The Public Utilities Authority (Electricity) will convene on Monday to approve a 6.5% electricity rate hike, which will apply retroactively from April 1. Israel Electric Corporation (IEC) (TASE: ELEC.B22) had requested a 12% rate hike, because of its severe cash flow problem.
This is not the first time that IEC has requested a higher electricity rate hike, but the Public Utilities Authority consistently rejects IEC's demands. The latest rate hike was approved on March 20, subject to a hearing.
The rate hike will bring electricity rates to an all-time high of NIS 0.5416 per kilowatt/hour. In 2008, the tariff was NIS 0.5462 per kilowatt/hour, but the lower VAT at the time (15.5% compared with 17% today) resulted in a lower price for consumers.
The latest rate hike will result in a cumulative 30% increase in the electricity tariff since August 2011. Half of the increase is due to the natural gas shortage caused by the termination of deliveries from Egypt, and half is due to IEC's costs. The termination of gas deliveries from Egypt, following attacks on gas pipelines and facilities beginning with the fall of the Mubarak regime in February 2011, has cost the Israeli economy NIS 15 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on April 18, 2013
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