Israel Electric's fight to keep the lights on

Wed Jul 18, 2012 10:42am EDT
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By Ari Rabinovitch and Tova Cohen

TEL AVIV (Reuters) - In a TV comedy sketch well-known among Israelis, a man sits in his living room bundled in a fur coat with four air conditioners on full blast. A shivering guest asks if he could turn just one of them off.

"Turn off an air conditioner?" retorts the man who, as an employee of Israel Electric Corp, would enjoy free electricity. "Why turn off an air conditioner when I can turn on an electric heater?"

Some viewers may have chuckled when the sketch first aired years ago. But for the majority of Israelis now, facing the prospect of rolling blackouts in sweltering heat, the electricity situation is no joke.

Israel Electric Corp (IEC), which is responsible for nearly every aspect of electricity from running power plants to connecting households, simply cannot keep up with growing demand.

The state-owned utility just lost natural gas supplies from neighbouring Egypt and fuel costs are soaring. Reserves are low and capacity insufficient and the government, under pressure from massive cost-of-living protests, has limited how much it can charge the public for electricity consumption.

IEC is also grappling with a huge debt load exacerbated by generous workforce benefits. Its nearly 13,000 staff enjoy salaries three times the national average - and that free electricity.

Reforms are needed, and fast. But the crackdown the government has been promising for more than a decade is being fiercely resisted by the union, and politicians have backed down from a sweeping plan to split IEC into two companies, one for power generation and one for distribution.

Unions saw the plan as a first step towards privatizing the company and feared job cuts.   Continued...

A labourer works at the construction site of Dorad, a private power plant in the southern city of Ashkelon May 17, 2012. REUTERS/Baz Ratner