"It's going to be a tough week and summer," Israel Electric Corporation (IEC) (TASE: ELEC.B22) chairman Yiftach Ron-Tal told the nation at a press conference last week together with Minister of Energy and Water Resources Uzi Landau and other officials. Everyone was on hand to tell the public that, this time, it could really happen:- the doomsday weapon will have to be used; there will be rolling blackouts - "compelled" was the word of choice this time - for the first time since the Second Lebanon War in the summer of 2006.
For a moment, just before the weekend, it seemed that the cry of "Wolf!" was real. A series of breakdowns at the Ashkelon and Hadera power plants raised the level of anxiety, and some of the media took Ron-Tal and his colleagues too seriously, and rushed to report an electricity fiasco.
But the weekend has passed, and on Sunday, IEC suddenly announced that there was no electricity shortage. Despite the breakdowns, despite the heat wave, the electricity supply should exceed peak demand by 700 megawatts - a respectable reserve of over 5% of production capacity. Only an extraordinary coincidence of concurrent major breakdowns at IEC could cause an electricity shortage.
Since January, the Ministry of Energy and IEC have been sounding the alarms and sending all kinds of frightening messages about what we can expect this summer. In practice, there has been no real battle for extra megawatts. Proposals by electricity providers to fly in generators were politely rebuffed. A proposal by the Ministry of Defense to provide generators was rejected, because it involved a cost of NIS 15 million. Only in May, did IEC get around to publishing a tender for the procurement of generators, only to withdraw it because of the unrealistic timetable.
The campaign of fear had at least one positive result: it persuaded consumers to conserve electricity. But the campaign appears to have had wholly different objectives, objectives that were not overtly said and were more controversial. The first was to ready a response to a commission of inquiry or State Comptroller's report about the leaders of Israel's electricity market, if despite everything, the unexpected happens and we are plunged into darkness. The second is to persuade public opinion of the need to build more power stations, at the state's expense, or more accurately at the public's expense. This includes the dual-fuel Project D at the Rothenberg Power Station in Ashkelon at an estimated cost of $3 billion and the smaller Alon Tavor Power Station at an cost of $500 million.
At every press conference, IEC chiefs repeat the Project D and Alon Tavor mantra.
The Ministry of Finance has consistently blocked both projects as profligate and superfluous. Today, it turns out that the ministry is right.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2012
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