Private Power Plants Kept Off Grid by Electric Corp.

IEC may pay up to NIS 10 million for violating contract with privately owned power station due to sanctions by its workers union.

A ludicrous sight greets visitors to the Rotem industrial zone about 15 kilometers east of Dimona: A spanking new power station sitting idle and disconnected from the electricity pylon standing just meters away.

The privately owned OPC Rotem power plant, which cost some NIS 2 billion to build, was ready to be fired up three weeks ago after two years of rushed construction. But the Israel Electric Corporation union has blocked installation of a power transmission cable. Only on Tuesday night, following extended deliberations, did the Haifa Labor Court order it connected.

A month ago the union decided to apply sanctions against what it called “creeping reform” − the generation of electricity through private initiatives without the workers being party to the arrangement. The union announced it wouldn’t connect any more private power plants to the electrical grid or allow the registration of small, solar-powered, rooftop generators.

But in any case the owners of OPC − Idan Ofer’s Israel Corporation with an 80% share and France’s Veolia Environement group with the remaining 20% − needn’t worry: IEC is obligated to pay NIS 10 million for every month’s delay it’s responsible for in starting up the plant, starting in mid-March.

IEC itself has been dragging its feet on the matter, taking its time in turning to the Haifa Labor Court over the sanctions until reaching a dead end in talks with its workers. In an exceptional move the court also summoned the head of regulation at the Public Utilities Authority for electricity, Oded Agmon.

In a statement submitted to the court, Agmon said OPC might sue IEC for much more than NIS 10 million for deliberately violating the contract. OPC’s customers, he explained, would soon demand compensation for not getting the electricity they contracted for. It will also be exposed for its “take or pay” obligations to the Tamar consortium for its natural gas allocation. In addition, OPC may need to compensate the South Korean company that erected the plant and has 700 workers standing by idle at the site.

Agmon added that the fine won’t be recognized by the authority in the rates paid by consumers for electricity, so the financial position of IEC, with its whopping debt load, will only worsen.

Meanwhile the anxiety level at government offices is on the rise, and not just due to the amount it may need to pay OPC. The country desperately needs the OPC facility to be operational this summer to insure against power shortages. Last summer reserves at peak hours reached a record low point of 1.8% and the need for rolling power outages was just narrowly avoided.

With demand constantly growing and not one new IEC unit anticipated coming on line in the next year, the OPC plant was slated to make up the shortfall this coming summer. The facility is meant to provide 440 megawatts of power as soon as gas starts flowing from the offshore Tamar reservoir in April, but run-in procedures haven’t yet commenced.

Albatross Aerial Photography
Tomer Appelbaum