The ministers presented for government approval their proposal to implement reform in the electricity system, via legislative amendment by the end of February

Hirchson and Ben-Eliezer: “The impact on employees of structural changes in the Electric Corporation will be discussed with them, while ensuring their rights are protected.”

Finance Minister Avraham Hirchson and National Infrastructure Minister Benjamin (Fuad) Ben-Eliezer decided this evening following a long series of discussions held over the past few months between representatives of the government and the Electric Corporation’s management and workers’ representatives, to submit today for government approval this coming Sunday their proposal for implementing reform in the electricity system.

The ministers’ proposal to the government was formulated after lengthy discussions over the past few months between government representatives and the workers, and after the workers’ representatives did not accept various government proposals brought to them by the ministers and their representatives.

The ministers emphasized that a dialogue will be established with Electric Corporation workers to cover everything relating to the impact of the structural change, in an effort to reach agreements with them that will protect their rights, in accordance with the accepted rules of labor relations, and labor law.

Ministers Hirchson and Ben-Eliezer added that implementation of the reform is a very important step for consumers and for the Israeli electricity system, and its aim is to achieve greater efficiency, reduce operating costs, increase production capability in the electricity market, encourage competition, improve customer service, and encourage the entry of private producers to the market.

The ministers directed the professional teams to continue holding intensive discussions with Electric Corporation workers’ representatives, with the aim of reaching agreements to protect their rights.

Below are the main points of the proposed structural changes:

A.            Beginning on March 3, 2007, existing electricity licenses will be extended for a four-month period, with the option of extending them for an additional two months with the approval of the ministers, during which time, the government will make an additional attempt to reach agreements with the workers’ representatives.

B.            The Electric Corporation will become a holding company, which will hold production, transmission and distribution companies.

C.           The production segment will be incorporated into four subsidiary companies in January 2008, while actual operation of the companies will begin in January 2009.  Distribution of the companies will be done on the basis of a similar fuel mix (coal and natural gas).

D.           The transmission company will be established as a subsidiary company of the holding company by the end of 2009, and will begin operating at the end of 2010.  In this case, the ministers will be able to decide within a year of the establishment of the transmission company whether the company will remain a subsidiary company of the holding company or whether it will become a separate transmission company owned by the State.

E.            In the distribution segment, 4-5 subsidiary companies will be established on a regional basis, similar to the district divisions currently in existence.  The companies will operate starting in January 2010.

F.            By January 2009, additional subsidiary companies will be established for planning and setting up power stations, logistics, fuel purchasing, etc.  The companies will begin operating in January 2010.

G.           Privatization of 49% of the total of the companies, except for the transmission companies, will be done by mid-2013.

H.            Long-term system management, sales and planning will be in the hands of an independent State-owned company beginning in 2008.