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Electricity rates to rise 8.9% in April

22 Mar, 2012 13:52
שלח תגובה במיילAmiram Barkat

The rate hike is well above the 6.5% rate hike originally planned and follows demands from the Ministry of Finance.

The Public Utilities Authority has approved an 8.9% electrcity rate hike for April. Sources inform ''Globes'' that the Ministry of Finance asked for an immediate 8.9% electricity rate hike, well above the 6.5% rate hike published in the summons for the hearing. Ministry officials made the demand at Tuesday's Public Utilities Authority (Electricity) discussion on the planned rate hike.

Two of the five members of the board opposed the proposal, and demanded a lower electricity rate hike, after rates have already climbed 25% since the summer of 2011.

Yesterday, "Globes" reported that Minister of Finance Yuval Steinitz tried to postpone the Public Utilities Authority's meeting, until possible solutions were formulated to ease the planned rate hike. Ministry officials objected to Steinitz's request, saying that the Public Utilities Authority had full independence to determine electricity rates. The officials were backed by a legal opinion.

The Public Utilities Authority's decision on electricity rates in 2012-14 has been delayed by a month. Israel Electric Corporation (IEC) (TASE: ELEC.B22) is seeking an immediate 9% rate hike, which Public Utilities Authority chairwoman Orit Farkesh strongly opposes. She insists on keeping the originally planned 6.5% rate hike, the first hike scheduled for a three-year period decided on by a team headed by Acting Ministry of Finance director general Doron Cohen.

The rate hike is intended to ease IEC's cash flow problem. IEC faces a NIS 3 billion shortfall in the coming months, caused by its need to buy more expensive diesel due to the stoppages of natural gas deliveries from Egypt and the depletion of Israel's Yam Tethys reservoir. The Ministry of Finance has already given government guarantees to IEC for the raising of NIS 1.5 billion, and the company promises to raise an additional NIS 1.5 billion. The raising of this debt will boost the utility's debt to over NIS 70 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on March 22, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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