This increase is a serious injury to the public and businesses in Israel, in a difficult time as well, when we are all suffering from the wave of price increases. An unfortunate decision by the Electricity Authority, this is not how you fight the cost of living.
“We hope that the new government will live up to the promises of the incoming prime minister and find a way to cancel the electricity tariff increase.”