Starting this week, the household can connect to a private electricity supplier and enjoy a discount of at least 5% on the electricity bill. The problem is that this option is only possible for those who have a smart electricity meter. Those who do not have such a meter will have to wait two months
As of Sunday this week, the option of private homes to connect to private electricity providers was expanded. The method, which has operated so far as a pilot, allows one to “disconnect” from the electricity company and connect to one of the private companies that provide electricity services, among them Electra Power (Supergas), Cellcom and Pazgas, and receive electricity from them at a lower rate than that of the electricity company. “Large businesses such as hotels have been purchasing electricity from private suppliers for years, and enjoy a discount. Now households can also benefit from it,” says Chen Melamed, CEO of Electra Power.
Households make up about a third of electricity consumption and have different consumption patterns than businesses. The main consumption at home is in the morning before going to work and in the evening when you return from work until about 10 at night.
It is not really about disconnecting from the electricity company. The electric network, cable maintenance and network operation will still remain the responsibility of the electric company, but the supply segment is transferred to another company.
“The price of electricity varies according to the demand for electricity. The higher the amount of electricity consumed in the economy, the higher the price of electricity,” explains attorney Michael Macia, a partner in the energy department and a specialist in the regulation of the electricity sector at Agmon Co. and the former legal advisor of the Electricity Authority. When the customer’s billing is done on the basis of half-hourly consumption measurement, as can be done with smart meters, it is possible to direct the consumer’s behavior and incentivize him to consume during the hours when the cost of electricity is lower. This is the way in which the private electricity suppliers can generate value for customers and give discounts on the electricity company’s prices.”
1 Viewing the gallery
Adv. Michael Makiya. Economic logic
(Photography: Yoram Reshef)
Another way in which the private suppliers can reduce the rate for customers is the establishment of storage facilities that allow the suppliers to purchase the electricity during the hours when it is cheaper and sell it towards the evening hours when the demand for electricity is at its peak and so is the price.
How do you connect to a private provider?
One of the difficulties in connecting to the private electricity suppliers stems from the low amount of smart meters installed in homes throughout the country. The smart meter, which allows you to record the amount of electricity consumed at home every hour, is a prerequisite for joining one of the private electricity suppliers. Today, less than 200,000 smart meters are installed in Israel in private homes. The electric company says that by the end of 2023, 450,000 smart meters will be installed.
However, there is a way to get ahead of the queue for a smart meter. For a fee of NIS 223, you can order the installation of such a meter from the electric company. Although this is a financial expense, it will pay for itself quickly.
The electricity bill for the average home consumer, according to the Electricity Authority, is about NIS 4,570 per year (NIS 381 per month). The amount is divided into fixed payments (usage fees) and a consumption rate that depends on the amount of electricity the customer consumes. The consumption rate makes up about 85% of the electricity bill, about NIS 3,890 per year. On this part, the private suppliers offer discounts that start at 5% or even more. A 5% discount will amount to about NIS 195 per year so that within a year or so you can cover the cost of installing the meter.
Another difficulty in the migration procedure is the amount of time it takes to perform it. After installing a smart meter, the roaming process can take about two months and only at the end will the customer start paying the bill to the supplier and not to the electricity company. This, in addition to a period of time that can last up to two months from the moment of the connection request to the actual connection. For comparison, in the European Union the mobility procedure must be carried out in only three weeks. According to the data of the consulting company BDO, after 4-5 years of opening the supply segment to competition, the market share of the new competitors in Ireland and Australia reached 40%.
Some of the companies that chose to enter the private market already offer the packages to customers on their website. If the customer has a smart meter, he can directly contact the company he wants to connect to. If there is no smart meter, contact the electricity company and ask to install one. After installing the smart meter, you can contact the companies and ask to switch to one of the routes.