Electricity subsidies for solar energy producers in Israel do not differ from the global norm, claims the government in its statement of response to a request to recognize a class action lawsuit against the government over the so-called green electricity subsidies. "Globes" obtained a copy of the statement of response.
The government rejects the claim that electricity rates must reflect only the cost of production. The government says that it has the right, when setting electricity rates, to include the interest of encouraging electricity production from clean energy sources, which is accepted practice in other countries.
Since last year, Israel Electric Corporation (IEC) (TASE: ELEC.B22) has been purchasing power from solar energy producers at a rate (feed-in tariff) that was preset for 20 years by the Public Utilities Authority (Electricity). The rate is several time higher than the cost of producing electricity from conventional sources (coal, natural gas, diesel, and heavy industrial oil), and is intended to encourage the development of electricity production from renewable and environmentally friendly sources.
This policy is in line with the cabinet decision, which set a target of 10% of electricity production from renewable sources by 2020. The Public Utilities Authority earlier estimated in an internal report that the cost of achieving this target will result in a 14% increase in electricity rates, amounting to NIS 3.85 billion.
In February, a private citizen petitioned the Jerusalem Administrative Court for a NIS 12 billion class action lawsuit on behalf of two million IEC customers. The claimant wants an injunction against continued payment of the subsidy paid to private power producers, and a court order voiding all contracts signed with them. The claimant also wants the government to refund NIS 56 million to consumers for direct and indirect damages which he claims was caused to them by the subsidized electricity tariffs up to the date of the filing of the petition.
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2010
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