Antitrust Authority director general David Gilo has sent a warning to Israel Electric Corporation (IEC) (TASE: ELEC.B22). The Antitrust Authority today notified the utility that it was considering banning it from increasing its electricity production capacity in order to prevent harming competition against independent power producers. The instruction will enable the independent power producers to consolidate their positions and prevent harming their incentives for entering the market.
On Tuesday, Gilo accused IEC employees of breaking the law at least five times in recent months. Speaking at a conference on regulation in the 21st century at the Hebrew University's Business School, he alleged that IEC employees were abusing their control of the national grid to prevent independent power producers from competing against the utility.
The Electricity Sector Law 5756-1996 bans IEC from building new power stations. In practice, the utility built power stations as part of its emergency plans, and it is due to build the coal-fired D power station in Ashkelon and a power station at Alon Tavor in collaboration with strategic investors.
In the summons for a hearing, Gilo said, "The present time is characterized by the opening of the power production sector to competition and the entry of independent power producers… Increasing IEC's electricity production capacity causes, or is liable to cause, problems for independent power producers, which have already begun to compete against IEC in the production sector."
Gilo has the power to give orders to IEC as it is a monopoly along the entire electricity supply chain, including production.
IEC said in response that it would study the decision. It is determined to pursue the electricity sector reform as a critical target for the sector in 2014.
Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2014
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