Households Pay Extra NIS 100m for Gas

Commissioner: Business sector pays far less for gas than households do; new gas providers face barriers that keep them from entering the market.

Households are paying an extra NIS 100 million a year for gas due to the lack of competition in the sector, according to Antitrust Commissioner Ronit Kan.

This statistic comes from a report Kan prepared for the Knesset Economics Committee, which is scheduled to discuss the matter today.

Natural Gas - Bloomberg

The business sector pays much less for its gas than households do, and the three major gas companies aren't competing against each other, said Kan. Their profit margin is significantly higher from selling to households, she said.

Furthermore, customers almost never change gas providers, and new players face barriers keeping them from entering the market, she said.

Households use gas mainly for cooking, but some also use it for heating. "The Antitrust Authority's data indicates that the gas sector reform of the past few years did indeed reduce barriers facing small gas companies. Yet their share of the household gas market is still tiny, and major barriers are keeping them from expanding," Kan said.

Three big companies - Amisragas, PasGas and Supergas - control 90% of the household market. Dorgas, a smaller company, has not managed to keep up.

Kan noted that the three big companies don't try to seize customers from each other, they only go after customers of the smaller companies. The last reform blocked large gas companies from calling departing customers for six months, to give smaller companies a chance to win them over.

However, very few people ever change gas providers. This is even more true for households that use a building-wide gas supply, as opposed to personal gas tanks.

"Israeli households pay an extra NIS 100 million a year to gas companies due to excess concentration and a lack of competition," said committee chairman MK Carmel Shama-Hacohen (Likud ). "The 2008 gas sector reform hasn't achieved its goals. The Economics Committee will try to develop new medication for the sector's illnesses."