Electricity reform moves forward as deal struck with union
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Electricity reform moves forward as deal struck with union

Government reaches deal to end monopoly and bring down prices; power company to shed hundreds of jobs

An Israel Electric Corporation employee working on an electric line. (Roni Schutzer/Flash90)
An Israel Electric Corporation employee working on an electric line. (Roni Schutzer/Flash90)

A decades-long plan to reform Israel’s electricity network took a leap forward Wednesday as the Finance Ministry signed a deal with the workers’ union to streamline the workforce, including laying off nearly 2,000 people.

The reform, which ultimately aims to break the Israel Electric Corporation’s near-monopoly on producing and supplying electricity, was being held up by union demands over the fate of workers.

Israeli governments have been working to reform the Israel Electric Corporation since 1996, but never succeeded in reaching an agreement with its workers. The two came closest in 2014, but scrapped the deal at the last minute after workers balked.

Energy Minister Yuval Steinitz said the moves would bring down electricity prices in the future and help the power company.

“We have achieved a historic reform of the electricity market after 20 years of failed attempts,” he said.

As part of the deal agreed on between the unions and the Finance and Energy Ministries, the electricity company is to shed some 1,800 workers over the next eight years, while others will move to other roles within new government corporations that will be set up as part of the reform.

The government agreed to a compensation deal with the workers who are to leave and an increase in the basic pay of the remaining staff.

View from the Israel Electric Corporation power station in Hadera, central Israel. August 11, 2011. (Yaakov Naumi/Flash90)

Additionally, over the next five years, the Israel Electric Corporation will sell off five gas-fired power stations — in Eshkol, Reading, Alon Tavor, Ramat Hovav and the eastern part of the Hagit site — and will build two new natural gas operated combined-cycle power turbines in the coastal city of Hadera.

The remaining power stations will be operated by a subsidiary of the company.

While the electricity company will remain the default supplier, part of the grid — the part that connects private homes and offices to the national and municipal grids — will be opened to new, private companies.

Finance Minister Moshe Kahlon welcomed the deal. “After decades, the monopoly has ended,” he said. “There will be competition in the electricity market.”

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