Minister of National Infrastructure, Energy, and Water Yuval Steinitz today signed three 20-year licenses for supplying electricity for private electricity producers Mashav Initiating and Development, Dorad Energy, and Dalia Power Energies. In addition to selling electricity to Israel Electric Corporation (IEC) (TASE: ELEC.B22), these licenses also entitle the owners of the private power stations to sell electricity to large electricity producers, both industrial and commercial.
The licenses became valid with the minister's signature, after they were approved yesterday by the Public Utilities Authority (Electricity) plenum.
The licenses bring the direct sale capacity for private consumers to over 2,300 megawatts. Additional supply licenses are expected to be granted to private electricity producers, such as Ramat Negev Energy and Edeltech Ashdod, Zomet Energy, and Etgal Energy which will begin producing electricity in the coming years.
Steinitz decided that with the new licenses, the companies will be able to compete with each other for the supply of up to 33% of all private electricity. This will ensure competition between at least the three largest producers, in addition to IEC. This measure is designed to prevent a single producer from attaining too large a share of the total deals for the sale of electricity to industrial companies in the market, which would create over-concentration and have a negative impact on future competition in this sector. The purpose of the rules established in the licenses is to institute regulations for preventing damage to consumers in the coming years as a result of growth and development in the private electricity production and supply market.
The licenses also state that future electricity supply deals between suppliers and their consumers receiving electricity through high voltage and ultra-high voltage transmission must provide an option for termination of the contract after five years. Where low-voltage consumers are concerned, mostly households, subject to future competition in this sector, deals for the exit point will be limited to one-year duration.
Steinitz said, "The real reform in the electricity sector starts today. This is a significant element in the development of a private electricity production market in Israel that will foster competition, the entry of new players, and lower prices in the electricity sector."
Published by Globes [online], Israel business news - www.globes-online.com - on July 13, 2015
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