Electric company workers in action.
More cases of non-supply of electricity (Photo: Yossi Weiss, the Electric Company)
The State of Israel invested over seven billion shekels in the reform of the Electric Company that came into force in 2018, and was supposed to lead to the optimization of the Electric Company and the electricity sector and lower tariffs.
In a scathing report published by the state comptroller, he states that the reform has failed.
This is what the comptroller states: despite the copious sums invested in the electric company, electricity rates have become more expensive, the number of power outages has increased, billions are paid for salaries to the manpower that has not been significantly reduced, half of the employees of the electric company earn huge salaries. A government agency did not follow up on the implementation of the reform, so no one had any idea that it was not being implemented.
Between the months of May and December 2021, the state auditor checked the efficiency and effectiveness of the electricity company, and found serious failures in the implementation of the reform and its monitoring. The goal of the reform was to make a comprehensive change in the electricity company, Opening to competition of segments in the electricity production and supply chain, outsourcing the management of the system to a new government company, and early retirement of 1,800 employees.
Despite expensive retirement plans, the amount the company spends each salary is the same as it spent on the eve of the reform (Photo: Reuven Castro)
We paid billions, but the reform falters
In practice, very little happened, and this despite the sums of money transferred by the state to the electric company, the generous compensation mechanisms established for it, and the extreme salary benefits received by the employees.
The streamlining was supposed to increase the company's profitability, and save approximately 6.5 billion shekels of public funds, but the auditor states that the company's profitability will not increase in the coming years and the economy will not save anything.
6.4 billion shekels of the total amount allocated for the electricity reform were transferred as retirement costs to employees and increased pensions for all company employees.
1,229 employees retired out of 1,800 employees who were supposed to retire.
Instead of reducing the workforce, the Electric Company hired 547 temporary workers in their place, whose cost is very high, so high, that the amount paid for salaries after the introduction of the reform, is equal to the amount paid for salaries in 2016.
Salary expenses in 2021 stood at NIS 4.85 billion, about 28% of the company's total expenses, an unimaginable amount in a company that was supposed to go through an efficiency process.
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The average salary in the economy, according to the National Statistics Office, in July 2022. The average salary in high-tech, for example, is 10% lower than that of half of the employees of the Electric Company (photo: from a report to the National Statistics Office)
Average salary of over NIS 30,000 per month
If you thought the salaries in high-tech were high, look at what's happening at the Electric Company: half of the employees earn over 30,000 shekels a month, at Mekorot only 23% earn such huge sums, as well as only about 18% of the employees of the aerospace industry.
All of this is due to an incomprehensible two-year delay in signing the new salary agreement that was supposed to significantly reduce these amounts.
Sunset over the chimney of Reading Power Station.
Was supposed to close in 2021, will continue to operate at least until 2026 (Photo: Reuven Castro)
Bad service and high electricity bill
One of the benefits that the reform was supposed to bring is the lowering of electricity rates by introducing competition to the electricity production segment.
Despite the sale of three power plants, not only has the rate not gone down, it is set to go up again soon.
The amount of power outages increased by 37% from 2017,
a year before the reform came into effect, despite increased investments in the electricity network.
The Reading station, which was supposed to close in 2021, will continue to operate until at least 2026, even though it is outdated and problematic and therefore the electricity supply to Gush Dan is not reliable.
The waiting time for an answer at the 103 hotline has become longer
.
In 2019 we waited on the line for almost two minutes and in 2021 we waited an average of 4.5 minutes until we received an answer from a representative, although less than six minutes, as the law states, but for the billions we paid, the waiting time could at least be shortened.
The waiting time for a representative is reasonable, but twice as long as it was in 2019 (Photo: ShutterStock)
No account and no supervision
The intolerable ease of throwing public money is reflected in the failure discovered by the State Comptroller in monitoring the implementation of the reform, which was supposed to be carried out by the Financial Stability Monitoring Committee headed by the Director of the Government Companies Authority, and the Monitoring Committee after the Implementation of the Reform headed by the Director General of the Ministry of Energy and Director General Ministry of Finance, as determined by the government decision.
The first met once in 2019 and the second did not meet at all.
In the conclusion of the difficult audit report, the auditor recommends that the government tighten the supervision of the implementation of the reform in the electricity sector and draw conclusions from its failure also regarding the formulation of future reforms in the sector. In addition, he recommends signing a new wage agreement as soon as possible, adapting it to the labor market and the energy sector, and checking the situation of the employees inflated and expensive, to check the reasons for the high operating costs and to reduce them significantly, to improve the serviceability to customers and to check why the company changed its indicators and targets with surprising frequency.
"Despite the improvement in the company's financial situation and the various efficiency measures it has taken in recent years," writes the auditor, "it is clear that there are still many activities in the company that can be improved and optimized."
The CEO of the Electric Company, Meir Spiegler. He established committees to correct the deficiencies. It should be noted that the report deals with the company's activities before he was appointed to his position (Photo: Reuven Castro)
The Electric Company's response to the auditor's report
In the last 4 years (from 2018), since the government's decision to reform the electricity sector, the electricity company is in a significant implementation process that includes massive efficiency measures and organizational changes.
The auditor even praised quite a bit the significant work of the electric company and the great achievements of the company and the electric sector as a whole.
For example, the report stated that "in the years 2021-2018, Hai Hai implemented the various measures established in the reform, including reducing the number of permanent employees, reducing its share in the production segment by selling power plants according to the planned schedule, and taking internal efficiency measures." .
The auditor determined that the company is meeting the target set for the permanent workforce, that there has been a real and continuous improvement in the company's financial situation, that the company is meeting the target of reducing its share in the production segment, that wage costs following the reform are about a billion shekels lower compared to a scenario without reform, that there has been a decrease in network development costs, and that there has been an improvement in the satisfaction index The desire of customers who contacted Moked 103.
Among the negative points, it is stated that there is a worsening trend in the index of non-delivery minutes, a temporary staffing situation that exceeds the goals of the reform, the company has not yet signed a wage agreement that will regulate the change, an increase in operating costs.
At the same time, the final report contains assertions and conclusions that, in the company's opinion, do not reflect the full data presented to the audit team.
The Electric Company respects and appreciates the serious work done by the State Comptroller's office and considers every comment and clarification as significant feedback for the company's activities.
A team to correct deficiencies headed by
The CEO of the company, Meir Spiegler
, acts in accordance with the decisions and recommendations of the auditor, all the lessons and conclusions of the state auditor have been learned, assimilated and internalized, and therefore the company continues to operate.
All this, in order to implement the reform as stipulated and continue to be the leading national energy company in Israel.
Of money
Tags
State Comptroller
Electric Company
Auditor's report
reform