Following the canceling of the excise tax on fuel purchased by Israel Electric Corporation (IEC) (TASE: ELEC.B22) and compensation in the framework of a class action lawsuit, the electricity rate for home consumers will go up 2.9% starting on January 1, and the average rate will rise by 2%, the Public Utilities Authority (electricity) announced. The decision was taken a short time ago, following a public hearing by the Authority.
Early this month, the Public Utilities Authority (electricity) announced that following prices rises in the basket of fuel, the shekel depreciation against the dollar, and the substantial increase in renewable energy, the electricity rate would be raised by an average of 6% and by 7.3% for households. The announcement was succeeded by strong public criticism and protests throughout Israel, because higher electric rates will cause prices rises throughout the economy. Indeed, several days after the announcement, water rates were raised, and several major food manufacturers announced price hikes.
The Public Utilities Authority (electricity) stated in its announcement that the lower increase in the electricity rate had become possible when the Ministry of Finance announcement a postponement of an additional excise tax amounting to NIS 57 per ton to the beginning of 2021. This measure will save electricity consumers a cumulative NIS 715 million, amounting to 2.4% of the rate for household consumers. This amount will be subtracted from the rate for 2019. If the measures for exempting coal from excise tax are not completed by February 28, 2019, the electricity rate will be revised accordingly.
In addition, in the framework of arbitration concerning an IEC auction for the purchase of GIS equipment, for a sub-station, it was recently announced that IEC would probably receive NIS 465 million in compensation during 2019. The bulk of this sum will be returned to electricity consumers. Half of the compromise amount will be recognized in the rate for 2019, equivalent to 0.8% of the rate for home consumers. The balance of the sum will be returned to consumers in the following years.
Published by Globes, Israel business news - en.globes.co.il - on December 24, 2018
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