A NIS 7 billion reform in Israel’s electricity production and distribution system is set to kick in this week, with the final passage by the Knesset this week of the Electricity Bill. “Something new happened in Israel when this law was passed,” Energy Minister Yuval Steinitz said at an energy conference on Tuesday. “For 70 years Israel suffered from the threat that someone who was dissatisfied with their work agreement or other issues could ‘turn off the juice,’ because all electricity production was controlled by a workers’ committee and union that could do what they wanted. From now on, that power is no longer in their hands,” he said.
The complicated law, which goes into effect Thursday, is aimed at breaking up the control of the Israel Electric Corporation of the country’s electricity. The IEC will sell five of its power plants to other producers, but it will also receive a permit to build two new plants; the company will shed 1,800 workers, with the government footing the bill for their severance pay and benefits to the tune of NIS 6.4 billion; and regulations on the production and delivery of power by the IEC will be relaxed.
Altogether, it’s estimated that the law will cost taxpayers NIS 7.1 billion, according to Globes. At the end of the process, the IEC will be responsible for production of just 40 percent of Israel’s electrical power, although it will remain the distributor of power in most parts of the country.
The law is the result of a decades-long effort by governments to break up the IEC’s monopoly on power production, and although the deal accedes to much of what IEC management and workers had demanded as the price of reform, the company has still filed a petition with the High Court against enactment of the law. About this, Steinitz said that “in the coming years the IEC will stop investing in power production, but it will be able to invest more in distribution. This will lead to an increase in the use of alternative energy, and make electrical production more efficient.”
After 22 years, Steinitz said, “we have accomplished the most important reform in the most important element in society – and the most important thing is that no one group can any longer control electrical production – no more ‘power fluctuations,’ management or Histadrut that can threaten Israelis with a cutoff of power.”