HOT, Paz and ICL are considering selling electricity to consumers

The new competition for household electricity supply is coming to a close, and some surprising companies are considering entering the industry. Last week, the IEC held its first conference for private suppliers and new interested parties who are considering direct electricity sales to households instead of the IEC.

In less than two months, at the end of March, a history is expected to register in the electricity economy in Israel, when private customers will not be obliged to purchase electricity from the electricity company but will be able to choose an electricity supplier, just as they choose an Internet or cellular provider. In the meantime, consumers will be able to get a discount on their monthly bill and purchase the electricity at a cheaper price than its current price.

According to information received by Calcalist, the conference was attended by representatives of dozens of leading companies, including HOT Communications, which is considering entering the field, with a future option to offer its customers not only Internet and TV channels but also electricity.

Another intriguing participant in the conference, which was held through Zoom due to the closure, was the Paz Group, which is considering entering the field at three different levels: the entire group, only the refineries in Ashdod, or only Pazgaz. Representatives of each of these bodies attended the conference. Paz currently owns two private power plants, which produce about 110 megawatts, but sells only to selected industrial customers and the surplus to the national grid.

The Dead Sea Works (ICL) of the Ofer era also participated in the conference. The company is already a large private electricity supplier, with a private power plant at the Dead Sea factories, which has been operating since 2018 and produces about 250 megawatts for production needs, with surplus electricity being sold to the national grid. Ofer is also the controlling owner of the private power plant OPC.

In addition, most of the owners of the private power plants, including Dorad and Dalia Energies, attended the conference, including those that the IEC sold as part of the preparations for the reform. There was also participation from some of the electricity producers from renewable energies, who are considering the sale of “green electricity” to various households, including kibbutzim.

The conference presented the main points of the pilot that is expected to be launched in about two months, the work processes between the market participants, the computerized systems developed by the electricity company for the benefit of the subject, and the method by which customer mobility will be managed between suppliers. A computerized platform was also presented at the conference, which includes two new systems, through which customer mobility between suppliers will be managed, and the information will be transferred to suppliers automatically.

For the purpose of selecting suppliers, the state defined that, among other things, “an array of billing and collection, a database of consumer data history and a customer service center are required.” In other words – a company is needed that can deal with thousands of customers, provide service and transfer payment invoices with a billing system.

The early assessment was that telecommunications companies have the ability to meet these requirements. If HOT does enter the field, it will be able to offer its customers a combined triple deal: a package of channels, Internet infrastructure and electricity. Another possible interesting triple is that of Paz, a company that specializes in fuels and refining. A direct sale to households will create a direct connection for the consumer that can lead, for example, to the sale of fuels. In such a situation, Paz will be able to offer its own triple: cooking gas, car fuel and electricity.

In the same way, Shikun VeBinui, which also participated in the conference, can offer customers who purchase electricity from it, for example, a possible discount on Road Six and the Carmel Tunnels – in both of which it is involved as the owner.

Private electricity producers currently produce about 40% of electricity in Israel. Among the prominent private producers: Ramat Hovav, Dalia Energies, Dorad, Alon Tavor, OPC and smaller power plants. In addition to producers, in the electricity sector there are a number of private suppliers with a supply license, who purchase the energy from the private electricity producers.

Private electricity producers have been operating since 2013, but due to regulatory restrictions have so far been able to supply electricity only to business and industrial customers at an official discount of up to 10% of the government tariff. The regulation and reform of the electricity economy, which was approved in November 2018, opened the door for manufacturers and private suppliers to start selling electricity to domestic consumers as well.

As part of the reform, it was decided, among other things, that the management of the national electricity system would go from an electricity company to an independent government company that had already been established, while the electricity company would gradually sell five active power plants by 2026. This is with the aim of lowering the same production analyzer from 70% today to only 35% in 2026. Two of the stations have already been sold: The Alon Tavor power plant, which has a production capacity of 600 megawatts, was sold in July 2019 to a group consisting of the Chinese government PMEC and Mivtach Shamir and Rafek of Israel. In November 2020, the Ramat Hovav power plant with a production capacity of 1,150 megawatts was sold to Shikun VeBinui and Adletech.

After the sale of the two stations, about 40% of the electricity production is in private hands, and with the completion of the sale of the power plant at the Hagit site during 2021 and the future sale of Eshkol sites in Ashdod Reading in Tel Aviv in the next two years, the IEC will cease to be a monopoly Its dropped to a threshold of only about 35%. But the IEC’s transmission and distribution network will remain a monopoly. This means that the company will continue to conduct electricity to customers and will not require new infrastructure in purchasing electricity from a private supplier.

The first phase of the transfer will take place in about two months, with a pilot that will include 40,000 households. At the end of next year, the move is expected to expand and include all citizens of the State of Israel. The only requirement for a home customer to be able to buy electricity from another supplier is that its electricity be digital, with an independent communication network, and that the household’s electricity consumption can be read in real time and remotely. As part of the preparations for the move, the IEC issued a tender in mid-December 2020 to replace the electricity meters of a large part of the customers. Once the franchisee is selected, the mass conversion is expected to begin this summer and last for about 3 years during which about a million counters will be replaced.

Two years after the start of the new division, the Electricity Authority will examine the regulation and draw lessons. When the IEC’s customer share drops below 60%, it will be able to join and take part in the competition.

IEC CEO Ofer Bloch concluded that “We have completed another significant step, and the IEC has embarked on a new path and continues to prove that it is 100% committed to implementing the reform, without any barriers on its part, so that everything required to open supplies can be put into competition. We see the new entrepreneurs as full and committed partners. “

HOT responded: “HOT is always exploring opportunities to create competition and bring innovation to the Israeli market.”

Mepaz declined to comment.

Contains No response was given.