The long-awaited proposals for reforming Israel’s electric power industry were ensnared by last-minute disputes on Monday, as plans for a press conference to unveil the overhaul were, for now, canceled after a day of conflicting announcements.
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The 11th-hour confusion came amid reports that the Israel Electric Corporation, the state-owned electric-power monopoly at the center of the reform plan, was offering unions a payout – to win their support – that was so generous it would cost the utility more than the cost savings the reforms are supposed to introduce.
Meanwhile, IEC workers’ committee will begin a labor slowdown on Tuesday, with some 500 team leaders scheduled to be called to a union meeting during the workday at the company’s Orot Rabin power plant in Hadera.
Sources said the meeting was the first protests against the Yogev reforms planned by unions, although the proximate cause for the action is an announcement by IEC CEO Eli Glickman last week that he will not award workers a pay raise due them this year under their collective bargain agreement.
The Yogev committee, formally known as the Steering Committee for Reform of the Power Sector, was supposed to hold a news conference on Tuesday to present its interim report. But the Finance Ministry put out an announcement on Tuesday saying the report would instead be presented in the next several days.
An hour later, it said the report would be released on Tuesday but without a news conference. But even that date, treasury officials conceded, was not final.
The Yogev committee was formed last summer to take another stab at overhauling the power sector by beefing up private sector competition, which is aimed at breaking the chokehold IEC and its unions have on providing electric power, and at restructuring IEC to cut costs.
Behind the confusion over the news conference, sources said, was an internal dispute in the treasury over how the committee had been operating. Uri Yogev, who is both director of the Government Corporations Authority and chairman of the panel, reportedly scheduled the news conference without informing other committee members or the treasury. That prompted treasury Director General Yael Andorn to pull mthe news conference.
But the committee in recent weeks has been dogged by criticism over its work. The panel has been accused of not being transparent and of conducting parallel talks with IEC unions and management while taking expert testimony.
The state comptroller has agreed to look into the matter. In addition, because of the criticism, when the Yogev committee’s interim report is published, it will be followed by a 30-day period of hearings.
Meanwhile, the Yogev committee received an estimate that the compensation to be paid to IEC employees in exchange for their consenting to the reforms would cost the utility some 6.5 billion shekels ($1.9 billion) over five years -- an amount that would exceed the cost savings from reducing IEC’s payroll and leave the utility with losses.
Under the proposal, IEC would pay some 2,600 employees to be cut from the payroll some 1.6 million shekels each in severance pay. They would get the huge payout even though only half of them would be taking early retirement, while the rest would be let go as part of natural attrition.
Their 1,300 employees taking early retirement – mainly employees over age 50 or with more than 25 years on the job – would get a pension of 870,000 shekels and average severance pay of 700,000 shekels and other cash benefits.
For the IEC employees who remain on the payroll, each would be entitled to a 50,000-shekel “reform bonus” and an extra 2,000 shekels a month contribution to their pensions by the utility. In addition, in exchange for giving up the rights, as they have long enjoyed, of unlimited free electricity at home, they would get 1,000 shekels month.
However, IEC will benefit financially from having fewer permanent hires on its staff. The proposal calls for reducing the payroll by 1,700 permanent employees and 900 temporary workers, but 600 of the temporary workers will be replaced by temporaries, who cost the utility less.
The treasury has not yet commented officially on the proposal, but it has been the cause of tensions between Yogev himself and Kobi Amselem, the treasury’s wages director, who is determined to reform wages and compensation at IEC as part of the broader reform initiative.