Making a bill for electricity: the reform that will save money for every house in Israel/ShutterStock
Last week (February 13), the Minister of Energy and Infrastructure, Eli Cohen, convened a press conference and announced significant news in the field of electricity consumption, which affects every household in Israel.
The success of the new move announced by the minister may result in a 5-20% reduction in the cost of consumption which may be expressed in savings of hundreds to thousands of shekels per year for each electricity consumer, even if they do not have a smart meter.
What we know about the reform and the updates, it turns out is not enough, so here is some background and data that you should know.
In June 2018, after strenuous struggles, the reform of the electricity sector was launched, with its main goal to help lower the cost of living in Israel.
With the end of a gradual and lengthy process and after a two-year pilot that ended in January 2023, the possibility was opened for private consumers with a smart (digital) electricity meter to change the electricity supplier and save money on a basic commodity.
Since there are currently 3.1 million electricity meters in Israel and only about 700,000 are smart meters, there was a need for a real change that would allow full competition, and would provide the possibility of financial savings even for basic meter owners.
Examining the possibility of associating them with the benefit became the good news on which the minister's announcement is based: "Competition in the electricity sector will reach all households in Israel this summer so that every resident of the country can choose the electricity supplier, enjoy flexible and smart consumption and save hundreds to thousands of shekels a year."
Breaking the monopoly?
From now on, anyone who returns to Israel will be able to "disconnect" from the electricity company/ShutterStock
Breaking the monopoly?
The reform in the electricity sector effectively abolishes the exclusive control of the Electric Company in the production and supply segments in order to create competition and lower the price paid by consumers, and on the other hand it strengthens it as a natural monopoly in the transmission and distribution segments (infrastructure) with the aim of improving the quality of electricity supply in Israel.
In order for the reform to come to fruition, a number of gradual processes were required that took years: it was decided that in the production segment, the Electric Company would sell five power plants it owns and two state-of-the-art Ged stations with advanced technology would be built instead of coal-fired units.
In the supply segment, private companies will enter that will be able to supply electricity to consumers, and in the transmission and distribution segments, the electric company will continue to build, maintain and operate facilities and will invest at least NIS 3 billion in infrastructure development each year.
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As mentioned, with the entry into force of competition in the electricity market, each household will be able to connect to one of the 18 suppliers in an official arrangement that will offer discounted rates according to the nature of household consumption.
Among the companies that supply: Pazgaz, Electra Power, Bezeq, Hot Amishragaz, Cellcom, Partner and more.
In order to adapt to the future changes in the energy market, the Electric Company had to change the organizational structure: about 2,800 employees were put into early retirement, about 100 managers moved to a personal contract and the "free electricity" benefit for the company's employees was stopped.
At the end of the adjustment process, the company's workforce will decrease by about 25%.
The Electric Company's position on the reform: "The opening of the economy to competition, the unprecedented investment in infrastructure and the streamlining of the Electric Company will contribute to lowering the cost of living in Israel and the stability of electricity supply to customers."
Minister of Energy and Infrastructures, Eli Cohen/Assaf Magal, L.A.M
The meaning of competition
Competition in the electricity sector encourages suppliers to produce and supply electricity in an advanced, efficient and cheaper manner.
Added to this is a transparent pricing model that allows consumers to compare prices and choose the option that suits their needs and is the most affordable for them.
The pricing mechanism becomes dynamic and ensures that the electricity prices charged to us fairly reflect the true cost of production.
Another advantage of competition in the industry, it was necessary to invest in innovation.
We will all benefit from this.
46 companies were granted a license from an official electricity supplier, 18 of which are already active in the economy with household and business customers and they offer different consumption packages, from which you can choose the one that suits the nature of your personal consumption.
To our question, what is the reason that most of the public has not heard about the reform, we answered that the supplying companies are still preparing to provide proper service, some are now setting up the control and service centers and some are still deploying infrastructure.
It seems that the campaigns to raise public awareness will increase towards the summer.
A year into the electricity reform and 52% of the public has not heard of it
According to a survey conducted by the Amishergas company last January, one year after its entry into force, 52% of Israelis still have not heard of the electricity reform in Israel and the possibility of switching to another electricity supplier, which will significantly lower the cost of consumption.
