Electricity Authority Refuses to Cover 230 Million NIS in IEC Delays
The Electricity Authority refuses to recognize 230 million NIS in costs from the Israel Electric Corporation over delays at the Hadera power plant, sparing consumers part of the 4.6 billion NIS economic damage.
The Electricity Authority, the regulator setting consumer electricity prices, will refuse to recognize costs of 230 million NIS due to delays by the Israel Electric Corporation in constructing new power plants at the Orot Rabin site in Hadera.
These delays, stretching over two years, caused billions of shekels in damage to the economy. However, according to the Electricity Authority, most of stems from justified delays caused by the COVID-19 pandemic and the war. Nonetheless, the Israel Electric Corporation also delayed projects due to internal issues, supplier management, and schedule mismanagement under its direct responsibility.
Economic Damage and Regulatory Decision
Normally, the costs incurred by the Israel Electric Corporation are fully passed on to consumers through electricity tariffs. This time, however, the company will be forced to absorb 230 million NIS from its own pocket, without affecting consumer electricity prices. The remaining damage will still be imposed on electricity consumers.
Recently, two new production units went into operation at the Hadera complex, likely the last ones the Israel Electric Corporation will build. Their construction was mandated by the major electricity sector reform in 2018, which opened the market to competition from the private sector. The total economic damage from these delays is estimated at roughly 4.6 billion NIS, including surplus costs from older power plants, environmental costs, and financing interest.
"In examining the factors behind the delays, the Authority recognized that part of the schedule and cost overruns stemmed from external events beyond the company's control, such as the pandemic and the Swords of Iron war," stated the Electricity Authority.
Internal Failures and Corporate Accountability
Regarding the parts under the company's control—including supplier management, financing costs, and investment totaling around 230 million NIS—the Electricity Authority refused to recognize these expenses. As a result, the state-owned enterprise must bear the burden internally.
Total construction costs for the production units reached approximately 5.3 billion NIS, with the regulator deciding to recognize around 5.1 billion NIS to be passed on to electricity consumers. The decision will now proceed to a public hearing.
