State Reaches Deal With Dorad to Head Off Power Shortage

Electricity Authority would pay higher rates in return for speeding up completion of private power plant.

In an effort to head off a summer of power shortages, the Electricity Authority has reached an agreement in principle to buy power from Dorad, a private-sector utility.

Under the agreement, the Electricity Authority would pay higher rates than usual on condition that Dorad finish completion of its generating plant by July.

Dorad would supply between 300 and 600 megawatts of power between July 1 and September 15, if and when it is needed. Dorad would be paid a higher tariff as an incentive to move the scheduled completion of its south Ashkelon plant from December to July.

Israel is expected to face brownouts this summer after a gas-fired generator at the state-owned Israel Electric Corporation's Gezer power station suffered a severe malfunction in March that could take up to a year to repair. Gezer generator will reduce reserve generating capacity this summer by 5%, and IEC will be hard-pressed to meet demand during the hottest days of the season.

The agreement, which was debated by the Electricity Authority board on Monday, does not legally obligate either side to buy or sell power. This is meant to avoid legal complications that might arise from a contract requiring public money to be spent.

If it is approved, the agreement will bring an end to a long-running dispute over Dorad's demands that it be paid $30 million in government compensation for moving up the launch date of its plant. The 840-megawatt plant will cost about NIS 4.2 billion to build.

The agreement will be subject to a public hearing and open to other private-sector power providers, sources said.

It is likely to meet criticism from the other big private-sector utility, OPC, which is due to start operations at its plant July 1.

The 430-megawatt OPC plant, located in Mishor Rotem in the Negev, has contracts with the government and IEC to sell power. It is 80% owed by The Israel Corporation and 20% by the French company Veolia.

The IEC workers committee is also opposed to buying private power, arguing that it constitutes a kind of "creeping reform" undertaken without their consent. On Wednesday the Haifa Distract Labor Court is due to hear a motion by IEC management seeking to bar its employees from preventing Dorad's plant from being connected to the electrical grid.

Sanctions have also been taken against the OPC plant, prompting Antitrust Commissioner David Gilo in February to issue a warning that IEC's failure to hook up OPC to the national grid would be an abuse of its position as a monopoly provider of electricity. 

Rachel Levy