According to the survey, it appears that the main barrier is the lack of a smart digital meter.
The survey conducted by the "Sample Panel" company among a nationally-representative sample of 504 respondents aged 25-65, examined the level of awareness of consumers on the issue: do they know that electricity bills can be reduced and if so, how many of them actually implement the reform?
Or what are the factors that prevent them from switching to a new supplier and starting to save on consumption costs.
The results of the survey show that those who did hear about the reform (48% of the public in Israel) understand that the main points of the reform are: the introduction of competition into the electricity market (58%), the possibility of lowering the electricity bill (56%), the possibility of moving to another company (34%), the need in a digital/smart meter (7%).
When the question was asked about private consumers switching to another provider following the reform, 27% answered that they might switch, only 26% answered that they intend to switch and 47% answered that they would not switch for several different reasons, among them: they no longer know people who switched, they do not have a smart meter, they They live in a rental, the move seems too complicated to them, they only trust the electric company or they don't understand enough about it.
Gili Sasson, VP of Marketing of Amishragaz
: "The results of the survey point to the fact that the public in Israel is far from understanding the meaning of the reform and especially the great potential for financial savings."
Have you chosen a provider?
Start saving
A smart electricity meter reads the consumption data continuously and transmits the information automatically to the new electricity suppliers, which makes it possible to manage the electricity supply in a controlled and efficient manner.
Its smart operation makes the transition simple and without the need for the arrival of a technician.
To know which electricity meter is installed at your place, you can contact the 103 hotline of the electricity company, or perform an online check on its website.
If you have a smart electricity meter, you can already join one of the companies with one phone call, in a simple and short process that is done entirely remotely.
If you have a basic electricity meter, you can wait for a free installation until 2028, or alternatively order the installation of a smart meter at a cost of NIS 273.
The option now opened with the announcement of the Minister of Energy and Infrastructure Eli Cohen, will allow you to switch to another electricity supplier only in the last quarter of this year (we are trying to aim for August 2024) and even then, the financial benefits for smart meter owners will be higher.
Before choosing a new electricity supplier, it is advisable to compare prices and adjust the package to your consumption habits.
The electricity prices offered by the official suppliers are varied and thanks to the competition, each of them has the intention of giving the best offer.
Among the companies that have entered the electricity market are also gas companies and telecommunication companies, so that in addition to discounts on electricity bills, you will be offered electricity packages that combine benefits on gas, cellular and internet services.
Who are the new providers and what do they offer?
Electra Power (formerly Super Gas) offers customized packages:
POWER package
- fixed discount on electricity consumption at all hours of the day (5% in the first year, 6% in the second year and 7% in the third year)
Hi-tech package
- fixed discount on consumption between 11 p.m. :00 to 17:00 the next day (8% in the first year, 9% in the second year, 10% in the third year)
Double package
- choose one of the electricity routes and receive an additional discount of NIS 120 per year on gas bills.
Amishragaz Electricity - offers a fixed discount of 6.5% on the electricity tariff, plus an option for a package that combines electricity service + gas benefits (one month free of charge each year and a 10% discount on gas tanks, up to 2 tanks per year).
Cellcom Energy Electricity - offers 3 packages with discounts on electricity rates:
Permanent savings package:
permanent discount on electricity consumption at all hours of the day (5% in the first year, 6% in the second year, 7% in the third year).
Package for working from home
: a fixed discount of 15% on consumption on Sunday-Friday between the hours of 7:00-17:00.
Savings package at night
: 20% on electricity consumption on Sunday-Thursday between 22:00 and 7:00 the next day
Pazgaz Electricity - also offers customizable packages
Day discount package
: 15% fixed discount on electricity consumption on Sunday-Thursday between 8 00:00-16:00.
Free night package
: NIS 0 for the first 3 months and then a 15% discount on consumption on Sunday-Friday between 00:00 and 07:00 the next day.
Discounted weekend package
: 10% fixed discount on electricity consumption from Thursday at midnight to Wednesday night at midnight.
24/7 package: a fixed discount of 6% on electricity consumption at all hours of the day.
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Eli Cohen
reform