Rabbi Gafni Calls on Government to Freeze Electricity Prices

YERUSHALAYIM
MK Rabbi Moshe Gafni chairs a Finance Committee meeting at the Knesset. (Olivier Fitoussi/Flash90)

​​The Finance Committee, chaired by MK Rabbi Moshe Gafni (United Torah Judaism), convened on Monday to discuss prices increases and the cost of living. Committee Chairman Rabbi Gafni said at the start of the meeting: “For a long time we have all been encountering severe price increases, any way you look at it — much more than in the past, and [more than] in other places. Just now we have been informed about an increase in the interest rate, and increases in the prices of electricity, water, municipal property tax and various products. The thing that bothers the state’s citizens the most is this reality, in which it’s becoming more and more difficult. Apartment prices jumping by 20%; that is unprecedented.”

Israel Electric Corporation CEO Meir Shpigler said: “The price increase is set by the Electricity Authority, and is caused solely by the increase in [the price of] raw materials. About NIS 3.5 billion is a result of a very significant increase in coal costs, this is almost the sole reason. As for conversion of coal power plants to gas, that should certainly help to lower [prices], and it is on the agenda. By the end of 2025 we are scheduled to complete all the conversions, and we believe that this change will also affect electricity rates. We’re doing everything to make the work efficient, and to ensure that current expenses will drop, as will electricity rates. We have no interest in raising prices, we view electricity as a ​vital product.

“The IEC is fully transparent to the Electricity Authority; the Electricity Authority analyzes the revenues and expenditures together with us, in full cooperation. They’re the ones who manage the issue, there isn’t another penny here except for excess coal costs. It’s either to have such an [price] increase, or for the state to allocate the funds,” said Shpigler.

Rabbi Gafni asked: “Have you reached out to the government on the matter?”

Shpigler: “No, we spoke with the Ministry of Finance Budget Department; there’s a new government, we’ll turn to it with this issue. By the way, as part of the move to open the market to competition, we are currently producing less than 50%. The IEC is accelerating the process of converting the plants to gas, to the point that we started out even before the consent of the [board of] directors. We’re sensitive to the public’s [needs].”

Rivka Laufer of the Electricity Authority added: “This year was very surprising. We started in good condition, the IEC opened up competition, gas-based production began and this stabilized the prices. We thought that the reforms were beginning to work. We made many cuts in the IEC, I don’t think there are changes left to make there. We made a great effort not to raise prices, we did everything possible. We raised the prices slightly at first. There was a double coal event, demand dropped and companies stopped production. This was compounded by the war in Russia. Eventually the supply dropped and [coal] prices rose. This was unforeseen, and we started raising prices gradually, until in the summer [coal] prices shot up, and we raised the [electricity] prices by eight to nine percent.”

Rabbi Gafni said during the debate: “The retail chains were invited, did anyone show up? The large manufacturers were invited, did anyone arrive? It’s important for me to know about this; I will summon them here, and if they don’t show up, they won’t come before the Finance Committee anymore. This has to be here on the table; we have to know why the retail chains that receive a product for NIS 3 sell it for NIS 20. There are a lot of components to this matter.”

Minister of Economy and Industry MK Nir Barkat (Likud): “Any right-minded person that comes from the free market — and I believe in a free and open market, I can speak on behalf of all the ministers and the Prime Minister — we take the cost of living as a core issue. There is the overall cost of doing business, and these are concepts that we will have to manage. Along with this, we will compare [the situation] to the OECD and see how we can reduce the gap with them.

“On Thursday we were sworn in, and on Friday morning I heard the announcement about price increases, and I said to myself, wait a moment, that’s on our watch. So I made a series of calls to the business sector, I spoke with the finance minister several times. We will present the strategic responses to the cost of living in the budget, but we have also encountered it in the short term, and we are examining what needs to be done to attenuate the current increase. This issue is under examination, and we want to resolve the short term. There is no question here that we also have to cope in a smart way with [market] concentration, and open up competition, and also deal with the regulation issue. It’s like a cancer, if we don’t know how to reduce the unnecessary regulation similarly to the rest of the world and the OECD, we will pay very high costs.

“I will conduct a roundtable on this issue with representatives of industry and our representatives, we need inter-ministry cooperation here. We’re asking for a few days, not 100 days of grace, a few days to provide a short-term solution, and later on we will also present an orderly plan,” said Barkat.

Rabbi Gafni summed up the meeting: “We in the Finance Committee call upon the government to freeze electricity prices, to find a way. This is a crucial factor in terms of price increases, along with the chain reaction with municipal property tax and water. [We have to] address the issue and lower the cost of living; it’s reached a scale that we have not seen in the past. We have known in the past how to cope with increases, and we will do it in the committee too, we’ll invite the retail chains and the manufacturers. We’re calling to lower prices, it’s critical for us.”

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