A Misuse of Power

Leaving the IEC’s vertical monopoly in place, perpetuating its political power, and bribing its workers with public funds does not constitute a worthy proposal for reform.

Haaretz.
Haaretz Editorial
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IEC's Reading Power Station, north Tel Aviv. Credit: Moti Milrod
Haaretz.
Haaretz Editorial

The Yogev committee on reforming the electricity market issued its interim report yesterday – a report that is not supported by all the committee members, nor by the Israel Electric Corporation and its workers. That’s why the released report is worded in general terms, focuses on technical structural changes and evades a simple presentation of the benefits it seeks to bring to the public and the economy.

The purpose of this comprehensive reform is supposedly to improve services and reduce costs. The structural changes required for this are merely the means to achieve the ultimate consumer objective. But the Yogev report shows that the committee sees the reform as the end, not the means. As a result, 18 years after the passage of the Electricity Market Law, the Yogev report threatens to completely bury the demands for true reform.

The committee’s recommendations – including increasing the capacity of private producers, incorporating a separate company for power production via natural gas, issuing 15 percent of the company’s shares on the stock exchange, and more – don’t ultimately pierce the vertical monopoly of the IEC, which controls the production, transmission, distribution and supply of electricity in Israel. Given the IEC’s precarious financial position, the current reform proposal is a localized efficiency plan at best, and, at worst, a posture for change.

The IEC is 74 billion shekels ($21.3 billion) in debt, some of that guaranteed by the government. Even though Uri Yogev argues that financing the plan will not rely on the electricity rates paid by consumers, there is concern that in the end they will bear the cost of the reform. In return for “agreeing” to the reform, the IEC’s proposal to its workers includes a payment of 1.5 million shekels to every worker who leaves; a permanent increment of 2,000 shekels on their monthly pensions, a 50,000 shekel grant to all workers, and a conversion of the free electricity they currently receive into a salary increase.

The cost of this basket of employee benefits is estimated at 6.5 billion shekels. In addition, the public will indirectly bear the costs of the state’s reduction of the IEC debt.

Leaving the IEC’s vertical monopoly in place, perpetuating its political power, and bribing its workers with public funds does not constitute a worthy proposal, even if they appear in a report that has “reform” in its title. Ministers Silvan Shalom and Yair Lapid, who received the interim recommendations, should reject them.

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