Israel builds Better Place's monopoly

Dubi Ben-Gedalyahu

Only in Israel will an electric vehicle owner not be able simply to plug in at home.

Next year, in many countries around the world, any citizen who so desires will be able to buy an electric car. The choice will be narrow, the purchase price will be high, and second-hand values not at all clear. However, at least in one critical respect, the citizen will have an incentive: a certain and worthwhile electricity price. The customer in the West will be able to know in advance the approximate cost of charging his car from the national grid and how many kilometers he will be able to drive after each charge, and thus to calculate his costs and savings.

All the manufacturers understand this point, and are designing vehicles for unrestricted charging on the national electricity grid. In this way, they will be able to sell electric cars the same way they sell regular cars: fire and forget.

Most Western countries support this approach, and even encourage it on environmental grounds. If the state believes that the electric vehicle is indeed clean and green, as its supporters claim, then it is in the state's interests or in the interests of the city authorities to boost its use at the expense of the polluting alternatives. Therefore, large cities like London, Berlin, and San Francisco are currently setting up public charging stations with subsidized charging prices, or at least with regular prices.

But the State of Israel, which has never missed an opportunity to create a monopoly or an oligarchy in infrastructures often under the aegis of government regulation does not intend to miss this opportunity too to make some quick cash. The Israeli trick is called "managed charging", and it's simple: instead of letting the electric vehicle owner charge it at any available point such as the power outlet at his home - and pay normal electricity rates just the same as if he were plugging in a domestic cell phone charger, he will have to go via middlemen and pay agency fees, which will be substantially higher than normal grid tariffs.

These middlemen include commercial sub-suppliers, such as Better Place, which will buy cheap packages of kilowatts from Israel Electricity Corporation (IEC) and on-sell them at prices that they will determine, and of course IEC itself. IEC, incidentally, has never concealed its intentions: in its 2009 annual report, it states explicitly that it plans to pass on the infrastructure and charging costs to the electric vehicle owner's electricity bill.

This owner will not be able to charge his vehicle at normal grid prices if he wants to. The grid, the vehicle, and the computers at the charging stations will not allow him to do so.

The state has a plenty of excuses for mandating managed charging: the safety risk (someone apparently forgot the invention of the circuit breaker, more than 70 years ago), and of course, the ultimate argument, "preventing overload on the national grid." According to studies adopted by the Ministry of National Infrastructures itself two years ago, electric cars will impose such a load on the national grid only towards the second half of the decade, if ever. Meanwhile, the network will be managed by middlemen.

Have we forgotten something? Oh yes, the environment. When money comes into the picture, suddenly weaning people off gasoline is no longer a national priority. Each of the big players is rushing to secure its pound of flesh, even if this will deter future customers from exchanging their benzene and diesel fuelled vehicles for electric ones.

But the customers aren't suckers. No-one will want to gamble on uncertain electricity prices that are dependent on the whim of a middleman, and be hit in the future with "roaming costs", "connectivity costs", "insurance costs", and other kinds of mysterious costs, which some future upright regulator will probably have to contend with, after the first billions accumulate in the pockets of the middlemen.

Published by Globes [online], Israel business news - - on November 17, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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