Largest Class Action Suit in Israel’s History to Proceed Against Israel Electric Corporation

Itai Trilnick
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Itai Trilnick

A lawsuit seeking up to NIS 11 billion from the Israel Electric Corporation on behalf of consumers has been certified by the Tel Aviv District Court as a class action, making it the largest in Israel’s history.

The plaintiffs based their suit on a claim that electricity rates were for years calculated using costs that included improper salaries and pension expense data at the electric utility.

Certification as a class action means that the court recognizes those who brought the case as representatives of all electricity consumers affected by the allegedly improper rates.

On Thursday, IEC notified the Tel Aviv Stock Exchange of the district court’s decision, but the utility also announced its intention to appeal the certification of the case as a class action to the Supreme Court.

The plaintiffs are demanding that the electric company either make refunds of the claimed overcharges or lower rates in the future as compensation.

In support of their case, the plaintiffs contend in part that until 2010, one particular salary category constituted a component of the rates that IEC charged, even though the salary category was allegedly discontinued in 2005.

They also say that due to an actuarial error, IEC improperly overpaid NIS 8.9 billion in employer contributions to employee pension funds. In the process, as the plaintiffs see it, the electric utility reduced its equity capital, thereby worsening the loan terms available to the utility and passing on the increased expense to the consumer.

In December 2011, at a hearing to recognize the case as a class action, Avi Antebi, IEC’s personnel director from 2002 to 2010, denied that salaries which deviated from the norm were paid at the company. However, at one point he was confronted with a document, that had been sent to the Finance Ministry, which contained a handwritten note making reference to a file of such exceptional salaries. ‏

Additional reporting by Avi Bar-Eli‏

Israel Electric control center. Credit: Tomer Neuberg