The Public Utility Authority - Electricity is coming under intense pressure to approve an increase in electricity tariffs. Sources inform ''Globes'' that today the authority discussed Israel Electric Corporation (IEC)'s request for an immediate hike of around 10%.
IEC chairman Mordechai Friedman, board member Moshe Gavish, and CFO Avner Yehudai have warned of the dire consequences for the raising of capital and the development of the energy economy, if the tariff hike is not approved. The Ministry of National Infrastructures has, in recent days, been putting intense pressure on the Utility Authority to allow an increase in electricity tariffs. A decision is due this evening or tomorrow.
IEC is calling for tariffs to be increased by 15% on average. The company's board decided last week that it would not authorize any further raising of capital, without a substantial tariff hike. Sources in the electricity market today criticized the hurried manner in which IEC's request had been handled. "The Utility Authority council is being convened under heavy pressure from the National Infrastructures Ministry. From a professional point of view, there is no call for a hike this steep, and the issue should be approached in a professional manner. The key problem here is structural change, not tariffs," they said.
At present, the Utilities Authority council is composed of just three board members: chairman Amnon Shapira, the Finance Ministry representative, Uri Shusterman, and the National Infrastructures Ministry representative, Hagit Ben Hamou. The Finance Ministry representative is reportedly opposed to the hike, so the decision will depend on a single vote. Shapira has the right to a double vote in the event of a deadlock. It is believed that Utilities Authority will have difficulty approving a hike upwards of 3% at this stage.
An IEC spokesperson said in response, "IEC has submitted its request to the Utilities Authority. The Utilities Authority council is reviewing the issue of electricity tariffs and will make an announcement once a decision has been reached." A National Infrastructures Ministry spokesperson said, "The ministry is not party to the decision on tariffs. The Utilities Authority is independent, and the ministry does not intervene in its decisions, even though there are grounds for an increase in electricity tariffs."
Published by Globes [online], Israel business news - www.globes.co.il - on August 1, 2007
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