Sources inform ''Globes'' that, unless there is a last-minute change, electricity rates will rise 4.7% from November 1, despite the resumption of natural gas deliveries from Egypt.
At its weekly meeting, the Public Utilities Authority (Electricity) today approved the new electricity rate, on the basis of the dynamic model that was set up this past July. According to the model, the rate is calculated at the end of each month, where a change of more than 3.5% in the tariff requires approval. The current large deviation is a result of the complete halt in gas deliveries from Egypt to the Israel Electric Corporation (IEC) (TASE: ELEC.B22) over the last three months. The amount of gas being supplied by Israel's Yam Tethys reserve has temporarily declined by 30% as a result of water seepage into one of the wells.
Any decrease in gas supply compels the IEC to use diesel or fuel oil to generate electricity, and these fuels are much more expensive than natural gas. The public compensates the IEC for all of its expenses by paying increased rates.
Yesterday, the IEC published a tender to purchase 750,000 tons of diesel for $700 million (not including tax), with an option to increase the amount by 40%. This amount that the IEC intends to purchase should meet its needs as long as Egypt continues to supply 30% of the amount it is contracted to supply via the East Mediterranean Gas Company (EMG).
Electricity rates rose 9% in July following a drop of 70% in gas supply. EMG renewed gas flow last week after repairing the damage caused to the Egyptian National Gas Company (EGAS) pipeline by the last attack, the fifth one since the beginning of the year.
Israeli officials believe that the gas flow has been renewed as a result of the rapprochement between Israel and Egypt subsequent to the return of kidnapped Israeli soldier, Gilad Shalit. On the other hand, renewed flow of gas to Israel followed just a short time after the renewal of gas deliveries to Jordan.
Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011