6.5% electricity rate hike approved

Electricity rates are set to reach an all-time high after the Public Utilities Authority (Electricity) approved the latest rise.

The plenum of the Public Utilities Authority (Electricity) last night approved a 6.5% hike in electricity rates in 2013. The decision means that electricity tariffs for households before VAT will rise from NIS 0.50.86 per kilowatt hour to NIS 0.54.16. The decision is subject to a hearing.

This is the highest price for electricity ever. In 2008, the price was NIS 0.54.62 per kilowatt hour for a brief period but VAT during that period was only 15.5% compared with 17% today.

The latest price hike means that electricity prices have risen more than 30% since August 2011. Half of the rise stems from the Egyptian gas crisis and the cut off of supplies through Sinai and the remainder in higher costs to the Israel Electric Corporation (IEC) (TASE: ELEC.B22). The Egyptian gas crisis has cost the IEC about NIS 15 billion in having to purchase more expensive alternatives.

The Public Utilities Authority said that electricity rates would have risen 50% had they not worked to spread the hike over three years and taken other steps such as the receipt of NIS 9 billion in government guarantees, and withdrawn NIS 600 million from a secret trustees account of the IEC and its employees.

The Public Utilities Authority decided not to change its decision from last year to raise electricity prices by a further 3.7% in 2014.

The price of producing electricity will fall next month when natural gas supplies begin flowing from the Tamar field.

Published by Globes [online], Israel business news - www.globes-online.com - on March 21, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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