Minister of Finance: admission of private producers will make the electricity market competitive and is part of the de-monopolization process
The Prime Minister, in his capacity as Minister of National Infrastructures, has signed new regulations pertaining to the electricity system. The regulations are an outgrowth of a Government policy that aimed to introduce competition into the electricity system and are based on legislation, passed in 2003, to reform the electricity system and expose it to competition as part of the economic recovery plan. The Ministry of National Infrastructures and the Budget Division of the Ministry of Finance, in conjunction with the Office of the Prime Minister, drew up the regulations pursuant to Government resolutions, as part of the 2005 economic policy, to provide a role for private producers within the electricity system.
This policy is part of the Minister of Finance's policy on de-monopolization. The regulations will allow the private sector and industry to build power plants in order to improve the efficiency of industrial energy consumption and to allow private players to sell electricity to consumers at policy rates lower than those charged by the Israel Electric Corp. (IEC) today. Indeed, several private producers are expected to begin competing with the IEC monopoly over the next few years.
The regulations include:
- Allowing cogeneration of electricity, so that industry may build power plants that combine heat and steam and thereby lower their own energy costs and sell surplus electricity to other consumers at lower prices or to the central electricity grid at rates that the Public Utility Commission (PUC-Electricity) shall set.
- Allowing private producers to build power plants and giving them an incentive to sell electricity to end-users and not to the IEC, charging these consumers lower prices than those charged today.
- Encouraging private entities to build pump-back power plants, thereby making the overall cost of capital more efficient.
The new regulations were drawn up following a thorough examination of the capital market's ability to finance such ventures. In essence, they allow institutional entities to take part in long-term financing.
The regulations will go into effect as soon as they are published in the government gazette.
