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The Public Utilities Authority (Electricity) will discuss the 6% electricity rate hike for 2012 on Monday. The Authority doubts that a decision will made at the meeting, and that it will have to hold more meetings.
Since the hearing on the rate hike was announced on January 26, numerous queries by consumer organizations and other parties have been submitted to the Public Utilities Authority. The proposed rate hike is the third in the past year, and follows a 15% increase in electricity rates in 2011.
The plan to spread the electricity rate hikes over several years was in response to Israel Electric Corporation's (IEC) (TASE: ELEC.B22) demand for a 30% rate hike to cover the extra cost of diesel and fuel oil to make up for the shortage of cheaper natural gas. Electricity rates are due to rise by 6% in 2012, 2.6% in 2013, and 3.7% in 2014. However, the rate hikes could be greater if natural gas deliveries come to a complete halt.
Halts in gas deliveries from Egypt have forced IEC to double its 2012 fuel procurement budget from NIS 9 billion to NIS 19 billion, and it is demanding that most of this extra cost be paid by consumers through electricity rate hikes. In addition to agreeing to a lower rate hike, the Ministry of Finance agreed to give IEC state guarantees to raise NIS 3 billion through bond issues on the TASE.
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