Bottom Shekel / Let There Be Darkness

For years we've been told that once Israel's electricity producers adopt natural gas instead of worse-polluting fossil fuels, we'll win twice. The quality of the air we breathe will improve, and the price of electricity will drop.

The day has come. Today 40% of Israel's electricity is produced using natural gas - rather than coal or fuel oil - which has reduced the Israel Electric Corporation's costs by NIS 2.2 billion a year. So wouldn't it follow that electricity prices to households and industry alike should drop?

Paying less for electricity wouldn't only improve our standard of living: It would also reduce production costs for manufacturers. Industry consumes about 30% of the power produced in Israel. Making power cheaper would make Israeli industry more competitive in the global arena, stimulating manufacturing and exports. We can therefore understand the president of the Manufacturers Association, Shraga Brosh, when he sighs that "we have waited for this price cut for 10 years."

The Utilities Authority (Electricity) supports a price cut. Actually, it has to because the law requires it to base power prices on the IEC's costs. But National Infrastructure Minister Uzi Landau opposes the cut. He wants electricity prices to remain high and would use the income over costs for all sorts of unrelated things such as subsidizing the purchase of energy-conserving devices.

The IEC has ideas of its own regarding the extra money. Chairman Moti Friedman suggests that it be used for "development." Of what? Of bonuses for the IEC's workers? Of the extraordinarily generous pensions for its ex-workers?

In short, the IEC would applaud if electricity prices are not reduced. It wants to keep the money, and Landau knows this perfectly well. In this case, he's been acting like just another political hack, seeking to lavish goodies on his constituents.

He knows that the IEC's employees would like it if he lets the IEC keep its prices high and keep the money. He also knows that the public would like being treated by the government to power-saving electric bulbs on the cheap: The public would be dazzled by the gift and not notice that it was paying for it with inflated electricity bills.

It's up to the Utilities Authority to block any such cross-subsidies. That's the very reason the authority exists: to prevent politicians from setting electricity prices in Israel.

Simple problem, simple solution

Landau is considered honest. But what would happen if some other politician came along and abused electricity prices for personal gain?

But while Landau wants prices to stay high, the Utilities Authority wants them to drop. Landau's solution is simple: fire Amnon Shapira, chairman of the Utilities Authority. Shapira also accused Landau and the government of cowardice for not daring to push ahead with plans to restructure the IEC, for fear of the workers and their powerful union.

Shapira claims, rightly, that failure to reform the IEC will cause Israel's electricity economy to decline. He also says, rightly, that Landau and the government are failing to support a plan to cut back staffing at the IEC by 2,500 superfluous employees, again because they cower before the workers who could (in theory) throw the switch and plunge the nation into darkness.

Landau is frustrated that he can't set electricity tariffs himself. That's lucky for us. Electricity prices must stay in professional, non-political hands.

Water over the bridge

Landau is equally frustrated by the Water Authority. He was exceedingly displeased when the authority's chief, Uri Shani, raised the price of water. Landau felt that Shani was ignoring his opinion when Shani decided (with the treasury's budget department) to cancel the so-called drought tax and instead raise the price of water by 40% this month.

Again, Landau had hoped to look like a Jewish version of Santa Claus. At a meeting of the Knesset's State Control Committee, he said he rejects the concept that the consumer has to bear the full cost of building water infrastructure. "The state" should pay part too, he said. But what exactly is "the state" if not its people?

Anyway, Landau wanted to spread the increase in water prices over four years, not impose the whole thing this month. He thought a 10% increase this month would be plenty. In fact a compromise was achieved (water prices are rising 25% this month, 13% in July and then 2% in January 2011). But Landau stayed angry because he hadn't been the one to determine when and by how much prices should increase. Which is just as well, as we said: The Water Authority should also remain in the hands of disinterested professionals, innocent of political considerations.

Happily for Uri Shani, Landau doesn't want to fire him. He does, however, want to fire Shapira because he shot off his mouth, and because Shapira wants to lower electricity prices. Landau would like to replace Shapira with a marionette who would consult with Landau the Lofty before any decision and grovel before him.

If Landau succeeds, we can land a place of honor in the roster of third-world countries. And the one day when we turn on the tap nothing will come out, and when we flip the switch, we will remain in the dark.