Israel Electric Corporation’s losses from last week’s storm could reach 1 billion shekels ($285.4 million), the utility company’s president and CEO Eli Glickman, told the Knesset Economic Affairs Committee on Sunday.
Members of the committee were touring IEC facilities in northern Israel to see some of the damage wreaked by the storm.
At the height of the storm as many as 60,000 customer households were without power. IEC officials said at least 600 power lines were downed, necessitating the use of 90 aerial platforms to repair broken or damaged cables. In addition, they said, the company operated 72 generators and increased staffing at its 103 hotline by a factor of 15.
The added expenses could mean the IEC will request a rate hike.
In answer to a question about the company’s heavy debts and the prospect for consumer prices, Glickman said: “In 2015 electricity rates could decline, because we will have covered the guarantees we took during the natural-gas supply crisis and have repaid the debt. Nevertheless, reducing rates before 2015 would push the company into crisis, as would cutting rates by tens of percentage points. There’s no reason to cut them 30%.”
IEC had to borrow heavily in 2011 and 2012 after Egypt abruptly shut off Israel’s supply of natural gas, forcing the company to source fuel from other, more expensive sources until Israel’s Tamar gas field came on line earlier this year.
IEC came under heavy criticism for the blackouts during the storm, but the chairman of the Knesset Economic Affairs Committee MK Avishaiy Braverman (Labor), said Sunday he came away from the tour believing that IEC had for the most part performed adequately during the storm.
“We are convinced that [IEC] employees worked hard to reconnect power to communities that were cut off,” he said. “In places where there were problems, like the call center, the company has promised to correct them. We’ll make certain that happens.”
In the coming days, the committee will be taking up the matters of renewing IEC’s operating license and approving another delay in restructuring the company and Israel’s electricity sector. The company’s license is due to expire at the end of the year, by which time it was supposed to have completed a restructuring.
But the company has failed to do that, so the Energy and Water Resources Ministry will request a one-year extension, to January 1, 2015, of the planned structural changes. If approved, it would be the 11th such postponement.
Although these delay requests have become routine, the Knesset Economic Affairs Committee is not authorized to approve them. Instead, the Knesset as a whole must pass a law extending the restructuring deadline. The bill will be put to a preliminary reading tomorrow.
Two months ago Braverman vowed not to back legislation extending IEC’s license unless the restructuring measures were first put into place. But on Sunday he took a softer tack, emphasizing that the reform must be done “cautiously.”
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